Anti-Social Behaviour Has Adverse Consequences for Tenants
The Court of Appeal has upheld a decision that an immediate possession order should be granted to the landlord of a mentally disturbed mother and daughter who had waged a campaign of harassment against their neighbours.
The tenants had appealed against the decision of the lower court on the basis that their anti-social behaviour had abated and that the incidents which were the reason for the application to evict them were largely in the past.
The Circuit Judge had considered that the fact that the mother and daughter were refusing treatment for their problems meant that there was a likelihood that their former behaviour would be repeated. Also, the damage they had already done could not be undone. The landlord was therefore granted an immediate possession order. The Court of Appeal agreed.
One rather surprising aspect of this case was that the argument that the women had been discriminated against on the grounds of disability was not pursued in the appeal.
In another case, a Leeds man who was the subject of an Anti-Social Behaviour Order (ASBO), who then breached the order by having noisy gatherings and playing loud music at his flat, has had a custodial sentence (suspended for six months) upheld by the Court of Appeal.
The courts are taking a tough line on tenants whose behaviour is unacceptable or who repeatedly breach an ASBO. If you need advice on what to do about problem tenants, contact us.
Partner Note
Accent Peerless Ltd. v Kingsdon [2007] EWCA Civ 1314.
Leeds City Council v MacDonald EWCA, 20 November 2007.
Buyer Pays Heavy Penalty for Missed Deadline
Considering the sums involved, the contractual terms relating to property transactions are often treated rather casually, in the sense that the penalties for failing to meet completion dates are often not enforced.
However, this is not always so, as a recent case involving a buyer who was late with his completion money demonstrates. The buyer failed to complete on the agreed date and, as a result, the seller issued a notice of completion, which is a notice requiring the buyer to complete within a stipulated period. Once such a notice has been issued, time becomes of the essence in the contract and the buyer must pay the sum due by the date specified. If the buyer fails to pay, the seller has the right to rescind the contract and to retain the deposit paid by the buyer.
In this case, the buyer paid across the purchase price on the last day of the notice period. Crucially, however, the buyer failed to pay the seller’s legal costs and the contract provided that these would also be payable by the purchaser in these circumstances.
The court ruled that since the buyer had not paid the full consideration required under the contract, the seller was free to rescind the contract and retain the buyer’s deposit. The argument that the buyer did not know the precise amount of the seller’s legal costs was also given short shrift – the whole amount due had to be paid by the end of the period specified. This makes things quite complicated where these costs are not known. Typically, a contract will also specify that interest is payable by the buyer in the event of a late completion. The vendor can therefore insist that these sums are paid also.
It is unwise to assume that a vendor will adopt a casual attitude in such circumstances or will allow the transaction to go ahead and the ‘extras’ to be paid later by the buyer.
Partner Note
Chinnock v Hocaoglu, ChD.
Changing the Scenery
Some people think that a covenant on a property lasts forever, but in some circumstances an application can be made for a covenant to be discharged. The Law of Property Act 1925 allows a freeholder, or the holder of a lease for a term of greater than 40 years with 25 unexpired, to apply for an order to remove or modify a covenant.
The instances in which this can be done are:
- if circumstances have changed so that the covenant has been rendered obsolete;
- if the modification or removal of the covenant will not injure those who benefit from it;
- if those benefiting from the covenant give express or implied agreement to its modification or removal; or
- where the reasonable use of the property is impeded by the covenant and this is contrary to the public interest or there is no continuing benefit from the covenant and the disadvantage arising from the modification or discharge of the covenant can be adequately compensated for by the payment of money.
A second, and generally less onerous, procedure exists for lifting covenants prohibiting the conversion of a property from a single dwelling into a multiple dwelling.
If your property is subject to a covenant which prevents you using it as you would like or diminishes its value, it may be possible to have the covenant removed or modified. Contact <<CONTACT DETAILS>> for advice.
Partner Note
Applicable law – The Law of Property Act 1925 S.84 and the Housing Act 1985 S. 610.
Council’s Right to Deny Tenancy Upheld
Although tabloid editorials might give a different impression, local housing authorities are not obliged to house everyone who demands it.
Local authorities are not, for example, obliged to house anyone who they judge to be ineligible for housing by virtue of being guilty of behaviour unacceptable enough to make them unsuitable as a tenant. Behaviour is unacceptable for this purpose if it is behaviour which would justify an application for an immediate possession order if the person were a tenant.
In a recent case, a man who was convicted of possession of cocaine and was cautioned for possession of cannabis was considered ineligible to be offered housing and that decision was upheld by the High Court.
Partner Note
Dixon v London Borough of Wandsworth [2007] EWHC 3075. See Solicitors Journal, 12 February 2008.
Courts to Consider Commercial Benefit When Setting Fines
A recent case, in which a company was convicted of tipping waste illegally, prompted a comment from Lord Justice Keene which should set alarm bells ringing for organisations which fail to comply with the laws on waste disposal.
The company involved had been successfully prosecuted for depositing waste unlawfully and was served with a notice to remove the waste from the land where it had been left. Eventually, the company successfully applied to the Divisional Court to overturn a decision of the Crown Court that the waste could not be treated where it was because the company had no authorisation to do so under a waste management licence.
