Introduction: A Changing Landscape, but Familiar Legal Failures
The last two months have produced a series of judgments which, viewed collectively, reveal an important development in the approach taken by courts and tribunals to landlord and tenant disputes.
The underlying statutory and contractual principles may be familiar. What is increasingly apparent, however, is the willingness of appellate courts to scrutinise how those principles have actually been applied, particularly where questions of corporate responsibility, the reasonableness of expenditure, contractual remedies and evidential sufficiency arise.
For practitioners, the significance extends beyond the individual outcomes.
In September, the Upper Tribunal examined the circumstances in which company directors may become personally liable for housing offences. The High Court revisited the established distinction between a tenant’s obligation to repair and a landlord’s preference for replacement or refurbishment. The Supreme Court also considered the recovery of losses sustained by a third party to a commercial lease.
October then saw several important Upper Tribunal decisions concerning defective rent increase notices, substantial service charge demands, fire-safety expenditure and valuation evidence in statutory lease extensions.
A common theme runs through these cases: a legal entitlement does not dispense with the need to establish the factual and evidential foundation upon which its exercise depends.
That distinction is particularly important in the present residential property environment. The implementation of major reforms under the Renters’ Rights Act 2025 has increased the importance of accurate statutory procedures, clear contractual documentation and defensible decisions.
For landlords, tenants, property management companies and their advisers, the lessons from September and October 2026 are therefore both immediate and practical.
1. Khuja v Cherwell District Council [2026] UKUT 363 (LC)
25 September 2026 | Upper Tribunal (Lands Chamber)
Corporate Landlords: Does Being the Sole Director Make You Personally Liable?
The increasing use of corporate structures in the private rented sector has made the question of personal liability particularly important.
A landlord may hold property through a limited company, appoint a managing agent and delegate day-to-day responsibility for maintenance and compliance. But if the company commits an offence under housing legislation, when can its directors also be penalised personally?
That question arose in Khuja v Cherwell District Council.
Background
The proceedings concerned a property comprising three flats above commercial premises. The freehold was owned by OX1 Limited, of which Mr Khuja was the sole director and shareholder.
Following inspections, the local authority identified alleged breaches of HMO management regulations.
Financial penalties were imposed on both the company and Mr Khuja personally.
The First-tier Tribunal confirmed penalties of £11,000 against each, finding that the company’s breaches had occurred with Mr Khuja’s consent because he was its sole director and controlling mind.
Mr Khuja appealed.
The Upper Tribunal’s Decision
The Upper Tribunal rejected the First-tier Tribunal’s approach.
Section 251 of the Housing Act 2004 provides for personal liability where a corporate offence is committed with the consent or connivance of, or is attributable to neglect by, a director or other relevant officer.
The Upper Tribunal emphasised that these are distinct statutory grounds.
Being a director, even the sole director, does not automatically establish consent.
To prove consent, the decision-maker must establish that the director had knowledge of the material facts constituting the offence and agreed to the company’s conduct on that basis.
Knowledge that ought to have been acquired may be relevant to an allegation of neglect. It is not necessarily proof of actual consent.
The tribunal also identified a separate problem with the financial penalties: the First-tier Tribunal had not adequately considered the risk of double punishment where penalties were imposed on both a company and its sole shareholder-director.
Mr Khuja’s personal penalty was set aside, and the matter was not remitted.
Analysis
This is an important decision because it rejects an approach to corporate liability based simply on status. In housing enforcement proceedings, there can be a temptation to treat the sole director of a property company as personally responsible for every regulatory breach committed by that company.
That is not what section 251 provides.
The legislation permits personal liability, but it requires a legally recognised basis for attributing the corporate offence to the individual.
The distinction between consent, connivance and neglect is therefore substantive, not merely semantic.
From an enforcement perspective, the judgment exposes the risks of failing to identify the correct statutory ground and obtain evidence supporting it. A council alleging consent should be prepared to demonstrate actual knowledge of the relevant circumstances.
Conversely, the judgment should not be understood as granting immunity to directors who remain deliberately distant from the management of their properties.
Where a company has inadequate compliance systems or its director fails to exercise appropriate oversight, an allegation of neglect may still arise, provided the necessary elements are proved.
The decision also serves as an important reminder that the financial impact of penalties imposed on closely held companies cannot be ignored when considering personal penalties.
2. Craigard (Dartford) Ltd v Westbury Homes (Holdings) Ltd [2026] EWHC 2453 (TCC)
29 September 2026 | High Court, Technology and Construction Court
Terminal Dilapidations: A Repairing Covenant Is Not a Licence to Modernise
Few areas of commercial landlord and tenant litigation generate as much disagreement over quantum as terminal dilapidations.
