Leasehold Reform Act 1967
Magnohand Limited v. Earl of Cadogan and another (4 May 2012) (Court of Appeal)
It was decided that a purpose built block of flats could not be “reasonably so-called” a “house” for the purposes of s.2 (1) LRA 1967.
In the past year there has been a marked increase in the number of requests made to RP’s to extend the term of Shared Ownership Leases. Such requests are made by leaseholders who find difficulty in obtaining a mortgage of their property where the unexpired term of their lease is 70 years or less.
Whilst shared owners have no statutory right to a Lease extension the HCA have advised RP’s to consider the same wherever possible. If a lease extension were not granted, the shared owner would be left with a lease upon which a mortgage would not be available and a property they may not be able to sell.
It would be usual for RP’s to extend the term of a Shared Ownership lease by way of Deed of Variation. As the extension is at the request of the leaseholder they would be expected to pay the RP’s legal fees in this respect. The consent of the HCA to such variation is not required as the fundamental clauses of the lease are unaltered.
Please contact us if you would like to discuss this issue in more detail.
The recent case of Avocet industrial Estates LLP v Merrol has served as a reminder of how strictly the Courts can enforce any conditions attached to lease break clauses.
The break clause in the Lease provided that the break notice would be of no effect if any rent, defined to include interest payments, remained outstanding. The Tenant had paid the rent but owed default interest on late payment of rent under the Lease on the break date, though the Landlord had not issued any demand for default interest. After service of the break notice by the Tenant the Landlord later argued that the break clause had not been validly exercised because of the outstanding interest due.
The court found in favour of the Landlord and held that the Tenant had failed to comply with the conditions for breaking the lease despite the amount of interest being negligible. The judge admitted that the result was ” harsh” and that the conditions attached to the notice represented “something of a trap for a tenant”.
The words of the judge should serve as a warning for all tenants and the case reaffirms that any tenant should proceed with extreme caution in negotiating break clauses and any proposed conditions attached to them. Any such conditions will be strictly and literally interpreted by the courts.
Section 122 of the Charities Act 2011 imposes requirements for Charities (including exempt charities) to include statements in prescribed forms in documents relating to the disposition and acquisition of land. These section 122 statements are to be included in all transfers, leases contracts, deeds of easement etc.
Generally for Registered Providers which are exempt charities the statements are:-
Disposals – “the land the subject of this transaction is held by or in trust for [ ], an exempt charity, and is one falling within section 117 (3) (A) of the Charities Act 2011”
Purchases – “the land the subject of this transaction will as a result of this transaction be held by or in trust for [ ] which is an exempt charity.
Labour MP Frank Field has tabled a private member’s bill which would introduce new measures to determine who should get social housing. His suggestion is that new tests should be applied, including how long someone had lived in an area, whether they had contributed to the community and whether they had paid their rents and taxes. Mr Field also feels that it would be fair to take into the account how applicants’ children had behaved in the past, and any complaints from neighbours, to demonstrate whether families had an “exemplary tenancy” record.
The legal rules governing Energy Performance Certificates (“EPCs”) changed on 6 April this year.
Energy Performance Certificates (EPCs) provide information on the energy-efficiency of a building and makes recommendations on how to improve the building’s energy use and carbon dioxide emissions.
The requirement to ‘commission’ an EPC or Predicted Energy Assessment (PEA) before the building is ‘put on the market’ will apply to all buildings including non-residential buildings, whether they are being sold or rented out. Prior to 6 April, this only applies to the sale of residential property.
Currently, an EPC or PEA must have been commissioned before the marketing of a property can take place, and then ‘reasonable efforts’ to obtain it within 28 days of commissioning. From 6th April this 28 day period will be reduced to 7 days. However, if after this initial 7 days the EPC has not been secured, a further 21 days will be given.
Currently, for only residential sales, there is a duty to attach the EPC to Estate Agent written particulars or at least include the asset rating on those particulars. From 6 April the actual front page of the EPC or PEA will need to be attached to the particulars, and this duty will be extended to apply to all commercial and residential properties for sale or rent.
Come 6th April, a full copy of the PEA or EPC must be provided to prospective buyers or tenants ‘at the earliest opportunity’ but, in any event, before they receive literature about, or view, the property. The practice of retaining the EPC until shortly before exchanging contracts is therefore unlawful under the new rules.
Agents and others who market property must become aware that they may become liable for a Penalty Notice if marketing a property without an EPC or PEA . A Penalty Notice will be for a sum equal to 12.5% of the property rateable value subject a minimum fine of £500 and a maximum fine of £5,000.
As part of the new Regularoy Framework for social housing the HCA have once again taken responsibility for the regulation of Social Housing Providers in England from 1 April. The new Framework implements the amendments to the Housing and Regeneration Act 2008 introduced by the Localism Act 2011. The Tenant Services Authority will be replaced with a new regulatory committee which will preserve independence from the HCA’s investment activity.
As the activities of Registered Providers are becoming more complex the new Regulatory Framework details how governance, viability and value for money will be the focus of economic regulation and has been designed to maintain lender confidence and protect taxpayers.
There will also be a different approach to consumer regulation. While the HCA will continue to set consumer standards for tenants, it will only intervene in cases of serious detriment that have caused, or are likely to cause, harm to tenants. It is the intention that less serious tenant issues and complaints will be resolved locally through landlords, tenant panels and local councillors.
As ever it remains to be seen how the regulation will translate into working in a practical effective way.
The Community Infrastructure Levy is fast approaching as the Mayor of London’s CIL will come into effect on 1 April 2012 and many other local authorities are preparing to introduce it in their areas.
There are a number of reliefs and exemptions available under CIL including exemptions for social housing where the development comprises “qualifying dwellings” (either in whole or in part). In brief, these are dwellings which satisfy at least one of two conditions relating to Registered Providers letting dwellings and to disposal of homes on shared ownership terms.
In order to claim social housing relief a claim must be made in writing on a form published by the Secretary of State and the claim with supporting evidence and a relief assessment must be received by the collecting authority before the commencement of the chargeable development. The claim will lapse if development is commenced before the collecting authority has notified the claimant of its decision on the claim.
Social Housing relief can be withdrawn under claw back provisions where there is a change in circumstances within 7 years from commencement of development resulting in the eligibility criteria no longer being met.
L&Q Housing Association (L&Q) has completed the purchase of 48 homes in London Borough of Sutton. Sharratts were instructed by L&Q who acquired the Properties last week on an acquisition and works basis with funding from the HCA. The apartments will comprise of a mix of rent and shared ownership homes.
Following handover of the units L&Q said of Sharratts involvement with the transaction: “Great Service as always!”
The NewBuy loan guarantee is designed to give buyers access to mortgages even if they only have a 5% deposit. Under the scheme, housing developers pay the lender 3.5% of the purchase price of a new-build property while the government provides an additional guarantee of 5.5%, to be called upon only if there is a crash in house prices
The scheme is available on flats and houses up to a maximum value of £500,000 and means a buyer requiring a £40,000 deposit for a £200,000 property will now only need £10,000. The scheme is open to anyone buying a property, but the government sees it as a means for first-time buyers in particular to purchase their first home.