Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

31 August, 2012 • 09:18 3

Squatting

Just a reminder to all that from tomorrow squatting will become a criminal offence under section 144 of the Legal Aid, Sentencing and Punishment of Offenders Act. This Act applies to residential property only. It applies to someone who has entered a residential building as a trespasser, and not to a person holding over after the end of a lease or licence (even if the person leaves and re-enters the building). If you believe your property contains squatters you should contact the police who have the powers to arrest anyone committing an offence.

It is yet to be seen how individual police forces apply this law but it is understood that the Metropolitan Police are briefed and ready to take action. We will in due course be posting a more in depth article but for further advice please contact us.

Filed under: England & Wales

10 August, 2012 • 17:39 0

Landlords’ safety obligations

Thanks to our friends at Nearly Legal we have been alerted to the recent case of Gillian Drysdale v Joanne Hedges (2012) QBD 27/07/2012. A tenant slipped off some steep steps while moving her belongings in at the beginning of the tenancy and injured her back. The steps were painted with gloss paint which became slippery while wet, and there was a dangerous drop unprotected by railings. The tenant claimed against the landlord under section 2 of the Occupiers Liability Act 1957 (OLA), section 4 of the Defective Premises Act 1972 (DPA), as well as under his common law duties. You can read a full summary here.
In short it was decided:
1. Section 2 OLA did not apply at all – a landlord’s duty is defined in section 4 of the DPA and it is this Act which applies.
2. Section 4 DPA provides that where there is an express or implied right of access for the Landlord to carry out repairs, there is a general duty of care to occupiers (and their possessions) to take reasonable care to ensure safety from damage or injury as a result of any defect which the landlord is liable to repair, and which they are – or should be- aware of. (Note that this duty applies without actual notification if the landlord should reasonably have been aware). The court confirmed that these provisions did not translate into a duty to make safe.
3. Common law duty of care: the court confirmed the principle that there was no requirement to make safe a property let in a dangerous condition. ( In this particular case there was no common law requirement to make the drop safe, but there was a duty of care not to create an unnecessary risk of injury).
The claim was dismissed.
So what does this mean for Landlords? It does not mean that they can leave their tenanted properties in a dangerous condition. It means that the court confirmed the position with regard to the claimant’s claim and the landlord’s liability under the DPA, OLA and his common law duty of care. There are however safety standards set out in other legislation and regulations.
Landlords will be aware of the provisions of the Housing Act 2004. The Housing Health and Safety Rating System ( HHSRS) introduced by part one of the Act imposes a set of safety obligations on Landlords, including obligations in relation to slips, trips and falls. Under the HHSRS a local authority, by way of an environmental health officer, can inspect a property for hazards and require that remedial action be taken to diminish a risk. (NB, HHSRS applies to all residential properties, not just rental properties).
Houses in Multiple Occupation ( HMOs) are subject to enhanced safety obligations . See our blog here
Further all landlords will be aware of the Gas safety ( installation and use) Regulations 1998 which we have blogged on here.
So although in this particular case the tenant was unable to claim against the landlord under the heads of claim pleaded, there are nevertheless requirements on landlords to keep their properties safe. We often get queries on our Helpline as to safety in rental properties. Landlords and agents should bear in mind not only their repairing obligations but also the requirements of HHSRS and the raft of other legislation designed to keep occupiers safe.

Filed under: England & Wales, disrepair, gas safety, HHSRS, Housing Act 2004, LACORS

30 July, 2012 • 09:07 0

Forfeiture of Residential Long Leases

For sometime there has been debate as to whether a County Court default Judgment satisfied the requirements of Section 168 of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”) and section 81 of the Housing Act 1996 (“the 1996 Act”)

The section of the 2002 Act provides that a Landlord cannot serve a forfeiture notice in respect of a tenant’s breach of covenant until a Court or Tribunal has determined that the breach has occurred. The 2002 Act introduced a special procedure for the Leasehold Valuation Tribunal (“the LVT”)to determine breaches of covenant. The 1996 Act provided that there needed to be a final determination or agreement before forfeiture could take place.

Many landlords continued as part of their debt collecting processes to issue proceedings in the County Court and obtain default judgements which they then relied upon to seek forfeiture. If claims for service charges in the County Court are defended then often they will be transferred to the LVT for a determination. Until recently it was not clear as to whether a default judgement was a final determination with two results in cases, one saying it was a default judgement and the other the opposite.

In Church Commissioners v. Koyale Enterprises and Thaleshwar [2012] 21 EG 96 at first instance the District Judge determined that a default judgement was not a final determination and therefore section 81 of the 1996 Act was not satisfied. The landlord appealed.

