When is a “building” not a building?

A recent Court of Appeal decision has given landlords, developers and leaseholders some important guidance on a surprisingly tricky question:

What actually counts as a “building” under the Landlord and Tenant Act 1987?

Why does it matter?

Because where a landlord wants to sell a freehold containing multiple blocks of flats, qualifying tenants may have a right of first refusal.

And getting the “building” question wrong could have serious consequences.

The Court of Appeal’s message was essentially:

Don’t rely solely on Land Registry titles or the number of physical blocks.

Instead, look at whether the structures are “functionally integrated” — in other words, do they operate as one integrated building?

In SGL 1 Ltd v FSV Freeholders Ltd:

• Block A was treated as a separate building because it stood independently and had its own services and utilities.

• Blocks B, C and E were treated as one building because they were more closely integrated and shared services, access and infrastructure.
  

Interestingly, shared communal areas do not automatically turn separate structures into one building.

Why should landlords & tenants care?

For landlords and developers, incorrectly identifying the buildings involved in a disposal could invalidate notices and potentially expose you to significant legal consequences.

For leaseholders/tenants, understanding these rights is important because the 1987 Act may give you an opportunity to acquire the freehold when it is being sold.

The takeaway?

Multi-block residential developments need careful analysis before a freehold sale. In Property, the Details Can Change Everything. Get Advice Early. — ELS Legal

This post is for general educational purposes only and does not constitute legal advice. For further information please contact ELS Legal by telephone on 0203 149 8488 or by email at info@els.legal.