Insurance Rent: You can be sure that the First-Tier Tribunal has jurisdiction
You can be sure that the First-Tier Tribunal has jurisdiction
The background
In Howe v Mahamood [2019], the tenant occupied a first-floor flat under a lease dated 19th September 1986. The building contained two further residential flats and a commercial unit. Under the terms of the lease, the landlord was required to insure the building and the tenant covenanted to contribute one sixth of the costs and other expenses as a service charge.
Instead of taking out one overall insurance policy for the whole building, the landlord instead took out four separate policies. The tenant believed that the four separate policies failed to insure the whole building and, claiming that the landlord had therefore not met his obligations under the lease, brought proceedings in the First-tier Tribunal (Property Chamber) to determine the reasonableness of the service charges in respect of insurance premiums, or otherwise what his liability for service charge was.
The First-tier Tribunal concluded that it did not have the appropriate jurisdiction to determine the issue, and the tenant appealed.
The decision
The Upper Tribunal allowed the tenant’s appeal, finding that under s.27A of the Landlord and Tenant Act 1985, it was within the FTT’s jurisdiction to make a determination as to whether the tenant’s contribution towards insurance costs were properly payable.
However, the UT rejected the tenant’s principal argument, finding no evidence that the four separate insurance policies failed to properly insure the building. The building had been properly insured during the years 2005-2014 inclusive. The UT determined the sums payable by the tenant for subsequent years.
Advice and action for landlords
Although centring on a technical point relating to jurisdiction, this case is helpful to landlords of multiple-occupied buildings as an indication that, where insurance is effected over separate properties rather than one overall policy, this doesn’t necessarily result in a breach of the landlord’s covenant to insure the whole building.
However, it is certainly advised that landlords ensure insurance policies cover not only internal demises but also the structure of the building and its common parts for completeness of cover.
This case also reinforces the First-tier Tribunal’s authority to determine the reasonableness and liability of service charge where a claim is brought by a tenant.
The Upper Tribunal allowed the tenant’s appeal finding that it was within the FTT’s jurisdiction to make a determination as to whether the tenant’s contribution towards insurance costs were properly payable.
