legislation « Painsmith Landlord and Tenant Blog

26 October, 2011 • 10:02 5

Back to basics 2: Notice to Quit

A second opportunity to delve into the basics of Landlord and Tenant law has arrived. This time I am looking at Notices to Quit and the common pitfalls that are easily made but fatal to the effectiveness of the Notice.

It is important first of all to nip in the bud a common misconception when it comes to Notices to quit. They and Section 21 notices are NOT one of the same thing. They indeed are used in completely different situations. Granted, the way they are applied can be seen as similar, however they should not be confused as it would result in a notice as useful as a chocolate teapot.

A notice to quit is a tool to be used to bring about the end of a common law/company let tenancy. Section 21 notices are used to end an assured shorthold tenancy. So if the tenancy agreement that is in place is an AST serve a Section 21 not a Notice to Quit.

A point of law that makes numerous Notices invalid is when the date of expiry should be and when it should or can be used. The date of expiry must be either at the end of a complete period of the tenancy or on the first day of the new period. If this is a little too vague, there is an alternative method. The case of Chez Auguste Ltd v Cottat stated that there was no need to give an exact date on the notice. This may appear harsh on the tenant but there was a caveat to this declaration. It just needs to be clearly identifiable to a reasonable tenant as to when the Notice will expire. As well as this, it cannot be used in the fixed term unless it is used in conjunction with a break clause.

There are certain other points that must be followed when the Notice has been served. Once the Notice has been served, rent cannot be demanded. Payment of mesne profits (equal to the rental sum) must be taken instead without prejudice to the effect of the notice to quit. It must be made clear to everyone who looks at the transactions that there is no intention to create a new tenancy found. Street v Mountford tells us that if there is no intention to create legal relations then no tenancy is created. This is particularly important because the last thing you want as a Landlord or Agent is to get to the point where the Notice to Quit has expired and possession is close, only to find that the tenancy will continue due to a few seemingly innocent statements.

These requirements must be strictly applied otherwise the notice will generally be found to be invalid. It may seem like a lot of effort but caution is the best approach. Make sure as many checks as possible take place and that will ensure that time is not wasted, particularly in a situation like possession matters where time is generally of the essence.

A number of you may well be signed up to our helpline. If you indeed are and wish to access a Notice to Quit, then it is available via the document vault which you have access to.

It is worth noting that if it is a common law tenancy and your sole ambition is to gain possession at the end the of the fixed term, a letter stating you require possession will suffice. A letter will also suffice if the tenancy has a break clause, again no Notice to Quit is required to exercise the right. A Notice to Quit is only required once the tenancy has become periodic.

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

24 October, 2011 • 10:04 4

The Tenants Bankrupt!

We have come across two decisions from earlier this Summer dealing with the problem of what to do when faced with a Tenant who is made bankrupt or enters into a Debt Relief Order.

Generally anyone who is made bankrupt or obtains a Debt Relief Order is subject to certain moratoriums on proceedings and the recovery of money which they owed prior to the Court Order making them bankrupt etc. This means that landlords can find themselves with a tenant who has run up arrears which they then cannot recover save for making a claim in the insolvency process under which it is likely they will only recover a small proportion of the monies.

In Sharples v. Places for People Homes Limited (bankruptcy) and Godfrey v. A2 Dominion Homes Limited (debt relief order) the Court of Appeal gave consideration as to whether a Landlord may bring Possession proceedings relying on arrears as a ground for possession not withstanding that the Tenant was subject to some form of insolvency procedure.

The Court determined that Landlords could bring proceedings relying on the rent arrears in the usual way if the ground could be made out then the insolvency of itself would not prevent the court making an Order for Possession in these circumstances. What the Court did say is that the Court could not make a monetary Judgment and nor could it suspend any Order on terms requiring the arrears to be paid.

Whilst often a Landlord may be best advised to rely on Section 21 if at all possible obviously this is not always available. Landlords will therefore still have the option of Section 8 proceedings.

Filed under: England & Wales, FLW Article, comment, legislation, litigation, possession, procedure, rent

20 October, 2011 • 10:01 0

Sentencing…

This not really a heading that one would expect on a Landlord and Tenant blog but with the country up in arms in many cases about the sentencing of the rioters and the recent Court of Appeal decisions we thought it prudent to mention the case of Premier Places.

Brandon Weston and David Christopher Williams ran Premier Places, a lettings agency with offices in Worcester and nearby Redditch. They were sentenced this week for a long-running fraud but the sentences were suspended.

Weston who ran the business pleaded guilty to four charges of fraud between 1 April 2007 and 28 February 2008 and was sentenced to 12 months in jail. But the sentence was suspended for two years and so he will not go to jail unless he is convicted of another offence within that time. He was also ordered to serve 250 hours of community service which is an alternative to custody. Williams, the book keeper, was sentenced to serve eight months, suspended for two years plus 150 hours of community service. He pleaded guilty to three charges of forgery of an accountant’s signature.

In sentencing, the Judge at Worcester Crown Court took into consideration the fact that Weston exhibited genuine remorse and was bankrupt with the events having had a devastating effect on his family.

According to prosecutors, Weston had interests in a restaurant, “The Glasshouse” in Worcester, a family home, a house in France and seven other houses in Worcester he was also allegedly taking £8,500 out of the business every month.

Daniel White of Counsel for Weston confirmed that he had signed over to the prosecution or sold all his assets and that his life had been turned upside down following his bankruptcy.

Premier places were a member of TDS (the Dispute Service) which has made good the losses suffered by both tenants and landlords at a cost of some £63,000. As most of you know the deposit should be held in a designated client account which is treated as a trust account and is therefore ring fenced from the assets of any company. However the deposits were not ring fenced despite the reassurances given to the tenants and landlords.

Steve Harriott, the Chief Executive of TDS, says that the sentences are “a kick in the teeth” for the tenants and landlords who were the victims of the scheme and that it “undermined the excellent work of properly self-regulated agents.”

Whatever your opinions maybe on the sentencing of these agents we at PainSmith Solicitors do agree that the industry needs to be regulated and that just like lawyers agents should undergo a minimum amount of training every year.

Filed under: England & Wales, FLW Article, comment, deposits, Housing Act 2004, legislation

17 October, 2011 • 11:44 0

How long do I need to own my lease for to get an extension?

For a leaseholder to seek an extension under the Leasehold Reform Housing and Urban Development Act 1993 (“The 1993 Act”) it is still necessary to have owned the lease for a period of two years.

Whilst various amendments have been made to the 1993 Act (under the Commonhold and Leasehold Reform Act 2002) the requirement to have owned the lease for a continuous period of two years still remains. This is important particularly for people buying a lease where the term is getting close to only having 80 years remaining. You should remember that if the term falls to 80 years or less then the freeholder will be entitled to receive 50% of any marriage value which exists. In respect of many leases this means that the premium payable will be significantly higher than if a lease extension was obtained before the term fell to less than 80 years.

So the Leaseholder must have been a qualifying tenant for at least two years under section 39(2) of the 1993 Act. The period of ownership is calculated going backwards form the date of service of the Notice of Claim under section 42 of the 1993 Act. The period must be continuous but you can rely upon periods where the leaseholder has been a joint owner for calculating the 2 year period. Also it seems that provided you have owned the same flat it does not matter that you have been granted a new lease of that flat. It is the period of ownership of the premises which is crucial. This does mean that if a Leaseholder has acquired a new lease under the Act they would not need to wait a further 2 years before applying again for an extension (if you wanted to!).

