Property Litigation Cases Round-Up: August 2026

August delivered a number of interesting property litigation decisions.

Here are the cases that caught our eye. First, two cases which show that the courts can and will remove covenants that no longer secure a practical benefit of substantial value:

1. Domus Living Ltd v Edward VII Estates Ltd

In Domus Living Ltd v Edward VII Estates Ltd [2026] UKUT 287 (LC), the owner of a property built a substantially larger house than permitted by a restrictive covenant and then applied to have the covenant discharged. The objector argued that the breach could affect future development opportunities elsewhere on the wider estate.

The Upper Tribunal found there was no real evidence of loss, no meaningful practical benefit being protected by the covenant, and no reason why the covenant should remain in place. The covenant was discharged without compensation.

2. Hughes Family Property Co Ltd v Marvin

In Hughes Family Property Co Ltd v Marvin [2026] UKUT 310 (LC), a landowner obtained planning permission to build a new house on part of a garden plot, only to find themselves restricted by a historic covenant preventing development.

Although neighbouring owners objected, the Tribunal concluded that any benefits provided by the covenant were limited and not of substantial value. The covenant was modified to allow the development to proceed.

Service Charges and Temporary Accommodation Costs

In the next case the Tribunal had to consider if landlords could recover the cost of rehousing residents during major works. Their judgment is multi-faceted.

3. Southern Land Securities Ltd v Rettie

In Southern Land Securities Ltd v Rettie [2026] UKUT 308 (LC), leaseholders challenged service charge demands which included the cost of temporary accommodation and storage while extensive damp-proofing works were carried out.

The Upper Tribunal held those costs were recoverable. They were part of the overall cost of carrying out the landlord’s repair obligations and could be passed on through the service charge provisions in the lease.

Within the judgment the Upper Tribunal also gave guidance on the distinction between situations where the cost of temporary accommodation falls on the landlord and where those costs can be passed through the service charge. Drawing on the Court of Appeal’s decision in McGreal v Wake, the Tribunal explained that occupiers are only obliged to vacate their homes where this is strictly necessary to enable the repairs to be carried out. If vacating is essential, the occupiers must do so at their own expense and the landlord is under no obligation to provide alternative accommodation or storage. In those circumstances, there would be no accommodation costs for the landlord to recover through the service charge in the first place.

Conversely, where works can be carried out while occupiers remain in residence, even if doing so would be slower, more disruptive or more expensive, the occupiers cannot be compelled to leave. If the landlord nevertheless decides that a temporary relocation is the most practical way to undertake the works and agrees to meet the occupiers’ accommodation and storage costs to secure their co-operation, those costs may still be recoverable from all leaseholders where the lease permits recovery of ancillary expenditure incurred in performing the landlord’s repairing obligations. The Tribunal treated accommodation, removal and storage costs as analogous to other incidental repair costs, such as professional supervision, waste disposal and the costs of scaffolding or skip permits.

Landlords therefore may have more scope than previously thought to recover ancillary costs associated with major works, if the service charge provisions are drafted widely enough and the expenditure is reasonably incurred.

Reserve Funds Must Be Supported by the Lease

In the next judgment the Tribunal made clear that the creation of reserve funds must be supported by the lease:

4. Tachkani v Thornfield Hawley Management Company Ltd

Tachkani v Thornfield Hawley Management Company Ltd [2026] UKUT 295 (LC) shows that operating reserve or sinking funds without a contractual basis comes with significant risk.

The management company argued that its power to collect reserve fund contributions arose from its general repairing obligations and long-established practice. The Tribunal disagreed, finding that if the lease does not permit a reserve fund, the landlord cannot simply create one. Nor can a lease be varied informally through years of custom and practice.

Supreme Court Clarifies Right to Manage Challenges

The most significant decision of the month came from the Supreme Court and curbs technical challenges to Right to Manage (RTM) claims.

5. Avon Freeholds Ltd v Cresta Court E RTM Company Ltd

Avon Freeholds Ltd v Cresta Court E RTM Company Ltd [2026] UKSC 31 – A landlord attempted to defeat an RTM claim because one qualifying tenant had not received a Notice Inviting Participation before the claim was made. The Supreme Court overturned the Court of Appeal decision and held that the landlord could not rely on those procedural breaches to challenge entitlement, where the omission caused it no prejudice.

This is a major win for RTM companies and confirms that a landlord cannot necessarily defeat an otherwise qualifying RTM claim by relying on a procedural omission which did not affect the landlord or deprive it of a substantive objection.

Lease Wording Remains Critical

Finally, a case where the Upper Tribunal once again stressed the importance of precise lease drafting.

6. Teo v Rockstead Holding Company Ltd

In Teo v Rockstead Holding Company Ltd [2026] UKUT 309 (LC), the dispute centred on whether certain service charges could be recovered under the lease. Despite the landlord’s argument making commercial sense, the wording did not support it. As a result, significant elements of the demands were found to be irrecoverable.

When service charge disputes arise, the lease will almost always have the final word.