Many leases require the landlord to keep parts of the property in repair, and tenants to contribute to the cost of those repairs through a service charge. Difficulties can arise when considering who should pay to repair inherent defects in the property.

What are inherent defects?

Inherent defects are problems with a property arising from when the property was built.

They can be contrasted with disrepair, which typically arises due to the use of the property and the passage of time.

What costs can landlords recover from their tenants?

Landlords are not normally able to recover costs through a service charge for correcting inherent defects but a ‘fact and degree’ test of the works required has been applied in court in recent years. The court has since held that remedy of an inherent defect could not count as a repair unless there was some damage which had been caused which needed repair. Remedy of a defect where there was no damage did not qualify.

However, the wording of the particular lease must be considered carefully as a recent case shows.

Leases in a building in this case specified that tenants must pay the landlord a reasonable part of the costs of carrying out ‘specified repairs’. This included the repair of the structure and exterior of the premises, but not costs of correcting structural defects.

The landlord completed extensive works to fix the building’s framework and hoped to charge each tenant £72,000 for the costs incurred.

The Court of Appeal held that these costs were not recoverable due to the wording within the leases. It did not matter that the works may have counted as ‘repairs’ under the aforementioned test, where the leases specifically excluded the cost of such works from recovery.

Conclusion

Recovering costs will depend both on the ‘fact and degree’ of the works and on the specific wording of the lease.

Landlords and tenants should consider any planned works and the lease carefully to decide whether tenants are responsible for costs.