ALMO defeats challenge to increase in cost of discretionary leasehold services

Blackpool Coastal Housing has won an appeal taken against its decision to increase the cost of discretionary leasehold services.

Tenants had challenged the 2010 decision, which was taken after a review found the £50 annual charge made to some 400 leaseholders was insufficient to cover costs.

The landlord, which is the arm’s-length management organisation (ALMO) of Blackpool Borough Council, increased the charge to £190 in April 2011.

Two leaseholders challenged the increased charge at a Leasehold Valuation Tribunal, which ruled in their favour and annulled the increase having decided that some of the management services were not chargeable under the leases.

The Upper Tribunal overturned that decision but resident Ian Morris took the case to the Court of Appeal, which has now rejected the challenge.

ALMO chief executive John Donnellon said: “We take no pleasure in increasing the charges we make to our tenants and leaseholders - quite the opposite.

“However, as a publicly funded company, it is right that we should be able to charge leaseholders a fee for our services which meets the cost of providing them.”

The ALMO’s barrister Sebastian Clegg, of Deans Court Chambers, Manchester, said: “BCH has, in its discretion, provided various services for those leaseholders such as anti-social behaviour services, gas safety and the provision of information by way of newsletters and forums. In 2010, BCH concluded that [£50] was substantially less than the services cost.”

He said the main issue on appeal was whether the terms of the lease permitted the council to charge for the discretionary leasehold services.

Morris argued the council did not have a right to charge for the discretionary leasehold services unless they were directly related to regulations passed by the council.

But Clegg said he pointed to the wide provisions for the council to do works and provide services and submitted it was “expressly permitted to charge for those works and services”.

The Court of Appeal accepted the submission that the most likely reason for the relevant lease provision was so that the council could provide the services and charge for them, although it was not under a positive obligation to provide the services.