The matter then came before HHJ Dight at Central London County Court. He ruled that where a default judgement had been entered the issues were to be treated as “determined” between the parties and that for the purposes of section 81 of the 1996 Act a default judgement was a determination.

In his view the leaseholders had been provided with an opportunity to mount a challenge to the charges if they had chosen to do so. Simply deciding that a default judgement was a “final determination “did not prevent the leaseholders form subsequently challenging (e.g. making an application to set aside the judgement). The judge was concerned that requiring an actual hearing in circumstances where no defence was filed would be unfair on landlords and increase pressure on the courts. For all of these reasons the judge decided that a default judgement was a final determination.

It seems that the judge was perhaps swayed by the practical difficulties that would arise if a default judgement was not a final determination. This may require landlords in service charge cases to require the Court to hold a hearing even when the leaseholders had not looked to defend. Clearly at a time when the Court Service is under enormous pressure this was not appealing particularly given the whole process of seeking a judgement does allow the defendant an opportunity to appeal.

What this case means is that in respect of service charge arrears recovery freeholders and landlords can rely upon County Court default judgements as the basis for forfeiture. For landlords this system is seen as relatively quick and user friendly for the majority of claims which are not defended. If a landlord thinks a matter may be defended they may still wish to consider whether to use the County Court or the LVT and both options are open. Hopefully we do now have some clarity on this difficult issue although the Courts still remain reluctant to forfeit a residential lease for what are often modest service charge arrears when considered against the value of the leasehold interest.

Filed under: England & Wales, legislation, long lease, service charges

23 July, 2012 • 11:53 5

I Haven’t Protected the Deposit? What can I do?

As regular readers of this blog will be aware the 6th April 2012 saw the amendments made to the Housing Act 2004 by the Localism Act 2011 come into force.

Prior to these changes various court decisions (in particular Tiensa v. Vision Enterprises Ltd [2010] EWCA Civ 1224 and Gladehurst Properties Ltd v. Hashemi [2011] EWCA Civ 604) rendered the provisions on enforcement of the deposit protection scheme, in the words of Lord Justice Sedley, “a dead letter”. These decisions meant that where a deposit had not been protected it was relatively easy for landlords and agents to avoid any of the penalties as included in section 214 of the Housing Act 2004. The changes were meant to correct the errors in the original drafting and give the Housing Act 2004 real teeth.

The changes mean that if a deposit is now not protected (and more below as to what this means) properly then the landlord and/or agent will be subject to a penalty amount if the tenant makes an application to the Court. The other serious consequence is that a landlord will not be able to serve a valid Notice under section 21 of the Housing Act 1988 (Section 215 Housing Act 2004). This Notice allows a tenancy to be ended without the landlord having to prove any fault on the part of the tenant and is a sure way for a landlord of obtaining possession.

To properly protect a deposit there must be strict compliance with the rules of one of the authorised schemes (section 213 Housing Act 2004). This now means that the deposit must be protected within 30 days of receipt (not necessarily the same as the start date of the tenancy), together with the giving of any and all prescribed information and any other requirements of the particular scheme (some require an advice leaflet to be given). If the deposit has not been fully registered within this scheme the general view currently is whilst you can register the deposit out of time this will not afford you protection.

So if the deposit is not properly registered what can happen? Firstly you will not be able to use a section 21 Notice to seek possession. The court forms for accelerated possession have been changed to ensure that details of the deposit and its registration are included. In our experience Courts are looking at this information and considering if deposits have been properly registered. The tenant may also make an application under section 214 of the Housing Act 2004 to seek a return of the deposit and also a penalty amount.

The Court has the power to order the return of the deposit in full to the tenant or that it is paid into an authorised scheme. Whilst prior to the changes the Court had to award a penalty amount of three times the deposit this has been amended so the Court can award an amount between one and three times the deposit amount. It is here that the Court retains some discretion as to the amount. It will be for the landlord or the agent to adduce evidence to try and mitigate this amount perhaps by showing that there was a technical breach, financial hardship etc. Clearly an award requiring the return of a deposit and also a penalty of three times the deposit (which of itself could be more than 4 months rent) will be crippling to many landlords and if such a claim is made as a counterclaim in rent arrears proceedings may wipe out any and all arrears meaning that possession is not granted.

