Right to Buy (RTB) leases — be warned about service charges

The Right to Buy (RTB) legislation — primarily enshrined in the Housing Act 1985 — has long been a complex area for local authorities and housing associations to navigate. 

While the Act provides a framework for disposals, it leaves significant room for interpretation and discretion in drafting, particularly around lease terms. One critical area where this discretion can have serious consequences is in the recovery of service charges.

Here, Andrius Roos — a Partner in our housing and communities sector team who leads our offering for leasehold management landlords — outlines five important takeaways from the recent case of Plymouth Community Homes Ltd v Crisplane Ltd [2024] UKUT 15 (LC).

The legal framework

Under the Housing Act 1985, leases granted pursuant to the RTB must conform to certain statutory requirements, particularly those set out in Schedule 6. 

While some covenants are implied by statute — such as the tenant’s obligation to keep the interior of the property in repair — others, including the obligation to contribute to service charges for structural repairs, aren’t implied and must be expressly included in the lease.

Paragraph 14 of Schedule 6 is particularly relevant. It doesn’t imply any covenant by the tenant to contribute to the landlord’s expenses unless such a provision is explicitly included in the lease. This creates a potential pitfall for landlords who assume that standard lease terms or general principles of fairness will suffice.

Plymouth Community Homes Ltd v Crisplane Ltd

The recent case of Plymouth Community Homes Ltd v Crisplane Ltd is a cautionary tale. Plymouth Community Homes (PCH) had granted RTB leases for two flats in separate buildings. When significant roof repairs became necessary, PCH sought to recover a proportionate share of the costs from Crisplane Ltd, the leaseholder of the two flats.

However, the leases didn’t contain an express provision that required the leaseholder to contribute to such costs. The First-Tier Tribunal initially found in favour of PCH but this was overturned by the Upper Tribunal and later upheld by the Court of Appeal. The courts held that — in the absence of an express covenant — there was no legal basis for requiring Crisplane to pay for the roof repairs.

The case has since progressed to the Supreme Court, with permission to appeal granted in April 2025. Yet the current legal position remains clear — if the lease doesn’t say it, the landlord can’t claim it.

Key takeaways for draftsmen

This case underscores several important lessons for those drafting RTB leases.

1. Express service charge clauses are essential

Don’t rely on implied terms. If the landlord intends to recover costs for structural repairs, maintenance of common parts or other estate management expenses, these must be clearly and unambiguously set out in the lease.

2. Tailor the lease to the property

Avoid using boilerplate clauses. Each RTB lease should be reviewed in the context of the specific building and estate to ensure that all foreseeable liabilities are covered.

3. Understand the limits of the Housing Act 1985

While the Act provides a framework, it doesn’t protect landlords from poor drafting. Paragraph 14 of Schedule 6 is particularly unforgiving in this regard.

4. Review existing lease templates

Housing providers should conduct a thorough review of their standard RTB lease templates to ensure that they include all necessary provisions for cost recovery.

5. Train and support draftsmen

Legal and housing teams should be trained on the implications of this case and the statutory framework to avoid similar pitfalls in future disposals.

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