The dispute often begins with an apparently straightforward question: what should the tenant have done before handing the premises back?
In practice, that question becomes considerably more difficult where the landlord’s intended works extend beyond repair into refurbishment, replacement or modernisation.
Craigard v Westbury Homes provides an instructive examination of that boundary.
Background
The claim concerned commercial premises at Cotton Lake House, Dartford, following the expiry of a long commercial lease.
The landlord sought substantial damages for alleged breaches of the tenant’s repairing obligations, together with consequential losses.
A central issue was the building’s heating, ventilation and air-conditioning system.
The existing system had not been adequately maintained and was out of repair at lease expiry.
The landlord considered replacement appropriate, particularly in the context of its intended refurbishment and the desire to improve the building’s marketability and environmental performance.
The tenant disputed whether full replacement was necessary to comply with its repairing covenant.
The High Court’s Approach
The court distinguished between the condition required by the lease and the standard the landlord wished to achieve for its future commercial purposes.
The landlord had to establish that complete replacement was necessary to discharge the tenant’s repairing obligations.
It was not enough to demonstrate that replacement would be commercially preferable or would produce a more modern and efficient building.
A tenant is generally entitled to discharge its obligation through the least onerous method of performance that meets the contractual standard.
The court was not satisfied that the landlord had established the necessity of replacing the entire HVAC system.
The judgment also examined causation, supersession, loss of rent and the statutory diminution-in-value cap under section 18(1) of the Landlord and Tenant Act 1927.
Analysis
The decision highlights a recurring weakness in dilapidations claims: the failure to separate the contractual obligation from the landlord’s commercial ambitions.
A landlord may understandably wish to modernise premises at the end of a lengthy lease, particularly where market expectations and energy-efficiency standards have changed substantially.
But the cost of bringing a property up to the landlord’s preferred specification is not automatically recoverable as damages for breach of a repairing covenant.
The contractual wording, the condition of the property and the works reasonably necessary to achieve compliance remain central.
There is also an important evidential distinction between proving that an item was defective and proving that replacement was the necessary remedy.
Expert evidence must address both.
A report stating that a system has reached the end of its economic life may support a recommendation to replace it. It does not, without more, establish that the tenant’s legal obligation required that outcome.
The judgment should not, however, be reduced to a proposition that landlords cannot recover substantial refurbishment-related losses. Its analysis of supersession and statutory diminution demonstrates why questions of causation, contractual performance and valuation must be considered separately.
3. Forthwell Ltd v Pontegadea UK Ltd [2026] UKSC 33
17 September 2026 | Supreme Court — Scottish appeal with wider contractual significance
Commercial Leases and Third-Party Losses: Who Is Actually Entitled to Damages?
Commercial property arrangements frequently involve several companies within the same business group.
A parent or holding company may hold the lease, while a subsidiary conducts the business from the premises.
That structure may be commercially convenient, but it can create difficulties when a contractual breach causes loss to the operating company rather than the contracting tenant.
This was the central issue in Forthwell v Pontegadea.
Background
The dispute arose from the premises occupied by the Rogano restaurant in Glasgow.
Forthwell held the lease but had granted a licence to a wholly owned subsidiary, Lynnet Leisure, which operated the restaurant.
Following flooding and fire damage, the premises could not be used for trading.
Forthwell pursued the landlord for repairs and sought damages reflecting the operating subsidiary’s lost trading profits.
The difficulty was that the subsidiary, rather than Forthwell, had suffered those trading losses.
The Supreme Court’s Decision
The Supreme Court dismissed the tenant’s appeal.
The general principle is that a party to a contract ordinarily recovers damages for losses it has suffered itself.
The law recognises limited exceptions involving transferred loss, but the Court rejected the proposed broader solution which would have allowed Forthwell to recover the subsidiary’s losses and account to it for the proceeds.
The Court emphasised the importance of respecting separate corporate personality and the limits of contractual liability.
It also expressly addressed the position under English law, while leaving certain questions concerning the broader transferred-loss exception unresolved.
Analysis
Although the appeal arose under Scots law, it raises a practical issue that regularly appears in English commercial property transactions.
Businesses often treat companies within the same group as commercially interchangeable.
The law does not necessarily do so.
Where the contracting tenant and operating business are different legal persons, the allocation of contractual rights, liabilities and potential losses should be considered at the outset.
There is a distinction between a tenant suffering its own loss and a tenant attempting to recover the profits of a separate company.
That distinction may become decisive when substantial trading losses are claimed following disrepair, interruption or alleged breach of lease.
