The Court of Appeal considered what counts as a "building" under Part 1 of the Landlord and Tenant Act 1987 and whether section 5 notices served on Liverpool flat tenants were valid.
Key facts
- Who: Tenants of flats with rights of first refusal, and landlords proposing to sell a freehold covering more than one block
- From: Judgment of 13 March 2026
- Source: SGL 1 Limited v FSV Freeholders Limited [2026] EWCA Civ 267
The Court of Appeal (Civil Division) gave judgment on 13 March 2026 in SGL 1 Limited v FSV Freeholders Limited [2026] EWCA Civ 267. Lord Justice Lewison, Lady Justice Asplin and Lord Justice Arnold heard the appeal, and Lady Justice Asplin gave the judgment. It concerned the meaning of "building" in Part 1 of the Landlord and Tenant Act 1987 and, as a consequence, whether certain notices served under section 5 of that Act were valid.
Background
Part 1 of the 1987 Act gives tenants of flats rights of first refusal where a landlord proposes to dispose of an estate or interest affecting the premises of which their flats form part. The landlord must first serve a notice under section 5 on the qualifying tenants.
Section 5(3) provides that where a landlord proposes a transaction involving the disposal of an estate or interest in more than one building, the landlord must sever the transaction so as to deal with each building separately.
The dispute concerned the freehold title of Blocks A to E, Fox Street, Liverpool, known as Fox Street Village. The landlord's administrators disposed of the freehold of Blocks A, B, C and E to SGL1 Limited. Two section 5 notices were served, one for Block A and one for Blocks B, C and E. FSV Freeholders Limited was incorporated on 14 January 2021 and was authorised by 115 qualifying tenants as their nominee to acquire the freehold reversion.
The question
The Court had to decide how to tell whether a disposal is of more than one building and, if it is, how to decide the number of buildings.
The earlier decisions
On 11 January 2022 District Judge Lampkin declared that the landlord had complied with section 5. On 14 October 2022 Fancourt J allowed an appeal in part and restored the claim so that the High Court could decide whether Blocks A, B, C and E form one, two or more buildings, and whether the notices were therefore valid.
In October 2024 His Honour Judge Hodge KC, sitting as a judge of the High Court, held that the four blocks together were a single building and that the two notices were invalid. He applied Long Acre Securities Ltd v Karet [2005] Ch 61 and carried out a multi-factorial evaluation of the relevant factors. His judgment is at [2025] EWHC 3 (Ch). SGL1 appealed.
Earlier case law
The Court reviewed earlier authorities on the word "building" in the 1987 Act. One, concerning flats at Holden Road, Brookdene, was decided before the Housing Act 1996 amended the 1987 Act. It held that "building" could include appurtenances such as gardens and paths or roadways over which tenants had rights of way, but not garages held on separate leases.
What this means for tenants and landlords
The number of "buildings" in a sale matters because section 5(3) requires a transaction covering more than one building to be split, with each building dealt with separately. In this case the question of how many buildings were involved decided whether the section 5 notices were valid.
Sources
- SGL 1 Limited v FSV Freeholders Limited [2026] EWCA Civ 267, Court of Appeal (Civil Division), 13 March 2026