With regards to section 21 notices if the authorised scheme has not been strictly complied with the landlord cannot serve a valid Notice. At this stage there are no particular cases relating to the changes and how in practice the Court will look at this situation. It is however believed that simply complying with the requirements out of time will not of itself allow you to then serve a valid section 21 Notice. Section 215 does provide that you can return the deposit in full to the tenant. It is believed that tenants will be advised not to accept the return of the deposit so in this way preventing a landlord from being able to serve a section 21 Notice. If the tenant brings a claim under section 214 Housing Act 2004 and this has been determined, withdrawn or settled this will allow the landlord to then be able to serve a section 21 Notice. If a section 21 Notice cannot be served this would then mean that a landlord could not rely upon this mandatory no fault ground to bring possession proceedings. A tenant would then find themselves in the position of almost being akin to an assured tenant only able to be made the subject of a possession order if one of the grounds to Schedule 2 of the Housing Act 1988 had been made out.

We are yet to see how the Courts interpret the amended Act and whether they give landlords “get outs” as they did previously. Most people will not want to be the no doubt expensive guinea pig to test this situation. The will of Parliament was to give the legislation teeth as part of the regulation of the private rented sector. It is vital that you do comply and if you become aware of a deposit which has slipped through the net take advice.

Filed under: England & Wales, deposits, Housing Act 1988, Housing Act 2004, legislation, tenancy agreements

6 July, 2012 • 10:54 0

Interaction Between Courts and LVTs

Over the past 12 months the Leasehold valuation Tribunal (“LVT”) has fallen under the responsibility of the Ministry of Justice. It is due to reform to become part of the Lower Tribunal (“Lands Chamber”) to reflect the various changes in jurisdiction of tribunals and organisation undertaken over the past few years. This will result in a new set of rules and procedures governing all cases before the LVT. It will however continue to be a specialist tribunal with members of the panel having appropriate specialist knowledge.
The LVT has over the past decade interacted increasingly with the Courts. In particular since the Commonhold and Leasehold Reform Act 2002 (“CLRA”) came into force the Courts have had a power to refer matters relating to service charge disputes to the LVT to determine. This jurisdiction has seen many claims which have been started in the County Court as a traditional debt claim being referred to the LVT to determine particular questions. Case law has provided that in such cases the LVT is however only allowed to deal with the particular question posed of it by the County Court. For this reason County Courts should ask specific questions of the LVT so that all parties are clear regarding the questions that the LVT are being asked to determine.
This procedure means that usually if a claim for a service charge debt is defended the Court as part of the allocation process will wish to consider if a referral is to be made to the LVT. The LVT has powers to consider points under which it already has jurisdiction such as the reasonableness of the service charge; and what often flows from this point is whether the lease itself allows recovery of all or part of the service charges being claimed. In practice it is evident that an LVT may determine all substantive matters; which when referred back to the Court the Court by the LVT allows the Court to simply giving final effect to such findings. The Court will of course continue to have costs jurisdiction in the usual way and it will be for the Court to determine any costs which may or may not be awarded for or against either party using the usual principles of court procedure.
The CLRA also provided jurisdiction to the LVT for the first time to determine if there was a breach of the terms of a residential lease. In essence this procedure was made the first step which a freeholder had to undertake if they wished to try to forfeit a lease. Once such a determination was made by the LVT then the matter could proceed for forfeiture in the usual way. Ultimately this could lead to an application to the Court for forfeiture. In considering a forfeiture claim the Court would no longer usually have to consider whether or not there was a breach of the lease as this aspect would have been predetermined. Obviously this can lead to many such claims taking up less time before the Court and being resolved prior to actual forfeiture proceedings. The determination of a breach procedure is viewed by many practitioners as being a fast and efficient way of dealing with allegations of breach, particularly given that in practice most can and will be remedied.
These changes have reflected the fact that it is generally accepted that the LVT is a specialist tribunal which can bring specialist knowledge and expertise to residential leasehold disputes. This was recently reiterated by the Court of Appeal in the case of Winstone v. Great Gate Management Company Limited 2012 unreported which was a case involving a leasehold dispute, injunctions and service charge matters where in an obiter statement the Court of Appeal suggested that the parties might seek to have the remaining items in dispute following the appeal referred to the LVT given its specialist jurisdiction.
What is clear is that everyone practising in this field must give careful consideration as to the correct forum to begin a claim as often a claim could be issued either in the Court or the LVT. There may be tactical advantages in using one avenue over the other, but ultimately the party making the decision could find themselves before the LVT come what may. The influence of the LVT and no doubt its successor are growing as may the jurisdiction over disputes which they cover.
If any help or assistance is required in this complex field PainSmith Solicitors are happy to advise.

Filed under: England & Wales

28 June, 2012 • 13:39 0

Are In House Solicitors Costs recoverable as service charges or administration fees?

