The Upper Tribunal has delivered a significant victory for residential leaseholders, overturning a lower court’s decision and substantially reducing a landlord’s disputed insurance service charge in the case of Shah v Assethold Ltd.
Background
The case involved Priyanj Shah, a long leaseholder of a flat in Edgware, London, who challenged the dramatic and seemingly unjustified increases in the building’s insurance premiums after the freehold was acquired by Assethold Limited in 2018. Under the previous landlord, the premium was £1,631 in 2017/18, but it increased to £3,803 by 2019/20, reaching a high of £5,840 in 2022/23.
Mr. Shah argued that these costs were unreasonable and provided key evidence to support his claim. He pointed out that the increases were well above the rate of inflation, supplied an alternative quote for a significantly lower premium, and referenced a prior decision by the same tribunal concerning a different tenant in the same building, where the insurance charges for 2019/20 had already been found to be unreasonable.
The initial First-tier Tribunal (FTT) dismissed Mr. Shah’s arguments, ruling that the landlord was entitled to use its chosen insurer and that the tenant had not provided “persuasive evidence” to challenge the charges.
Upper tribunal
The Upper Tribunal, led by Judge Elizabeth Cooke, found that the FTT had committed a series of legal errors. The judgment stated that the FTT had ignored the tenant’s arguments and failed to explain why it had disregarded the alternative quote and the reference to the prior decision. The ruling emphasized that while a tribunal is not legally bound by its own previous decisions, it cannot simply “ignore so obviously relevant a decision” concerning the same service charge at the same property.
Crucially, the Upper Tribunal reaffirmed the principle that a leaseholder only needs to present a “prima facie case” – a credible reason or evidence – to challenge a service charge. The court determined that Mr. Shah had met this low bar, which then shifted the burden of proof to the landlord.
As a result, the Upper Tribunal set aside the FTT’s decision. It found the reasonable cost for Mr. Shah’s share of the insurance for the years in question to be £259.38 on each occasion, a significant reduction from the landlord’s requested amount. This final figure was consistent with the amount previously deemed reasonable in the earlier case involving the other tenant, ensuring a fair and consistent outcome.
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