However, in remitting the matter back to the Crown Court for reconsideration, LJ Keene commented that he would encourage the courts dealing with such prosecutions to ‘reflect in any financial penalty imposed the amount of commercial advantage which has been obtained by a person through the unlawful deposit of controlled waste’. He clearly is encouraging the courts to make sure crime doesn’t pay.
Partner Note
Neal Soil Suppliers Ltd. v Environment Agency for Wales [2007] EWHC 2592 (Admin).
Criminal Tenants – Courts Get Tough
Recently, the courts have had to consider two cases involving applications to evict tenants from their properties following their convictions for criminal offences.
The Housing Act 1988 allows a landlord to evict a tenant if the tenant commits an indictable offence in the locality of the dwelling.
In the first of the cases in point, the tenant was convicted of offences under the Protection of Children Act 1978. He was sentenced to four years’ imprisonment and his housing association landlord sought possession of his property. He argued that his criminal activity predated his tenancy, as it had occurred when he was living nearby but was not a tenant of the housing association. He claimed that his conviction could not therefore be used as the ground on which his property was to be repossessed. The Court of Appeal rejected this argument.
In the second case, a secure tenant, who had several convictions connected with illegal drugs, had set up in his home a ‘sophisticated and extensive’ system for growing cannabis. The court allowed the landlord’s application for a possession order, but suspended it for two years to give the tenant the chance to show he had changed his ways. The local authority appealed the decision. The Court of Appeal took the view that the tenant had breached the terms of the tenancy by carrying out the criminal activity and had also disregarded the rights of his neighbours. In the absence of clear evidence that his undesirable activity had ceased, an immediate possession order was granted.
“Tenants who breach the terms of their tenancies by committing criminal acts are getting short shrift in the courts,” says <<CONTACT DETAILS>>.
Partner Note
Raglan Housing association Ltd. v Fairclough [2007] EWCA Civ 1087.
Sandwell MBC v Hensley [2007] EWCA Civ, 1 December 2007.
E-Conveyancing on the Way
Plans to update the conveyancing process in England and Wales have been ongoing since 1998, when preliminary proposals were set out in a report, compiled by the Law Commission and the Land Registry, entitled Land Registration for the Twenty-First Century. Consultation on how best to go about re-engineering the system has been extensive. The aim is to develop an electronic system of conveyancing that makes buying and selling easier for all those involved in the process.
The Land Registry’s e-conveyancing project, developed by IBM, is expected to go live some time this summer following the introduction of a public key infrastructure (PKI) system that uses cryptography to guarantee the authenticity of property transaction documents. The system is designed to allow authorised users to exchange information quickly, securely and reliably with each other and with the Land Registry. Documents will be encrypted and signed with a digital certificate. Documents will only be able to be produced or read by those in possession of a cryptographic token, username and password. Once up and running, the system should allow property and mortgage registrations to be completed instantly, funds to be transferred immediately, securely and reliably and it will enable accurate and up-to-date information on the progress of all linked conveyancing transactions to be accessed online.
For further information on the e-conveyancing system, see http://www.landregistry.gov.uk/e-conveyancing/.
Partner Note
Widely reported. See http://www.computerweekly.com/Articles/2008/01/17/228972/land-registry-e-conveyancing-system-to-include-pki.htm.
EPCs – Time is Running Out
Commercial buildings to be built, sold or let will in future require an Energy Performance Certificate (EPC). The requirement is being phased in, commencing on 6 April 2008, when EPCs will be required for commercial buildings over 10,000 square metres. On 1 July 2008, EPCs will be required for commercial buildings over 2,500 square metres and all other commercial buildings will require an EPC from 1 October 2008.
From 6 April 2008, all public buildings over 1,000 square metres will be required to display an EPC.
A builder or landlord is required to provide not only the EPC, which shows the energy efficiency of the building, but also a recommendation report issued by an energy assessor. This will show recommended actions necessary to improve the energy efficiency of the building. A new building will not be able to be issued with a certificate of completion by the building inspector unless the EPC and report are available.
There are certain exceptions to the requirements. Details, in the form of frequently asked questions, can be found at http://www.communities.gov.uk/planningandbuilding/theenvironment/energyperformance/frequentlyaskedquestions/.
Partner Note
There is a good summary at http://commercialenergyperformancecertificates.co.uk/commercial-epc.htm
HMRC in Buy to Let Probe
HM Revenue and Customs (HMRC) have launched hundreds of investigations into the tax affairs of taxpayers they believe have under-declared or failed to declare taxable income from their buy to let activities.
Two thousand investors are expected to be targeted in a drive to identify taxpayers who have failed to declare investment income. It is thought that the first wave of enquiry letters includes many sent to taxpayers who have already sold their buy to let properties and therefore probably thought it unlikely that their under-declarations would be discovered.
Where the evasion of tax is wilful (i.e. fraudulent), HMRC can collect tax for up to 20 years after it is due, plus interest. They can also levy penalties of up to 100 per cent of the unpaid tax.
