Clarke and Son News

In the present economic environment, many tenants will be seeking to vacate premises, reduce the size of their premises or renegotiate their leases, so times are tough for landlords.  Furthermore, tenants who were ‘good tenants’ or who seemed financially strong may now be a less attractive proposition than they once were.

Here are some tips for landlords to help deal with tenants when a break clause in a lease is booming:

• Be ready. Do your research on your tenant and try to anticipate their stance. Get up-to-date accounts and look at their operation.  A short visit can often be very illuminating;
• Be ready to remarket your property if negotiations with your tenant break down or they wish to terminate. Put together a pack containing all the necessary planning consents, searches and so on, so a prospective new tenant is in possession of all the information they need to make a decision straight away;
• Make sure you know when and how notices must be issued. The notice you receive from your tenant may not be valid;
• If your tenant wishes to renegotiate their lease, make sure you know your market and can ascertain what their options might be.  Also, consider asking for better security; and
• If you think the tenant is likely to default, remember that your right to repossession of the property may be delayed unless you act first.

Says Charles Marchant-White,

Landlords need to take great care and do their research thoroughly in order to minimise their risks. We can help you control your risks in all property matters.

For more information on Commercial Property, contact Charles Marchant-White on Tel: 01256 320 555.

The Department for Communities and Local Government (DCLG) has published the responses to its consultation on how to improve standards in the private rented sector.  The report explains the DCLG’s next steps and its plan for further work with stakeholders.  It intends to implement the following key measures:

• A hotline for private tenants offering free practical advice (by Summer 2010).
• A “Tripadvisor” style website comparing landlords (by Summer 2010).
• A mandatory national register of landlords.
• Regulation of letting and managing agents.
• Mandotory written tenancy agreements.
• An increase in the maximum rent for assured shorthold tenancies  to £100,000 per annum (from 1 April 2010).
• The creation of local letting agencies and landlord accreditation schemes.

For advice and assistance relating to private lettings, please contact Paul Cowdery on Tel: 01256 320 555

In Morgan v Fletcher & others [2009] UKUT 186 (LC), six residential tenants (the “tenants”) in a building of eight flats (the “building”) applied to the Leasehold Valuation Tribunal (LVT) to vary their leases (the “leases”).  The tenants claimed that the service charge provisions in the leases were “unsatisfactory” under section 35 of the Landlord and Tenant Act 1987 (LTA 1987).  At the time of their application the aggregate of the service charge proportions under the leases amounted to 116% of the landlord’s expenditure.

 The landlord then amended the service charge provisions for the other two flats in the building, reducing the total service charge contributions for the building to 100% of the landlord’s expenditure. The LVT adjusted the leases of the tenants to make the service charge contributions proportionate. The landlord appealed.

The court allowed the appeal. It held that section 35 of the LTA 1987 was not intended to deal with unfairly disproportionate service charge provisions.  It was only intended to deal with surplus contributions or a shortfall and not situations where the contribution amounted to 100% of the landlord’s expenditure albeit the contribution proportions were unfair.

 Paul Cowdery comments:

In a surprising decision (in fairness terms) relating to service charges on residential flats, on appeal from the Leasehold Valuation Tribunal the Court has found that it has no statutory based power under section 35 of the Landlord and Tenant Act 1987 to adjust the apportionment of service charges between lessees.

The extent of the court’s statuory power is limited to instances where the drafting of leases allows for a surplas or shortfall in the service charge (i.e. so that the amount recoverable from all lessees is more or less than 100% of the recoverable costs incurred).

When purchasing leasehold property it is important that buyers understand the actual arrangement being entered (i.e. what is specified in the lease of the particular property). Whilst the court had sympathy for the tenants in this case, they had no authority to amend what were disproportionate service charge contributions. The court could not intefere with the contractual freedom of the parties to enter leases on those terms.

 If you would like more information about Landlord and Tenant issues, please contact Paul Cowdery on Tel: 01256 320 555.

In a recent decision, the Court of Appeal held that a notice to quit purporting to end a periodic tenancy held by joint tenants was valid, even though the notice was served by only one of the tenants. This is a well-established common law principle.

The main point of interest is that the notice to quit was held to be effective, despite using an incorrect date as the end date for the tenancy. The notice was saved by the inclusion of some catch-all wording. Neither the acceptance of rent for a period after the termination date, nor the landlord’s offer to allow the tenant who served the notice to remain in occupation after termination affected the notice’s validity.

This decision will be of interest to anyone who is drafting a notice that must take effect on a certain date, or who has received such a notice.

For more information on landlord and tenant issues, please contact Paul Cowdery on Tel: 01256 320 555

The High Court has held that some of the charges that estate agent Foxtons imposes on landlords are unfair under the Unfair Contract Terms in Consumer Contracts Regulations 1999 (UTCCR). The case was brought by the OFT, which said clauses in the small print of Foxton’s contracts for managing tenanted properties were a “trap”. Foxtons required a renewal commission if a tenant stayed beyond the initial one-year tenancy and 2.5% of the value of the property if the tenant went on to buy it. Mann J held that the renewal commission term did not form part of the core bargain between the parties and was therefore subject to review for fairness under the UTCCR. When he considered the fairness of the terms he found that some were not in plain language, that they were not sufficiently brought to a landlord’s attention and that they became increasingly disproportionate as the years went by, without Foxtons having to provide any commensurate services. The case illustrates that the OFT will take suppliers to court if they fail to agree to change their consumer terms and that the courts will act to protect consumers from suppliers who impose unfair terms.

For more information on landlord and tenant issues, please contact Paul Cowdery on Tel: 01256 320 555

The Tribunals, Courts and Enforcement Act 2007 (TCEA 2007) contained provisions on a wide range of topics, including tribunals and inquiries, judicial appointments, enforcement of judgments and orders and debt management.

Part 3 of the TCEA 2007 replaces the ancient remedy of distress with a new system of commercial rent arrears recovery (CRAR). The Law Commission recommended that there should be a delay of six months between the TCEA 2007 receiving Royal Assent (19 July 2007) and the provisions relating to CRAR coming into force, to allow landlords time to become familiar with the changes.

On 17 March 2009, the Justice Minister made an announcement in Parliament on bailiff and enforcement law, but the announcement made no reference to CRAR. This has been queried informally with the Ministry of Justice which has advised that the Government also intends to implement CRAR in April 2012.

For more information on landlord and tenant issues, please contact Paul Cowdery on Tel: 01256 320 555

With effect from 1 April 2009, landlords and employers should check that anyone carrying out work on gas appliances or flues is registered under the new Gas Safe Register. CORGI registration will no longer carry any statutory force. There is no grace period.

In the commercial sector, failure to check that an installer is registered under the Gas Safe Scheme may mean a breach of the Building Regulations 2000 and Regulation 3 of the Gas Safety (Installation and Use) Regulations 1998.

In the residential sector, as well as a breach of the Building Regulations 2000, residential landlords (including those in the social housing sector) will breach Regulation 36 of the Gas Safety (Installation and Use) Regulations 1998 if their regular gas appliance checks are carried out by a person who is not registered on the Gas Safe Register.

This change in the regulatory regime will not only be of importance to Employers but also Landlords, Tenants as well as their agents, advisors and property managers.

If you would like advice on renting out a residential property, please contact Paul Cowdery on Tel: 01256 320 555.

If you would like advice on renting out commercial property, please contact Charles Marchant-White on Tel: 01256 320 555.