News

Welcome Back to the Housing Market!

On 13 May, the Housing Secretary, the Rt Hon Robert Jenrick MP, delivered to the House of Commons and published a speech in which he set out the Government’s “clear, coherent and comprehensive plan to restart, reopen and renew the housing market and our construction industry.” It applies to England only – the devolved administrations to Scotland, Wales and Northern Ireland, to quote from the Financial Times “have all declined to follow the Westminster government’s revision of lockdown restrictions.” However, Nicola Sturgeon has since announced that the Scottish government will work with the property industry in the hope of re-opening the Scottish housing market on or after 18 June.

The English property and construction industry was quick to respond – estate agencies re-opened, appointments to view were made, conveyancers and removal firms swung into action and construction firms returned to abandoned sites. However, all must be conducted within social distancing and safety rules.

Under the coronavirus lockdown, people could only move house if they thought it ‘reasonably necessary‘. Mr Jenrick said this meant 450,000 had to put their plans on hold. Now, however, so long as people follow the Government’s guidance, moves can take place. The new guidance was first published at the end of March with subsequent updates made during May. As might be anticipated, the rules include extensive cleaning and hand washing.

100 construction firms have signed up to the Charter for Safe Working Practice published by the Home Builders’ Federation. It ensures that house building activities are conducted safely and within Government advice. Mr Jenrick thanked in particular Taylor Wimpey. This company has returned workers to the majority of its sites, thus removing its staff from the furlough scheme and allowing them to return to work on full pay. A 5% reduction on the company’s new homes has been offered to NHS and care workers and has, in particular, caught the Minister’s eye.


Coronavirus: some assistance

Amongst the measures introduced by the UK Government to assist people in these difficult times is the morgage holiday. Introduced first in March to assist both individuals and businesses, it proposed mortgage lenders should give a three month payment holiday to those clients who required it. The Government reports that 1.8million morgagee payment holidays were taken up.

HM Treasury has now proposed that in order to further assist mortgagors and “to give people the certainty they need, they will be contacted by their lender to discuss a way forward. Where consumers can afford to re-start morgage payments, it is in their best interest to do so. However, if people are still struggling and need help, a full extension of the morgage holiday for a further three months will be available as one of the options open to them.” The current lender ban on repossession of residential property will, it is proposed also continue until 31 October, 2020. This will, no doubt, be welcomed by those who face life with a reduction in their income and, in particular, those poor souls who presently have no or very little income at all.

Consultation on these proposals finished on 26 May and the Finance Conduct Authority expects to finalise its guidance to mortgagees “shortly afterwards”.

The independent consumer body ‘Which?’ has been championing the cause for consumers since 1957 and has an on-line publication entitled “Coronavirus what it means for mortgages, credit cards, loans and savings”. It is well worth a read considering, as it does, not just loan holidays but some Government concessions re withdrawal of savings. For instance, Which? says “The latest move comes from the Treasury which has announced it has lowered the withdrawal penalty on lifetime Isas from 25% to 20% to help those who need to access their savings during the coronavirus crisis.”

We are all living through strange and very difficult times but at least some assistance is available to those in need of it.


More temporary protection

The restrictions imposed by the UK government in order to prevent the spread of coronavirus continue but so, too, will measures to be introduced to, it is hoped, assist some businesses.

As we said in March 2020, business tenants have been given temporary protection from forfeiture for non-payment of rent (s82 of the Coronavirus Act, 2020). This protection presently extends to 30 June 2020. Additionally, on 23 April the Ministry of Housing, Communities & Local Government and the Department for Business, Energy & Industrial Strategy issued a joint statement saying “High street shops and other companies under strain will be protected from aggressive rent collection and asked to pay what they can during the coronavirus pandemic.”

The statement records that whilst the majority of landlords and tenants are working together to reach agreements on debt obligations, some landlords have been putting their tenants under undue pressure by using aggressive debt recovery tactics. To prevent this, if a company cannot pay its bills due to coronavirus, the government will temporarily prevent the use of statutory demands made between 1 March 2020 and 30 June 2020 and the issuing of winding up petitions presented from 27 April 2020 to 30 June 2020. The measures are to be included in the Corporate Insolvency and Governance Bill. Secondary legislation will provide tenants with “more breathing space” by preventing landlords from using the Commercial Rent Arrears Recovery (‘CRAR’) scheme unless they are owed 90 days of unpaid rent.