HMRC’s exercise is in addition to their usual enquiries in this area which focus on excessive expense claims and, in particular, on whether taxpayers have claimed their mortgage payments in full, as opposed to the interest on the mortgage, as a tax deduction. Only the interest element of a mortgage is allowable as a deduction for Income Tax purposes, not the capital element.
Says <<CONTACT DETAILS>>, “Tax law for owners of rental properties of different types is very complex and quite often poorly understood by taxpayers. We can advise you on all aspects of property ownership and letting and assist you in dealing with HMRC.”
Partner Note
Reported in the ICAEW Tax Faculty’s ‘Taxline’ 398, 4 March 2008.
If you would like to see a sample of the letter, please email joe@bestpracticeonline.com.
In Brief
Estate Agent Not Responsible for Inaccuracy
An estate agent who included in a set of property particulars details of land to which the title was in dispute was not guilty under the Property Misdescriptions Act 1991 because the agent had no reason to doubt that the land was part of the property, nor had she made any representations in the sale particulars regarding the title to the property.
In this case, the property in question was garden land adjacent to a house. Title to the land was claimed by the owner of the house but was disputed by the local authority.
Partner Note
Lancashire County Council v Buchanan, DC.
In Brief
Tenant’s Rights Survive Transfer of Title
A corporate landlord who tried to prevent its tenant from exercising the option to purchase the property after the title to the property had been transferred to a subsidiary company (for reasons unconnected with the right to buy) found the court unsympathetic recently.
The court ruled that the tenant’s right was exercisable against the subsidiary, which was ordered to transfer the property to the tenant. The fact that the transfer was not done specifically for the purpose of preventing the tenant from acquiring the property was not relevant.
Partner Note
Coles v Samuel Smith Old Brewery (Tadcaster) [2007] All ER (D) 473 (Nov).
Is a Mobile Phone Mast for Life?
There are still several areas of the country in which a strong mobile phone signal is not to be found and each operator has ‘dead spots’ in their coverage. If you live in such an area, you might regard the receipt of a letter from one of the mobile phone operators, asking you for permission to erect a mobile phone mast on your land in exchange for payment of a rent, as one of the more welcome pieces of correspondence you receive.
However, there are cons as well as pros to granting such a request, even assuming you discount any health risk you may ascribe to having a phone mast nearby.
The main potential problems stem from the rights granted to mobile phone operators. To understand these, it is important to understand the context of the development of the mobile phone networks in the UK, which has been based on the Government’s desire to ensure comprehensive access by customers to competitive mobile phone networks. Accordingly, the Government has given the mobile phone companies considerable rights.
These rights include extensive ‘compulsory purchase’ powers. If you were to grant permission for a mast on your land, these powers might well be exercised by the operator at the end of the lease were you to refuse to agree to the renewal of the lease (say, because you had the land earmarked for development). In practice, defeating a mobile phone company’s right to buy can be a difficult process, even if it is possible at all. A request for the removal of a mast is also likely to result in an application for compulsory purchase. If this is not the result, a counter notice can be served by the operator to retain the equipment and will normally be upheld by the court if the operator can show that the removal of the equipment will disrupt service to consumers.
Another potential problem comes if work needs to be done on the land. In such circumstances, the landowner must serve a notice on the phone company before the work can commence. However, the company has the right to serve a counter-notice to prevent any disruption to the service it offers to its customers. If this is done, it would be for the court to decide whether the landowner’s interests justified the disruption in the service to the public.
Most of the cases involving disputes over mobile phone masts have been decided in favour of the phone companies involved, so it looks very much as though a mobile phone mast will, in many cases, be for life.
If you would like advice on any property matter, contact <<CONTACT DETAILS>>.
Partner Note
Sch 2 of the Telecommunications Act 1984.
Sch 3 of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003. See also St Leger-Davey v First Secretary of State & ors [2004] EWCA Civ 1612.
New Law Journal, 18 January 2008, pp 92-3.
Lack of Clarity Makes Repair Responsibility Problematic
Lack of clear wording in a lease can often cause problems. A recent case dealt with who was responsible for redecorating and repairing the windows of an apartment – was it the builder landlord, who had sold the 999 year leases in a property development within a Grade II* listed building, or was it the purchaser of one of the leases?
The relevant clauses required the builder to repair ‘the main structure of the building’, which was briefly defined, and to decorate ‘the exterior, including the wood and ironwork…as often as…reasonably required’.
One would reasonably think that the repair and decoration would go together but, in this case, the court ruled that the repairs were the responsibility of the tenant as the windows were not ‘part of the main structure’. The decoration of the (repaired) windows, however, was the responsibility of the landlord.
Says <<CONTACT DETAILS>>, “This is one of those cases where more care over the drafting of the documentation could have made it clear who was responsible for what, which would have been preferable to spending time and money later on to resolve the issue in court. We can assist you in drafting leases and related property agreements which will help prevent such problems arising.”
Partner Note
Pattrick v Marley Estates Management [2007] LRX/130/206.
See Solicitors Journal, 29 January 2008, pp 24 and 25.
