Development lease registered as concurrent lease: leasehold boundaries

Posted: 30/06/2020

R (on the application of HCP (Hendon) Ltd) v Chief Land Registrar [2020]

The decision in this case is a useful reminder for housing associations and developers who wish to grant or enter into development leases and stresses the importance of examining the registered lease, as the notes in the register are not conclusive. 

Failure to do so may result in a physical overlap of the demised premises and having a concurrent lease that could limit the ability to develop the property.  In this case, the High Court held that HM Land Registry had correctly registered a development lease of the roof and roof space of an existing building as concurrent with the existing registered leases of the seven first floor flats within the same building.

A concurrent lease is one that will run at the same time as another lease of the same premises and the tenant of the concurrent lease will acquire the rights and duties of the landlord in relation to the other lease.

“As to the parts tinted blue on the title plan only the first floor maisonette is included in the title.” We often see this phrase on title registers for leasehold property. Is it sufficient to take this at face value or should we investigate further by requesting a copy of the registered lease?  The High Court answered this very question when handing down its judgment in the HCP case.

Case summary

Henley Court Properties Ltd (HCP) had been granted a development lease of the roof and roof space of a building.  Its intention was to renovate a block of 14 maisonettes/flats (across two floors) at Henley Court, Watford and to construct an additional floor of flats and a new roof. In fact, the development lease contained an obligation on HCP to build an additional floor. 

HCP relied on the floor-level note statement in the property registers of the flat leases - similar to the statement above - in that the existing leases demised “only” the first floor and did not order copies of the leases to verify this statement. Upon HCP’s application to the Land Registry, the registrar concluded that the roof and roof space had already been demised under the existing flat leases and that, due to the overlap, the development lease could only be registered concurrently with and subject to the existing leases of the seven first floor maisonettes. 

HCP challenged this decision, as it was unable to take possession of the roof and roof space and therefore comply with its obligation to construct an additional floor. It argued that the statement in the property register was conclusive as to the vertical boundaries of the property irrespective of what the leases provided. 

The judge dismissed this claim and confirmed that the general boundaries are determined by examining the lease itself and the lease is included on the title register and a copy lodged with the Land Registry so that both the register and the registered lease can be read with one another. Similarly, it is not sufficient to rely on the schedule of leases alone to check the general boundaries. 

If the register by itself is treated as defining the extent of the property and limits this to only the first floor, the maisonettes could potentially be unusable without, for example, the staircase that is necessary for access and often included within the property itself after opening the front door.

An interesting point is that only three of the first floor flat leases explicitly demised the “roof” and the “roof space” and the other four only demised the “roof”. The judge held that the same application should be used even where the “roof space” had not been explicitly demised since it would not make sense for the landlord to demise the flat and the roof and retain the roof space in between.

How does this affect housing associations?

Housing associations should take particular caution when purchasing leasehold property (particularly where parts of the building are leased across a number of titles) or entering into a development lease as a limited title investigation could significantly affect development proposals. 

It would be beneficial to investigate the title in conjunction with the lease(s) at the earliest opportunity to check the extent of what has already been demised.

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