Sacred or Statutory? Service Charges following Cloisters v Anvari

In this Newsflash episode, Lizzie Collin is joined by Richard Snape, Head of Legal Training at Davitt Jones Bould, to unpack a Court of Appeal decision about an ecclesiastical setting.

Cloisters Business Centre Management Company Limited v Anvari [2026] is about service charge liability in a former convent converted into mixed business and residential use and raises important questions about when statutory protections under the Landlord and Tenant Act 1985 are triggered.

Richard and Lizzie explore how the Court of Appeal approached the definition of a “dwelling”, and why ancillary or intended residential use can be enough to bring statutory service charge controls into play, even where premises are predominantly commercial.

The discussion covers:
•The background to the dispute and the unusual mixed-use setup at Priory House
•How the Court of Appeal interpreted “dwelling” under the 1985 Act
•Why residential use doesn’t need to be obvious or dominant to matter
•The consequences for landlords, tenants and advisers dealing with mixed-use buildings, and service charge consultation requirements.

This case is a reminder that service charge recovery in mixed-use properties remains a sensitive area, and that assumptions about “commercial” buildings can quickly unravel upon closer inspection.

Other cases mentioned:
- JLK Ltd v Sleepy Hollow Ltd
- Kensington and Chelsea v Mellcraft

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Transcript

Lizzie C
Hello Richard.

Richard Snape
Hello, Lizzie. And how are you? Just back from London, I hear.

Lizzie C
I am. I'm fresh off the train from London, ready to record some podcasts, and the first of which is a Court of Appeal decision from the 21st of January. So last week, as we're speaking and it's called Cloisters Business Centre Management Company Limited and Anvari and it's about service charge. Statutory controls under the 85 landlord and Tenant Act for mixed business residential premises. So can you tell us about it? What's the background of this one?

Richard Snape
Yeah, it's anvarian wolf. There's a second person involved. Yeah, the Cloisters business centre Management Business Centre is in Battersea in London. It's a place called Priory House and it's a former Victorian convent, hence the name and one of the it's. It's various units, but one of the units, Unit 6, which is on. The top floor. Was the subject matter of of the? Case. It consisted of a suite of rooms, but included a kitchen and a shower room. The lease was entered into is that was backdated. It started on September the 29th, Michaelmas Day on 1987 and 999 year lease. And the covenants, the years of covenants allowed office use, but also ancillary residential use, although at the time. At the moment, it seems that nobody's actually living there. That's being used for storage. There was that ability in the in the covenants, they got a Long story short, the the landlord was claiming that the tenants were in with service charge of years. And wanted to bring. Action against them for the the arrears and the tenants argued that it's mixed business residential and it'll come within the 85 landlord and Tenant Act. As you said, the 1985 landlord and. Tenant acting incredibly. The disjointed piece of legislation, but more of that shortly because if it does come with an 85 act, then your landlord, the landlord should have, or the work must be reasonably incurred of a reasonable standard under section 19 the act and under section 20 and this service charge consultation requirements, England regs. Fascinating indeed. They should have gone through consultation before they did qualifying works. They can't charge one £250 per tenant unless they go through a consultation unless they apply successfully to be exempted. So that was it. What what it was about and it went to the county court. You know, the landlord claiming this money and. The. And the tenants putting up this defence?

Lizzie C
So what did the county court decide?

Richard Snape
Well, the county court decided that the 85 landlord and Tenant Act would apply to mixed business residential units, and it would apply here. And so they sent it to to the first tier tribunal who got the jurisdiction to decide. On service choice liability under the 85 Act section 27-A. And then it was appealed, it was appealed to the Court of Appeal and the Court of Appeal heard they gave judgement on mentioned January the 21st.

Lizzie C
So what happened when it went to the Court of Appeal? What did they decide?

Richard Snape
Well, they pointed out to start off with that, you know, the 85 act is a mess. They think say that, but it's a it's a consolidation of legal. Relation, you know, background goes back to to certain terms of service charge and statutory control for residential properties went back to the housing finance sector in 1972. Then there was a 74 Housing Act which amended it in the 1980 Housing Act that amended it and then the 85 landlord and tenant that consolidated and amended it, there was an 87. And tenant act that amended it and so on and so forth and it's about to be amended again. When they finally get around to implementing the provisions in. There. At least old and Freehold Reform Act of 2024, so that's some of some of the background to it. And they also discussed, you know what section 18 basically says when the provisions apply, this part of the Act applies. And they they define the service charges an amount payable by a tenant of ad. As part of Oregon, in addition to the rent and under Section 38 of the the 85 Act, a dwelling is defined as a building or part of the building occupied or intended to be occupied as a separate dwelling. So we basically looked at whether this particular suite of rooms. Will come within that. And they said that, well, they discussed a case called JLK limited and equate as to whether it's a separate part of the building, basically, that's the question of fact. It's physical condition of the building, if you like, and not what the user is. So when as a query it was a Liverpool, it was. Student accommodation bed sits in a big converted property in Liverpool and the students sat their own little bed sits and legs, but there was communal areas. And then actually they said that, uh, well, it doesn't have to be a home to be a dwelling to one thing. It doesn't have to be your principal home or home. It can still be a dwelling. But they said because there's communal areas, it's not. The individual units are not separate dwellings. So they didn't come within. The 85 act. But the court in this particular case. At that, they also looked at. Various other things, not least of which section 32 of the 85110 attack. Which says that certain parts of the act, the Act deals a lot different areas, not really related on occasion, but certain parts of the act. Section 32 made clear that leases were under 54 landlord and tenant. Act would be. Exempt they they wouldn't come within the legislation. Things like sections one to three A which is all about tenants being able to request for dwellings, details of the landlord from the person who collects the rent. And details of any directors, if the landlords are company and and also the landlord has to inform on assignments in sections 11 to 15 which deal with this is less than seven years duration of dwellings where the landlord is responsible for the structure and exterior and the installations. But there is no such exemption mentioned. And in relation to sections 18 to 27 a which are the relevant provisions here. So by implication, the 54 act leases would come within it and if it's mixed business residential, it can come within the 54 act. And they also said that it might not be. Occupied as a dwelling at the moment within the definition. But it was intended to be occupied as a dwelling, which also fits within definitions and for. All of those. Reasons. It was held that mixed business residential properties, even if the residential element is ancillary and not being used but can be intended to be used in the future. Came within the 85 act. It's quite an important case. Very important case.

Lizzie C
So why is it important, do you think?

Richard Snape
Well, there's a lot of these. Things out there nowadays lithium, things like. Live work units and the likes in which the flavour of the moment on occasion and all of those premises, would suddenly come within if they got service charge liability. Any property which is mixed you live on in a flat. You know there's a case Kensington and Chelsea Millcraft. If you're a half ago. Where you know you've got a flat above your commercial, your office and the likes under a lease and they'd all come if there's a service charge liability, you'd come within quite changing requirements for for consultation before you can carry out works, you have to really think about it. And as say they if they finally getting ground to implementing the relevant provisions in the leasehold and freehold of Reform Act, there's going to be even more stringent provisions. It's amazing it's taken so long to actually have a clear case on it. Actually, that's it.

Lizzie C
Well, thank you very much. Richard.