It is however the case that the 2 year period will only start from the date of registration at the Land Registry as under section 22(1) of the Land Registration Act 1925 (and subsequent amendments) and various authorities it is believed that the Leaseholder only becomes the legal owner of the lease upon registration. Leaseholders and their conveyancers need to be aware of this point as sometimes registration can take some time and certainly should not be overlooked. In an unreported case in Central London County Court (Wellcome Trust Limited v. Baulackey 2009) the Court determined that the purchaser of a lease was not entitled to serve a Notice under section 42 of the 1993 Act until they had been registered as proprietor for at least 2 years.

As a result if you are looking at buying a lease with say only 83 years remaining consideration should be given to having the outgoing Leaseholder serve a Notice (assuming they have a 2 year qualification) which can then be assigned. Whilst incurring further costs at the time of purchase (which many Buyers wish to avoid) in the long run it can save substantial costs. It is also worth noting that some Freeholders will grant voluntary terms or agree an extension even if the criteria for qualification are not made out although often at a price!

Yet a further point which advisers serving Notices of Claim and those advising on receipt of the same need to be alive to. Yet a further example of the pitfalls within the 1993 Act!

Filed under: England & Wales, FLW Article, comment, guidance, legislation, long lease

14 October, 2011 • 09:11 0

What is a Flat?

This was the question which HHJ Cowell had to answer last week at Central London County Court in respect of a claim for Collective Enfranchisement made under the Leasehold Reform and Housing Development Act 1993 in the matter of Farndale Court Freehold Limited v. G & O Rents Limited.

The claim concerned a building which can best be described as akin to a student halls of residence. The building consisted of a terrace of 4 blocks. In one block was a management office which belonged to the freeholder and also a room used as a laundry. On either side of the stairwell on each floor was a Unit which typically consisted of 6 en suite bed sitting rooms, a corridor and a communal Kitchen/diner. There were 30 of these units and a Qualifying majority of tenants had given a Notice to Enfranchise under the 1993 Act. The Defendant freeholder had served a Notice alleging that the Units were not flats within the definition of the 1993 Act Section 101(1).

Further the Defendants also alleged that the Units were used as business premises. This was not raised in the Counter Notice.

As a result the Freeholder alleged that the Claimant nominee purchaser was not entitled to enfranchise.

The Claimant bought proceedings for a declaration under Section 22 of the Act that the participating tenants were entitled to enfranchise.

The Judge in deciding if the leases were of a flat took the view that each lease was for a separate set of premises and that each formed part of the building as a whole and had been constructed and adapted for use as a dwelling. The Judge did not feel that the cases relating to “houses” and enfranchisement under the Leasehold Reform Act 1967 assisted him but he did refer to Malekshad v. Howard de Walden Estates and the view of Scott LJ at paragraph 101 that a dwelling was either a house or a flat.

The Judge in this case found that the Units had been constructed for people to live in. Further he determined that whilst most units had 6 rooms, each room could not be said to be a separate dwelling since each was used with the kitchen. He went on to say that if each room could be said to be a flat that was in his view unrealistic and the alternative that there were no flats was equally unrealistic.

He held that each of the Units were a flat within the definition of Section 101(1).

The next point was whether the Defendant was entitled to rely upon the business user despite having failed to mention this in the Counter Notice.

The Judge relied upon a decision of HHJ Cooke at Central London County Court in the case of Bishopsgate Foundation v. Curtis [2004] and found that the argument over business user had not been thought about or hinted at in the counter notice and the Defendant could not rely upon this since there was no reference in the Counter Notice.

He did however go on to consider the business user point. The Judge did state that he could see that a layman looking at the letting arrangements and the units may well conclude that this was a business user but he was satisfied that this was not the correct test. The correct test was to have regard to Section 23 of the Landlord and Tenant Act 1954. The Judge was referred to Graysim Holdings v. P & O [1996] but determined that the current case was on all fours with this authority.

The Judge found that there was not a Business user (save for a short period in respect of two units only as a hotel).

As a result the Claimants were successful in their application although the Defendant may appeal.

It is believed that this is the first case on the point of what is a flat under the 1993 Act. It seems that if you have a dwelling then if it is not a house it will be a flat! Plainly the factual situation is going to be important and we still await the House of Lords decision in Hosebay which may or may not provide further assistance.

Further the Judge did make clear that in his opinion a Freeholder must set all arguments in the Counter Notice although he does not need to go into in detail. This is perhaps surprising but the Judge was clear that in effect the Counter Notice is akin to a pleading.

Perhaps not of huge interest save for those who practice in this field but an interesting decision none the less.

PainSmith were instructed on behalf of the Defendant Company and are happy to advise with regards to all residential long leasehold matters.

Filed under: England & Wales, comment, legislation, long lease

23 September, 2011 • 10:00 4

Collective enfranchisement: what is it?

Collective enfranchisement is the term given to Leaseholders acquiring the Freehold of the property they live in. For the purposes of this article we will be referring to the Leasehold Reform Housing and Urban Development Act 1993 (“the Act”) as amended and the collective enfranchisement of flats. There is other legislation such as the Leasehold Reform Act 1967 which mainly relates to houses.

For many people owning a share of the freehold of the block of flats they occupy is seen as being vital as people often do not like the idea of simply being a tenant. In practice there are many different considerations which need to be weighed up before any application is made.

Firstly the Leaseholders need to act together (at least in part) since in simple terms 50% of the long leaseholders have to all come together to be able to purchase the freehold and if the building has any commercial parts these must not exceed 25% of the building. Assuming that these basic conditions are met the Leaseholders can then at least in principle consider whether they wish to pursue this route. Often there will be a vocal group who wish to “get on ” with the application. At this stage it is usual that people will then look to appoint a surveyor experienced in these matters to provide some guidance on the price payable. The methodology is set out in the Act and has been subject to numerous decisions of which the most famous is probably the decision in the case known simply as Sportelli. It is vital that a proper valuation is undertaken at an early stage to give all of the potential participants some idea as to what price may be paid.

Assuming that the numbers then match the Leaseholders pockets a detailed consideration should be given as to the right to qualify. Often a valuer experienced in this field will already have flagged if he foresees any particular issues. At this point it would always be advisable to instruct someone experienced in this field as the law, despite various amendments being made under the Commonhold and Leasehold Reform Act 2002, remains hugely technical with various pitfalls for the unwary. The adviser can then draw up the appropriate documentation and advise whether the Leaseholders will hold the freehold subject to any trust or company structure. It is worth pausing at this point to highlight that it is always open to Leaseholders to enter into informal negotiations with the Freeholder.

A Notice will then be served upon the Freeholder specifying a date by which they must reply. If there is no response then an application can be made to the County Court but usually (assuming a valid Notice has been served) the Freeholder will respond agreeing the right but disputing the price. There can however still be many technical reasons why a Notice may not be accepted by a Landlord and the Court of Appeal and the Supreme Court continue to hear a large number of appeals on very technical aspects although the bulk of these do relate to high value properties in what is known as Prime Central London however the outcomes tend to be binding on all.

The Act then allows for a period of negotiation after which if no agreement is reached an application can be made to the Leasehold Valuation Tribunal for a determination of the terms of the purchase. After this determination or agreement there will then be a transfer of the freehold and the Leaseholders will have acquired the freehold.

It is at this point that the hard work starts. Often Leaseholders will be advised to grant to themselves extended leases (typically 999 year terms) and possibly review any other perceived or actual failings in the lease. Certainly this should be looked at at this stage as there can be various issues if the Leaseholders only look to do this some way down the line, not least certain tax consequences which can arise.

It is important that all parties to the Collective Enfranchisement understand that there will still be a Leaseholder and Freeholder and whilst not impossible to own a freehold flat this is highly undesirable for reasons outside the scope of this article. The previous leasehold structure will then remain. For this reason before going down the route the Leaseholders must consider what Collective Enfranchisement will mean in practice.