For practitioners, the lesson is not simply about damages. It is about transactional structure.
The identity of the contracting party, any authorised occupier, the lease’s alienation provisions, third-party rights and insurance arrangements may all affect the remedies available when something goes wrong.
PART II — OCTOBER 2026
4. Salford City Council v Brown [2026] UKUT 393 (LC)
19 October 2026 | Upper Tribunal (Lands Chamber)
Delegation Is Not Abdication: The Continuing Responsibilities of Property Company Directors
Read alongside Khuja, the judgment in Salford City Council v Brown provides an important counterbalance.
Where Khuja confirms that a director is not automatically liable because of their position, Brown demonstrates that delegating operational responsibility does not automatically remove the possibility of liability.
Background
Mr Brown was the director of a property management company involved in managing a substantial residential portfolio.
He maintained that responsibility for regulatory compliance had been delegated to another individual, who oversaw an operational team.
The First-tier Tribunal accepted that division of responsibilities and concluded that Mr Brown had not been negligent.
Salford City Council appealed.
The Upper Tribunal’s Decision
The Upper Tribunal held that the First-tier Tribunal had taken an incorrect approach.
The fact that responsibility had been delegated to someone who was not a statutory director did not automatically exclude the possibility that an offence was attributable to Mr Brown’s neglect.
A director’s responsibilities could not simply be treated as extinguished because another person was conducting the day-to-day business.
However, the Upper Tribunal carefully distinguished the possibility of liability from proof of liability.
It did not find Mr Brown personally responsible for an offence.
The case was remitted for the First-tier Tribunal to determine whether the company had committed an offence and, if so, whether that offence was attributable to his neglect.
Critical Analysis
The significance of Brown becomes clearer when considered together with Khuja.
The two decisions should not be treated as contradictory.
Rather, they define the boundaries of section 251 from different directions.
In Khuja, the tribunal rejected personal liability based solely on a director’s status.
In Brown, it rejected an automatic exclusion from liability based solely on delegation.
Both judgments require a proper analysis of the individual’s actual responsibilities, the nature of the corporate offence and the evidence connecting the two.
This is particularly relevant to large property businesses where directors may oversee extensive portfolios through layered corporate and operational arrangements.
The greater the separation between strategic management and day-to-day property operations, the more important it becomes to demonstrate how compliance is actually supervised.
A company structure may identify the person tasked with carrying out compliance functions. It does not, without further evidence, establish that the company has an effective compliance system.
Practitioner Perspective
A sensible response is not for directors to become personally involved in every inspection or repair.
It is to ensure that responsibility is clearly allocated, compliance reporting is meaningful, risks are escalated, and appropriate action is taken when concerns arise.
The existence and operation of those arrangements may be crucial evidence if regulatory enforcement follows.
The central lesson: Delegation may be necessary, but effective oversight remains an essential part of managing regulatory risk.
5. Monaco v Orlando [2026] UKUT 411 (LC)
23 October 2026 | Upper Tribunal (Lands Chamber)
Rent Increase Notices: Is a Technical Error Fatal, and Can Tribunals Ignore Valuation Evidence?
The validity of statutory notices has long been a fertile area for landlord and tenant disputes.
A defective notice may undermine proceedings, yet the law does not require every clerical error to have fatal consequences.
Monaco v Orlando revisits that distinction while also examining the First-tier Tribunal’s obligation to consider evidence.
Background
The landlord served a notice proposing an increase in monthly rent from £1,825 to £2,350. The tenant challenged the notice, pointing to an incorrect entry in the prescribed form. She also submitted evidence concerning the property’s condition and comparable rental properties. The First-tier Tribunal determined the rent but did not properly address all the tenant’s evidence.
The Upper Tribunal’s Decision
The Upper Tribunal concluded that the particular error in the notice did not invalidate it. The notice remained sufficiently clear, and the incorrect entry had not materially misled the tenant about the proposed increase or its operation. However, the tribunal had failed to address relevant rental evidence submitted by the tenant.
That failure was material.
The appeal therefore succeeded in part, and the market rent determination was remitted for reconsideration. The judgment expressly concerned a notice served in August 2025 and the law applicable before the changes introduced on 1 May 2026.
Analysis
This decision demonstrates why procedural validity and evidential fairness should not be conflated.
A party may fail in a technical challenge to a notice yet still succeed because the tribunal has not properly considered the substantive evidence.
The case also illustrates the limits of the approach associated with Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd.
A mistake in a notice does not automatically make the notice invalid where its intended effect remains sufficiently clear. But this is not a general licence to disregard mandatory statutory requirements.