Loss Reduced if Cost Not Real
Where a landlord or tenant breaches their repairing covenants on a let property, the other party is entitled to compensation for the loss they suffer. Normally, once the responsibility is accepted, agreeing the amount payable is a relatively straightforward matter. Occasionally, however, the arguments are more complex, as was the case in a dispute which recently ended up in the Court of Appeal.
In the case in point, the tenant had breached its repairing covenants and the landlord sought damages. The tenant argued that the sum awarded should be based on the reduction in the value of the freehold as a result of the tenant’s failure to repair the property. This was because the property was ‘ripe for development’ and so it was very likely that a new owner would redevelop it, making most of the repairs for which compensation was sought unnecessary. The lower court accepted this line of reasoning and set the damages at £50,000. The landlord was unhappy with this decision, claiming that the correct amount of damages was the cost of the necessary remedial work. The landlord appealed.
The Court of Appeal ruled that in the particular circumstances that applied in this case, the judge had been justified in concluding that any purchaser would acquire the premises with a view to redeveloping them. Such a purchaser would not need to undertake much of the repair work and therefore the correct measure of compensation was the reduction in the value of the property due to its lack of repair.
Partner Note
Ravensgate Estates Ltd. v Horizon Housing Group Ltd. and persons unknown [2007] EWCA Civ 1368. See TSJ, 15 January 2008 pp 32 and 33.
Problem Trees and Preservation Orders
Cases involving damage to a property caused by trees located on a neighbour’s land, especially those dealing with subsidence or heave due to roots, are fairly common. One complication that arises is where the tree in question is subject to a preservation order.
In a recent case, a tree on a neighbour’s land was causing continuing damage to a house. As the tree was the subject of a preservation order, the homeowners applied to the council for planning permission to fell it. The homeowners considered that they should be entitled to a declaration that they could fell the tree because it was creating a nuisance and taking it down was necessary to prevent this continuing. The planning application was refused. The local authority considered that the nuisance could be prevented by other methods, such as creating a root barrier or by underpinning the affected house. The court, however, rejected the council’s argument, holding that the existence of alternative solutions to the problem was not relevant. The council therefore appealed to the Court of Appeal.
The Court of Appeal overturned the decision of the lower court. In its view, the purpose of the legislation that covers tree preservation orders is to preserve trees. Therefore, the existence of alternative means of abating the nuisance which would allow the preservation of the tree had to be considered. The legislation could not be considered to apply only to what might need to be done to the tree to solve the problem – it was reasonable to consider alternative action that might be taken which did not involve lopping or felling the tree.
It would appear, therefore, that in circumstances such as this the whole range of possible solutions will have to be considered before the court will support a decision to fell a tree which is the subject of a preservation order.
If you have problems with nuisance caused by your neighbours or their plants, our experts can help you resolve them.
Partner Note
Perrin and Another v Northampton Borough Council [2007] EWCA Civ 1353.
Put it in the Lease Renewal or Lose it
A recent case confirmed the principle that a tenant who has enjoyed property rights that are not within the lease cannot require that they be included when the lease is renewed.
In the case in point, parking rights had been granted by the landlord to the tenant by way of a licence. On renewal, the tenant wanted the rights to be brought into the lease as ‘rights enjoyed by the tenant in connection with the holding’. The court did not agree that a right not specifically catered for within the lease was part of the bundle of rights given to the tenant under the lease. The parking right was separate.
“The message for tenants is to beware,” says <<CONTACT DETAILS>>. “It is risky to assume that informal rights or even rights under a formal licence will continue in the same way that rights under a tenancy do.”
For advice on any commercial property matter, contact us.
Partner Note
Picture Warehouse Limited v Cornhill Investments Limited [2008] EWHC 45 (QB). See http://www.bailii.org/ew/cases/EWHC/QB/2008/45.html.
Right to Buy – Can Tenants Buy Their Commercial Property?
A recent decision of the House of Lords may have opened the door for thousands of tenants of offices and other properties originally designed to be used as homes to be given the right to buy their properties.
The Leasehold Reform Act 1967 gives a long leaseholder of a house the legal right to purchase the freehold according to a set procedure. The Act does not apply to commercial premises – but the House of Lords’ decision suggests that in some circumstances commercial tenants may acquire the right to buy the property.
The question turned on whether the premises in question were a ‘house’. The Act defines a house as premises which are designed or adapted to be lived in and which can reasonably be called a house.
In the case in point, the building was used for commercial purposes but had originally been designed as a residential property. The Lords considered that the fact that the premises themselves were not habitable was not relevant. The strict construction of the law meant that since the premises were designed to be lived in, the right to buy applied. It is quite clear from the judgment of Lord Walker that the Lords consider that a property which is of ‘mixed’ use, having been adapted for residential occupancy, would also qualify as a house for this purpose.
Says <<CONTACT NAME>>, “This decision has potentially massive implications for owners and tenants of all sorts of properties which were originally designed as houses. We are watching with interest to see what the full impact will be. Landlords thinking of giving a long lease for commercial premises which were originally designed as a residential property might want to think again until the position is clearer.”
Contact us for advice on all commercial tenancy matters.