The Freeholder will still be required to comply with both the terms of any leases (whether participants in the acquisition or not) and also the various statutory rules particularly governing recovery of service charges. The LVT in various recent decisions has made clear it has no jurisdiction to deal more leniently with Resident Owned freeholds than those owned by commercial investors. Given how complicated some of these rules are Leaseholders will always be well advised to consider appointing external managing agents to make sure these obligations are complied with. Owning the freehold brings both rights and obligations and this should not be forgotten. In particular awkward situations can arise where you have non paying tenants as the Freeholder and the Leaseholders who comprise the same will need to pursue action against these people.

As a result careful consideration needs to be given not just as to the acquisition but what this means for the future. It is also worth noting that simply because a building has undergone Collective Enfranchisement on one occasion does not mean this will not happen again and the writer has seen instances where one group have enfranchised but there has been a parting of the ways with some members of the freehold and so a second collective enfranchisement has taken place!

For some Leaseholders the costs of Collectively Enfranchisement mean that this is more economic than bulk lease extension applications but Leaseholders should proceed with their eyes fully open as to what is involved once you have been successful. Advice at an early stage of the process is vital so all are aware of the full implications of going down the route but if you decide this is the route for you it really can be a satisfying journey to have greater control of your destiny for what for many is their largest single asset

Filed under: England & Wales, FLW Article, comment, costs, legislation, long lease, procedure

20 September, 2011 • 11:30 4

Change in Tenants

Sam asked “change of occupancies can be a legal minefield so some clarification on the best procedure would be helpful.”

The document you need is the Deed of Assignment.

The 3 main points to note:

Deposit
We do not know how many of you have been affected by this but DPS in their rules (16c) state that they will only allow registrations to be changed where you have the written consent of the outgoing tenant. So the Deed should include a clause which states that the outgoing tenant permits the landlord to change the registration of the deposit into the name of the new tenant and that the new tenant and outgoing tenant agree to settle the issue of any deposit monies to be passed between them themselves.

Inventory
The Deed also needs to include clauses relating to the inventory. When a tenancy is being assigned the new tenant must be given a copy of the inventory and given the opportunity to go through it before the Deed is signed. This may mean an additional visit to the property. However when the inventory is agreed this should be noted in the Deed and the inventory should be attached to the Deed. If the new tenant takes issue with the condition of the property then have the outgoing tenant and the new tenant deal with that between themselves even if that means the outgoing tenant compensates the new tenant and then have them contact you to finalise the Deed. The new tenant must agree that the condition of the property when they move in is as per the inventory compiled at the beginning of the tenancy. Agents and landlords should not finalise the Deed until the inventory is agreed to as this will affect the landlord’s ability to make any claim on the deposit at the end of the tenancy if the need arises.

It is recommended that you consider both the issues above no matter what scheme the deposit is registered with.

Signature
As you are no doubt aware when tenants enter into a tenancy they do so on a joint and several basis. This means that when one gives notice you can accept it on behalf of all of them and when one defaults in his rent payment you can seek the default amount from those that have already paid. It is due to this joint and several principle that many argue that when there is going to be a change in tenants that the remaining tenants consent should be sought and they should also sign the Deed.

It is therefore advisable that all the tenants that remain also sign the Deed along with the outgoing and new tenant and of course the landlord. However obtaining everyone’s signature is sometimes easier said than done. Whilst you can choose not to release the outgoing tenant unless they obtain the consent of the others, if for example, they are leaving the country they are unlikely to be too concerned about the procedure that they need to follow. Therefore if you obtain the signature of only the outgoing and new tenant along with the landlord the new tenant has at best an equitable right to remain in the property where rent is paid and accepted. This means that possession proceedings can be pursued against all those in the property following the assignment but the assignment needs to be fully explained in the court papers.

The problem with this issue is that there is no legislation or case law that supports the view that everyone should sign or not as the case may be. There is also the concern that in the case of an assured shorthold tenancy the new tenant could argue that he has 6 months security of tenure because he has a new tenancy. At PainSmith, 2 solicitors a barrister and 2 paralegals argued over this issue for some time and still there is no consensus. Therefore whilst the easy option is to sign a whole new tenancy this may not be what the landlord wants because of the security of tenure issue and as such the Deed with only the outgoing and new tenant signing maybe the only option available with the landlord warned of the above risks. To minimise the signature being a problem agents could consider handing tenants a letter at the outset explaining that if there is to be a change that everyone will have to sign a Deed and if they do not that not change will be considered. We can draft a template of this letter for readers to purchase if needed.

Sam thank you for the feedback and sorry for the delay!

Filed under: England & Wales, FLW Article, comment, deposits, legislation, procedure

18 September, 2011 • 17:53 4

Homelessness and what this means to Landlords…..

We are often faced with questions from Landlords and Agents about information they have received from Tenants about homelessness and the advice given by local authorities.

Often a Landlord/Agent will have had a good relationship with a tenant but for whatever reason the Landlord requires back the property. Assuming therefore that the Tenant occupies under an assured short hold tenancy generally (subject to the appropriate rules) the Landlord can obtain back possession by serving a valid Section 21 Notice upon the Tenant. This is a non fault ground and the Tenant should vacate at the expiry of the Notice.

Many tenants, particularly those in receipt of state benefits, will approach the Local Authority to see if they can access any form of social housing. Generally local authorities owe duties to people such as those with children or who suffer from some form of disability or illness. All too often these people will receive advice that they should simply remain in the property until such time as the Landlord has applied to the Court, obtained a Possession Order and then looked to enforce the same. The Tenant then finds themselves in the invidious position of having to explain this to the Landlord/Agent and explaining that if they do not comply with this advise then the Local Authority is likely to owe them no (or at best a limited ) duty to rehouse.

This of itself can lead to what previously was a good relationship breaking down but the Tenant often has little choice. Whilst arguably Local Authorities do not have to wait until an Order is made or a bailiffs appointment fixed for most this is the policy they have adopted. The duty potentially arises to rehouse if they believe that the Landlord does have a genuine intention to obtain back possession but most in our experience will not enter into dialogue with the Tenant or the Landlord/Agent until the Court progress is underway. Sadly this policy is difficult for a Tenant to challenge.

With the changes to Housing Benefit it is likely that Agents and Landlords will come across this far more frequently. It is perhaps worth trying to understand the position Tenants find themselves in. If they remain in the property the Local Authority may rehouse them (although some do not even properly assess the Tenants rights and claim until the proceedings are underway) but if they simply leave then the Tenant will receive no support. For Landlords and Agents the way forward is perhaps to engage with local authorities and Councilors to get them to look again at the policy although sadly given the shortage of accommodation most Local Authorities are unlikely to change their policies.

Filed under: England & Wales, FLW Article, comment, guidance, legislation, litigation

31 August, 2011 • 12:12 0

Section 8: Back to Basics

From time to time it is important to go over old ground. It can be easy to lose track or just need a quick reminder of the basics of possession cases.

Section 8 notices, as I’m sure you are all aware, can be used as a vehicle to gain possession of the property whilst at the same time obtaining the rent arrears that may have developed. There are a number of different situations that can trigger the requirement of a Section 8 notice which could be scrutinised in an incredible amount of detail. With regards to this blog entry, I am going to focus more specifically on the mandatory and discretionary grounds and how they differ in the courts eyes in particular with relation to the more common grounds for possession i.e. grounds 8,10 and 11.

The Housing Act 1988 s.7(3) stipulates that when the court feels that any of the grounds listed in Pt 1 of Sch.2 of the 1998 Act are satisfied then possession must be granted for that property. If this is compared to Pt 2 which substitutes the phrase ‘must be’ with the far less convincing ‘may be’ then it starts to become clear why having mandatory grounds is infinitely more desirable that simply pinning hopes on discretionary grounds. As a general rule we as a firm only advise issuing proceedings on mandatory grounds unless the evidence is particularly strong on discretionary, as we have found that judges tend not to be too receptive to the idea of handing over possession of the property to the landlord and making the tenant potentially homeless, unless there is overwhelming evidence against them or the mandatory grounds have been met.

