Beach Hotel, Regent Street and Salisbury Terrace
- The building
- A former hotel converted to flats on the upper three floors with six commercial units on the ground floor, at the hearing including three fish and chip shops.
- What was applied for
- A determination under section 27A of the Landlord and Tenant Act 1985 of the insurance contribution, with section 20C and paragraph 5A applications.
- The figures
- Six commercial units, three of them fish and chip shops at the hearing. Insurance rent percentage 66.6. Building premium £17,716.18. Lease of 999 years at £100 a year.
- Costs
- The section 20C and paragraph 5A applications were granted even though the tenant lost the main issue, because the lease contains no provision permitting recovery of the landlords' costs as a service or administration charge.
What Happened
The lease fixes an insurance rent of 66.6 per cent of the cost of insuring the whole building, but requires insurance to the extent ordinarily arranged for properties such as the premises. The landlords conceded loss of rent insurance was not recoverable, leaving the single question the parties framed as 66.6 per cent of what.
What the Tribunal Held
The tenant must pay 66.6 per cent of the reasonable cost of insuring the whole building as a mixed-use building. The tribunal held the natural and ordinary meaning is clear, and that the tenant sought to place on the words a very artificial construct under which the landlords would have to pretend the commercial units are residential. It found that properties such as the premises means properties in mixed-use buildings, and that the absence of any words such as as if it was not within a mixed-use building added weight. Applying Arnold v Britton, whether 66.6 per cent actually reflects the residential share of risk was irrelevant, that being the intention from the words used. On double recovery it held there was no evidence the landlords recover more than 100 per cent and that even if they did, it is not a matter for this tribunal.
What it means for a block here. A fixed percentage insurance contribution in a mixed-use building is what it says. The tribunal will not reprice the premium as if the commercial units were residential, however unfair the split turns out to be.