In OM Property Management Limited v. Mr Olajide Olaleye [2012] UKUT 102 (LT) the Upper Tribunal (Lands Chamber) had to consider whether legal costs incurred by an in house solicitor of dealing with an application to the Leasehold Valuation Tribunal (“LVT”) could be recoverable as a service charge. At first instance the LVT determined these were not a “cost” and therefore the legal costs were not recoverable. The respondent appealed this decision. They sought to rely upon Re Eastwood (deceased) [1985] 1 Ch 112 which set out the principle that the costs of an in house solicitor are to be dealt with on the same basis as if the costs were incurred by an independent solicitor. The Upper Tribunal agreed there was no reason to depart from this authority. As a result the costs incurred by the in house solicitor were recoverable.
What this decision means is that whilst a person is entitled to challenge the rate charged for work carried out, it will be up to the solicitor to demonstrate how the rate has been calculated and that it is fair. It is not correct or acceptable to say no costs are payable because an in house lawyer is used. Whilst this decision applied to a service charge dispute it seems there is no reason why this cannot apply to all matters under which costs may be an issue in a matter heard before the LVT. This decision is likely to apply to Leasehold Reform Housing and Urban Development Act 1993 claims for costs of enfranchisement or lease extensions made by a freeholder. Simply because a freeholder or managing agent decides to use in house expertise will not necessarily prevent them from recovering the reasonable costs of such an arrangement.

Filed under: England & Wales, long lease, service charges

22 June, 2012 • 17:25 1

Routes of Appeal in Possession Claims

There has recently been a useful case dealing with the routes of appeal in a possession claim. The case in question is the London Borough of Southwark v. Ofogba [2012] EWHC 1620 (QB) which dealt with this point.

The background was that a claim was made by a local authority against a secure tenant based upon rent arrears. Initially the matter was compromised on terms that the possession claim was adjourned generally. The matter progressed with the Defendant not paying the rent and the instalments of rent arrears which were due; and the Defendant appointing new solicitors. As a result an application was made to the County Court to restore the proceedings.

The claim was restored and allocated to the multi track with permission for the Defendant to rely upon an amended Defence and Counterclaim and consequential directions given. The matter came on for trial and an Order was made giving a money judgement with the possession claim adjourned generally with permission to restore by a fixed date in the future.

The Defendant tried to appeal the terms of the Order lodging an Appellant’s Notice with the Court of Appeal and with the High Court. The Appellant pursued the Appeal in the High Court. Mr Justice Hichinbottom considered the matter and gave an assessment of the law relating to Appeals in possession proceedings generally.

To appeal direct to the Court of Appeal the claim must have been issued under Part 7 of the Civil Procedure Rules allocated to the multi track route. Until October 2001 possession claims were Part 8 claims but since then they have been treated as Part 7 claims. Further the decision appealed against must be a “final decision”.

As a result the Judge determined that the appeal against the money judgement was a matter relating to a “final decision” and that fell to be decided by the Court of Appeal. The decision in respect of adjourning the possession claim was not a “final decision” and could be dealt with by the High Court but in Mr Justice Hichinbottom’s opinion on the facts of this case this should also be transferred to the Court of Appeal under Rule 52.14(1)(b) of the Civil Procedure Rules.

The Judge also expressed some concern that the White Book is not as clear as it could be in connection with such appeals. (The White Book is re-printed annually and contains all the rules which are used by solicitors, barristers and judges governing procedures). He made clear that if there was a “final decision” whether made by a District Judge or a Circuit Judge and the other criteria applied (i.e. Part 7 claim allocated to the multi track) then the route of appeal is direct to the Court of Appeal. Further any decision of the County Court made on appeal (i.e. by a Circuit Judge from a District Judge) also lies directly to the Court of Appeal.

The case is useful in reminding everyone as to which Court an appeal lies. Care needs to be taken in ensuring that an appeal is made to the correct Court and consideration given to the route to follow. It is also often worth clarifying and making sure appropriate Directions regarding allocation have been made before the start of any trial so that no issue arises concerning the correct route to follow thus avoiding excessive costs or delays.

Filed under: England & Wales

19 June, 2012 • 13:27 0

HELPLINE RENEWALS

Just a quick reminder to all those people who subsribe to our Helpline that it is time for subscription renewal. If you have not received a reminder please contact us so we can get this through to you and make sure that your subsrcription is renewed without delay.

For those people who are not currently subscribers our Helpline runs from 1st August each year at a cost currently of £235+VAT for a single office. The service comprises a telephone helpline 9am to 5.30pm Monday to Friday and access to certain standard legal documents. Full details of what service is provided can be found here.

Filed under: England & Wales

6 June, 2012 • 12:17 7

Electronic Signatures: Can we use them?