Particular care is required following the implementation of the Renters’ Rights Act 2025.
The relevant statutory framework, prescribed form and transitional position must be identified before relying upon authorities concerning earlier notices.
The second and arguably more important aspect of the decision concerns valuation evidence.
A tribunal is entitled to assess and reject evidence. It is not entitled simply to overlook material evidence relevant to the determination it must make.
For tenants disputing proposed increases, well-prepared comparable evidence may therefore be as important as any challenge to the notice itself.
6. Albemarle Ealing No.1 Ltd v Fahim [2026] UKUT 408 (LC)
23 October 2026 | Upper Tribunal (Lands Chamber)
£1.49 Million in Proposed Works: How Much Evidence Must a Landlord Produce Before Demanding Payment?
Service charge disputes frequently involve a fundamental imbalance of information.
The landlord or managing agent generally controls the specifications, contracts, invoices and projected expenditure.
Leaseholders are then asked to meet charges based on information they may have had little involvement in preparing.
Albemarle Ealing v Fahim illustrates the consequences where the evidence supporting substantial proposed expenditure is inadequate.
Background
The dispute concerned Greystoke Court, comprising three residential blocks.
The landlord demanded approximately £1.49 million in advance for proposed major works.
The leaseholders challenged the charges and raised concerns about the specification, costs and overlap with the landlord’s wider development proposals.
Other disputed items concerned fire doors, lifts, emergency works and insurance.
The Upper Tribunal’s Decision
The Upper Tribunal held that the landlord had failed to establish the reasonableness of the advance major works demand.
The specification was insufficiently detailed, quantities were unclear and the scope of proposed works remained uncertain.
The landlord therefore could not demonstrate that the estimated charges were reasonable.
The tribunal determined that the major works charges, as demanded, would not be payable even if properly demanded.
The decision also considered the distinction between expenditure already incurred and estimated future expenditure, together with aspects of the remaining service charge claims.
Analysis
This is one of the most commercially significant decisions in the October roundup.
The central problem was not simply that the landlord’s estimate was high.
It was that the evidence did not adequately establish what work was actually proposed and what properly recoverable expenditure would be incurred.
That distinction matters.
A substantial service charge is not unreasonable merely because it is substantial.
Conversely, the necessity of carrying out major works does not establish that every proposed charge is contractually recoverable or reasonable in amount.
Section 19 of the Landlord and Tenant Act 1985 requires proper consideration of reasonableness, while section 27A provides a mechanism for determining payability.
For advance charges, the question concerns whether the estimate is reasonable in the circumstances.
That assessment cannot be undertaken meaningfully where the proposed works themselves remain inadequately defined.
Another important feature of the judgment concerns consultation.
Dispensation from consultation requirements does not eliminate the separate statutory requirement of reasonableness.
These are different legal questions.
7. Avon Ground Rents Ltd v Jing [2026] UKUT 412 (LC)
26 October 2026 | Upper Tribunal (Lands Chamber)
Waking-Watch Expenditure: When Does Necessary Fire-Safety Spending Become Unreasonable?
Fire-safety expenditure presents a difficult balance.
Landlords and managing agents must respond appropriately to identified risks, but leaseholders should not be required to meet unreasonable expenditure merely because the works or services were introduced in the name of safety.
That tension was central to Avon Ground Rents v Jing.
Background
The landlord introduced a waking watch at a residential building pending the installation of a replacement fire alarm system.
The arrangement continued for approximately twelve months, with total costs exceeding £200,000.
The leaseholders challenged the expenditure, arguing that the landlord had delayed installing the alternative fire alarm system.
The First-tier Tribunal accepted that the waking watch had continued longer than reasonably necessary.
It nevertheless calculated the allowable expenditure by reference to estimated costs rather than the actual expenditure incurred.
The Upper Tribunal’s Decision
The Upper Tribunal held that the calculation was incorrect.
The leaseholders’ challenge concerned the length of time for which the waking watch had been maintained.
They had not separately established that the actual rate charged was unreasonable.
The tribunal therefore substituted a recoverable figure of £118,934.66, reflecting the period of expenditure found reasonable using the actual cost.
Analysis
The decision provides an important illustration of the distinction between three questions frequently grouped together in service charge litigation.
First, was the service reasonably required?
Second, was it maintained for a reasonable period?
Third, was the amount paid for that service reasonable?
Those questions may overlap, but they are not interchangeable.
A landlord may act reasonably in introducing an emergency fire-safety measure while acting unreasonably by continuing it longer than necessary.
Similarly, establishing excessive duration does not automatically establish that the contractor’s daily or weekly charge was excessive.
