Industry comment, updates and news from the Websters team.
An article Penningtons Manches looks at the ‘non domestic’/commercial proposed consultation on the regulations for minimum energy performance (now called minimum energy efficiency standards (MEES)) Properties with an energy performance certificate (EPC) rating of F or G will be unlettable until works improving the property’s energy efficiency are carried out.
Read the full article here
HM Revenue & Customs has finally confirmed that the surrender of a lease subject to tenancies can constitute a “transfer of a going concern” with the result that no VAT is payable. This will result in stamp duty land tax(SDLT) savings for landlords accepting surrenders and in certain cases it will be possible to reclaim SDLT that has been overpaid on historic surrenders.
Phil Taylor has highlighted an interesting recent service charge question arising in the case of Daejan Properties Ltd v Griffin & Anor. If a property suffers a structural failure, due to lack of repair, can tenants claim that reduced service charges should only be paid on the assumption that the repairs had been carried out?
Read the full article here
Morton Fraser has noted that the Rent (Scotland) Act 1984, says that any person who, as a condition of the grant, renewal or continuance of a protected tenancy, requires the payment of any “premium” is guilty of an offence. However letting agents still sometimes ask for payments from tenants on top of any rental that is due in terms of the tenancy. In the recent case of Cross -v- Aberdeen Property Leasing the letting company had imposed an administration fee on the tenants of £125 simply for the entering into of the tenancy agreement. The tenants paid this fee initially (presumably because they thought they no choice) but subsequently took court action to recover it. The court confirmed that the administration fee was a prohibited payment.
Dominic Cunliffe of Macfarlanes notes that, unless the lease makes express provision to the contrary, a tenant will not be able to recover from its landlord any prepaid rent or other sums, which relate to the period after a break date.
Read the full article here
Inside Housing reported that ‘coalition MPs defeated an amendment to the Consumer Rights Bill last night, to ban letting agent fees, by a majority of 53 votes. The Labour proposal was defeated 281 to 228 with all but three Conservative and Lib Dem MPs voting against it. The government released its own amendment yesterday – letting agents will have to publish all fees charged in comprehensive detail or face fines. The Communities and Local Government department statement about the amendment said it will be added to the bill at a later date. Stella Creasy, Labour MP for Walthamstow, tabled the opposition’s motion and said before the vote: ‘It is a fundamentally anti-competitive corporate practice. We want to do something about it.’
Hill Dickinson has recently focused on the problems of dilapidation, when a new lease is negotiated. In this case, the main focus of tenants and landlords is upon the financial payments to be made throughout the lease term, such as rent and service charge. Quite often the parties do not realise that failure to understand and deal with dilapidations, which are essentially the breach of repairing/decorating obligations within the lease, can have serious financial implications in the future.
Read the full article here
BBC Business News reported this week that the Office of Fair Trading is to look into the relationship between leaseholders and their freeholders and, in particular, will look into the way in which charges are made for the management and maintenance of leasehold homes. This investigation will cover councils and housing associations , as well as private freeholders.
Read the full article here
No. 1 Deansgate (Residential) Limited v No. 1 Deansgate RTM Co. Limited
In Eversheds ‘Top 5 cases of 2013, it was reported that the decision in this case was that, for the
purposes of the Commonhold and Leasehold Reform Act 2002, a building can be
attached to another and still be considered to be ‘structurally detached’, so long as the
attachment is not of a structural nature. The relevance of this finding is because
qualifying leaseholders of flats are entitled to establish and join a Right to Manage
company (‘RTM company’) if they all occupy a ‘self contained’ building. The building in
this case was a 14 floor block of flats which was originally a stand alone building but
over time neighbouring properties had been connected to it. The leaseholders formed
an RTM company and sought to acquire the Right to Manage which was denied.
However it was held that as the neighbouring buildings derived no structural support
from the building in question, it could be regarded as structurally detached and the
Right to Manage application could proceed. The cases which considered the phrase
‘structurally detached’ when looking at the Leasehold Reform Act 1967, were irrelevant
for this purpose. Residents will now have to consider not whether their building is joined
or touches another building, but if it gains any real support from that building before
making an application.
Websters has been specialising in the production and audit of service charge accounts for nearly forty years. When we started this work, service charge audits 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:-
We now act for a very large number of landlords, who recognise that independently audited accounts can remove a major cause of conflict with their tenants
