Section 21 ban – System reform is necessary

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Section 21 evictions are being reviewed by the government, with a view to removing them from English and Welsh Law. James Brokenshire, the Housing Secretary commented that Section 21 evictions were one of the biggest causes of homelessness for families.

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30% of tenants in Scotland don’t aim to ever own a property

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A survey of people who rent privately has found that almost 30% of tenants in Scotland don’t aim to ever own a property.

The Tenant Research Survey, conducted by SafeDeposits Scotland ahead of its upcoming Tenant Conference, asked tenants about their experiences in the private rented sector and their expectations for the future.

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NLA Postcard Campaign

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The NLA have launched a postcard campaign against the banning of section 21 to tell the Prime Minister, Theresa May, what you think the repercussions of this decision are and will be.

“We are asking you to complete and return your postcard to us

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Can Brexit frustrate a lease?

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Commercial Property:

While Brexit may be
frustrating for many people, whether it can frustrate a lease has recently been
reviewed by the High Court. The European Medicines Agency (EMA) is the European
Union (EU) agency responsible for the scientific evaluation, supervision and
safety monitoring of medicines in the EU. In 2014 it took out a 25 year lease
in Canary Wharf to use as its headquarters. Following the decision to leave the
EU, the EMA wrote to its landlord to say that “if and when Brexit occurs, we will be treating that event as a
frustration of the Lease.�

The EMA’s stated reason for
wanting to end their lease was because it would be ‘inconceivable for’ an EU
agency to be based in a non-EU member state, hence the need to relocate.
Clearly the EMA did not want to have to pay rent for its new offices as well as
a London office that it felt it could no longer use.

If the EMA could prove that
Brexit was a frustrating event, the lease would terminate and in doing so release
the EMA from the obligation to pay rent for the remaining 20 years. The
landlord disagreed that Brexit was a (legally) frustrating event and sought a
declaration from the courts to protect its significant rental income.

So what is frustration?

The legal concept of
frustration is where the law recognises that sometimes things happen, with no
fault attributed to either party, that stop an agreement from being performed
or that would render the agreement radically different. For example, when World
War II broke out a contract to deliver goods manufactured in Leeds to Poland
became frustrated because, after the contract had been formed, it became
illegal to sell goods into Poland. Likewise when the coronation of King Edward
VII was delayed because he was ill, the purchase of tickets to watch the
coronation on that day was frustrated because there was no coronation. Frustration
immediately brings a contract to an end without creating liability for either
party.

The EMA’s arguments

The EMA argued that either
after Brexit it would be illegal for them to perform its obligations under the
lease, or that there was a common purpose to provide the EMA with a European
headquarters.

Illegality

The Court found that English
law did not prevent the EMA from performing its obligations under the lease. It
also said that it thought that if European law made it illegal for the EMA to
use the property or perform its lease obligations that was an issue for EU law
and was “not a matter for the English law of frustration�.

In this particular instance,
the Court went on to say that because the EMA is an EU agency, then even if it
was wrong and it should take issues of EU illegality into account, these problems
would be self-inflicted by the EU by not passing regulations to deal with the
effects of Brexit. Since frustration can’t be used where the supervening event
is caused by one of the parties that would have to be taken into consideration
by the Court.

Common purpose

The Court disagreed that there
was a common purpose for the lease. The EMA wanted to use the space on the most
flexible terms it could get, and for the lowest rent, while the landlord wanted
exactly the opposite: maximum rent for the longest term. On the basis that
there was no common purpose, this couldn’t work as a basis for frustration.

The Judge said that “… the
fact is that hindsight has shown that EMA has paid too high a price for the
Premises it acquired, in that it failed to build into the lease the flexibility
as to term that events have shown would have been in its commercial interests.�
However, frustration cannot be used solely to get out of a bad bargain.

Summary

While this is welcome news for
landlords concerned about tenants seeking to use Brexit to exit property
contracts or leases, the EMA has recently been granted leave to appeal the
decision.  Property lawyers and landlords
will be keeping watch to see what the Court of Appeal has to say if the EMA
pursues an appeal.

