Industry comment, updates and news from the Websters team.
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?
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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.
Travers Smith has reported that Martin Retail Group Ltd v Crawley Borough Council is the first case in which the Courts have applied competition law principles to tenant mix policies. The Court decided that restricting the use of a shop to a newsagent and for the sale of books, toys, CDs, fancy goods and greeting cards made it part of a “letting scheme” which prevented the tenants on a shopping parade from competing with each other, and was unlawful.
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In his ‘Tip of the Week, David Wells of DAC Beachcroft reports that the recent case of Friends Life Management Services Limited and A&A Express Building Limited reinforces the point that a landlord either has to spend monies it receives by way of service charge within the service charge year a lease terminates or return it to the tenant.
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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.
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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.’
King & Wood Mallesons has reported that CRAR (Commercial Rent Arrears Recovery) – the new rules for seizing a tenant’s goods – comes into force on 6 April 2014 in England & Wales, replacing the ancient common law rules of distress for rent. CRAR is designed to be fairer to tenants, but will it be an effective remedy for landlords and are there any alternatives?
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Shoosmiths has reported that, in Siemens Hearing Instruments Limited v Friends Life Limited, the High Court has held that a break notice which failed to comply with the express provisions of the break clause was nonetheless valid. The key lesson for landlords is to ensure that, if you intend to make non-compliance with the terms of a break clause fatal, you must say so. From the tenants point of view, not a great deal has changed. It is essential to follow break clauses to the letter but, if something goes awry, the language of the clause may just be flexible enough to rescue the break.
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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.
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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.
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