Tower Hamlets LPS Ruling: Costs Not Recoverable from Leaseholders

Key Points

• On 9 December 2025, the Court of Appeal delivered its judgment in The London Borough of Tower Hamlets v Various Leaseholders of Brewster House and Malting House.
• The case centres on whether long leaseholders of two East London blocks, Brewster House and Malting House, must contribute via service charges to costs of works addressing structural defects in Large Panel System (LPS) buildings.
• The blocks, built in the early 1960s using LPS, were reinforced after the 1968 Ronan Point disaster and further strengthened in the 1990s, but deemed unsafe under normal loading in around 2018.
• The London Borough of Tower Hamlets (LBTH) undertook major remedial works and sought to recover costs from leaseholders under lease clauses covering works for building safety and reasonably incurred expenses.
• Leaseholders challenged this in the First-tier Tribunal (FTT) under section 27A of the Landlord and Tenant Act 1985; both FTT and Upper Tribunal ruled service charges not payable.
• LBTH appealed to the Court of Appeal, granted permission due to national importance for local authorities given widespread LPS use.
• The Court of Appeal upheld the lower tribunals’ decisions, ruling costs not recoverable from leaseholders.

Inverted Pyramid Structure

The Court of Appeal has ruled that the London Borough of Tower Hamlets cannot recover costs from leaseholders for essential remedial works on two structurally defective Large Panel System (LPS) blocks in East London. This landmark decision, handed down on 9 December 2025 in The London Borough of Tower Hamlets v Various Leaseholders of Brewster House and Malting House, confirms that service charges under the leases do not extend to such major safety-related expenditures. Leaseholders of Brewster House and Malting House are thereby shielded from contributing to these costs, a ruling with profound implications for similar LPS properties nationwide.​

The blocks, constructed in the early 1960s using the flawed LPS method, faced scrutiny post the tragic Ronan Point partial collapse in 1968, prompting initial reinforcements. Additional strengthening occurred in the 1990s, yet inspections around 2018 revealed ongoing unsafety under normal loading conditions. LBTH proceeded with extensive works to ensure habitability and invoked lease obligations requiring leaseholders to cover ‘all such works … as in the absolute discretion of the Lessors may be considered necessary or advisable for the … safety … of the Building’ and ‘any other costs and expenses reasonably and properly incurred in connection with the Building’.​

Leaseholders contested the charges before the First-tier Tribunal under section 27A of the Landlord and Tenant Act 1985, which determines service charge reasonableness and payability. Both the FTT and Upper Tribunal sided with the leaseholders, deeming the charges unrecoverable. Permission to appeal was granted recognising the case’s significance to local authorities managing numerous LPS structures erected across the UK in the mid-20th century.​

What Triggered the Court of Appeal Case?

The dispute arose from LBTH’s decision to address persistent structural flaws in Brewster House and Malting House, both emblematic of widespread LPS construction issues. As detailed in the judgment summary, the LPS—prevalent in social housing from the 1950s to 1970s—was exposed as vulnerable after the Ronan Point disaster, where a gas explosion caused progressive collapse killing four and injuring 17. Subsequent government directives mandated reinforcements, implemented here in 1968 and bolstered in the 1990s.​

By 2018, engineering assessments confirmed the blocks remained unsafe, necessitating further intervention. LBTH, as freeholder and landlord, initiated comprehensive remedial programmes, estimating substantial costs partly attributable to leaseholders via service charges. Leaseholders, represented in the tribunals, argued the lease terms did not encompass such ‘non-routine’ or ‘major’ structural overhauls, a position vindicated through the appellate process.​

Which Lease Clauses Were Contested?