Partner Note
Boss Holdings Ltd. v Grosvenor West End Properties and Others [2008] UKHL 5. House of Lords, 30 January 2008. See http://www.publications.parliament.uk/pa/ld200708/ldjudgmt/jd080130/boss-1.htm.
Anti-Social Behaviour Has Adverse Consequences for Tenants
The Court of Appeal has upheld a decision that an immediate possession order should be granted to the landlord of a mentally disturbed mother and daughter who had waged a campaign of harassment against their neighbours.
The tenants had appealed against the decision of the lower court on the basis that their anti-social behaviour had abated and that the incidents which were the reason for the application to evict them were largely in the past.
The Circuit Judge had considered that the fact that the mother and daughter were refusing treatment for their problems meant that there was a likelihood that their former behaviour would be repeated. Also, the damage they had already done could not be undone. The landlord was therefore granted an immediate possession order. The Court of Appeal agreed.
One rather surprising aspect of this case was that the argument that the women had been discriminated against on the grounds of disability was not pursued in the appeal.
In another case, a Leeds man who was the subject of an Anti-Social Behaviour Order (ASBO), who then breached the order by having noisy gatherings and playing loud music at his flat, has had a custodial sentence (suspended for six months) upheld by the Court of Appeal.
The courts are taking a tough line on tenants whose behaviour is unacceptable or who repeatedly breach an ASBO. If you need advice on what to do about problem tenants, contact us.
Partner Note
Accent Peerless Ltd. v Kingsdon [2007] EWCA Civ 1314.
Leeds City Council v MacDonald EWCA, 20 November 2007.
Buyer Pays Heavy Penalty for Missed Deadline
Considering the sums involved, the contractual terms relating to property transactions are often treated rather casually, in the sense that the penalties for failing to meet completion dates are often not enforced.
However, this is not always so, as a recent case involving a buyer who was late with his completion money demonstrates. The buyer failed to complete on the agreed date and, as a result, the seller issued a notice of completion, which is a notice requiring the buyer to complete within a stipulated period. Once such a notice has been issued, time becomes of the essence in the contract and the buyer must pay the sum due by the date specified. If the buyer fails to pay, the seller has the right to rescind the contract and to retain the deposit paid by the buyer.
In this case, the buyer paid across the purchase price on the last day of the notice period. Crucially, however, the buyer failed to pay the seller’s legal costs and the contract provided that these would also be payable by the purchaser in these circumstances.
The court ruled that since the buyer had not paid the full consideration required under the contract, the seller was free to rescind the contract and retain the buyer’s deposit. The argument that the buyer did not know the precise amount of the seller’s legal costs was also given short shrift – the whole amount due had to be paid by the end of the period specified. This makes things quite complicated where these costs are not known. Typically, a contract will also specify that interest is payable by the buyer in the event of a late completion. The vendor can therefore insist that these sums are paid also.
It is unwise to assume that a vendor will adopt a casual attitude in such circumstances or will allow the transaction to go ahead and the ‘extras’ to be paid later by the buyer.
Partner Note
Chinnock v Hocaoglu, ChD.
Changing the Scenery
Some people think that a covenant on a property lasts forever, but in some circumstances an application can be made for a covenant to be discharged. The Law of Property Act 1925 allows a freeholder, or the holder of a lease for a term of greater than 40 years with 25 unexpired, to apply for an order to remove or modify a covenant.
The instances in which this can be done are:
- if circumstances have changed so that the covenant has been rendered obsolete;
- if the modification or removal of the covenant will not injure those who benefit from it;
- if those benefiting from the covenant give express or implied agreement to its modification or removal; or
- where the reasonable use of the property is impeded by the covenant and this is contrary to the public interest or there is no continuing benefit from the covenant and the disadvantage arising from the modification or discharge of the covenant can be adequately compensated for by the payment of money.
A second, and generally less onerous, procedure exists for lifting covenants prohibiting the conversion of a property from a single dwelling into a multiple dwelling.
If your property is subject to a covenant which prevents you using it as you would like or diminishes its value, it may be possible to have the covenant removed or modified. Contact <<CONTACT DETAILS>> for advice.
Partner Note
Applicable law – The Law of Property Act 1925 S.84 and the Housing Act 1985 S. 610.
Council’s Right to Deny Tenancy Upheld
Although tabloid editorials might give a different impression, local housing authorities are not obliged to house everyone who demands it.
Local authorities are not, for example, obliged to house anyone who they judge to be ineligible for housing by virtue of being guilty of behaviour unacceptable enough to make them unsuitable as a tenant. Behaviour is unacceptable for this purpose if it is behaviour which would justify an application for an immediate possession order if the person were a tenant.
In a recent case, a man who was convicted of possession of cocaine and was cautioned for possession of cannabis was considered ineligible to be offered housing and that decision was upheld by the High Court.
Partner Note
Dixon v London Borough of Wandsworth [2007] EWHC 3075. See Solicitors Journal, 12 February 2008.
Courts to Consider Commercial Benefit When Setting Fines
A recent case, in which a company was convicted of tipping waste illegally, prompted a comment from Lord Justice Keene which should set alarm bells ringing for organisations which fail to comply with the laws on waste disposal.