The judgment also has a broader lesson concerning the formulation of tribunal challenges.
A party challenging service charges should identify with precision which aspect of the expenditure is disputed and why.
For managing agents, the practical difficulty is particularly acute where temporary measures become prolonged and expensive.
Decisions about funding applications, contractor availability, installation programmes and alternative safety arrangements should therefore be recorded contemporaneously.
8. Brickfield Properties Ltd v Haines [2026] UKUT 421 (LC)
28 October 2026 | Upper Tribunal (Lands Chamber)
Lease Extension Valuations: Can a Tribunal Adopt a Methodology Neither Party Has Advanced?
Valuation disputes often turn on competing professional assessments rather than sharply defined questions of law.
Nevertheless, the tribunal’s freedom to evaluate expert evidence is not unlimited.
Brickfield Properties v Haines illustrates the importance of procedural fairness when a tribunal chooses a valuation approach not advanced by either party.
Background
The dispute concerned the premium payable for a statutory lease extension under the Leasehold Reform, Housing and Urban Development Act 1993.
The parties relied on different methods of assessing the existing short leasehold value.
One approach drew on relativity graphs, while the other placed greater emphasis on market comparables.
The First-tier Tribunal adopted a blended approach that neither party had proposed.
The Upper Tribunal’s Decision
The Upper Tribunal held that the First-tier Tribunal had acted unfairly by adopting a materially different valuation methodology without giving the parties an opportunity to address it.
The relevant valuation finding was set aside.
The Upper Tribunal substituted a short lease value of £400,000, resulting in an agreed lease extension premium of £104,570.
Analysis
The case illustrates an important distinction between a tribunal’s evaluative judgment and the adoption of a new analytical approach.
A tribunal is not required to accept either party’s valuation merely because both experts have taken different positions.
However, where the tribunal proposes to rely on a materially different methodology, fairness may require the parties to have an opportunity to comment.
This is particularly important in lease extension disputes where relatively modest variations in valuation assumptions can materially affect the premium.
The judgment also demonstrates the importance of testing the reliability of market evidence against established valuation methods rather than treating any one source as automatically conclusive.
There is a wider procedural lesson here.
A tribunal’s expertise does not remove the requirement for parties to understand and address the basis upon which their dispute may be determined.
COMMENTARY
Property Litigation Is Increasingly About the Quality of the Evidence
The most striking feature of this two-month period is not the creation of an entirely new body of landlord and tenant law.
It is the repeated demonstration that established principles can be decisive when applied rigorously.
A director’s liability cannot be inferred simply because a company is closely held.
A landlord cannot recover the cost of a complete replacement without establishing that the contractual obligation required it.
A tenant cannot necessarily recover losses suffered by a different legal entity.
A substantial service charge cannot be justified without an adequate explanation of the works and costs.
And a tribunal cannot disregard material evidence or determine a dispute through a procedurally unfair methodology.
In each instance, the dispute turns on the relationship between the legal rule, the factual circumstances and the quality of the evidence presented.
For those advising landlords and tenants, this reinforces the importance of conducting a critical assessment at the outset of any matter.
It is not sufficient to identify a potentially valid claim or defence.
The more important questions are often whether the relevant statutory requirements have been met, whether the evidence supports the position being advanced, and whether the proposed outcome is commercially proportionate.
In the current legislative environment, those considerations are likely to become increasingly important.
The abolition of section 21 for relevant private assured tenancies, the revised possession framework and the wider regulatory changes introduced by the Renters’ Rights Act 2025 have altered the context in which residential disputes arise.
However, new legislation does not displace the basic disciplines of sound legal practice.
Accurate documents, careful statutory interpretation, credible evidence and realistic assessment of litigation risk remain essential.
“Ultimately, successful property litigation is not simply about identifying the right legal provision. It is about understanding what must be proved, how it can be proved and whether pursuing the remedy makes practical and commercial sense.”
HOW PRIVITY LEGAL CAN ASSIST
At Privity Legal, our Landlord & Tenant and Commercial & Contracts departments advise on a broad range of residential and commercial property matters, including:
- Residential possession, tenancy disputes and enforcement.
- Commercial lease renewals, assignments, forfeiture and surrender.
- Rent arrears, service charges and dilapidations.
- Housing disrepair, licensing and regulatory enforcement.
- Rent Repayment Orders and First-tier Tribunal proceedings.
- Property management and guaranteed-rent agreements.
- Commercial contractual disputes and litigation.
- Leasehold disputes and associated advisory work.
Our approach is to provide clear, commercially informed legal advice, with particular emphasis on risk management, dispute resolution and practical outcomes.