Communities Secretary, Robert Jenrick said the government is doing everything it can to ensure commercial tenants are as well placed as possible to get back to business after the lock down. However, he recognized that landlords, too, are facing very serious pressures and thus the government is “working with banks and investors to seek ways to address these issues and guide the whole sector through the pandemic.

The British Retail Consortium and UK Hospitality welcome the measures but emphasize they may need to be extended to ensure businesses can survive.


Act re Coronavirus

The much publicised and far reaching Coronavirus Act, 2020 received Royal Assent on 25th March, 2020. Relating to, for instance, the emergency registration of health, care and social workers, to food supply chains, temporary closure of educational premises, to statutory sick pay and pensions and to the grant of various and all-consuming powers to prevent events and gatherings and closure of premises, the Act has effectively reduced our lives where the greatest excitement is the purchase of food or collection of prescribed drugs! Elections have been postponed, many court proceedings reduced to video links and statutory enforcement powers curtailed.

In the arena of landlord and tenant, residential tenants in England and Wales have been given temporary protection from eviction (s81 and Schedule 29 of the Act) and business tenants temporary protection from forfeiture for non-payment of rent (s82).

With residential tenancies, the relevant period commences today, 26 March 2020 and ends on 30 September 2020. During that period, the Protection from Eviction Act, 1977 is to be read as if, in relation to Rent Act protected and statutory tenants, a notice to quit given by a landlord must give 3 months’ and not 4 weeks’ notice. With secure tenancies, the landlord’s notice stating possession proceedings are to be commenced, the specified date must not be earlier than 3 months after the date of service of the notice.

Landlords of business tenants to whom the Landlord and Tenant Act, 1954 applies cannot enforce, by proceedings or otherwise, a right to forfeit or re-enter premises for non-payment of rent during the relevant period. In this case, the relevant period also commences on 26 March but expires on 30 June 2020 unless altered by statutory regulations.

In a Government press release dated 18 March, 2020, the Ministry of Housing, Communities and Local Government expresses the hope that landlords and tenants will work together at the end of the relevant periods ‘to establish an affordable repayment plan, taking into account tenants’ individucal circumstances.’


Overlooking no nuisance

We reported, in February, 2019, the High Court decision in Fearn and others v The Board of Trustees of the Tate Gallery. Flat owners in a building neighbouring Tate Modern on London’s riverside complained that visitors to the Tate’s viewing platform could look directly into their flats thereby breaching their privacy. Some visitors went so far as to take binoculars in order to obtain a better view. The flat owners sought an injunction requiring the Tate to prevent members of the public from viewing their properties from the viewing platform. They could not believe it when the judge held there were measures they, the owners, could take to protect themselves from ‘an inwards intrusion by others’ for instance by installing net curtains or blinds. They appealed to the Court of Appeal.

Judgement was given in the appeal court by The Master of the Rolls, Sir Terence Etherton, Lord Justice Lewison and Lady Justice Rose DBE on the 12th of this month. They reviewed what constitutes a legal nuisance and said:

… despite the hundreds of years in which there has been a remedy for causing nuisance to an adjoining owner’s land and the prevalence of overlooking in all cities and towns, there has been no reported case in this country in which a claimant has been successful in a nuisance claim for overlooking by a neighbour. There have, however, been cases in which judges have decided and expressed the view that no such cause of action exists.”

Further, they stated:

“... it may be said that what is really the issue in cases of overlooking in general, and the present case in particular, is invasion of privacy rather than (as is the case with the tort of nuisance) damage to interests in property.”

They held there are already other laws which bear on privacy, including the law relating to confidentiality, misuse of private information, data protection, harassment and stalking and is an area in which legislature has intervened. Legislation is better suited than the courts to weigh up competing interests rather than extend the law of nuisance. Off to the Supreme Court? We will see.


Some trains not on track

Part 12 of the Equality Act 2010 relates to transport including taxis, rail vehicles and buses. S182(6) states:

“The Secretary of State must exercise the power to make rail vehicles accessibility regulations so as to secure that on and after 1 January 2020 every rail vehicle is a regulated rail vehicle.”

