The Court of Appeal's decision in Cloisters Business Centre Management Co Ltd v Anvari [2026] EWCA Civ 17 confirms that statutory service charge protections can apply to live/work units where any degree of residential use is permitted by the lease, even if that residential use is only ancillary.
The appeal involved long leaseholders of premises in a converted Victorian convent in Battersea.
The leases described the premises as offices with ancillary residential use, although in practice the units were being used for storage.
The issue was whether the leaseholders could nevertheless be considered lessees of a 'dwelling' under the relevant statutory provisions, i.e. section 38 of the Landlord and Tenant Act 1985.
Are live/work units protected as residential dwellings?
The unit in question comprised a suite of rooms including a kitchen and shower room, and was described in the lease as a 'self-contained unit'.
Under section 18 of the 1985 Act, statutory service charge protections apply to tenants of 'dwellings'.
The landlord argued that live/work units fall outside the statutory regime where any residential use is subordinate to commercial use and, therefore, disputes about recoverability of service charges should not fall within the First-tier Tribunal's jurisdiction.
The tenant contended that the permitted residential use meant the premises qualified as a dwelling.
The County Court agreed, and so did the judge who upheld that decision on appeal; the landlord then appealed to the Court of Appeal, but that appeal was unsuccessful.
Court of Appeal: key findings
In its decision, the Court of Appeal confirmed the following.
- The live/work unit was a dwelling and therefore benefitted from the statutory service charge regime in the 1985 Act.
- The fact that residential use of the unit was only 'ancillary' did not prevent the unit from being a dwelling.
- The court did not place any weight on the fact that the unit was described as being for storage, because the lease expressly permitted residential occupation.
On that basis, while each case will turn on its own facts, where a lease permits any form of residential use – even if ancillary to commercial use – landlords may find themselves subject to the residential statutory service charge regime.
Practical implications for landlords
Landlords should ensure that they understand whether the residential service charge regime applies to a live/work unit in their portfolio. Where the regime applies, this can lead to:
- exposure to First-tier Tribunal challenges to service charges
- tighter limitation periods for demanding service charges.
This decision reinforces a central principle: any degree of permitted residential use can activate the residential statutory service charge regime, even in premises that appear predominantly commercial, such as a live/work unit.
For landlords, the key takeaway is the need to look beyond labels and focus on both the current use of the property and the use that the lease permits.
Landlords may want to seek professional advice where they are unsure about how to treat a particular unit in their portfolio, as failure to comply with the residential service charge regime where it applies could be costly.
A version of this article was previously published by Charles Russell Speechlys in February 2026. The article reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to any specific matter.
Chandni Pandya is an associate, real estate disputes at Charles Russell Speechlys
Contact Chandni: Email
Georgina Muskett is a senior associate, real estate disputes at Charles Russell Speechlys
Contact Georgina: Email
Related competencies include: Leasing and letting, Legal/regulatory compliance, Property management
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Effective from 31 December 2025 and aimed at commercial property managers and occupiers in the UK, Service charges in commercial property, 2nd edition promotes best practice, uniformity, fairness and transparency in the management and administration of service charges in commercial property.
Three template documents for voluntary agreements are also available to download.
- Template 1 is for the agreement to retain monies included in a budget and already collected but where work has been deferred until a subsequent service charge period.
- Template 2 is for the agreement to forward fund the cost of future works.
- Template 3 is for the agreement to defer the recovery of costs incurred by the landlord over future periods, known as a payment plan.
Effective from 7 April 2026, Service charge residential management code, 4th edition sets out best practices for managing residential leasehold properties with a focus on raising standards, promoting consistency and ensuring transparency.
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