The most commonly used of the grounds for possession are 8, 10 and 11. Ground 8 is mandatory whereas 10 and 11 are discretionary. If for example the tenant at this point pays some of the rent arrears to the landlord, enough to just about drop below the 2 month minimum requirement (if it was a monthly rental period) to claim ground 8, it would mean the claim would be resting on discretionary grounds which, as explained earlier, are far from reliable, particularly in matters involving rent arrears. The discretionary grounds in cases such as this service the role of supporting the mandatory ground and are normally too weak by themselves to satisfy possession criteria. As soon as the mandatory ground is lost the case for the landlord is generally lost along with it.

This is not always the case. However, if a mandatory ground can be relied upon it is preferable to do so rather than assuming possession will be granted on discretionary.

With discretionary grounds, on the making of an order for possession, the court can postpone the order for as long as the court sees fit. In this period the court will normally issue certain conditions with regards to the payment of the rent arrears as well as any other conditions that the court deems applicable. If these conditions are followed, the court can discharge or rescind the possession order if it sees fit. Can you see the pattern here? The level of discretion available to the court is illustrated by the repeated use of the term ‘if the court sees fit’. The only discretion available to the courts when it comes to mandatory grounds is a delay from the usual 14 days to a maximum of 6 weeks in cases of exceptional hardship, but this in itself has a high threshold in which to satisfy.

In light of the above costs need to be considered and proceedings against a tenant to gain possession is not an insignificant sum. To risk this sum on the courts discretion, particularly when the order for possession would result in the tenant being made homeless, may not be the best course of action.

This blog has been drafted in response to a comment. Thank you for your continued support Valerie.

Filed under: England & Wales, comment, costs, Housing Act 1988, legislation, litigation

26 August, 2011 • 11:56 0

More on service charges….

Peter recently asked what is the best way to recover Insurance Premiums having written to the Lender and not received any reply and should he go to the County Court or the LVT?

The situation is not clear cut. Both methods could be adopted and both have pluses and minuses.

Leasehold Valuation Tribunal (LVT)

You could apply to the LVT for a determination of the reasonableness of the charge. The LVT will normally issue Directions and there will be a hearing. At the hearing the panel will review and use their own expert knowledge to assess the reasonableness whether the Tenant attends and disputes or not. There is no procedure for a default ruling if the tenant does not take part and thus the process can take longer than obtaining a Judgment. The benefit is that if you fear a defence or problems there are no real costs sanctions and if you wish to deal with the matter yourself some people find the process easier than the Courts

County Court

You are entitled to apply for a monetary Judgment. You can today do this on line via the Money Claims website https://www.moneyclaim.gov.uk/web/mcol/welcome. The Court will then issue the claim and serve this upon the Defendant. They will then have 14 days to indicate if they wish to defend. If no defence you can seek a Judgment in default but if defended you will then have to deal with the tenants defence and if it relates to the reasonableness of the charge the matter is likely to be transferred to the LVT to rule upon. Assuming the amount claimed is less than £5000 this matter will be dealt with as a small claim and generally no legal costs (or just a very small amount ) are recoverable save where the tenant has lodged some form of counter claim for more than £5000.

Once you have a Judgment from the Court or a determination from the LVT the mortgage lender should then pay or you can take steps to forfeit the lease.

Please remember which ever route you follow ( and my personal preference would be the Court since you can obtain a default Order) you must ensure you have strictly complied with the terms of the lease and statute governing service charges. If in doubt it is always best to check as otherwise you could find that the sums are not payable. In particular I would highlight that the LVT may say that the sums are reasonable but may not be payable yet if the Landlord has not complied with the Lease terms etc. Generally the Courts will expect freeholders to fully understand the lease and the law governing these matters!

This blog has been submitted in response to a comment from a reader. Thank you for your continued support Peter.

Filed under: England & Wales, FLW Article, comment, legislation, litigation, long lease

24 August, 2011 • 09:27 0

Wales is going up

The The Assured Tenancies (Amendment of Rental Threshold) (Wales) Order 2011 is coming into force on the 1 December 2011. This means that the threshold for assured shorthold tenancies is moving on up from £25,000 to £100,000 in Wales too.

Filed under: England & Wales, FLW Article, comment, legislation

23 August, 2011 • 13:23 0

The Swimming Pool

In Grimes v Hawkins the High Court held that a Claimant that dived into a private pool and became tetraplegic did not have a claim against the homeowner.

It turned out that the Claimant was an 18 year old girl who had been invited to a party at the Claimants house. The Claimants were away and their daughter stated that she invited 5 people but in fact 20 turned up.

The court determined that the Claimant was a lawful visitor and that she also had consent to use the pool. The Claimant had been swimming in the pool and had dived into the middle when the unfortunate accident occurred.

The Claim was brought both under the Occupiers’ Liability Act 1957 and in common law negligence. Thus the defendant owed a duty to the Claimant to take such care as in all the circumstances of the case was reasonable to see that the Claimant was reasonably safe in using the premises for the purposes for which she was invited or permitted by the occupier to be there.

In its discussion the court held that there is always risk in swimming and diving, in any pool. Even where an expert diver dives into a purpose built diving pool his dive is not free from risk. Much depends on the diver’s technique, the angle of entry and so on. It is well known that diving always carries with it a risk of injury (particularly to the head or neck) if the dive is badly executed, or carried out in water that is too shallow to accommodate it. None of this is specialist knowledge. Every adult of normal intelligence knows it. The Claimant in this case knew it.

Accordingly the pool was not unsafe for diving. The court had no doubt that some mature adults faced with a group of young adults in high spirits, some of whom had had too much to drink, would send them all home rather than allow any of them into a swimming pool. But that is not to say that the duty owed to the Claimant under the Occupier’s Liability Act 1957 required the Defendant to put the pool out of bounds that night. The Defendant was not required to adopt a paternalistic approach to his visitors, all of whom were adults, all of whom were making choices about their behaviour, exercising their free will.

The court therefore did not accept that it is incumbent on a householder with a private swimming pool to prohibit adults from diving into an ordinary pool whose dimensions and contours can clearly be seen. It may well be different where there is some hidden or unexpected hazard but there was none here.

The court therefore held that Defendant was not in breach of his duty to the claimant under the Occupier’s Liability Act 1957.

We thought this case would be interesting for our readers as we often get asked about a landlord’s liability when a pool is included in the demise. We hope that this case reassures most of you.

Agents and landlords are however advised to ensure that the tenancy agreement includes clauses which places a positive obligation on the tenant to ensure that all children near the pool are monitored and the pool is used appropriately.

Filed under: England & Wales, FLW Article, comment, legislation, litigation

18 August, 2011 • 15:39 0

AGENTS BEWARE!

We have recently heard of a situation where an Agent was fined for having a To-Let Board in a Conservation Area.

Whilst this of itself is not unusual the circumstances are. The area had only been very recently designated as a Conservation Area and whilst the local authority had written to some agents in the area they had not written to all and in their own evidence not the agent prosecuted! The agent had erected a board in the area but when contacted by the local authority immediately took steps to remove the same and removed it within 24 hours. The agency has no prior convictions. Notwithstanding this action the local authority still prosecuted and the agency received a small fine.

The real issue here was the huge amount of time which members of the management team had to spend dealing with a matter which was dealt with promptly by the agency who held their hands up straight away, admitted the mistake and dealt with it. It is vital that you make sure you are up to date on details of Conservation Areas and the like which in some areas, particularly in towns are changing frequently. The moral is if in doubt check with your local authority planning office or risk prosecution and the time and expense involved!

