The Upper Tribunal (Lands Chamber) dismissed a landlord's appeal over the freehold value used to set a lease extension premium, holding that a covenant to keep a flat in "good tenantable repair" did not require modernisation.
Key facts
- Who: Leaseholders seeking statutory lease extensions, and landlords disputing the premium, where the flat is in poor condition
- From: 26 May 2026 (judgment date)
- Source: Mountview Estates Plc v W8 Property Limited [2026] UKUT 196 (LC)
Background
Flat 9, Kensington Court Gardens, London W8, is on the third floor of a Victorian mansion block. It is held under a 70-year lease granted in November 1960, so only a handful of years remain. The landlord, Mountview Estates Plc, holds a 999-year lease of property including the flat.
Under clause 2(4) of the lease, the tenant must keep the interior of the flat, including the central heating and the landlord's fixtures and fittings, in "good tenantable repair". Under clause 2(5), the tenant must decorate the interior in the last month of the term.
A notice seeking a lease extension under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993 was served on 13 March 2023, proposing a premium of £2,081,150. The respondent, W8 Property Limited, acquired the lease with the benefit of that notice on 23 March 2023 for £985,000. The landlord's counter-notice of 16 May 2023 proposed £3,762,000.
The question
The First-tier Tribunal determined the premium. The only issue on appeal was the freehold value of the flat. The flat was agreed to be "uninhabitable". The dispute concerned the condition the flat should be assumed to be in for valuation, and how the comparable properties should be treated. The First-tier Tribunal preferred one valuer's approach, under which the comparables, other than the flat next door, which was in similar condition, were adjusted to reflect the actual condition of the flat.
The decision
Upper Tribunal Judge Elizabeth Cooke dismissed the appeal. The First-tier Tribunal's determination of the freehold value, and so of the premium, stands.
The reasoning
The judge held that the starting point is the law on when repair is required, not the standard to which repairs must be carried out once they are required. A covenant to repair does not oblige a tenant to repair something that is not broken.
There was no evidence in either valuer's report that anything was broken or did not work, or that the flat was unfit for human habitation. The judge said a repairing covenant does not require a tenant to decorate, "however tired the decoration may have become". Nor does it require up-to-date electrical equipment unless the old equipment is out of repair, additional power points, built-in kitchen appliances where the existing ones are not built-in, modern bathroom fittings, an efficient boiler or radiators.
The judge accepted that saying the flat was uninhabitable but in good tenantable repair may seem counter-intuitive, but a dwelling may be uninhabitable for many reasons. One valuer did not say why the flat was uninhabitable or what was meant by the term. Without evidence that a repairing obligation had not been complied with, the First-tier Tribunal was right to accept that the flat was in good tenantable repair. Its approach was "clearly correct" and its explanation was sufficient. Even if the explanation had been too sparse, the judge said there would be no point in disturbing a conclusion that was so obviously correct.
What this means for leaseholders and landlords
- In this case, the flat was valued on the basis that the tenant's repairing covenant had been performed, not on the basis of a modernised flat.
- The tribunal pointed to the lack of evidence that anything was broken or that a repairing obligation had been breached.
- The wording of the repairing and decorating covenants in a lease matters, so it is worth checking what yours say.
- Valuation disputes depend on their facts. Get advice before any deadline in a lease extension claim passes.
Any party may seek permission to appeal to the Court of Appeal on a point of law, within one month of the decision being sent to the parties (with different timing if costs are applied for within 14 days).
Sources
- Mountview Estates Plc v W8 Property Limited [2026] UKUT 196 (LC), Upper Tribunal (Lands Chamber), 26 May 2026: https://caselaw.nationalarchives.gov.uk/ukut/lc/2026/196