Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

Read the Lease!

A recent decision of the Upper Tribunal (Lands Chamber) in Sadd v. Brown [2012] UKUT 438 (LC) stands to remind us that it is always important that you read and understand the terms of the lease.

The case was about the recoverability of an insurance premium. In the past all parties to the lease had assumed that it allowed the recoverability of the costs incurred by the landlord in insuring the building. At first instance the LVT decided that whilst the amount charged was reasonable on the true construction of the lease the premium was not payable by the leaseholder. It would appear that this point was not itself taken by the parties but raised by the LVT itself.

Once again the Upper Tribunal made clear to the LVT that it is not for them to take points and certainly not without referring the issue to the parties for their comments. If we stop there it is important that all parties in approaching the LVT bear in mind that panels are now less likely to raise issues of their own motion and so parties must make sure they have properly considered what points they may have in their favour. The Upper Tribunal has made clear over the past 18 months that the LVT should be slow to interfere and raise points if not raised specifically by the parties.

The above being said the Upper Tribunal took the view given the landlord as part of its appeal had put forward its arguments it was reasonable for the upper Tribunal to determine the issue. The landlord contended that it was unusual for a lease to not include a term allowing the landlord to recover the cost of the insurance. He relied upon the fact that until this application both parties had assumed that the lease did allow recoverability. The landlord invited the tribunal to imply such a term into the contract relying upon Liverpool City Council v. Irwin [1977] AC 239. The Tribunal took the view that given this was a lease containing detailed provisions regulating the parties relationship and on the face of it contained all terms it was not appropriate to imply such a clause. Further the Tribunal took the view that it was not necessary to imply such a term to give effect to any other terms of the lease in the way that often the term “reasonable” is implied. Finally the tribunal decided that it was not necessary to imply such a term to give business efficacy to the lease (although we are sure the landlord did not agree with this!).

As a result the appeal was dismissed and the landlord could not recover the cost of insurance as the lease did not allow recoverability. As we have said before it is vital that a careful review of the lease is made. Anyone taking on block management should always ask to see all the leases and check with the Land Registry that no variations have been granted. Only when you have done this will you be sure as to what can and cannot be recovered as any failings are likely to find themselves laid at the managing agent’s door if they have not previously been drawn to the freeholder’s attention

Filed under: England & Wales, , , ,

Jackson Reforms on Costs

Many of our readers will not have heard about the Jackson Costs reforms specifically although you may have read about some of their effects in the press. Why should the amount us lawyers are going to receive affect you? Well you may ask but ultimately rules affecting costs and the recoverability affect anyone involved in litigation.

Whilst some of the rules are being finalised we do understand many of the new principles. Many of the new rules appear to be directed at those undertaking personal injury litigation and the desire to limit the recoverability of the costs in this field which it was felt were not reasonable. In particular this has led to the payment of referral fees in personal injury cases being banned.

However a number of the rules will impact on anyone using the courts. In particular from April of this year the small claims limit is due to rise to £10,000 and will then rise to £15,000. This will bring many more cases within that track and will mean that cases allocated to small claims will not generally recover any legal expenses. All businesses who have any involvement with the courts need to bear this in mind particularly if you often have debts which you pursue which fall below this level. It will mean that you need to think carefully how you pursue such debts and what use you make of legal advisers whose costs are likely to be irrecoverable. Perhaps the moral is look what debts you currently have outstanding and if between £5,000 and £10,000 and something you want to pursue using legal help it might be worth moving forward with these now rather than waiting until after April 2013.

We currently are awaiting various other changes to the rules. The courts will be imposing on fast track claims (those claims between £10,000 and £25,000) a fixed costs regime. Whilst talked about in the past it seems that the court will impose this upon all litigants falling within that track. This is likely to mean that not all legal costs will be recovered and so it is vital that early attempts are made to settle. To encourage this amendments are being made to the settlement regime (known as Part 36 Offers) to make it far more financially worthwhile to make a “good” offer at the outset to protect you on costs recovery.

As for multi track claims (which is the track into which many landlord and tenant matters fall) the court is going to require Costs Budgets which it will then review at the initial case management conference and supposedly everyone will then be bound by. This means all lawyers will need to provide robust estimates as their clients costs may be capped to these limits.

We await the rules but it seems there is a real desire to get a grip on costs and cap what can be recovered. This will not necessarily affect the amount a party has to spend (this will always depend on the particular case) but in deciding how to pursue a more careful consideration of the costs will need to be given.