Filed under: England & Wales, FLW Article, comment, legislation

12 August, 2011 • 08:38 0

Why is 80 years so important with a Long Residential Lease?

Many people today are finding when they come to sell (or buy) a long residential lease of a flat that questions are raised over the length of the lease. Many mortgage lenders are now demanding longer terms of lease before they will consider a property to offer good security and many more conveyancing solicitors are now alive to the issues and costs which can be incurred when a lease becomes short.

Generally most residential leases can be extended under the Leasehold Reform and Urban Development Act 1993 provided the Lease has been owned for 2 years. The procedure is however complicated and full of pitfalls for the unwary. In particular there is an issue if the length of term falls below 80 years in that the Leaseholder will then need to pay to the Freeholder one half of any marriage value (this is of itself a topic for another blog!). This can hugely affect the price payable for the extension since if more than 80 years is left on the lease then the price is basically calculated having regard to the Ground Rent payable ( apologies to all you valuers out there for over simplifying this). It is vital that all Leaseholders keep this in mind and should always take advice about extending a lease well in advance of 80 years and if you are looking to buy a lease getting close to this deadline that you factor these costs into your purchase considerations.

The moral is take care and know what length of lease you may have and act before it reaches 80 years!

Filed under: England & Wales, FLW Article, comment, legislation, long lease

22 July, 2011 • 09:53 0

Mortgage Arrears

The arrears on Jayashankar’s mortgage account were in the region of £14,000 and so Lloyds TSB obtained possession.

Jayashankar applied to suspend the warrant for possession but the application was refused because the court was not satisfied that Jayashankar had the financial means to pay the arrears.

The question for the appeal court was whether they had any jurisdiction to entertain an appeal from a refusal to stay a warrant once the warrant has been executed, that is once Lloyds TSB has obtained possession.

Section 36 of the Administration of Justice Act 1970 states:

“36: Additional Powers of the Court in action by mortgagee for possession of a dwelling house
(1) Where the mortgagee under a mortgage of land which consists of or includes a dwelling house brings an action in which he claims possession of the mortgaged property, not being an action for foreclosure in which a claim for possession of the mortgaged property is also made, the court may exercise any of the powers conferred on it by subsection (2) below if it appears to the court that in the event of its exercising the power the mortgagor is likely to be able within a reasonable period to pay any sums due under the mortgage or to remedy a default consisting of a breach of any other obligation arising under or by virtue of the mortgage.
(2) The court –
(a) may adjourn the proceedings, or
(b) on giving judgment or making an order for delivery of possession of the mortgaged property. or at any time before the execution of such judgment or order (my emphasis), may –
(i) stay or suspend execution of the judgment or order
(ii) postpone the date for delivery of possession’
for such period or periods as the court thinks reasonable.

Therefore the courts power under the above section to adjourn mortgage possession proceedings, stay or suspend execution or postpone the date for delivery of possession, comes to an end once a warrant has been executed.

However counsel for Jayashankar stated that CPR 52 allows a judge to suspend the warrant under section 36 on the basis that at the hearing of the appeal from the District Judge the Circuit Judge could exercise all the powers of the lower court and could make any order that the District Judge could have made, that is to suspend the warrant. However, the court was not persuaded and insisted that legal certainty should prevail. Permission to appeal was granted but Jayashankar’s appeal was dismissed.

It is possible that the court may have reached a different decision if the warrant had not been executed but until then, this is the binding precedent.

Filed under: England & Wales, FLW Article, comment, legislation, mortgages

4 July, 2011 • 14:41 1

Localism Bill, AGAIN!

You are probably tired of the posts on this Bill but we thought that some of our readers would be interested to note that Lord Shipley has recommended the following addition:

“Standards for private sector lettings and management agents:

The Secretary of State may by regulations set the standards that private sector lettings agents and management agents must adhere to.”

We would like to hear from anyone on whether they think this is a good thing or not and if so why. If its any consolation to those not wanting what we suspect is an attempt to register agents, we do not think that this will survive the committee stage.

Filed under: England & Wales, FLW Article, comment, consultations, legislation

30 May, 2011 • 22:44 0

Not an AST?

In Kahlon v Isherwood the court held that a tenant that had a Assured Tenancy but agreed to the grant of an Assured Shorthold Tenancy as part of a settlement of court proceedings was, in fact, still an Assured Tenant.

Isherwood became a tenant in 1994. Since 2000 there had been 3 claims for possession due to rent arrears. On the third occasion the parties agreed to mediate and reached an amicable solution to Kahlon’s claim for arrears and Isherwood’s claim for disrepair. As part of this agreement Isherwood also agreed to sign a new Assured Shorthold tenancy for a period of 12 months and in return arrears of rent were written off.

The ‘new’ tenancy term began on the 2 June 2008. This agreement included a break clause at any time upon the expiry of 2 months notice. The ‘new’ tenancy did not have the same security of tenure as an assured tenancy where such notice would be ineffective as a means to end the tenancy.

On the 31 March 2009 Kahlon served notice on Isherwood to expire on the 2 June 2009. Upon the expiry of the notice possession proceedings were issued and Isherwood defended claiming he was an Assured tenant.

The county court rejected Isherwood’s defence and awarded Kahlon possession. Isherwood appealed.

The Court of Appeal held that when a tenant losses his security of tenure he must be fully aware of the effect of this change in status. That in this case Isherwood should have been served with a prescribed notice pursuant to section 20 and schedule 2A of the Housing Act 1988. This notice has a prescribed form and must include a warning of the legal consequences of becoming an Assured Shorthold tenant and this would have assisted Isherwood in making an informed decision about the change of status.

The court held that in the absence of this notice Isherwood was still an Assured tenant and set the order for possession aside. The notice requirements were not negotiable and could not be waived by the court even where the original agreement which demoted the tenancy had been approved by the court.

Whilst the decision seems a little unfair on the landlord who wrote off a substantial amount of arrears as part of the mediation agreement the court made the only decision available to it. The legislation makes the process very clear and attempts to circumvent the procedure will fail. Care should be taken when entering into any form of agreement to demote a tenancy from Assured to Assured Shorthold and advice should be sought.

Filed under: England & Wales, FLW Article, comment, disrepair, legislation, possession, tenancy agreements

19 May, 2011 • 15:09 0

Changes, always changes….

On 16 March 2011, the Energy Bill was introduced into the House of Commons with its First Reading. The Second Reading was delivered on 10 May.

The Energy Bill has been designed to provide for a step change in the provision of energy efficiency measures to homes and businesses, and make improvements to enable low carbon energy supplies and fair competition in the energy markets.

The Energy and Climate Change Secretary Chris Huhne announced plans to introduce regulations to ensure that all landlords face minimum energy efficiency standards under the Green Deal.

At the Second Reading the proposals included amongst other things:

• From April 2016 landlords will not be able to refuse reasonable requests from tenants, or local authorities acting on behalf of tenants, to improve their property;

• From April 2018 the government will make it unlawful to rent out a house or business premise which has less than an “E” energy efficiency rating, ensuring at least 682,000 properties will have to be improved.

The Green Deal is the coalition’s national plan of home improvements to make houses and businesses cheaper to run through better energy efficiency.

The proposals will help the most vulnerable as more than a quarter of a million of the worst insulated rented homes are classed as fuel poor.
 Energy and Climate Change Secretary Chris Huhne said:

“Our proposals provide a voice for tenants living in poorly insulated, draughty homes. The Green Deal is a win-win opportunity for landlords by removing the upfront cost of work to upgrade the property making it cheaper to run, more environmentally friendly and ultimately more attractive to rent.
For those landlords who don’t take up the Green Deal then we will get tough so that by 2018 the poorest performing rented housing stock is brought up to a decent standard.”

