More Long Leasehold News

For those of you who are involved in people looking to extend their leases or undertaking freehold purchase by way of collective enfranchisement under the Leasehold Reform Housing and Urban Development Act 1993 you will no doubt be aware of the issues with regards to signing the Initial Notices required under this Act.

Due to a case called St Ermin’s Property Co. Ltd v. Tingay [2002]EWHC 1673 (Ch) it was determined that all such Notices must be personally signed by the relevant leaseholder. The case determined that the Notice could not be signed by a solicitor or even under a Power of Attorney but required an actual signature. This practically caused many issues particularly once the residence requirement was removed and leaseholders were often “Buy to Let” landlords spread all over the globe.

As a result a Private Members Bill, Leasehold Reform (Amendment) Bill, is due to get its second reading on 22nd November 2013. The Bill sets out to amend paragraph 99 of the 1993 Act to remove the requirement that Notices must be personally signed. If the Bill should become law it will mean that Notices may be signed “by or on behalf of the tenant” and should remove this practical difficulty.

Whilst this may seems minor many notices have been rejected by freeholders on the grounds they have not been properly executed and leaseholders have had to start the process all over again incurring not only their own costs but having to pay costs to freeholders.

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

Phillips v. Francis: Permisssion to Appeal granted

At the end of last year we were all faced with the Judgement in Phillips v. Francis [2012] EWHC 3650 (Ch). No doubt those of you with an interest in long leasehold matters and particularly property management will recall that Sir Andrew Morritt, The Chancellor, in what is believed to be one of his final judgments, determined that the test for qualifying works requiring consultation under the Landlord and Tenant Act 1985 required all qualifying works to be considered together. If the total cost would exceed £250 then consultation was required.

He determined that it was a case of looking at qualifying works as a whole in the relevant service charge period and if the cost would exceed the threshold for consultation then the landlord/managing agent should consult. So if the cost of repairs (no matter what was included) in any one service charge period would mean that any one leaseholder would have to contribute more than £250 (the current threshold) then consultation should take place. Prior to this the practice had been that elements could be broken down and it was a question of looking at the particular works and consulting on those for which the contract sum would result in a charge above the threshold.

The Supreme Court in Daejan v. Benson offered some relief in its decision earlier this year. Here the Supreme Court determined that generally dispensation for a failure to consult should be granted although conditions may be attached. However the Francis decision continued to cause much consternation.

It appears initially the Landlords did not appeal due to a lack of funds. It is understood that they have now gained support from interested parties including ARMA and RICS. An application for permission to appeal and an extension of time was made. This application was granted by the Court of Appeal yesterday, 18th November 2013, with Lord Justice Gloster giving Judgment.

The Court of Appeal accepted that there was a point of principle such as to satisfy Civil Procedure Rule 52.13. As a result time was extended and permission to appeal granted with the court taking account of the unprecedented industry interest and concern over the original decision.

It would appear the Respondents are concerned that the Appellants have assistance from various parties with the appeal yet supposedly no party has come forward to offer assistance to the Respondents. Various other arguments were raised which it is understood they will continue to pursue at any substantive hearing of the appeal.

It seems likely that the full hearing will come before the court at some point next year and so for the time being the position as to when to consult appears to be in a position of flux. As we learn more we will post updates.

We would like to thank Anneli Robins a pupil at Arden Chambers who attended the hearing and prepared a note and Justin Bates, also of Arden Chambers, for supplying us with a copy of the same.

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

Data Protection

We often get asked whether and in what circumstances landlords, tenants, agents and contractors can give out each other’s details of and those of other third parties. The main concern is not to breach the Data Protection Act 1998. Anyone who processes personal information must comply with eight principles of the Data Protection Act, which make sure that personal information is:
• Fairly and lawfully processed
• Processed for limited purposes
• Adequate, relevant and not excessive
• Accurate and up to date
• Not kept for longer than is necessary
• Processed in line with your rights
• Secure
• Not transferred to other countries without adequate protection

Unlawfully obtaining or accessing personal data is a criminal offence under s55 of the Date Protection Act 1998. Organisations processing personal information are required to register with the ICO. Failure to notify is a criminal offence. The ICO provides a checklist to organisations to check if they need to register. However lettings agents do generally process personal data ( e.g. tenants’ financial information) and if so should register.

There is a useful guide on the Information Commissioner’s website here.
Below is a list of the most common queries we get, and our answers
(with reasons).

1. Can an agent give out tenant referencing details to a landlord?
We say: Yes, the agent has collected the information as agent of the landlord, on behalf of the landlord. The Information Commission adds that the agent should make it clear to the tenants/guarantors that this will happen when the information is taken.

2. Can an agent give out landlord’s details to the tenant?
We say: It depends. If the tenant requests the landlord’s name and address in writing from the agent, section 1 of the Landlord and Tenant Act 1985 requires that the agent must supply the tenant with that information within 21 days of receipt. Criminal sanctions apply for failure to comply. There is a duty to disclose the name and address of all directors and company secretary to a corporate landlord. However where not required by statute, an agent should get the landlord’s permission before handing information to the tenant.

3. Can an agent/landlord give out tenant details to utility companies where there are unpaid bills?
We say: Yes the utility company may need the forwarding address of the former tenant to recover unpaid bills, or to return funds. The information commissioner adds that there should be a clause in the tenancy agreement setting out that this may happen.

4. Can landlords give former tenants details to enquiry agents/tracing agents in order to recover unpaid rent/ issue debt proceedings?
We say: yes – but again the ICO says it is good practice to notify the tenants in the tenancy agreement that this might happen.

5. Can landlords/agents give tenant’s details to guarantors?
We say: only to the extent that it relates to the guarantee. So you need to see whether the information you are passing on relates to the guarantee (e.g. it would probably be relevant to say there are rental arrears but not to notify the guarantor that the tenants have had a baby and the date of birth and name of that baby, for example).

6. Can landlords/agents give tenant’s information to the Local Authority/ Police?
We say: again, it depends. Local Authorities do have powers to request personal information, and so do the Police. However they should be able to provide authority – to demonstrate that they have authority to ask, and that a landlord/agent has the duty to disclose.

7. If the tenant requests to see the tenancy file, does the agent have to disclose the entire file?
We say: No. The tenant should make a subject access request. The file belongs to the landlord. You do not have to supply information about other people. The agent should send a redacted copy and even then only needs to provide personal information. This does not mean the agent’s management log for example.

What are the sanctions for breaching the Data Protection Act? The Information Commission can order the offender to stop the breach. For serious breaches monetary penalties can be given and criminal prosecutions brought. See here: http://www.ico.org.uk/enforcement/prosecutions

In general the best place to go for those concerned about Data Protection is the ICO website. They have useful guides and checklists, as well as news and updates.

Filed under: England & Wales, comment, Data Protection, OFT