We have over the past few months seen a rise in the number of enquiries we receive about the use of “electronic signatures” for the signing of tenancy agreements.

This area is complicated and not 100% clear. For the purposes of this article when we refer to a tenancy agreement we mean an assured shorthold tenancy (“AST”). Historically the rule has always been that you should obtain a “wet” signature on the tenancy agreement from both the Landlord (or the Landlords agent) and the Tenant before commencement. Many agreements are also drawn up that they are a deed and the signatures are witnessed. Generally for a valid AST of 3 years or less this does not have to be by deed and so does not strictly require a witness.

There are various providers of electronic signatures which have a method of encryption and digital certificate which can be used to provide an audit trail of how, when and by what address/information they were created. It is obviously important that before opting for any electronic signature system that you ensure you are satisfied as to the system and that it can, if required, provide to you the proof and evidence which a Court may seek. EU Directive 1999/93/EC sets out the standard which should be met.

The Electronic Communications Act 2000 provided that electronic signatures can be used as evidence of a signature (see section 7 of this Act which provides a definition). This Act came into force in July 2000. The Land Registry also indicated it would be looking at adopting electronic signatures but at this time this appears to have been shelved for the time being.

What the Act means is if you have an electronic signature you can rely upon this as evidence in a Court of Law. This means is if you can satisfy a Court that there is a valid electronic signature you will then have a valid tenancy. If this was an agreement which had to be completed as a deed to comply with the Law of Property (Miscellaneous Provisions) Act 1989 (i.e. for a tenancy of more than 3 years) then this system would probably not work and you will probably need wet signatures. To satisfy a Court you would need to produce an audit trail and be able to explain how the system worked. Unless challenged by a party it is likely that a Court would accept this at face value.

It is worth bearing in mind that since of course a tenancy agreement does not have to be in writing even if a party did challenge the validity of the electronic signature it may well still be possible to show that the “agreement” was evidence in writing of the terms which had been agreed. This would be in the same way that when agreements are challenged you would often look to rely upon the conduct of the parties and correspondence/emails to satisfy a court as to the terms.

All of the evidence appears to be that there is no reason why a tenancy agreement can not be signed electronically provided you use a reputable form of electronic signature. There may be other issues relating to making sure you have correctly identified the parties but your existing procedures hopefully would cover this. We do, however, expect that it is likely that there will be some case law and no doubt at some point the Courts will give guidance on what they will expect to see but for the moment we are not aware of any such guidance.

What seems clear is that this form of completing agreements is going to become the norm. If anyone has any experiences relating to the use and interpretation by the Courts please do let us know. In the meantime if and when we hear we will blog further!

Filed under: England & Wales, contracts, legislation, litigation, regulations, tenancy agreements

30 May, 2012 • 09:34 4

Fire Safety revisited

We have had a few queries regarding the Fire Safety (Protection of Tenants) Bill on which we have previously blogged, and so here is our update: the Bill failed to complete its passage through Parliament before the end of the session. This means the Bill will make no further progress and will not become law.

To recap, this was “a bill to require landlords to provide smoke alarms in rented accommodation; and connected purposes”. All landlords were to be required to install a mains operated battery backed smoke alarm before the tenancy agreement is signed.

The tenant would have been required to test the smoke alarm at least once a month and notify the landlord of any defects, who would then be required to carry out the repairs. There was to be a criminal penalty of up to 2 years in prison and/or a fine of up to £5000.00.

Filed under: England & Wales, HHSRS, LACORS, legislation, regulations

28 May, 2012 • 13:30 0

Pay as you go…….

A solicitor is entitled to refuse to do further work for a client until outstanding bills are settled and funds placed on account ( for anticipated costs not yet incurred) the Court of Appeal recently ruled . By doing so, the solicitor was merely suspending, not terminating the retainer and the client was liable to pay for the work done. The client in this case was unhappy with the size of the bill as it had exceeded initial estimates. The reason for the higher bill was that the matter had got more complicated, there being protracted possession proceedings.

All solicitors will have written terms of business which should set out on what basis the parties can terminate the agreement.

Inevitably there will be instances where costs are more than initially anticipated, and litigation ( in particular possession proceedings) are a minefield full of potential unwelcome developments that push your costs up. But if you are not happy with the costs and handling of the case there are channels available to resolve the matter ( for example the firm’s internal complaints procedure, the Legal Ombudsman and the Solicitors Regulation Authority amongst others).
But if your solicitors say no more work until you pay up ignore the message at your peril or you could find yourself liable for fees on the basis that you terminated the agreement.