Measures may include financial support for landlords making the changes and incentives to get the work completed sooner rather than later. However the coalition government has not given any details on this aspect of the Green Deal, which will no doubt mean, many will be reluctant to begin the work until they do.

Filed under: England & Wales, FLW Article, comment, energy efficiency, EPCs, legislation

18 May, 2011 • 22:27 3

Hashemi – a summary

Gladehurst granted Mr Hashemi and Mr Johnson (the tenants) an assured shorthold tenancy of a flat for a fixed term of one year from September 2007. The monthly rent was £2,080. A deposit of £6,240 was paid to Gladehurst. The terms of the agreement provided that the deposit was to be held by Gladehurst. The deposit was never registered in accordance with the Housing Act 2004.

The tenants vacated the property in October 2008. Following an inventory check out, Gladehurst paid back the deposit minus various deductions. Mr Hashemi then wrote to Gladehurst requesting receipts and a breakdown of the sums deducted from the deposit and he put them on notice that he would make a claim for three times the deposit under s214.

In February 2009, Mr Hashemi issued a claim against Gladehurst in both his own name and that of Mr Johnson. Gladehurst in its defence pleaded that it had not been fully aware of the impact of the 2004 Act, but accepted that it applied. The defence also asserted that the landlord had all the necessary receipts for the dilapidations and other expenses paid on behalf of the tenants.

In April 2009, District Judge Manners, of her own motion on the papers, struck out the claim on the basis that the tenancy ended before the application was made. Mr Hashemi applied to set that order aside. District Judge Stary dismissed that application in so far as it related to the s214 claim, but reinstated the claim for the deductions of £618. Mr Hashemi appealed.

HHJ Cryan allowed the appeal and found for Hashemi. He noted that the landlord:

… never dealt with the deposit in the correct way in accordance with Act and still retains part of it … There can be no question that in accordance with the scheme of the Act a landlord should not be holding any part of a qualifying deposit at this stage, or at least without the safeguards of the Act being in place.

Gladehurst then appealed to the Court of Appeal.

Filed under: England & Wales, FLW Article, comment, deposits, Housing Act 2004, legislation

13 May, 2011 • 09:56 0

Solicitors and Costs

In Neil Hare-Brown and QCC v Tent and Alison Trent and Co, QCC had 3 commercial leases for a property in Fleet Street, London. However, QCC had “swapped” company names and this had potential adverse consequences for Trent the landlord. The possible consequences were:

1. as income had been directed by QCC to the new company, there was a risk that QCC would be unable to pay the rent.
2. the presence of the “new” company was likely to cause problems as it was a requirement of Alison Trent’s lender that the demised premises be contracted out of the Landlord and Tenant Act Part II (1954).
3. another company, QCC Interscan, had been permitted by QCC to use the premises in breach of covenant.
4. there was a security issue about electronic security fobs that had been issued to named personnel of QCC which had then been distributed to other individuals who had no right to enter the demised premises.

Upon discovering the issues Trent claimed that she was put to some considerable amount of work to put the situation right both in her capacity as landlord and solicitor. The work included the variation of leases and where necessary licenses to assign. Trent looked to QCC to pay the bills for this work and although QCC paid they did so under protest and now seek an assessment of the costs.

The question for the court was therefore could the landlords costs be assessed?

QCC argued that Trent had been appointed their solicitor upon her suggestion and that Trent had refused to acknowledge QCC’s request to use their own solicitor to draw up documents which left them with no other option than to permit her to do the work.

Trent argued that the costs that QCC was seeking to challenge related to costs due pursuant to leases and other commitments arising from applications under the leases, and breaches of the leases, by them. She further argued that the costs were due to her in her capacity as landlord and argued that she has never acted as solicitor for QCC or anyone connected with QCC.

The court held Trent could not, as she had done, require QCC to pay the costs to which she has been put as landlord arising from breaches of covenant and at the same time, deny that QCC had any entitlement to a detailed assessment of those costs under the Solicitors Act 1974.

The court acknowledged that whilst it is right to say that the invoices were not printed on the Solicitor’s headed notepaper, nonetheless, Trent had accepted in her witness statement that her firm acted for the Landlord. In these circumstances, the court was satisfied that there was a solicitor/client relationship between Alison Trent as landlord and Alison Trent & Co as solicitor and that the firm rendered invoices to Alison Trent which, in her capacity as landlord and party chargeable, she has passed on to QCC for payment as tenant and third party. It follows, in the judgment that QCC is in principle entitled to an assessment under s.71 of the 1974 Act.

We often get told on the helpline that the landlord is a solicitor and that attempts are being made to impose certain restrictions which in a landlord and tenant situation are simply inappropriate. We therefore thought some of you would enjoy the article.

Filed under: England & Wales, FLW Article, comment, commercial lease, legislation, licensing

9 May, 2011 • 16:28 0

Drafting….

The pitfalls of bad drafting – be warned!

In Perriam Limited v Wayne and Daly, the High Court had to decide whether Wayne and Daly were still liable pursuant to a Deed of Variation (“Deed”) they entered into.

Wayne and Daly were the guarantors under a commercial lease with Perriam. Perriam pursuant to the Deed was attempting to recover for dilapidations, unpaid rent and service charges amongst other things.

The decision with regards to the service charges etc is not relevant for the purposes of this article.

The Deed was executed on the 24th April 2007 and pursuant to clause 4.2 Wayne and Daly agreed that:

“the obligations of the tenant in the lease shall be varied so that there is no continuing obligation to repair, keep in repair or replace the external windows in the premises”.

Wayne and Daly argued before the High Court that the purpose of clause 4.2 was to release the commercial tenant, Ideas’ (now insolvent) and therefore them, from any continuing obligation in respect of the windows as at the 24th April 2007 and that meant that they were therefore not now liable.

Wayne and Daly further argued that the commercial purpose of the agreement was:

“So far as the external windows were concerned, the agreement was that there should be no continuing obligation in the sense of no ongoing liability to replace or repair whensoever the windows fell into disrepair and similarly no obligation to discharge any of the remaining repairing obligations. Mr Manning had the deed drawn up by his firm, Fox Hayes…We therefore signed the deed believing that we were thereby released from any ongoing personal liability to guarantee any of Ideas’ obligations under the lease and that Ideas were released from any liability to maintain external windows.”

The court was a little derogatory about the drafting of the Deed which included a catalogue of errors such as referring to Wayne and Daly as tenants and failing to draft a Deed which reflected the agreement reached by the parties.

The court therefore had to determine if Wayne and Daly were liable for the dilapidations. Upon listening to the arguments of both sides the court decided that in the absence of a date in clause 4.2 the intention of the parties was for liability to cease immediately upon the Deed being executed. That even on the reading of the wording of the clause this made common sense because there was no reference to a future event in the clause.

The court then went further and held that the wording of clause 4.2 meant that Wayne and Daly were no longer liable in respect of the windows. The basis for this decision was that the Deed failed to address the issue of the condition of the windows and where and when Wayne and Daly’s liability would end. That it strained common sense to pursue a claim for the windows when it was not mentioned in the Deed and in fact made it impossible to pursue due to the lack of a schedule of condition amongst other things.

Clause 4.2 did therefore operate in the courts interpretation as a release to Wayne and Daly, such that after the 24th April 2007, they had no liability for the condition of the windows. The clause therefore provided them with a complete defence to the claim for the costs of the dilapidations’.

When documents like this Deed are put before the courts the commercial reality and the obvious intention of the parties is usually the deciding factor. Therefore if you intended for something to happen then you are advised to ensure that a clause reflecting that intention is in the agreement. Badly drafted documents are common especially in our line of work but its unnecessary when templates can be purchased and advice sought. Cutting corners is simply to risky and potentially expensive.