The company involved had been successfully prosecuted for depositing waste unlawfully and was served with a notice to remove the waste from the land where it had been left. Eventually, the company successfully applied to the Divisional Court to overturn a decision of the Crown Court that the waste could not be treated where it was because the company had no authorisation to do so under a waste management licence.
However, in remitting the matter back to the Crown Court for reconsideration, LJ Keene commented that he would encourage the courts dealing with such prosecutions to ‘reflect in any financial penalty imposed the amount of commercial advantage which has been obtained by a person through the unlawful deposit of controlled waste’. He clearly is encouraging the courts to make sure crime doesn’t pay.
Partner Note
Neal Soil Suppliers Ltd. v Environment Agency for Wales [2007] EWHC 2592 (Admin).
Criminal Tenants – Courts Get Tough
Recently, the courts have had to consider two cases involving applications to evict tenants from their properties following their convictions for criminal offences.
The Housing Act 1988 allows a landlord to evict a tenant if the tenant commits an indictable offence in the locality of the dwelling.
In the first of the cases in point, the tenant was convicted of offences under the Protection of Children Act 1978. He was sentenced to four years’ imprisonment and his housing association landlord sought possession of his property. He argued that his criminal activity predated his tenancy, as it had occurred when he was living nearby but was not a tenant of the housing association. He claimed that his conviction could not therefore be used as the ground on which his property was to be repossessed. The Court of Appeal rejected this argument.
In the second case, a secure tenant, who had several convictions connected with illegal drugs, had set up in his home a ‘sophisticated and extensive’ system for growing cannabis. The court allowed the landlord’s application for a possession order, but suspended it for two years to give the tenant the chance to show he had changed his ways. The local authority appealed the decision. The Court of Appeal took the view that the tenant had breached the terms of the tenancy by carrying out the criminal activity and had also disregarded the rights of his neighbours. In the absence of clear evidence that his undesirable activity had ceased, an immediate possession order was granted.
“Tenants who breach the terms of their tenancies by committing criminal acts are getting short shrift in the courts,” says <<CONTACT DETAILS>>.
Partner Note
Raglan Housing association Ltd. v Fairclough [2007] EWCA Civ 1087.
Sandwell MBC v Hensley [2007] EWCA Civ, 1 December 2007.
E-Conveyancing on the Way
Plans to update the conveyancing process in England and Wales have been ongoing since 1998, when preliminary proposals were set out in a report, compiled by the Law Commission and the Land Registry, entitled Land Registration for the Twenty-First Century. Consultation on how best to go about re-engineering the system has been extensive. The aim is to develop an electronic system of conveyancing that makes buying and selling easier for all those involved in the process.
The Land Registry’s e-conveyancing project, developed by IBM, is expected to go live some time this summer following the introduction of a public key infrastructure (PKI) system that uses cryptography to guarantee the authenticity of property transaction documents. The system is designed to allow authorised users to exchange information quickly, securely and reliably with each other and with the Land Registry. Documents will be encrypted and signed with a digital certificate. Documents will only be able to be produced or read by those in possession of a cryptographic token, username and password. Once up and running, the system should allow property and mortgage registrations to be completed instantly, funds to be transferred immediately, securely and reliably and it will enable accurate and up-to-date information on the progress of all linked conveyancing transactions to be accessed online.
For further information on the e-conveyancing system, see http://www.landregistry.gov.uk/e-conveyancing/.
Partner Note
Widely reported. See http://www.computerweekly.com/Articles/2008/01/17/228972/land-registry-e-conveyancing-system-to-include-pki.htm.
EPCs – Time is Running Out
Commercial buildings to be built, sold or let will in future require an Energy Performance Certificate (EPC). The requirement is being phased in, commencing on 6 April 2008, when EPCs will be required for commercial buildings over 10,000 square metres. On 1 July 2008, EPCs will be required for commercial buildings over 2,500 square metres and all other commercial buildings will require an EPC from 1 October 2008.
From 6 April 2008, all public buildings over 1,000 square metres will be required to display an EPC.
A builder or landlord is required to provide not only the EPC, which shows the energy efficiency of the building, but also a recommendation report issued by an energy assessor. This will show recommended actions necessary to improve the energy efficiency of the building. A new building will not be able to be issued with a certificate of completion by the building inspector unless the EPC and report are available.
There are certain exceptions to the requirements. Details, in the form of frequently asked questions, can be found at http://www.communities.gov.uk/planningandbuilding/theenvironment/energyperformance/frequentlyaskedquestions/.
Partner Note
There is a good summary at http://commercialenergyperformancecertificates.co.uk/commercial-epc.htm
HMRC in Buy to Let Probe
HM Revenue and Customs (HMRC) have launched hundreds of investigations into the tax affairs of taxpayers they believe have under-declared or failed to declare taxable income from their buy to let activities.
Two thousand investors are expected to be targeted in a drive to identify taxpayers who have failed to declare investment income. It is thought that the first wave of enquiry letters includes many sent to taxpayers who have already sold their buy to let properties and therefore probably thought it unlikely that their under-declarations would be discovered.