Filed under: England & Wales

24 May, 2012 • 09:58 1

Beginners guide to Long Residential Leases

For many people the first property they buy is a long leasehold flat. This is, of course, the most complicated form of home ownership yet many people get little or no explanation of the realities of what is involved.

As a long leaseholder you are a type of tenant. Fundamentally you are bound by the terms of that tenancy which are are set out in the lease subject to the various statutory rules and regulations. Whilst very few leases are identical in form (even within the same development often) they will have various common elements and it is these that we intend to cover. There is however no substitute to obtaining proper comprehensive advice on your lease terms when you purchase and a good lawyer will do this.

The basics are how long is left on the lease and the rent. The first element is important since this can have a bearing on the cost of obtaining an extension ( see our blog post on this topic) and also how saleable the lease is. Generally in our experience a lease with less than 80 years remaining can now be difficult to sell. It is then important to know the rent. You should also check if there are any rent review provisions and make sure you understand these. It is important to bear in mind that the amount of ground rent will have a significant effect on the price of any extension.

The next important sections to understand relate to repairs: who is responsible for repairing in leases. Often you will be responsible for all internal repairs and redecorations and the landlord for all external. It is important to make sure these clauses are comprehensive and clear to prevent dispute later. Elements that are often worth checking are things such as who is responsible for repair and replacement of windows particularly if you are on a raised floor of a block.

Insurance: this will usually be the landlords responsibility subject to you repaying the costs. Again best to check although if you are getting a mortgage your lawyer should have checked this.

Service charges: often in practice for people living in a flat cause the most problems. It is important that you fully understand the clauses relating to these. Normally there will be a mechanism for determining the total service charge and then how this will be divided up and when you will be notified. Often theses clauses are detailed and require the landlord to jump through various hoops before the service charge is payable. Understanding these and what sums may be charged such as reserve funds will help you better understand one of the major liabilities of living in a flat and one which many leaseholders have no control over. Remember it is often for the freeholder to plan the schedule of works with little regard for the leaseholders personal circumstances.

Can I sublet and alter the flat? Again most leases will have specific provisions as to what is required. Many leases require you to obtain the consent of the freeholder in advance and you are likely to have to pay the freeholders costs. Again if this is an issue make sure you check and make enquiries of your freeholders.

The other thing that people often make assumptions about is what they are buying and rights they have over communal areas and grounds. Again it is best to check to make sure you are getting what you thought such as parking spaces and garages. Just because there is for example a garden does not automatically mean you will have right of access. Things like this should be explained to the lawyer who can check. Remember if you do not ask you may not get an answer!

This article provides an overview of what practically can be the important points for someone buying. Leases are often complex even for lawyers and so do not be afraid to ask. It is vital that you do understand this document since even in blocks where leaseholders own a share of the freehold you are required to comply with your lease.

Filed under: England & Wales, long lease, service charges

23 May, 2012 • 08:56 0

Come and work for us

PainSmith solicitors seeks a 2-3 years qualified Landlord and Tenant solicitor to run own caseload and supervise up to 3 members of staff.

You will need to have strong civil litigation experience and be familiar with the principles of landlord and tenant law. A willingness to expand on landlord and tenant law is essential as well as a willingness to write articles and provide training in this area. The firm has a strong ethos for training young lawyers therefore you will need to be patient, confident and willing to help and assist when necessary.

Please send CV and covering letter to marveen@painsmith.co.uk

Filed under: England & Wales

18 May, 2012 • 11:17 0

Phone problems

For those of you who use our telephone helpline we apologise but we are experiencing technical problems with our lines. We are doing our best to get the problem fixed. Meanwhile we ask you to bear with us.

Filed under: England & Wales

16 May, 2012 • 12:08 3

Attention all Landlords!

We draw your attention to this recent decision of the Upper Tribunal which has caused a stir amongst leasehold lawyers in relation to service charges.

Section 47 of the Landlord and Tenant Act 1987 (LTA1987) provides that where any written demand is given to a tenant of residential leasehold property, then that demand must contain:

a) the name and address of the landlord and
b) if that address is not in England and Wales, an address for service.

Section 47 goes on to provide in subsection 2 that any part of the amount demanded that consists of a service charge will not be treated as being due until such information is furnished by notice given by the landlord to the tenant.

In Beitov Properties Ltd v Elliston Martin it has been decided that the wording of section 47 LTA 1987 means that where any written demand is given to the tenant the Landlord must put his or her actual address on the demand, not a care of address or agent’s address. A demand for service charges will be invalid without.

According to the Tribunal “The purpose of the requirement in section 47 to include in any demand the name and address of the landlord, in my judgment, is to enable a tenant to know who his landlord is, and a name alone may not be sufficient for this purpose. To provide an address at which the landlord can be found assists in the process of identification”.

