RICS Property Journal features Chandni Pandya and Georgina Muskett on service charges for live/work units

A recent Court of Appeal decision has confirmed that statutory service charge protections can apply to live/work units where any residential use is permitted by the lease, even if that residential use is only ancillary. This brings some important implications for landlords of mixed‑use properties.

The appeal involved long leaseholders of premises in a converted Victorian convent in Battersea. The leases described the premises as offices with ancillary residential use, although in practice the units were being used for storage. The issue was whether the leaseholders could nevertheless be considered lessees of a 'dwelling' under the relevant statutory provisions.

In its decision, the Court of Appeal confirmed that the live/work unit was a dwelling and therefore benefitted from the statutory service charge regime in the 1985 Act. The fact that residential use of the unit was only 'ancillary' did not prevent the unit from being a dwelling. The court did not place any weight on the fact that the unit was described as being for storage, because the lease expressly permitted residential occupation.

As a result, landlords should ensure that they understand whether the residential service charge regime applies to a live/work unit in their portfolio.

Chandni Pandya, Associate, and Georgina Muskett, Senior Associate, in our Real Estate Disputes team, write in RICS Property Journal:

This decision reinforces a central principle: any degree of permitted residential use can activate the residential statutory service charge regime, even in premises that appear predominantly commercial, such as a live/work unit.

For landlords, the key takeaway is the need to look beyond labels and focus on both the current use of the property and the use that the lease permits.

Landlords may want to seek professional advice where they are unsure about how to treat a particular unit in their portfolio, as failure to comply with the residential service charge regime where it applies could be costly.

The full article is available in RICS Property Journal here.