On the 22nd November 2017 the Chancellor of the Exchequer presented his Autumn Budget to Parliament.
The 2017 budget addressed the requirement of increased funding in the construction industry. It was announced that £15.3 billion of new funding would go towards supporting the building of houses over the next five years. This is with the aim to achieve a target of 300,000 new homes a year. In addition to this £34 million has been set aside to support the teaching of construction skills.
Thomas Reuters Practical Law have highlighted the implications that the new budget has on the construction industry – Read the full article here.
One of the main issues faced by landlords making a repair or replace decision concerns the recovery of such costs through the service charge.
In a recent article Zara Saunders of Shoosmiths comments that Service charge recovery can be a matter fraught with difficulty, even in the sphere of commercial property where no statutory limitation applies. Property owners may only recover costs to the extent permitted by a lease and issues frequently arise regarding whether an item of expenditure is one of repair or improvement and to what extent recovery might be permissible. Tenants will generally expect to pay the cost of repairs but not improvements.
Read the full article here.
Adele Nicol of Anderson Strathern LLP reports that new legislation, concerning Private Housing (Tenancies) (Scotland) Act 2016, creates a new form of residential tenancy known as the Private Residential Tenancy (“PRT”). Once the Act is in force it will not be possible to create new Assured or Short Assured Tenancies; existing leases will be phased out, for example a tenant inheriting an Assured or a Short Tenancy will acquire a PRT instead. The ability of a landlord to bring a PRT to an end is more limited than for a Short Assured Tenancy.
The new legislation also contains related provisions including on rent review, and on rent control (in “pressure zones”)
The changes in the Private Housing (Tenancies) (Scotland) Act 2016 have not yet been brought into force. The Scottish Government has indicated that this will happen in December 2017.
Read more here.
Zoe Stollard of Clarke Willmott provides insight into the Construction Industry Scheme and the changes which have been implemented in 2017.
The Construction Industry Scheme (CIS) is designed to decrease perceived undeclared payments in the construction sector. It requires contractors to register for the scheme and to withhold tax before payments are made to sub-contractors under contracts relating to construction operations. The amount of tax withheld depends on the registration status of the sub-contractor:
- if they are unregistered, 30% must be withheld;
- if they are registered, 20% must be withheld; and
- if they meet certain criteria and register for gross payments, 0% must be withheld.
The contractor must then pass to the HMRC the amounts withheld.
Prior to April 2017, contractors could verify whether sub-contractors were registered and whether they could be paid gross online or by phone. From the 6th of April 2017 sub-contractors must be registered online.
Read the full article here.
Jill Carey of Taylor Wessing comments on a recent case concerning the ability of landlords to recover the cost of improvements from tenants where the lease permits it, but the statutory regime for residential service charges also applies to restrict recovery.
Read the full article here.
When we started specialising in service charge audits they were frequently undertaken as part of the property owner’s general annual audit. This was not a satisfactory situation because specialist knowledge is needed for accurate service charge accounting assessment.
- Landlords and tenants have transparent financial relationships
- Tenants trust that the service charge is correct and fair at no added cost to the landlord
- A reduction in investigations by tenants into service charges, saving time and money for landlords
- Specialist advice on current techniques for the internal accounts team
- Almost all general practice accountants and auditors unfortunately do not have the specialist knowledge and experience to fully understand your needs
Since that time many large landlords in the UK have moved to providing independent audited accounts for their service charges thus removing one cause of landlord : tenant conflict
Burges Salmon LLP reports that, in the case of Riverside Park Ltd v NHS Property Services Ltd, the break clause in an NHS lease provided that the break would only be effective if vacant possession given but partitioning, kitchen units, window blinds and other such items were left in the premises.Therefore the landlord argued that the NHS had not given vacant possession of the premises and that therefore the break was invalid. The key issue was whether the items were fixtures or tenant’s chattels. If the items were chattels then vacant possession had not been given and the test for distinguishing chattels and fixtures centres on the degree of annexation and the object/purpose of annexation. The court determined that the items were chattels and not fixtures, because they were only “slightly attached” to the premises and did not provide a lasting improvement to the premises. The court also noted that, even if the items had been fixtures, the NHS had still not complied with the break clause, because the definition of “premises” specifically excluded partitioning and tenant’s fixtures.