However, despite the number of years rail operatives have had, accessibility improvements remain outstanding. In a letter from Chris Heaton Harris, Minister of State for Transport, to the Chief Executive of the Rail Delivery Group, the Minister records his frustration that disabled persons are still waiting for fully accessible services. However, in view of the fact that the withdrawal of non-accessible vehicles would cause delays throughout the railway network, he granted a limited dispensation for around 1,200 carriages subject to two major conditions:

“1. That operators are required to provide evidence that the introduction of new or refurbished vehicles remains on track.

2. Operators understand they are legally bound to deliver the commitments they made to providing information, journey planning assistance, mobility assistance and operational mitigations such as coupling non-compliant vehicles to compliant ones, where possible.”

Additionally, in relation to any rail replacement bus and coach services, the Minister was only willing to grant dispensation to transport operatives (‘TOCs’) for a one month period i.e. until 31 January, 2020. He said:

“During this time, I expect TOCs to do all they can to source compliant vehicles before considering using non-compliant ones. Where non-compliant vehicles are used, TOCs must provide passengers who require it with accessible alternative transport, such as taxis.”

We wait to see how long it is before a fully accessible transport system is provided.


Read with care!

Written contracts often contain a clause to the effect that the contract cannot subsequently be varied orally and any variation must be in writing signed by both parties (known commonly as a ‘No Oral Modification’ (a ‘NOM’)). Will a NOM be upheld by the courts?  There has been some uncertainty but in Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24, Lord Sumption, with whom the majority of the Supreme Court agreed, held “In my opinion the law should and does give effect to a contractural provision requiring specified formalities to be observed for a variation.”

In Great Dunmow Estates Ltd v Crest Operations Ltd [2019] EWCA Civ 1683, a contract for the sale of land contained a very specific NOM clause requiring any amendment to be in writing recorded in a letter or memorandum signed by both parties and their solicitors referring to the said clause.  The sale price was to be agreed by the parties after the grant of a planning permission and the removal of certain registered restrictions from the title.  Both requirements were met but the parties could not agree upon a purchase price, the ascertainment of which was subject to a complicated formula including whether the valuation date was to be a defined ‘Challenge Expiry Date’ (‘CED’) or, if later, the date of valuation.

The question of valuation was referred to an Expert, Mr Stephen Downham, in accordance with the terms of the contract.  He required, inter alia, that the parties’ expert valuers should prepare an agreed statement of facts.  This they did and in it, agreed the valuation date should be the date the Expert issued his determination.  Both valuers set about preparing their expert reports on that basis.

Mr Downham found the contract gave rise to various legal issues and, with the parties’ consent, appointed Mr Timothy Morshead QC to advise.  Although not instructed to do so, Mr Morshead advised that in his view the valuation date was not the date of the Expert’s determination but was in fact the CED.  Mr Downham adopted the advice.  Great Dunmow objected and sought a court declaration on the matter.  The judge said that on the true construction of the contract the valuation date was the CED but that the agreement in the statement of facts was contractual and bound Mr Downham.  The Court of Appeal did not agree:  Mr Downham was to determine the sale price in accordance with the contract and the parties had not varied its terms in accordance with the NOM.  So, read a contract with care before reaching any agreement varying its terms.


Hasn’t that been answered before?

Questions sometimes come to court which appear so fundamental that surely they have been answered before. Two recent cases prove us wrong! The first (Alford House Freehold Ltd v Grosvenor (Mayfair) Estate and anor [2019] EWCA (Civ) 1848) asked: what is a flat? Thirteen leasehold owners in a block of flats had given notice of their desire to acquire the freehold of the block. Legislation (Leasehold Reform, Housing and Urban Development Act 1993) required the number of qualifying leaseholder owners to amount to not less than half the number of flats in the relevant building. The block had consisted of twenty six flats: the thirteen relevant leasehold owners were, therefore, just sufficient. However, when the relevant notices were served, substantial works were being conducted in the block in order to create four additional flats.

The judge at first instance had decided the building consisted of thirty and not twenty six flats. Hence, the required number of qualifying leasehold owners would be fifteen: thirteen was insufficient. He came to his conclusion despite the fact he had found the construction works being undertaken had not resulted (at the time the notices were served) in creating space which added four additional dwellings within the block of flats. The relevant leasehold owners appealed. The Court of Appeal allowed the appeal. There were only twenty six flats at the relevant time.

