Adriatic Land 5 Ltd v Long Leaseholders at Hippersley Point

SummaryAdriatic Land 5 Ltd v Long Leaseholders at Hippersley Point [2025] EWCA Civ 856 is a landmark legal dispute that has clarified the retrospective effect of the Building Safety Act 2022 (BSA) on service charge recovery in residential buildings with fire-safety defects. The case revolves around whether a landlord can recover legal and professional costs from leaseholders via service charge when those costs were incurred before the BSA’s substantive protections came into force on 28 June 2022. The Court of Appeal held — by a majority decision — that the leaseholder protections in Schedule 8 of the BSA do apply retrospectively to prevent such cost recovery.
Background

• Hippersley Point is a 10-storey mixed-use building at 4 Tilston Bright Square, Felixstowe Road, London SE2, containing 32 residential flats held on long leases and a commercial unit. Fire safety defects — including unsafe external wall systems and other relevant building safety risks — were identified before the BSA was enacted.

In late 2020 and early 2021, substantial fire-safety works were required, prompting the freeholder, Adriatic Land 5 Ltd (the landlord), to apply to the First-Tier Tribunal (Property Chamber) for dispensation from the statutory consultation requirements under the Landlord and Tenant Act 1985 in relation to remediation works. The First-Tier Tribunal granted dispensation but initially imposed a condition preventing the landlord from recovering the costs of the application from leaseholders.
Tribunal and Appeal HistoryUpper Tribunal (Lands Chamber)

• The landlord appealed to the Upper Tribunal, which ruled that Schedule 8 of the BSA 2022 — the section protecting leaseholders from service charge costs related to building safety defects — applied to the costs of the dispensation application. Because those costs were necessarily tied to a relevant defect, the clause precluded recovery from qualifying leaseholders, even though the costs were incurred before the Act came into force.

Court of Appeal (Majority Decision)

• In Adriatic Land 5 Ltd v Long Leaseholders at Hippersley Point [2025] EWCA Civ 856, the Court of Appeal upheld the Upper Tribunal’s approach. It confirmed that paragraph 9 of Schedule 8 to the Building Safety Act 2022 prevents landlords from recovering legal and professional costs, including those incurred before 28 June 2022, via service charges from qualifying leaseholders.

The decision was by a majority of 2:1, with the dissent emphasising competing views on the scope of retrospective application.
Supreme Court Permission to Appeal

• The matter has progressed further: permission to appeal on the retrospectivity point has been granted by the UK Supreme Court (limited to the issue of whether paragraph 9 of Schedule 8 operates retrospectively). The Secretary of State for Housing, Communities & Local Government intervened on the side of the leaseholders.

Legal and Financial SignificanceLeaseholder Protections

• The case provides definitive authority that the BSA’s protective regime in Schedule 8 applies even when the costs in question were incurred before the Act came into force — so long as the costs are linked to relevant building safety defects.
• It protects qualifying leaseholders from bearing costs of historic legal and professional expenses via service charges, even if the landlord incurred them prior to 28 June 2022.

Implications for Landlords

• Freeholders and landlords can no longer use service charges to recoup historic costs linked to building safety remediation — including legal, professional and tribunal costs — if the building is a “relevant building” and the leaseholders are “qualifying leaseholders”.
• Instead, landlords must consider alternative enforcement mechanisms (e.g., Remediation Contribution Orders, Direct Remediation Orders, or other cost recovery strategies) under the BSA or civil law.

Financial Impact

• The decision has significant financial implications for owners of high-risk residential buildings who may otherwise have sought to pass historic remedial costs onto leaseholders as service charges. Instead, those costs must be absorbed by the landlord or recovered through other statutory instruments.
• The upcoming Supreme Court appeal means the final legal landscape is not yet settled, but the high court and Court of Appeal decisions create immediate cost exposures and risk considerations for landlords, freeholders and their insurers.

Key Takeaways

• Case: Adriatic Land 5 Ltd v Long Leaseholders at Hippersley Point
• Forum: Court of Appeal (2025 EWCA Civ 856)
• Issue: Whether historic building safety costs recoverable via service charge are precluded by Schedule 8 of the BSA 2022
• Holding: Leaseholder protections in Schedule 8 apply retrospectively — landlords cannot recover historic legal/professional costs from qualifying leaseholders
• Status: Permission to appeal to Supreme Court granted (retrospectivity point)