Where the evasion of tax is wilful (i.e. fraudulent), HMRC can collect tax for up to 20 years after it is due, plus interest. They can also levy penalties of up to 100 per cent of the unpaid tax.
HMRC’s exercise is in addition to their usual enquiries in this area which focus on excessive expense claims and, in particular, on whether taxpayers have claimed their mortgage payments in full, as opposed to the interest on the mortgage, as a tax deduction. Only the interest element of a mortgage is allowable as a deduction for Income Tax purposes, not the capital element.
Says <<CONTACT DETAILS>>, “Tax law for owners of rental properties of different types is very complex and quite often poorly understood by taxpayers. We can advise you on all aspects of property ownership and letting and assist you in dealing with HMRC.”
Partner Note
Reported in the ICAEW Tax Faculty’s ‘Taxline’ 398, 4 March 2008.
If you would like to see a sample of the letter, please email joe@bestpracticeonline.com.
In Brief
Estate Agent Not Responsible for Inaccuracy
An estate agent who included in a set of property particulars details of land to which the title was in dispute was not guilty under the Property Misdescriptions Act 1991 because the agent had no reason to doubt that the land was part of the property, nor had she made any representations in the sale particulars regarding the title to the property.
In this case, the property in question was garden land adjacent to a house. Title to the land was claimed by the owner of the house but was disputed by the local authority.
Partner Note
Lancashire County Council v Buchanan, DC.
In Brief
Tenant’s Rights Survive Transfer of Title
A corporate landlord who tried to prevent its tenant from exercising the option to purchase the property after the title to the property had been transferred to a subsidiary company (for reasons unconnected with the right to buy) found the court unsympathetic recently.
The court ruled that the tenant’s right was exercisable against the subsidiary, which was ordered to transfer the property to the tenant. The fact that the transfer was not done specifically for the purpose of preventing the tenant from acquiring the property was not relevant.
Partner Note
Coles v Samuel Smith Old Brewery (Tadcaster) [2007] All ER (D) 473 (Nov).
Is a Mobile Phone Mast for Life?
There are still several areas of the country in which a strong mobile phone signal is not to be found and each operator has ‘dead spots’ in their coverage. If you live in such an area, you might regard the receipt of a letter from one of the mobile phone operators, asking you for permission to erect a mobile phone mast on your land in exchange for payment of a rent, as one of the more welcome pieces of correspondence you receive.
However, there are cons as well as pros to granting such a request, even assuming you discount any health risk you may ascribe to having a phone mast nearby.
The main potential problems stem from the rights granted to mobile phone operators. To understand these, it is important to understand the context of the development of the mobile phone networks in the UK, which has been based on the Government’s desire to ensure comprehensive access by customers to competitive mobile phone networks. Accordingly, the Government has given the mobile phone companies considerable rights.
These rights include extensive ‘compulsory purchase’ powers. If you were to grant permission for a mast on your land, these powers might well be exercised by the operator at the end of the lease were you to refuse to agree to the renewal of the lease (say, because you had the land earmarked for development). In practice, defeating a mobile phone company’s right to buy can be a difficult process, even if it is possible at all. A request for the removal of a mast is also likely to result in an application for compulsory purchase. If this is not the result, a counter notice can be served by the operator to retain the equipment and will normally be upheld by the court if the operator can show that the removal of the equipment will disrupt service to consumers.
Another potential problem comes if work needs to be done on the land. In such circumstances, the landowner must serve a notice on the phone company before the work can commence. However, the company has the right to serve a counter-notice to prevent any disruption to the service it offers to its customers. If this is done, it would be for the court to decide whether the landowner’s interests justified the disruption in the service to the public.
Most of the cases involving disputes over mobile phone masts have been decided in favour of the phone companies involved, so it looks very much as though a mobile phone mast will, in many cases, be for life.
If you would like advice on any property matter, contact <<CONTACT DETAILS>>.
Partner Note
Sch 2 of the Telecommunications Act 1984.
Sch 3 of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003. See also St Leger-Davey v First Secretary of State & ors [2004] EWCA Civ 1612.
New Law Journal, 18 January 2008, pp 92-3.
Lack of Clarity Makes Repair Responsibility Problematic
Lack of clear wording in a lease can often cause problems. A recent case dealt with who was responsible for redecorating and repairing the windows of an apartment – was it the builder landlord, who had sold the 999 year leases in a property development within a Grade II* listed building, or was it the purchaser of one of the leases?
The relevant clauses required the builder to repair ‘the main structure of the building’, which was briefly defined, and to decorate ‘the exterior, including the wood and ironwork…as often as…reasonably required’.
One would reasonably think that the repair and decoration would go together but, in this case, the court ruled that the repairs were the responsibility of the tenant as the windows were not ‘part of the main structure’. The decoration of the (repaired) windows, however, was the responsibility of the landlord.
Says <<CONTACT DETAILS>>, “This is one of those cases where more care over the drafting of the documentation could have made it clear who was responsible for what, which would have been preferable to spending time and money later on to resolve the issue in court. We can assist you in drafting leases and related property agreements which will help prevent such problems arising.”