• Canary
  Wharf (BP4) T1 Ltd & Ors v European Medicines Agency [2019] EWHC 335 (Ch)
  (20 February 2019)

Author

Michael Goldfitch is a Commercial Property Lawyer with law firm Wright Hassall

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Can Brexit frustrate a lease? | LandlordZONE.

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Be a guest of Mark Smith (Barrister-At-Law) – Norwich

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Our Hon. Legal Counsel, Mark Smith, Head of Chambers at Cotswold Barristers will be presenting an overview of several landlords tax strategies at the pin Norwich Meeting property networking event Tuesday 14th May 2019.

The event will start at 6:00pm until 9:00pm and will be free for guests of Mark Smith that have not previously attended a pin meeting.

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Too little too late for Section 21

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I attended the Clive Emson Auction on 30th April, 2019. As one might have expected many irate Landlords wished to speak with me over their concerns about what they considered very poor and biased reporting by Richard Bilton who in the eyes of the landlords

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Can we save you money on Block of Flats insurance?

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IF you own or manage a block of flats, then let us price check your buildings insurance for you in under 5-minutes.

Many block of flat owners and management companies stay with their existing providers for years and may not be paying a competitive rate.

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National Landlords Alliance meets Sefton Council

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Wednesday 1st May, a delegation from the National Landlords Alliance held a meeting with Sefton council. The Alliance delegation consisted of Larry Sweeney, Councillor John Bullock National chair of the Alliance and Policy director John Allen. Sefton had officers from their licensing department

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Students claw-back rent from unlicensed landlord

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Rent Refund:

Students from the
University of Leeds took their landlord to court and won back 12 months’ rent.
They won the rent refund because their landlord had failed to license the HMO –
House in Multiple Occupation.

Delighted postgraduate student Ben Leonard and his
co-tenants discovered that the landlord was letting the property illegally,
because it did not have a current HMO licence. It seems that their landlord did
apply to Leeds City Council for a licence, but only when the tenancy was
half-way through.

New HMO rules came into force effective 1 October 2018 on
mandatory HMO licensing. This means that mandatory licensing has now been
extended to cover most Houses in Multiple
Occupation (HMOs) occupied by five or more non-related people where there is
some sharing of facilities. The rules may vary slightly from authority to
authority but now affect properties with any number of stories, not just 3-storey
properties as before.

There are also new minimum bedroom sizes of 6.52 square
metres for one person, and 10.23 square metres for two people. The measurement
of these rooms cannot include areas where the ceiling is below 1.5 metres in
height.

Landlords must show that they are a “fit and proper person�
to be a landlord, that is free from any criminal record, and the property must
meet exacting safety standards, with regular safety inspections.

Landlords who don’t have a current HMO licence face fines of
up to £30,000, and they can be forced to repay up to 12 months of rent to their
tenants. This is done through what is known as a rent repayment order (RRO)
instigated by the tenants. This was the case with Mr Leonard’s landlord.

When Mr Leonard reported the matter to Leeds City Council,
the housing officer on the case informed him that the Council was taking court action
against the landlord and he explained that they (all the tenants) were entitled
to seek an RRO.

Having made their application, the tenants were obliged to
provide evidence of their rent payments using bank statements and their tenancy
agreement. To their delight, the evidence was accepted and the landlord was
taken to court. He pleaded guilty and, after all bills were deducted, including
an amount due to the landlord’s financial position, each tenant could reclaim around
£2,000.

Following publicity received after winning their case, Mr Leonard
told the BBC that he had received an “incredible� response on Twitter about the
case. He said he had been inundated with messages from other HMO tenants who thought
they may be in a similar position and that their landlords might have cases to
answer.

The “screw� is gradually being tightened on the rogue
landlord, which goes to emphasise the vital importance of following the rules when
letting residential property.    

Rent
Repayment Order – Leeds City Council

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Brentwood Seminar is approaching and we would love you to be there

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Our Property Investment Seminar in Brentwood is only 1 week away and it is not too late to book your place.

Fast facts about the event –

Location: Marygreen Manor Hotel
Time: 6:15pm arrival, 6:30pm start
Venue: Marygreen Manor Hotel (60+ free parking spaces)

Marygreen Manor Hotel

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