Avon Ground Rents Limited v Canary Gateway (Block A) RTM Company Ltd

Under the Commonhold and Leasehold Reform Act 2002, the statutory definitions of a “long lease” operate as alternative gateways. A shared ownership lease granted for a term exceeding 21 years qualifies under section 76(2)(a), even where the tenant has not acquired a 100% share. The separate 100% requirement in section 76(2)(e) does not cut down the wider term-of-years provision. Consultation materials, drafting redundancy and the rarity of some statutory categories cannot displace the enacted language. Tenants holding such leases are therefore “qualifying tenants” for right-to-manage purposes.

Avon, the freehold owner of Block A at Canary Gateway, opposed the respondent RTM company’s claim to acquire the right to manage the building. The dispute concerned whether tenants with shared ownership leases of more than 21 years, but with interests below 100%, were qualifying tenants under the Commonhold and Leasehold Reform Act 2002.

Fancourt J had held in [2020] UKUT 358 (LC) that such tenants were qualifying tenants. The First-tier Tribunal upheld the respondent’s later claim. The central issue on appeal was whether section 76 required a shared ownership tenant to have staircased to 100% before holding a long lease.

1. Appeal dismissed. Lord Justice Newey, with whom Lady Justice King and Lady Justice Elisabeth Laing agreed, held that section 76(2) of the Commonhold and Leasehold Reform Act 2002 sets out alternative gateways. The connecting “or” applies across paragraphs (a) to (f). A lease satisfying any one gateway is a long lease.
2. Section 76(2)(a) applies where a lease is granted for a term of years certain exceeding 21 years. Section 76(2)(e) separately addresses shared ownership leases where the tenant’s total share is 100%. The 100% condition in paragraph (e) does not qualify or restrict the independent term-of-years gateway in paragraph (a). Subsections (3) and (4) define shared ownership lease and total share, but do not make paragraph (e) the exclusive route for shared ownership leases.
3. The Consultation Paper’s statement that a shared ownership tenant would need a 100% share was not a reliable guide to the enacted provision. The statutory language was the primary guide, as recognised in Settlers Court RTM Co Ltd v FirstPort Property Services Ltd [2022] UKSC 1. The Consultation Paper conveyed the general intention to adopt the approach of the 1993 Act, rather than resolving the precise interaction between paragraphs (a) and (e).
4. The possibility that paragraphs (b) to (f) might have little practical importance did not justify restricting paragraph (a). Other categories in section 76(2), including perpetually renewable leases and leases under section 149(6) of the Law of Property Act 1925, were also uncommon. The statutory scheme and the management interests of shared ownership tenants supported the broader construction.
5. Every shared ownership tenant in Block A was therefore a qualifying tenant. The Court did not need to determine the respondent’s notice issue.

• Court of Appeal (Civil Division): Appeal dismissed. The Court held that a shared ownership lease exceeding 21 years was a long lease under section 76(2)(a), regardless of the tenant’s percentage share.
• Upper Tribunal (Lands Chamber): Fancourt J held in [2020] UKUT 358 (LC) that shared ownership tenants were qualifying tenants, although Metropolitan Housing Trust Limited should also have received a notice of invitation to participate in respect of flats occupied by social rent tenants.
• First-tier Tribunal (Property Chamber): The respondent’s later right-to-manage claim was upheld in a decision dated 2 March 2022.