Partner Note
Pattrick v Marley Estates Management [2007] LRX/130/206.
See Solicitors Journal, 29 January 2008, pp 24 and 25.
Loss Reduced if Cost Not Real
Where a landlord or tenant breaches their repairing covenants on a let property, the other party is entitled to compensation for the loss they suffer. Normally, once the responsibility is accepted, agreeing the amount payable is a relatively straightforward matter. Occasionally, however, the arguments are more complex, as was the case in a dispute which recently ended up in the Court of Appeal.
In the case in point, the tenant had breached its repairing covenants and the landlord sought damages. The tenant argued that the sum awarded should be based on the reduction in the value of the freehold as a result of the tenant’s failure to repair the property. This was because the property was ‘ripe for development’ and so it was very likely that a new owner would redevelop it, making most of the repairs for which compensation was sought unnecessary. The lower court accepted this line of reasoning and set the damages at £50,000. The landlord was unhappy with this decision, claiming that the correct amount of damages was the cost of the necessary remedial work. The landlord appealed.
The Court of Appeal ruled that in the particular circumstances that applied in this case, the judge had been justified in concluding that any purchaser would acquire the premises with a view to redeveloping them. Such a purchaser would not need to undertake much of the repair work and therefore the correct measure of compensation was the reduction in the value of the property due to its lack of repair.
Partner Note
Ravensgate Estates Ltd. v Horizon Housing Group Ltd. and persons unknown [2007] EWCA Civ 1368. See TSJ, 15 January 2008 pp 32 and 33.
Problem Trees and Preservation Orders
Cases involving damage to a property caused by trees located on a neighbour’s land, especially those dealing with subsidence or heave due to roots, are fairly common. One complication that arises is where the tree in question is subject to a preservation order.
In a recent case, a tree on a neighbour’s land was causing continuing damage to a house. As the tree was the subject of a preservation order, the homeowners applied to the council for planning permission to fell it. The homeowners considered that they should be entitled to a declaration that they could fell the tree because it was creating a nuisance and taking it down was necessary to prevent this continuing. The planning application was refused. The local authority considered that the nuisance could be prevented by other methods, such as creating a root barrier or by underpinning the affected house. The court, however, rejected the council’s argument, holding that the existence of alternative solutions to the problem was not relevant. The council therefore appealed to the Court of Appeal.
The Court of Appeal overturned the decision of the lower court. In its view, the purpose of the legislation that covers tree preservation orders is to preserve trees. Therefore, the existence of alternative means of abating the nuisance which would allow the preservation of the tree had to be considered. The legislation could not be considered to apply only to what might need to be done to the tree to solve the problem – it was reasonable to consider alternative action that might be taken which did not involve lopping or felling the tree.
It would appear, therefore, that in circumstances such as this the whole range of possible solutions will have to be considered before the court will support a decision to fell a tree which is the subject of a preservation order.
If you have problems with nuisance caused by your neighbours or their plants, our experts can help you resolve them.
Partner Note
Perrin and Another v Northampton Borough Council [2007] EWCA Civ 1353.
Put it in the Lease Renewal or Lose it
A recent case confirmed the principle that a tenant who has enjoyed property rights that are not within the lease cannot require that they be included when the lease is renewed.
In the case in point, parking rights had been granted by the landlord to the tenant by way of a licence. On renewal, the tenant wanted the rights to be brought into the lease as ‘rights enjoyed by the tenant in connection with the holding’. The court did not agree that a right not specifically catered for within the lease was part of the bundle of rights given to the tenant under the lease. The parking right was separate.
“The message for tenants is to beware,” says <<CONTACT DETAILS>>. “It is risky to assume that informal rights or even rights under a formal licence will continue in the same way that rights under a tenancy do.”
For advice on any commercial property matter, contact us.
Partner Note
Picture Warehouse Limited v Cornhill Investments Limited [2008] EWHC 45 (QB). See http://www.bailii.org/ew/cases/EWHC/QB/2008/45.html.
Right to Buy – Can Tenants Buy Their Commercial Property?
A recent decision of the House of Lords may have opened the door for thousands of tenants of offices and other properties originally designed to be used as homes to be given the right to buy their properties.
The Leasehold Reform Act 1967 gives a long leaseholder of a house the legal right to purchase the freehold according to a set procedure. The Act does not apply to commercial premises – but the House of Lords’ decision suggests that in some circumstances commercial tenants may acquire the right to buy the property.
The question turned on whether the premises in question were a ‘house’. The Act defines a house as premises which are designed or adapted to be lived in and which can reasonably be called a house.
In the case in point, the building was used for commercial purposes but had originally been designed as a residential property. The Lords considered that the fact that the premises themselves were not habitable was not relevant. The strict construction of the law meant that since the premises were designed to be lived in, the right to buy applied. It is quite clear from the judgment of Lord Walker that the Lords consider that a property which is of ‘mixed’ use, having been adapted for residential occupancy, would also qualify as a house for this purpose.
Says <<CONTACT NAME>>, “This decision has potentially massive implications for owners and tenants of all sorts of properties which were originally designed as houses. We