It is noted however that the sanction for failing to give the actual landlords address in section 47 of the LTA 1987 is that service charges are not due. Nothing is said about rent and as such we are of the opinion that where you have an AST landlords and agents can continue to use care of addresses. If the position changes we will of course let you know.

Most people are aware also aware of section 48 LTA 1987. Therefore to complete this article we should mention subsection (1) which requires a landlord to furnish the tenant with an address for service, which can be a care of address or agent’s address but must be an address in England and Wales. Unless and until the landlord gives an address for service in England and Wales then rent will not be treated as falling due.

Filed under: England & Wales, FLW Article, Housing Act 1988, legislation

15 May, 2012 • 16:03 0

Why do I need a tenancy agreement?

The simple answer to this question is that for most circumstances you do not strictly need a written agreement however if you don’t this can have unintended consequences!

As regular followers of the blog will know the starting point for determining the terms and what you should do in a particular instance is the tenancy agreement. If no written agreement exists it will be a question of trying to recollect what was discussed and possibly looking at any letters or emails about the negotiations to determine the parties intentions. This can result in the terms being unclear particularly if a dispute has arisen.

Assuming we are discussing Assured shorthold tenancies, which are the majority of private letting agreements, as many of you will know this is now the default tenancy in most cases ( for exactly what is an assured shorthold tenancy see the Housing Act 1988 as amended). If you are taking a deposit you are now required to register such a deposit with an approved scheme of which there are three. As part of this process you are required to give certain prescribed information. If you do not do you will not have complied with the rules. Most standard agreements which can be purchased ( such as those we produce and are for sale in our shop on our website) incorporate this information. For this reason giving an agreement, practically, can be easier to ensure the information is given and nothing is missed.

If then you have a written agreement you can specify the exact terms. Whilst you cannot contract out of rules laid down by Parliament, such as the landlords responsibility to keep the property in repair, you can make sure everything is clear. This can be things as diverse as the length of term and break clauses through to restrictions on smoking or loud music (although you might want to have a look at the Office of Fair Trading (OFT) guidelines to check the likely enforceability of your clause). Such comprehensive agreements allow you to effectively manage your investment and to make sure that both sides are clear as to what to expect from the other. Having an effective list of rules of occupation can assist in helping any potential disputes being seen off as having a clear reference to point to.

Whilst sorting out the paperwork can sometimes appear to be a chore if and when you are faced with a dispute it is vital. As we have repeatedly blogged the courts will take the agreement as the starting point. If you have no agreement in writing often the courts will find it difficult to impose onerous terms on one or other party unless it can be shown unequivocally that this was agreed. Whilst relying on terms other than rent or operation of a break clause to evict can be difficult in our experience without a rewritten agreement it is almost impossible.

So take 5 minutes and make sure you have an agreement which is up to date and covers what you want and require.

Filed under: England & Wales, break clause, deposits, Housing Act 1988, Housing Act 2004, OFT, tenancy agreements, Unfair Terms

14 May, 2012 • 08:35 8

Wheel Clamping: Protection of Freedoms Act 2012

The 1st May 2012 saw the Protection of Freedoms Act being given Royal Assent. Whilst covering many areas this also introduced further regulation of wheel clamping and has, in effect, outlawed wheel clamping of vehicles on private land. The actual offence is set out in section 54 of the Act and provides that anyone found guilty of an offence under this Act would be liable for a fine.

For many Private Estates wheel clamping has been used as an effective tool to prevent unauthorized third parties parking without authority. Clearly they will need to look again at what steps are taken. The Act does make clear that the use of a fixed barrier would not be a an offence if the barrier was in place when the vehicle was parked whether in use or not. For many estates this is not a desirable option but other options are limited.

Clearly for any estates currently using wheel clamping they will need to liaise with their provider and see what if any alternative services they may offer such as imposition of fines etc. Sadly it seems that the actions of “cowboy” clampers have meant that this method of protecting rights has now been removed.

Filed under: England & Wales, legislation

9 May, 2012 • 13:49 2

Strikes!

Any readers currently dealing with the courts ( e.g. possession hearings, bailiff appointments etc), be aware of proposed industrial action by court staff. A “work to rule” may be in operation and you may find the courts are slower than usual in dealing with matters between tomorrow and August with urgent cases being prioritised. You can read about it in the Law Gazette here and on the BBC news here. The land registry also anticipates that tomorrow ( 10th May 2012) “Waiting times may be longer than normal; however, we will of course endeavour to ensure that any disruption is kept to a minimum”.

