© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
Leaseholders at a Welsh leisure park have lost their Supreme Court appeal against service charges that will eventually top £500,000.
The appellants in the Arnold v Britton and others case are leaseholders of chalets at the Oxwich Leisure Park near Swansea. There are 91 chalets on the site, each let on a 99-year lease from 1974. The first 70 leases granted contain a clause stating that lessees would pay an annual service charge that would increase by a compound rate of ten per cent every three years. The service charge for the first year of each of these leases was £90.
However, in the last 21 leases to be granted, the service charge increases by a compound rate of ten per cent every one year, from the initial £90.
The tenants of those 21 chalets argued that this could not be the right interpretation of the service charge clause as it meant the charge would be £2,500 this year (2015), and by 2072, the final year of the lease, it would be £550,000. That’s an annual service charge equivalent to the current cost of buying a studio flat in London’s Soho.
The Supreme Court decided by 4-1 that the landlord's interpretation was correct, although Lord Neuberger, delivering the lead judgment, said that the majority on the bench shared a "distaste for the result" but had to interpret the agreement made at the time.
Commenting on the decision, Lauren Fraser, associate in the property litigation team at Charles Russell Speechlys, said: “Whilst the Supreme Court’s decision seems grossly unfair to the leaseholders, and was clearly handed down reluctantly by the Court, it had no alternative but to apply the established legal principles of interpreting contracts to find that the wording of the leases was too clear to reach any other conclusion: the leaseholders made a bad bargain and now have to live with it.
“Whilst there are a number of statutory protections available to leaseholders, the Court determined that these did not apply to the service charge provisions in this case. The Court is restricted to interpreting contracts, not “correcting” them. Any extension of the statutory protection would be down to Parliament.
“Nonetheless, one cannot help but feel sorry for the Oxwich leaseholders who will soon face annual service charges in the tens and hundreds of thousands of pounds - far exceeding the value of their properties. Potential leaseholders would be well advised to keep in mind the classic maxim ‘let the buyer beware’ and to carefully check how their service charges are calculated before entering into a new lease, rather than seeking a way out after the deal has been done.”