Industry comment, updates and news from the Websters team.
An article in The Guardian states that The Office of Fair Trading is to investigate the property management industry following complaints from flat-owners and wants to hear from interested parties who can shed some light on why the management of leasehold homes in England and Wales may not be working well for consumers.
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A landlord often supplies services, other than rent, such as insurance, water and electricity. Some services may not be standard-rated as a stand-alone supply and Pearson has reported that barristers, who were tenants at the Middle temple, found that problems arose when their landlord supplied a ‘mixture’ of services. VAT law has a preference for treating ‘bundles’ of supplies as a single supply where splitting them would be regarded as ‘artificial’. When a mixed supply is deemed to be a single supply, the predominant supply will determine the VAT rate charged.
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Buying a home is increasingly out of reach for many, yet 78% of people want to be a homeowner. A revamped form of shared ownership could be the answer.
In Read Smith‘s Real Estate Legal Update, it was noted that some of the highest profile corporate occupiers have on-going programmes for reducing power consumption and improving their impact on the environment but others may be persuaded by the costs savings or required by some of these new laws and regulations to turn green.
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Joanna Nicholls of Howes Percival has reported that, from 1 January 2015, it will be illegal to use the hydrochlorofluorocarbon (HCFC) gas R22 in either its newly produced ‘virgin’ or recycled form. R22 gas is a commonly used coolant in older air conditioning systems so its ban will have a significant impact as these systems will either have to be converted or replaced. The key question for landlords and tenants is who will pay?
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Anna Rutherford of Speechly Bircham notes that the Taking Control of Goods Regulations 2013 made on 26 July 2013 provide further detail on the Commercial Rent Arrears Recovery (CRAR) procedure which comes into force next April. There has been uncertainty and speculation concerning the new regime which replaces the existing law on seizure and sale of goods and the archaic law of distress. CRAR seeks to provide a unified procedure for enforcement agents to follow. Since the Regulations cover specific amounts of rent only, commercial Landlords might be advised to refrain from offering inclusive rents, without detailing separate sums for rent and service charge.
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Peter Bolton King, the RICS Global Residential Director, reports that the RICS Service Charge Residential Management Code is in need of updating, as the current document is woefully out of date. RICS is intending to consult stakeholders next month about what revisions they would like to see in a 3rd edition and will also be asking respondents to assess the impact of any changes. Without a business impact assessment it is unlikely that any updated edition would be endorsed by the government.
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In February 2013, Russell-Coke posted a summary of the law relating to tenancy deposit protection. The recent Court of Appeal decision in Superstrike v Rodrigues has caused quite a stir. Ed Cracknell and Stephen Small summarise the consequences for landlords in light of both the case and subsequent guidance that has been jointly published by the deposit scheme providers.
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Practical Law notes that, in Blackpool Borough Council and others v Cargill [2013] UKUT 0377 (LC), the Upper Tribunal (Lands Chamber) held that a landlord had not acted unreasonably pursuant to section 19 of the Landlord and Tenant Act 1985 where it had recovered from each tenant the same amount in respect of a global management charge via the service charge.
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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. Some of the advantages of an audit are:-
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
