With the New Year fast approaching, Kathryn Copeland, Commercial Real Estate associate, reviews the key developments in commercial landlord and tenant law in 2018.
The article, titled ‘A roundup of 2018‘ covers developments surrounding:
- A new service charge code
- The Electronic Communications Code
- Electronic signatures at the Land Registry
- and various case law development.
Kathryn also briefly looks ahead to 2019 and reviews what might be next on the agenda, including radical changes in residential leasehold, and the potential impact of Brexit.
‘This article was first published in Property Law Journal (December 2018/January 2019) and is also available at lawjournals.co.uk’.
Please note that the views, thoughts, and opinions expressed in this article belong solely to the author and do not necessarily reflect the views, policy or position of Websters.
Andrew Graham-Smith of Womble Bond Dickson writes about the new RICS Statement, which will come into effect from 1st April 2019.
In September, the Royal Institution of Chartered Surveyors (“RICS”) published its latest Professional Statement, entitled “Service Charges in Commercial Property” (the “Statement”). The Statement re-states updates and replaces the existing Service Charge Code (the “Code”), and has the regulatory effect of formalising the Code within the RICS best practice framework. The Statement is effective from 1 April 2019 and will apply to all Service Charges across the UK.
The Statement sets out best practice in the management and administration of service charges in commercial property and provides mandatory obligations that RICS members and regulated firms engaged in this area must comply with or potentially face disciplinary proceedings.
The Statement is not capable of overriding the terms of a lease, however, service charge provisions must be read in conjunction with the Statement to help identify the best interpretation of the lease provisions, and ensure compliance with the Statement as far as possible.
The Statement has increased the regulatory weight of the Service Charge Code, and as such the mandatory requirements and core principles should be carefully considered by professional practitioners who advise on the terms of new commercial leases, or who are involved with service charge provisions in leases.
To read more on the Aims & Objectives, Mandatory requirements, Core Principals & Guidance Click here.
Tessa Shepperson of The Landlord Law Blog writes about how leases fall under contract law.
As well as being an ‘estate in land’ (looked at in part 1) a lease or tenancy is also a type of contract. So we need to take a look at contract law.
Contract law is a very important area of law which affects all of us in our lives every day.
A contract is an agreement about something which is enforceable by law. To create a contract you need to have three things:
- An offer
- Acceptance of the offer, and
- Consideration going both ways.
A lease or tenancy is created in the same way as a contract, by one party making an offer and the other party accepting it.
Normally there is a written document but not always (more on this later). The consideration, so far as the tenant is concerned, is the rent, and so far as the landlord is concerned, is the property.
The rent does not have to be a market rent. Nor does it have to be money. For example, in the past (and when spices were a lot more valuable) a peppercorn was sometimes used for rent. A ‘peppercorn rent’ is a phrase now used to indicate a payment which is of low value but sufficient to create the tenancy / lease.
Click here to read more
In an article published by Shopping Centre the following has been reported;
Following the House of Fraser CVA (company voluntary arrangement) and the collapse of Poundworld and Fabb Sofas into administration, the British Property Federation has called on government to conduct an urgent review.
The property industry body believes the CVA process is now being mis-used, and it highlights a number of faults in the current system including:
- Lack of transparency
- Unfair discrimination between different creditors
- The lack of regulation to ensure CVAs are used appropriately and to drive good practice
To read more click here.
With the new General Data Protection Regulations (GDPR) coming into force on the 25th May 2018 many Residents Associations and Management Companies are asking what this means for them.
In a recent Q&A from News on the Block, Vincent Billings of Bolt Burdon provides his advice on what is required to comply with GDPR in a property business.
The driving aim of the GDPR is to protect individual’s data. Any business cannot deal with personal data simply because it wants to. Every element of data processing must be justified according to the GDPR.
The starting point for dealing with the GDPR in relation to any property business is to establish what personal data you hold, where it came from and who you share it with including if any direct marketing takes place.
To read more click here.
In a recent post from News on the Block Clare Brady of Brady Solicitors highlights 5 factors to be considered before combining service charge and ground rents. She writes;
When acting for an RMC or Right to Manage Company, managing agents will often be told by the freeholder to allow them to deal with the service charge arrears. The benefits of such an approach are clear from the ground rent owner’s perspective, but is it in the best interests of the management company, the leaseholders and the block?
With ground rent recovery increasingly in the spotlight, both managing agents and freeholders must take care to ensure recovery procedures are legal, in line with the terms of the lease and – importantly – in the best interests of the RMC and leaseholders.
Click here to read the full article.
Victoria Barker of Residential Landlords Association states that landlords are being reminded of the importance of serving a copy of a valid gas safety certificate at the start of a tenancy, or they risk being unable to serve a Section 21 notice of possession.
In a case that was heard at Central London County court earlier this month, a letting agent failed in their attempt to use a Section 21 route to gain possession of their property.
District Judge Bloom rejected the possession claim, on the basis that at the time the Section 21 notice was served on the tenant, the landlord had failed to provide them with a copy of a valid gas safety certificate before the tenant had moved into the property.
Despite the landlord having provided the tenant with a copy of the new gas safety certificate, following an annual gas safety inspection 11 months later, this made no difference and the Judge still rejected the Section 21 claim.
What this means
Up until now, if a landlord wanted to gain possession of a property through using a Section 21 route to possession, and they had not served their tenants with a copy of a valid gas safety certificate, it was assumed they would have been able to rectify this for example by giving the tenants a copy of the gas safety certificate at a later date.
This case highlights that it is absolutely ESSENTIAL for landlords in England to serve tenants a valid gas safety certificate at the start of a tenancy, together with other prescribed documents, if the tenancy began on or after the 1st October 2015 (when the Deregulation Act provisions came into force).
Just as it is critical that all private landlords ensure that all gas equipment in the accommodation that they rent out has a valid gas safety certificate (which lasts for twelve months) it is now equally essential for landlords to share a copy of the gas safety certificate with tenants at the start or renewal of a tenancy.
Read more here.
The Royal Institution of Chartered Surveyors (RICS) announced in October 2017 that a fourth edition of the Service Charge Code for Commercial Property was under deliberation.
Ahead of it’s proposed launch on 01 April 2018 Monika Holyst of Freeths Solicitors has provided some insight into the draft fourth edition of the Code.
Read the full article here.
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.