WARNING FOR LANDLORDS… How does a revocable licence become an irrevocable right?
The recent judgment by the Court of Appeal in the case of The Corporation of Trinity House of Deptford Strond v 4-6 Trinity Church Square Freehold Limited  has raised the following important issues for landlords in relation to tenant’s claims for collective enfranchisement:
- The tenants had a right to use the communal garden area under a licence contained within their respective leases, but which licence may be revoked at any time by the landlord;
- However, the licence was not revoked by the landlord prior to the “relevant date” for the purposes of Section 1 of the Leasehold Reform Housing & Urban Development Act 1993, which is the date of the tenant’s initial notice in a collective enfranchisement claim;
- Section 1(4)(a) of the Act entitled the landlord to retain the freehold of the garden provided it could offer in lieu such “permanent rights as will ensure that thereafter the occupier of the flat…has as nearly as may be the same rights” as those enjoyed when the process of acquisition commenced;
- The Court held that to satisfy the permanence test under Section 1(4) this required the grant of an irrevocable easement to use the garden and therefore the landlord lost any development value it may have had by retaining the garden land.
It is essential therefore that in order for landlords to retain such development value and avoid significant losses that any revocable licences are revoked now and prior to lessees making a collective enfranchisement claim.
Our specialist leasehold enfranchisement team at Hart Brown would be delighted to assist landlords who may be in this situation.
This is not legal advice; it is intended to provide information of general interest about current legal issues.