Central to the appeal were specific lease provisions. LBTH relied on clauses obliging leaseholders to contribute to ‘all such works … as in the absolute discretion of the Lessors may be considered necessary or advisable for the … safety … of the Building’. A secondary clause covered ‘any other costs and expenses reasonably and properly incurred in connection with the Building’.​

The lower tribunals interpreted these narrowly, excluding extraordinary remediation costs tied to inherent design flaws predating leases. The Court of Appeal, upholding this, emphasised that ‘absolute discretion’ does not override statutory protections under the 1985 Act, nor extend to recovering remediation of latent defects from long leaseholders uninvolved in original construction.​

As reported in coverage of the judgment, tribunal determinations under section 27A scrutinise whether charges are ‘reasonably incurred’ and works of ‘reasonable standard’, factors unmet here due to the works’ scale and origin in historical building failures.​

What Happened in the Lower Tribunals?

The First-tier Tribunal (Property Chamber) initially heard the leaseholders’ application, ruling service charges unpayable. It found the works, though necessary for safety, fell outside leaseholders’ obligations, as they addressed systemic LPS defects rather than ongoing maintenance.​

The Upper Tribunal (Lands Chamber) dismissed LBTH’s appeal, affirming the FTT. This stage highlighted the decision’s broader ramifications, prompting Court of Appeal permission. Leaseholders successfully argued that absorbing such costs would impose undue burdens, potentially leading to evictions in social housing contexts.​

Why Was Permission to Appeal Granted?

Recognition of LPS prevalence across UK local authority stock underpinned the appeal grant. Thousands of dwellings built via LPS faced similar risks post-Ronan Point, with many undergoing repeated interventions. LBTH contended lower rulings risked bankrupting councils unable to pass costs onward.​

The Court of Appeal acknowledged this ‘importance to local authorities’, yet prioritised leaseholder protections. The judgment clarifies boundaries between landlord discretion and statutory reasonableness, guiding future disputes.​

What Are the Implications for Leaseholders?

Leaseholders of Brewster House and Malting House secure relief from potentially ruinous charges, preserving tenancy affordability. Nationally, this bolsters protections for long leaseholders in ageing stock, aligning with recent legislation like the Building Safety Act 2022 limiting remediation costs.​

As the ruling disseminates, similar challenges may arise, empowering residents against disproportionate service demands. Legal experts anticipate reduced council recoveries, shifting financial pressures to public funding.​

How Does This Affect Local Authorities?

LBTH and peers face heightened remediation costs without leaseholder recourse, straining budgets amid LPS decommissioning. Councils managing 1960s-1970s estates must reassess strategies, potentially seeking central government aid as post-Grenfell supports evolve.​

The decision underscores lease drafting limitations, urging reviews for future-proofing. LBTH may yet petition the Supreme Court, though prospects appear slim given appellate consensus.​

What Is the History of LPS Buildings?

LPS construction boomed post-war for rapid social housing delivery, utilising pre-fabricated concrete panels. The 1968 Ronan Point incident in Newham—mere miles from Tower Hamlets—exposed load-bearing flaws, triggering nationwide audits and over 800 buildings’ modifications.​

Brewster House and Malting House exemplify survivors, with 1968 reinforcements followed by 1990s upgrades. Persistent 2018 findings reflect enduring vulnerabilities, fuelling this litigation.​

Who Are the Key Parties Involved?

• The London Borough of Tower Hamlets (LBTH): Freeholder and appellant, responsible for the blocks in its Poplar estate.
• Various Leaseholders: Respondents, long-term tenants granted leases under right-to-buy or assured tenancies, challenging charges.
• Judicial Bodies: First-tier Tribunal, Upper Tribunal, and Court of Appeal Lords Justices, unnamed in summaries but pivotal in upholding leaseholder defences.​

No individual journalists or media titles are attributed in primary judgment reports, as sourced from legal bulletins; coverage draws from official releases.​

What Happens Next for Brewster House and Malting House?

Remedial works proceed under LBTH funding, ensuring safety without leaseholder contributions. Residents remain housed, averting displacement risks. LBTH must absorb costs, potentially billing central grants.​

Monitoring continues for LPS integrity, with this precedent informing decanting or demolition debates elsewhere.