Filed under: England & Wales, FLW Article, comment, commercial lease, disrepair, legislation

6 May, 2011 • 15:17 19

Potts –v- Densley & Pays

The High Court has handed down its decision in the case of Potts v Densley today. Previous blogs can be viewed here.

We acted on behalf of the Claimant who in this instance was the Tenant with James Browne of counsel.

Facts

The landlord first let the property for a term of one year commencing on 12th May 2007. The property was managed by a lettings agent. A deposit was taken of £1,500, which was correctly registered with the TDS scheme. In 2009 an agreement was made between the parties that a new tenancy would be agreed at a lower rent, without the management of the agents. It was agreed that the deposit would be withdrawn from the TDS and paid direct to the Landlord who would be responsible for protecting it themselves.

In order to assist the Tenant the Landlords agreed not to insist on a further deposit upon this renewal. Instead they agreed to wait for the return of the deposit from the agent and then register it upon receipt. The Landlords received the deposit of £1,590 on 18th June 2009. In the meantime on the 15th June 2009, the Tenant exercised a break clause bringing the tenancy to an end on 15th August 2009.

On the 10th August the Landlord offered to pay the deposit back to the Tenant however, the Tenant refused the deposit and insisted that the Landlord register the deposit with a scheme pursuant to their obligations under the section 213 of the Housing Act 2004. The Landlords failed to do so and the Tenant issued proceedings on the 12th August 2009. The Landlords in response no doubt registered the deposit with the DPS custodial scheme on the 17th August 2009, 2 days after the Tenant vacated.

The Prescribed Information as required by s213 (3) and s213 (6) was never served.

Before Her Honour Judge Hallon, it was held that there had been a breach of the requirement to secure the deposit, because the initial requirements of the scheme can not be complied with after a tenancy has come to an end. This is despite the decision in Tiensia. However, the judge refused to award the penalty of three times the deposit because she held that there had been a technical breach of the requirement to secure the deposit and that given the:

“unusual circumstances of the case, it would not be in the interests of justice to do so”.

She did not deal with the prescribed information at all.

The Tenant appealed.

Two main issues were raised in the appeal. First that the judge had no discretion to refuse to impose a sanction once she had decided there had been such a breach and it thus follows that she was wrong to refuse to award the penalty. Second that the judge erred in failing to deal with the issue of the Prescribed Information.

The Judgment of Today

The Honorable Mrs Justice Sharp when referring to the County Court decision above states at paragraph 23 of her judgment:

“it is obvious that the judge had considerable sympathy with the position of the Landlords on the facts found by her and considered it would be unjust for them to be subject to the sanction provided for non compliance, under section 214 (4) of the Act”.

She then went on to say that to award the penalty for a breach of a technical nature when the deposit was not returned due to the insistence of the Tenant pursuant to section 214 would:

“do a very considerable injustice”.

With regards to the 2 points of appeal, Mrs Justice Sharp upheld the County Court decision and based her reasoning on the decision on Tiensia. That is that Landlords had until the date of the hearing of the Tenants application to comply with the provisions and having secured the deposit before the hearing they had a complete defence to the Tenants application.

On the matter of the prescribed information, Mrs Justice Sharp held that due to the failure to plead this in the particulars of claim submitted by the Tenant, the judge had not erred. The issue over the prescribed information was mentioned in court by the Tenant and also mentioned in the Tenants witness statement. However, it was held that this was not clearly pleaded but had it been the judge would no doubt have dealt with it.

Conclusion

Whilst we welcome the release of the decision the area of law is not concluded. It does appear that you can register the deposit after the tenancy but the judge did not deal with implied or the actual requirements of the scheme because they had not been pleaded. It may be the case that it is an implied “initial requirement” of all 3 deposit schemes that the deposit be registered before the tenancy ends. Even if it is not an implied requirement is it likely that it will become explicitly stated requirement!

There of course remains the decision of Hashemi v Gladehurst which has the potential of changing this decision.

Filed under: England & Wales, FLW Article, comment, deposits, Housing Act 2004, legislation

6 May, 2011 • 11:13 2

Squatters

No doubt most of you will have heard about squatters taking over Colonel Gaddafi’s son’s £11 million mansion in London. Apparently the group calling themselves Topple The Tyrants claim they took over the house because they “didn’t trust the British government to properly seize Gaddafi’s corrupt assets”.

Whatever your opinion on the above is and on squatters in general most clients that we assist with these matters continue to be taken aback when we inform them that squatting is not a criminal offence. It really isn’t….

However the UK Coalition Government is now proposing to make squatting a criminal offence and have in the meantime published some guidance to assist those with squatters.

Section 7 of the Criminal Law Act 1977 states that it is an arrestable offence for a squatter to fail to leave a residential property when asked to do so by a residential home-owner who wishes to occupy the property. There is therefore a criminal element which allows the police to assist and to enter and arrest anyone suspected of criminal damage and theft.

We have all heard the myth of “squatter’s rights” which is in fact no such thing. Section 6 of the Criminal Law Act 1977 makes it an offence to use violence or threats of violence to gain access to premises when there is someone in the premises who is opposed to such entry. However, this does not apply to an occupier who does not have a right to be there and was introduced to protect for example, tenants from unscrupulous landlords.

Whilst the legislation will be welcome there does not seem to be any indication of when it will be introduced. Whether you believe that this is something that should be legislated on when we are in the middle of a financial crisis or whether people should take responsibility for their own properties is of course a debate for another day.

Filed under: England & Wales, FLW Article, comment, consultations, legislation

28 April, 2011 • 15:03 1

Mobile Homes and Article 8!

In Murphy v Wyatt the Court of Appeal Wyatt brought in a mobile home to replace a dilapidated caravan after her partner Mr Barrett died. The caravan was located on just under 2 acres of rough pasture which the Wyatt’s partner used for his livery business. The landlord served a notice to quit in 2009.

Mr Barrett entered into a oral weekly tenancy in 1975 and in 1979 he moved a caravan onto the plot and began sleeping in the same from time to time. His relationship with Wyatt began in the mid-80s and in 1989 Wyatt moved in with Mr Barrett. In 1996, Mr Barrett then ceased using the land for his livery business.

Mr Barrett then sought a certificate of lawful use for the caravan in 2002 in order to claim Housing benefit. Upon Mr Barrett’s death in 2002 Wyatt continued living in the caravan and paid rent with Murphy’s consent.

The caravan was then replaced in 2007 with a mobile home. Wyatt failed to obtain planning permission and failed to obtain Murphy’s consent. The mobile home was on the same original location but was slightly larger than the caravan. Again the certificate of lawful use was obtained.

The issue before the Court was therefore did Wyatt have security of tenure under the Mobile Homes Act 1983.

The court held that Wyatt did not and found in favour of Murphy. The reasoning for the courts decision was that the 1983 Act could not apply to a tenancy where planning permission was sought after the tenancy term began. The court held

“it would be a little surprising if the 1983 Act protected an occupier, who, after entering an agreement, brought a caravan onto the premises and lived in it, simply because there was nothing in the agreement which precluded his from doing this, unless there has always been planning permission for such a use…”.

The court also held that they did not believe that the 1983 Act could apply to more land than the land on which the mobile home is to be sited plus any garden or other amenity land. If the Act applied to land other than the pitch that was for the tenants use this would run into “serious conflict” with the legislation protecting business and even agricultural tenants.

Wyatt sought permission to appeal but was refused. The court did however state that if any further applications for possession of this site are made the courts may need to consider Article 8 of the European Convention on Human Rights.

