In the recent case of Cloisters Business Centre Management Company Ltd v Anvari [2026] EWCA Civ 17, the issue of whether a mixed-use premises would benefit from the protection of statutory controls relating to service charge was determined by the Court of Appeal.
Background
The case related to the 999 year lease of a property known as Unit 6, Priory House, Cloisters Business Centre demising to the lessee a “self-contained unit” which included a kitchen and a shower room. The lease contained the usual covenant for the lessee to pay the service charge. In addition to this covenant, the lease defined the use of the Unit, as “Offices (and ancillary residential use)”, with a further obligation not to use the Unit or any part of it for residential purposes or as sleeping accommodation. The Unit was in fact being used as storage by the lessee at the relevant time.
The dispute arose relating to the service charge and whether the lessee would benefit from the protection of the provisions of sections 18 to 27A of the Landlord and Tenant Act 1985 (“LTA 1985”).
There were arrears of service charge, and the lessee had defended the claim for service charge based on whether they were payable and reasonable pursuant to the relevant sections of the LTA 1985. Section 18 of the LTA 1985 confirms that the protections apply to a lessee of a “dwelling”. Relevant to this, was the question of whether the Unit would be defined as a “dwelling” under section 38 of the LTA 1985.
The county court found that the Unit was a dwelling and therefore referred the claim to the First Tier Property Tribunal (“FTT”) to determine the recoverability of the service charge, finding in favour of the lessee.
Appeal
The lessor appealed the court’s decision, and the Court of Appeal had to consider the meaning of the word “dwelling” as defined by section 38 of the LTA 1985. Section 38 states as follows:-
““dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling …”
The Court of Appeal considered the whole LTA 1985 as amended by the Landlord and Tenant Act 1987and acknowledged that there were a variety of different definitions, some of which referred to residential purposes.
It was held that the extent of the residential use in the mixed-use building was not relevant, but the actual terms of the lease were of importance, and in this case, whilst the lease prohibited the use of the premises for residential purposes, it also prohibited any noisy or offensive manufacture. Even with such clauses, the Court of Appeal found it did not prevent this mixed-use premises being a dwelling and as such, it dismissed the appeal.
Comment
From reading the terms of the lease in this case, it may have been tempting to conclude that it would not benefit from the protection of the LTA 1985 due to the reference not to use the premises for residential purposes. However, as can be seen, even with such terms, the court found in favour of the tenant.
If you are a landlord or tenant of mixed-use premises, this is an important case when considering the recovery of service charge, as there may be more protection than you think. If you require assistance in this regard, please contact us on 0345 646 0406 and a member of our team will be in touch.