Filed under: England & Wales

8 May, 2012 • 13:01 1

Recovery of Leaseholder’s Legal Costs

Most commercial and long residential leases contain provisions which enable the landlord to recover any legal costs that may be incurred, however due to the vast amount of case law surrounding this issue there is considerable uncertainty as to whether or not the landlord can recover these costs if they proceed through the Leasehold Valuation Tribunal (LVT).

In the case of Freeholders of 69 Marina v Oram & Ghoorun the freeholders of a block of flats undertook work on the common parts and sought to recover the service charges from the tenants. However two tenants disputed the amount and the freeholder applied to the LVT to recover the service charges and the costs of taking the matter before the LVT. No monies were received from the two tenants despite the LVT decision so the freeholders served notice under section 146 of the Law Property Act 1925 demanding payment and issued a claim at the county court. The tenants then made payment. The issue to then be decided was whether the tenants should be equally liable for the costs of enforcement of the legal costs or whether the costs should be applied to all the tenants collectively. The Court of Appeal interpreted the terms of the lease and it was held that the costs were to be recovered from the two tenants only.

The above decision of the Court of Appeal is one that courts will have to consider in future cases. It should be noted that this decision was made because the costs clause in the lease was unambiguous. The decision clearly indicates that each particular lease needs to be carefully considered and whilst many leases contain covenants with the wider wording such as Freeholders of 69 Marina, many other leases contain the narrower wording.

Filed under: England & Wales, FLW Article, Clarity, costs, Freeholder, Lease

4 May, 2012 • 11:34 0

Insurance: how to challenge

Most long leases require the Freeholder to insure and then to recover the premiums from the Leaseholders. In respect of residential leases Leaseholders have various rights.

The starting point as always are the terms of the lease and what these allow the Freeholder to do and recover. It is important to consider but usually the lease terms will be drawn allowing the Freeholder to insure with whom ever they wish and for what risks they consider appropriate. Often this results in a premium which the Leaseholders feel is unreasonably high.

As with all such matters we would in the first instance suggest that the concerns are bought to the attention of the Managing Agent or Freeholder. They ought to be prepared to engage with you to show how the premium was achieved and that it is reasonable. Sadly not all do so. If not the Leaseholder is entitled under the Landlord and Tenant Act 1985 to request a right to inspect the policy and take copies. This means not only the premium receipt but copies of the policy and all the relevant schedules which should include details of claims history etc.

Armed with details of the policy it is then possible to obtain alternative quotes. We pause at this moment to remind Leaseholders that they need to obtain alternative quotes which are on similar terms unless there are good reasons to depart from the terms of the existing policy. Before departing from those terms we would always suggest that you obtain advice from an experienced insurance broker so you can support any argument that the terms on which the Freeholder had been insuring were unreasonable.

Once you have an alternative quote, if lower, we would again suggest you submit it to the Freeholder for comment. Remember the Freeholder does not have to go with the cheapest quote but he needs to be able to show the quote he has obtained is reasonable in all the circumstances ( see section 19 of the Landlord and Tenant Act 1985). Assuming still you get nowhere then you can look to make an application to the Leasehold Valuation Tribunal (LVT) under section 27A of the Landlord and Tenant Act 1985. The application should attach a copy of the Freeholders demands and your evidence. This should include your quote, the proposal form and any other information such as letters etc with your broker and or the Freehold. Remember you will need to show to the LVT that your quote is on similar terms to those originally obtained by the Freeholder (or other reasonable terms) and is at a significantly lower price.

Often these disputes are dealt with on the papers. This means it is vital your case is clear. The Freeholder will be invited to comment upon your case and to explain why the premium which they claim is reasonable. Usually then the Leaseholder will have an application to respond. Remember this will be your last chance to have a say and it is worth commenting on what the Landlord says. Landlords will often say they used an independent broker who tested the market. If there is no proof as to how the market was tested you should point this out. If the Freeholder does not comment on whether they have received a commission this is a point worth raising as more often than not they will!

Remember just because the Premium seems high will not necessarily make it unreasonable. It is important to consider the terms. Things such as the claims history and if many of the properties are sublet with the lease not allowing the Freeholder control over this can affect the terms companies quote on. We have also seen Leaseholders obtaining quotes where the cover is split between 2 or more insurance companies with each having a percentage share of the cover. In the writers opinion it would be reasonable for a Freeholder to refuse such a quote. Dealing with 2 or more insurers could be difficult.

It is important to do your homework but if having done this the premium still seems high and the Freeholder will not budge the LVT can assist.

If you need help on this or any other long residential lease issue please do contact us.

Filed under: England & Wales

4 May, 2012 • 11:20 0