In the second case (London Borough of Haringey v Secretary of State for Housing Communities and Local Government [2019] EWHC 3000), the High Court had to decide what is a building? The question arose from an appeal against a planning inspector’s decision to allow an appeal against an enforcement notice issued by Haringey Council and relating to UPVC windows installed in a flat in a conservation area. The flat was within a converted house being part of a terrace block of three similar properties. The inspector had to decide whether the windows materially affected the appearance of the building. Was ‘the building’ the house in which the flat was situated or the terrace block? He believed it reasonable to consider the terrace block as a whole as the building and due to the prevalence of UPVC windows in the building, he held those installed at the flat did not materially affect the appearance of the building. The High Court held the inspector was wrong: each house within the terrace was ‘a building’ and the windows had to be considered within the context of the house, not the terrace.


Lost Parliamentary Bills

At the time of producing this newsletter, the House of Commons has agreed that a general election should be held on Thursday, 12 December. Members of the House of Lords now have their say before a formal Act of Parliament gives effect to this agreement. If passed, Parliament will be dissolved ahead of the general election (6 November presently looks the day of dissolution being calculated as 25 working days ahead of the election). Dissolution brings Parliament to a close and it is ‘prorogued’. This brings to an end practically all existing Parliamentary business.

Fine, but what happens to the Bills and consultation presently in progress? These will be ‘lost’ and the new Government will, via the Queen’s Speech, outline a new programme of legislation.

So what, being of interest to the property sector, will be lost? A considerable number of Parliamentary Bills and consultations for instance, in connection with energy performance, the Domestic Premises (Energy Performance) Bill and the Emissions Reduction (Local Authorities in London) Bill will disappear. The Clean Air (Human Rights) Bill, which would give rise to a statutory right to clean air and the establishment of a Citizens’ Commission for Clean Air, the Telecommunications Infrastructure (Leasehold Property) Bill which would, hopefully, clarify certain aspects of the Communications Act, 2003, and the Well-being of Future Generations Bill which would require public bodies to act in pursuit of, inter alia, the environmental well-being of the United Kingdom: these and some approximately 46 other Bills will all be lost. They may have become Acts if they have the backing of the present Government (although the present Government does not have a majority in the House of Commons) but if a private member’s Bill, it it unlikely to be successful or it might be re-introduced under a new Parliament. But, we will simply have to wait to see.

Finally, there is a chance that any one of the Bills presently before Parliament will be passed before 6 November (although members of both Houses seem too fixed upon Brexit to consider anything else) during the intervening period known as ‘wash up’ – see our newsletter of April 2017 written just before the last general election.


CVAs – the drama continues

In June, 2018 we reported many landlords were feeling they were being forced to shoulder their tenants’ loss when those tenants sought store closures and substantial rental reductions by way of Company Voluntary Arrangements (‘CVAs’). The British Property Federation called upon the Government to undertake a much needed review of the CVA procedure which, the BPF claimed, ‘risks undermining the UK’s global reputation and deterring much needed investment into our town and city centres’. To date, nothing has happened in Parliamentary terms (Parliament having only one topic on its members’ minds: Brexit) but the courts have been asked to intervene (Discovery (Northampton) Ltd and others v Debenhams Retail Ltd and others [2019] EWHC 2441).

Giving judgement this month, Mr Justice Norris was asked to consider, inter alia, whether a CVA cannot reduce rent payable under leases because it is unfairly prejudicial to do so and whether landlords are treated less favourably than other unsecured creditors without proper justification. He held ‘the fact that future rent is reduced under the CVA does not inevitably transgress the requirements of common justice and basic fairness‘.

Further, the judge was satisfied that the reduced rents were at or above market rents although there ‘would have been “unfairness” if landlords were expected to take reductions in rent to below the market value of the premises concerned’. He was not swayed by the argument that by making beneficial use of premises let to it, the tenant company must pay the full contractual rent referable to the particular period of occupation and could not unilaterally reduce the contractual rent. He declared a CVA can vary existing obligations but not create new ones. A right of forfeiture within an existing lease is, however, a proprietary right that cannot be altered by a CVA. Of course, landlords are unlikely presently to exercise a right to forfeit a lease of retail premises as the likelihood of re-letting is often remote.

Mr Just Norris recognises, in his judgement, that the applicatns are likely to appeal – so, watch this space!


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