In an important decision for landlords, tenants and property professionals, Cloisters Business Centre Management Company Ltd -v- Anvari & Anor (2026) EWCA Civ 17, the Court of Appeal has clarified that premises let for mixed business and residential use can qualify as a ‘dwelling’ under the Landlord and Tenant Act 1985 (“the Act”) - meaning that statutory service charge protections under sections 18 to 27A of the Act can apply.

Background

The dispute concerned Unit 6, Priory House, Cloisters Business Centre (“the Unit”) in Battersea, a self-contained top floor suite in a converted Victorian convent that included a kitchen and shower room. The permitted use under the lease was “Offices (and ancillary residential use)”. At the time of the proceedings, the unit was being used for storage.

The landlord, Cloisters Business Centre Management Company Ltd, sought to recover unpaid service charges from the tenant of the Unit. The tenant defended on the basis of non-compliance with the service charge provisions under the Act along with issues of payability and reasonableness of the charges.

At first instance, it was held that the Unit was a ‘dwelling’ for the purposes of Section 38 of the Act, meaning that the service charge protections contained in Sections 18 to 27A of the Act would apply.  

Section 38 of the Act defines a ‘dwelling’ as :-

“a building or part of a building occupied or intended to be occupied as a separate dwelling together with any yard, garden, outhouses and appurtenances belonging to it or usually enjoyed with it”

The Court therefore transferred the matter to the First-tier Tribunal (“FTT”) to decide the question of recoverability of the service charges.

Cloisters appealed the order transferring the matter to the FTT. The Circuit Judge dismissed the appeal, upholding the District Judge’s decision that the Unit was a ‘dwelling’ under Section 38 of the Act. Cloisters appealed to the Court of Appeal.

The Court of Appeal’s Decision

 The Court of Appeal dismissed Cloisters’ appeal and upheld the decisions of the lower courts. The key reasoning was as follows :-

• The amendment to the Act meant that the only operative definition of dwelling was that within Section 38, removing the previous Section 30 definition: “occupied wholly or mainly as a private dwelling”. There is no express requirement in Section 38 that the property must be used mainly for residential purposes or that residential use must be the predominate use.

• The absence of such requirement in the statutory definition means that mixed-use premises can be a dwelling. The legislation is clear when provisions apply to purely residential occupiers.   

• The physical separateness of the Unit plus the lease term permitting residential use (even if ancillary) meant the Unit could be “intended to be occupied as a separate dwelling”. Whether the Unit was actually used as a dwelling at the relevant time was not decisive.

Practical Takeaways

1. Mixed-Use Units Can Be Protected

   Properties subject to a mixed-use lease, including live/work units or business premises with ancillary residential rights, can be treated as a dwelling for service charge purposes. This confirms that tenants in such units can benefit from statutory protections, including consultation on major works and the ability to challenge reasonableness of service charges

2. Lease Terms Still Matter

   The Court’s focus on intention and the lease terms highlights the importance of carefully drafting use clauses. Clear wording permitting or restricting residential use will be key to determining whether service charge protections apply.

3. Not All Residential Protections Apply

   Importantly, while service charge protections apply, mixed-use tenants do not automatically gain all protections afforded to purely residential occupiers under other housing/landlord and tenant legislation e.g. the restrictions that apply to forfeiture for service charge arrears.

Conclusion

This decision offers welcome clarity on the reach of service charge protections under the Act. It affirms that the statutory definition of dwelling can extend to mixed-use premises intended to be occupied as separate units, even where the predominant use is commercial. For landlords, tenants and property professionals, this reinforces the need to consider both statute and the lease terms when assessing service charge rights and obligations.

Disclaimer

This Legal Update describes the position in law as at the date of this article and care should be taken to note any subsequent amendments to the position as set out above.  The Legal Update is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of KDL Law or by KDL Law as a whole.