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(1)The Courtyard RTM Co Limited, (2) The Studios RTM Co Ltd, (3) X1 The Terrace RTM Co Limited v (1) Rockwell (FC103) Limited, (2) Grey GR LP
(1) 14 Park Crescent Limited, (2) PC Investments Ltd v 14 Park Crescent RTM Co Ltd [2025] UKUT 39 (LC)
In an important decision, the Upper Tribunal (“UT”) has handed down its decision in two appeals (heard together) on how to apply the statutory test for a “self-contained part” of a building under sections 72(3)-(4) of the Commonhold and Leasehold Reform Act 2002.
What is the test for self-contained part of a building?
Sections 72(3)-(4) set out a three-stage test to establishing that a part of a building is a self-contained part.
First, whether the part constitutes a “vertical division of the building”.
Second, whether the structure of the building is such that it could be redeveloped independently of the rest of the building.
Third, whether the relevant services are provided independently of the relevant services provided for occupiers of the rest of the building, or could be so provided without significant interruption in the provision of any relevant services for the occupiers of the rest of the building.
The two appeals
The first appeal, (1) The Courtyard RTM Co Limited, (2) The Studios RTM Co Ltd, (3) X1 The Terrace RTM Co Limited v (1) Rockwell (FC103) Limited, (2) Grey GR LP concerned three blocks forming part of the Plaza Boulevard in Liverpool. The Plaza Boulevard was developed in phases and although each phase is separate from each other, all phases are structurally attached to a central concrete podium which spans the area between them. Beneath this concrete podium is a shared carpark. RTM was claimed by the respective RTM companies for each building on the basis that each block was a self-contained part of a building. The First-tier Tribunal (“FTT”) held that none of the blocks is eligible to acquire RTM because none are self-contained. The RTM companies were the appellants in the first appeal, although the respondents cross-appealed on the issue of vertical division.
The second appeal, (1) 14 Park Crescent Limited, (2) PC Investments Ltd v 14 Park Crescent RTM Co Ltd concerned 14 Park Crescent and 8 Park Crescent Mews East (“14 Park Crescent”). 14 Park Crescent, while originally built in 1820, underwent redevelopment between 2012-2018 and was demolished except for the front façade and a 1960s steel and concrete frame. As part of the redevelopment, the original foundations of the party walls were excavated, new substantial foundations were inserted and a basement was added. 14 Park Crescent RTM Company claimed the right to manage 14 Park Crescent on the basis that it was a self-contained part of a building. The First-tier Tribunal agreed. The immediate and superior landlords were the appellants in the second appeal.
The Upper Tribunal’s decision
The UT found that:
Vertical division
On vertical division, the UT found that:
However, with respect to the Plaza Boulevard blocks, it was held that, at basement level, the car park beneath the individual blocks was not a self-contained premises with a vertical ‘division’ in the ordinary sense because it is open-plan and undivided. Relying on Settlers Court, the UT held that it seems unlikely to have been intended that the management of the undivided car park would be split between the building owner and the relevant RTM companies. Moreover, another practical difficulty is that others who are not tenants of the block have been granted rights, including of parking spaces, within the areas of which the RTM company claims the exclusive right to manage ([74]-[76]).
On the second appeal, the UT held that it was irrelevant that the foundations of 14 Park Crescent spanned under in the voided areas of neighbouring properties since there is no sense in which the foundations on one side of a party wall “belong” to another’s building. Each owner owns up to the midpoint of the party wall and the foundations beneath it. Thus, a vertical line could be drawn between No 14 and No 12 and the spanning foundations were irrelevant. Furthermore, even though there were movement joints, it was decided that as section 72(3)(a) says nothing about the need for a perfectly straight boundary between the premises and its neighbour, no such requirement can be read into that section ([78]-[82]).
Independent redevelopment
The UT found that the independent redevelopment test could be met even if support was needed to the adjoining structures ([93]-[96]) or if part of the structure of the self-contained part had to be retained. As such, the UT held that each of the three Plaza Boulevard blocks could be independently redeveloped as could No 14.
Provision of services
This issue was only relevant to the Studios. The UT held that the FTT was entitled to reach the conclusion that the fire alarm service shared between these blocks could be provided independently without significant interruption ([98]-[103]).
Wider significance of the decision
The decision is one of very few to consider the statutory test for a “self-contained part of a building”. It also has wider significance: the language of section 72(3)-(4) is almost identical to that used in section 3(2) of the Leasehold Reform, Housing and Urban Development Act 1993 and in section 117(5) of the Building Safety Act 2022. Therefore, the decision has wider implications for both collective enfranchisement and building safety.
Simon Allison acted for Grey GR Limited Partnership, instructed by JB Leitch Ltd.
Justin Bates KC acted for 14 Park Crescent Ltd and PC Investments Ltd, instructed by Northover LLP.