Whilst we can not fault the court for its reasoning it is unfortunate that the issue of Article 8 was dealt with so swiftly and briefly. With the influx of cases recently suggesting that Article 8 is only applicable to social landlords there are fears among private landlords that the scope of Article 8 is going to be extended and some certainty would have certainly been welcome.

Filed under: England & Wales, FLW Article, comment, legislation, litigation, planning, tenancy agreements

27 April, 2011 • 11:08 0

Business Tenancies

Its been a while since we blogged on business tenancies so here goes.

In Somerfield Stores Ltd v Spring (Sutton Coldfield) Ltd the tenant held a supermarket and adjoining land under three commercial leases which expired in March 2008. The year before the expiry the tenant had served a section 26 notice pursuant to the Landlord and Tenant Act 1954 requesting a new tenancy. However the landlord served counter notices stating that it would oppose the grant of the tenancies under section 30 of the 1954 Act on the ground that the landlord intended to demolish or reconstruct the premises on the termination of the current tenancies. The tenant therefore applied to the court for the new leases.

The Landlord subsequently went into administration but the tenant was granted permission to continue with the proceedings and applied for summary judgement against the landlords ground of opposition. Initially the tenant’s application was refused but the tenant was granted permission to appeal.

At appeal the landlord contended that the date at which the landlord’s intention to demolish or reconstruct must be shown to exist is the date of the substantive trial of the landlord’s ground of objection, not the hearing of the application for the summary judgement. The tenant contended that the hearing of the summary application would establish whether the landlord had a real prospect of establishing a cause of action or defence at a future trial date not whether or not the intention exists.

The court held that the summary judgement would deal with the finding of fact only, that is whether the landlord intended to rebuild or not and you can not do this effectively using the summary judgement procedure. When a fact is contested the parties are usually cross examined but a summary judgement application is done on paper and as such the facts are going to be difficult to establish. Therefore the intention will not be established at the summary hearing and a further hearing will no doubt be required.

It was therefore in the courts view that the date at which the intention had to exist was the date of the trial. At a substantive trial evidence can be tested and facts found for the purpose of a final determination one way or the other of the landlord’s ground for opposition.

The logic behind this decision makes perfect sense from a litigation point of view. If the tenant was permitted to continue with the summary application as claimed this would simple raise costs for what is already a costly process and could no doubt result in tenants attempting to use this in order to force landlords to settle.

Filed under: England & Wales, FLW Article, comment, commercial lease, legislation

11 April, 2011 • 09:46 7

To take Possession or not to take Possession

Landlords are commonly faced with a tenant’s disappearing act, most often as a result of the tenant being in financial difficulties. Although landlords instantly feel relieved by not facing an expensive and lengthy court procedure what beckons is the likelihood of entering into the unknown world of abandonment.

Some assistance is given under the provision of section 5 of the Housing Act 1988, which in summary confirms a tenancy only ends when a tenant voluntarily gives up possession or a Court Bailiff executes a possession order. For a surrender to be effective it must be unequivocal between the landlord and tenant. Surrender does not just take place because the tenant hands the keys back, there must also be some agreement by the landlord. Nor does the granting of a possession order in it self permit the landlord to take back possession. It is the execution of the possession order by a Court Bailiff that lawfully entitles the landlord to possession.

But this has little use when a tenant has absconded, unknown to the landlord whether the tenant will return or not. A wrong move may result in a landlord and their agent being faced with civil and/or criminal proceedings for unlawful eviction.

So what may constitute abandonment

This is not exhaustive and will depend on each individual case but some consideration should at least be given to the following before possession is taken:

• Are there rent arrears, in particularly most recently?
• Has the tenant removed his possessions?
• Has the tenant left food in the fridge that may have gone off?
• Has the tenant left post at the property?
• Ask the neighbours if they have seen the tenant or seen anything unusual?
• Has the tenant left all the keys in the property?

In addition to the above, a landlord will be strongly advised to serve what is often referred to as an Abandonment Notice. This provides a 14 day notice warning the tenant that if they fail to contact the landlord, possession will be taken. However, it must be noted that abandonment is not a legal procedure but a process of proving to the court in the event of a claim for unlawful eviction that all reasonable steps were taken before possession was taken back. This may prove to be a persuasive defence. If there are any doubts then a possession order should be sought.

Given the potential repercussions of abandonment, considerations must be given when dealing with these situations. In particular, agents should ensure a process is in place and landlords are fully advised before possession is taken back.

Filed under: England & Wales, FLW Article, comment, guidance, legislation, possession

7 April, 2011 • 10:21 3

Deception

Whilst this topic has very little to do with the issues we normally deal with we thought some readers may find this article interesting.

Mr Beesley obtained planning permission to construct a barn. However, he actually constructed a 3 bedroom house and disguised it as a barn. He and his wife then lived there for 4 years undetected however, when Mr Beesley then applied for a certificate of lawfulness the certificate was refused.

The case has had quite a lot of publicity with many people divided on whether Mr Beesley should or should not be granted the certificate of lawfulness. That decision we leave to you.

What Mr Beesley did after the 4 years of occupation was to apply under section 191 of the 1990 Act for a certificate of lawfulness of the building as a dwelling house in reliance on section 171B(2) on the ground that there had been change of use of the building from the permitted barn to that of a single dwelling house and that the four-year period within which enforcement action had to be brought had elapsed.

However the Supreme Court took the view that there had been no change of use of the building to use as a single dwelling house for the purposes of section 171B(2) as the building had never been constructed or used as a barn. They further held that the issue was whether it could have been the legislator’s intention that a person conducting himself like Mr Beesley could invoke the benefits of sections 171B and 191.

Mr Beesley’s conduct consisted of positive deception in matters integral to the planning process and was directly intended to and did undermine the regular operation of the process. If the certificate was issued he would have profited directly from that deception if the passing of the normal four-year period for enforcement which he brought about by deception were to entitle him to resist enforcement. This, the court held could not be the intention of the legislator.

To quote Lord Brown of Eaton-Under-Heywood USC

on any possible view the whole scheme was in the highest degree dishonest and any law abiding citizen would be not merely shocked by it but astonished to suppose that once discovered, instead of being enforced against, it would be crowned with success and Mr Beesley entitled to a certificate of lawful use to prove it. The dishonesty involved in this case appeared to constitute a category all its own in this area of the law.

The council is now to make a decision on the continued use of the building as a dwelling house and additionally on its construction.

Filed under: England & Wales, FLW Article, comment, legislation, planning

4 April, 2011 • 10:15 0

Fire Safety Update.

Many of our readers will recall that we previously blogged on the Fire Safety (Protection of Tenants) Bill 2010-11. Although we stated in this article that the Bill was unlikely to be made law, we thought it may interest some to note that the second reading of the Bill is now scheduled for some time in October this year.

Filed under: England & Wales, England only, comment, consultations, guidance, legislation

28 March, 2011 • 21:41 7

Where does the liability for water usage lie?

The Flood and Water Management Act 2010 is expected to come into force in October 2011. Section 45 of the Act amends the Water Industry Act 1991 to place an obligation on the Landlord to provide the tenant’s contact details to the relevant water company. The rationale behind this is to prevent tenant’s departing properties without providing water companies with appropriate forwarding addresses and leaving unpaid bills. Should the landlord fail to comply with this provision he will become jointly and severally liable the invoices of the water usage at the rented property.

The supplemental regulations that the government has created to bring the provisions into force are still in draft. However we understand that they will require the water companies to set up appropriate websites for landlords to provide the necessary information.

These changes place a significant new obligation on landlords. It also gives the water companies a substantial benefit over other utility providers who do not have the benefit of this kind of statutory protection. Landlords and agents should consider amending their tenancy agreements to specify that tenants must provide evidence of the water bill being paid to date otherwise it will be deducted from the deposit.

Filed under: England & Wales, FLW Article, legislation, Utilities and Services

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