Filed under: England & Wales

Consultation for Repairs on Long Leaseholds

We all await the Supreme Court ruling in the Daejan v. Benson case which hopefully we will receive judgement on soon. Shortly before Christmas the High Court Chancery Division got in on the act. It ruled in the case of Phillips v. Francis [2012]EWHC 3650 (Ch).
In brief the facts are that this related to a holiday park consisting of various chalets let on long leases. A dispute had arisen over charges levied by the freeholder. From the point of view of this article the interesting point was whether the consultation requirements imposed by the Landlord and Tenant Act 1985 as amended applied to “repair” costs. The issue was what are “qualifying works”.

The court considered the definition of “qualifying works” set out in the Act which provides that these are “works on a building or any other premises..”. Consideration was also given to a case decided prior to the current legislative framework being Martin v. Maryland Estates [1999] 2 EGLR 53 but this case was discounted as being of relevance.

Whilst only a High Court decision, the decision itself was given by the Chancellor of the High Court . He determined that all works should be bought into the account to calculate the contribution and then apply the limit. In essence what this means is that all repair works carried out in any service charge period should be lumped together and then if any one leaseholders contribution exceeds £250 then consultation should be undertaken. The Judge said it is not appropriate to simply break the works down into what he termed “sets of qualifying works”.

This means that where a leaseholder has been presented with a service charge account with any item over £250 including for repairs undertaken in a twelve month period they may be able to challenge this to have a cap applied. Typically repair costs in an account may be made up of various relatively minor ongoing maintenance issues which have arisen during that period none of which it was imagined individually would require consultation.

For Landlords this poses a dilemma. For past charges they need to see if challenged. If so Landlords will then need to consider whether they look to make an application for dispensation from consultation. Currently, whilst the outcome of Daejan is awaited, this is certainly not a forgone conclusion. Alternatively every year they will need to consult on the process they will seek to adopt for repairs, although practically it is difficult to see how this can properly be undertaken. It may be that this decision itself will be appealed.

What is clear is that this year is going to see much debate on the question of consultation. It appears to us as the regulation over consultation grows and becomes more complex it is likely that the costs charged by Managing Agents (either for management in general and consultation in particular) are likely to rise to take account of the increased work and the risks involved in providing this service.

Filed under: England & Wales, , ,

The Green Deal

28 January 2013 was the first day on which works can start under the government’s Green Deal initiative on residential properties in England.

The aim of the Green Deal is to improve the energy efficiency of properties by removing the upfront cost of improvements and instead allowing the cost to be paid in instalments through energy bills.

Green Deal Finance can be used to pay for improvements such as cavity wall or loft insulation; upgraded heating; installation of draught-proofing; installation of double glazing; and installation of renewable energy technologies such as solar panels or wind turbines.

A Green Deal Assessor will carry out an inspection of the property being proposed for improvements and will make recommendations as to the most suitable – weighing the cost of the improvements against the likely savings that the improvements would attract. The golden rule is that the savings enjoyed as a result of installing any particular technology must be equal to or greater than the cost of the finance required.

Once the Green Deal Assessor has made recommendations, a Green Deal Plan will need to be signed with a Green Deal Provider. The Green Deal Plan is a contract setting out what work will be done and how much it will cost and once it has been signed the Green Deal Provider will arrange for a Green Deal Installer to carry out the contracted work. All participants in the process are bound by the DECC’s code of practice and must display the quality mark.

Once the Green Deal Installer has carried out the work, the cost will be payable in instalments through energy bills. As the finance obligation passes with the liability to pay the energy bills rather than with the person that signs the Green Deal Plan, Green Deal finance must be disclosed in all new property transactions as part of the EPC information. A written acknowledgment of the finance should be obtained from the tenant, licensee or purchaser in a standard form to confirm the information has been given.

In respect existing tenancies, neither the landlord nor the tenant can sign a Green Deal Plan without the permission of the other.

There are plans afoot to obligate landlords to install green technologies upon receipt of a “reasonable request” from tenants but, as we understand it, these are unlikely to come into force before April 2016.

Filed under: England & Wales, , , ,

Categories

RSS CLG Housing What’s New

  • An error has occurred; the feed is probably down. Try again later.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 61 other followers

Have you tried the PainSmith toolbar?

Useful links and access to the PainSmith blog in a convenient toolbar within your web browser. Available from: painsmithlettingshelper.ourtoolbar.com/