UK’s 200,000+ Shared Ownership Leaseholders Win the Support of the Court of Appeal

The 200,000-plus shared ownership leaseholders in the UK breathed a sigh of relief when the Court of Appeal granted them the same legal rights as other private sector leaseholders. This landmark ruling was a long-awaited victory.

In the case of Avon Ground Rents v Canary Gateway (Block A) RTM [2023] EWCA Civ 616 (30 May 2023), the Court of Appeal dismissed an appeal by Avon Ground Rents, a company owned by Israel Moskovitz, who contested the right to manage claim for seven apartment blocks in London’s East End. The leaseholders successfully argued that 12 shared ownership leaseholders (who had not yet reached 100% ownership) should still qualify as tenants under right-to-manage legislation—and the court agreed.

A Lengthy Legal Battle for Leaseholders

The residents' battle to remove Avon Ground Rents as the property manager took nearly four years, requiring multiple appearances at tenancy-agreements-made-easy'>planetrent.co.uk/blog/could-a-tax-tribunal-ruling-mean-btl-investors-avoid-3-stamp-duty-surcharge'>tribunals and courts.

• In 2019, leaseholders attempted to take over the management of their flats.
• In November 2020, the Upper tenancy-agreements-made-easy'>planetrent.co.uk/blog/could-a-tax-tribunal-ruling-mean-btl-investors-avoid-3-stamp-duty-surcharge'>Tribunal (Lands Chamber) acknowledged that the 12 leaseholders held long leases under the Commonhold and Leasehold Reform Act 2002, but rejected their right-to-manage claim on other legal grounds.
• Avon Ground Rents then challenged this ruling, leading to further proceedings.

The Key Legal Question: Do Shared Ownership Leaseholders Have Long Leases?

The crux of the case centered on whether the 12 shared ownership leaseholders—who had not yet acquired full 100% ownership—were still eligible for right-to-manage under the Commonhold and Leasehold Reform Act 2002, section 76(2).

• If they did not qualify as having long leases, their housing association landlord would be considered the qualifying tenant instead.
• This would mean that preliminary legal notices had to be served to the housing association, complicating the right-to-manage process.
• The debate revolved around whether a landlord could be seen as a "tenant" under the Act’s legal provisions.

Previous Tribunal Rulings on Shared Ownership Leases

In 2020, the Upper tenancy-agreements-made-easy'>planetrent.co.uk/blog/could-a-tax-tribunal-ruling-mean-btl-investors-avoid-3-stamp-duty-surcharge'>Tribunal had ruled that shared ownership leaseholders should be considered qualifying tenants.

• As a result, Avon Ground Rents initially agreed that half of the blocks could exercise the right to manage.
• However, the company later disputed whether the remaining blocks should also qualify, arguing that the tenancy-agreements-made-easy'>planetrent.co.uk/blog/could-a-tax-tribunal-ruling-mean-btl-investors-avoid-3-stamp-duty-surcharge'>tribunal had erred in its interpretation.

Despite Avon Ground Rents' continued legal challenges, both the First-tier tenancy-agreements-made-easy'>planetrent.co.uk/blog/could-a-tax-tribunal-ruling-mean-btl-investors-avoid-3-stamp-duty-surcharge'>Tribunal and the Upper tenancy-agreements-made-easy'>planetrent.co.uk/blog/could-a-tax-tribunal-ruling-mean-btl-investors-avoid-3-stamp-duty-surcharge'>Tribunal rejected their arguments. Avon then escalated the matter to the Court of Appeal.

Court of Appeal's Final Verdict

At the Court of Appeal, Avon Ground Rents claimed that section 76(2)(e) of the Act states that a long lease includes shared ownership leases only when the tenant owns 100% of the property.

• The leaseholders countered this claim, arguing that under section 76(2)(a), a lease should qualify as long if it lasts more than 21 years—which theirs did.
• The Court of Appeal ultimately sided with the leaseholders, upholding the ruling that shared ownership leaseholders still qualified for right-to-manage, even without full ownership.

What This Victory Means for Shared Ownership Leaseholders

This landmark ruling sets a powerful precedent for over 200,000 shared ownership leaseholders across the UK. It ensures that:

1. Shared ownership leaseholders (even those who have not reached 100% ownership) can qualify for right-to-manage.
2. Leaseholders no longer risk losing control over their property’s management due to restrictive legal interpretations.
3. This decision strengthens leaseholders' rights against freeholders and management companies attempting to limit their control.

This verdict marks a significant step forward in leasehold reform, providing greater security and management rights to those in shared ownership properties.