Websters Accountants - Property Accounting & Property Auditors

GOVERNMENT PRESSES AHEAD

John Pattrick — Fri, 24 May 2013 13:26:09 +0000

Speechly Bircham has reported that it is a virtual certainty that a new 15% top rate of SDLT for transfers of high-value UK residential property to companies and certain other entities will be incorporated into the Finance Act 2013 when it is passed this summer. As is commonly the case with Finance Act provisions, the provisions for the annual tax changes and extension of CGT will be back-dated to the preceding April, so in a sense the legislation is already in force.

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When is a service charge cost incurred?

John Pattrick — Thu, 23 May 2013 13:26:19 +0000

In a recent update, Optima Legal reported the case of OM Property Management Limited v Burr. OM had mistakenly paid EDF Energy for gas and EDF Energy passed this on to the correct supplier, Total Energy . However, there was still a shortfall in the region of £100,000. This sum was put through the service charge and demanded from the tenants. One of the tenants claimed that as the costs had been ‘incurred’ more than 18 months before the service charges demand had been sent and were therefore irrecoverable. A Leasehold Valuation Tribunal agreed with him but the Upper Tribunal overturned that decision, as it decided that the cost for the fuel had not been incurred until the supplier had presented its bill. The Court of Appeal dismissed the tenant’s appeal,stating that the Upper Tribunal was correct that a cost became incurred on the presentation of an invoice or when it is paid (by the landlord).

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Further twists to service charge consultation

John Pattrick — Wed, 08 May 2013 12:58:20 +0000

We reported earlier that, in the case of Daejan Investments Ltd v Benson, the Court of Appeal had denied a landlord dispensation from observing service charge consultation requirements. He had failed to comply with all stages of the requirements by not providing the tenants with a summary of observations on the estimates and a notice of where they would be available for inspection. However, Chris George, of Shoosmiths, has reported that these findings have been reversed by the Supreme Court.

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Is it worth buy-to-let landlords insuring against tenants not paying the rent?

John Pattrick — Tue, 23 Apr 2013 20:19:45 +0000

Emma Lunn reports in This is Money that many people with landlord insurance may be disappointed to find that unpaid rent isn’t covered. In most cases it only reimburses lost rent for periods when a property is uninhabitable because of another insured event such as a fire. Therefore landlords need specialist rent guarantee protection but there are many caveats.

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Break rights and apportionment of rent

John Pattrick — Fri, 19 Apr 2013 20:19:53 +0000

In Manches News & Publications it is pointed out that tenants who have exercised a break right often object to paying a whole quarter’s rent for a period of time that extends beyond the break date, where that date occurs mid-quarter. However, they should be far more concerned about the alternative scenario, namely remaining on the hook for the rent and all the other lease obligations for the rest of the term, as a result of trying to save relatively small amounts of money.

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What is reasonable?

John Pattrick — Mon, 15 Apr 2013 08:05:44 +0000

In an article by Clyde & Co, the recent case of ANSA Logistics Ltd v Towerberg Ltd considered a common tenant’s covenant: “Not to assign, underlet or part with
possession of the demised premises or any part thereof without the previous
consent of the landlord, which consent shall not be reasonably withheld.”

ANSA approached the landlord in November 2011 to
ask for consent to underlet but the landlord refused. The landlord
also served a notice on ANSA forfeiting the lease for breach of
the alienation covenant. ANSA applied to the High Court for a
declaration, and the Court considered two questions:
–– Had ANSA parted with possession; and
––Was it reasonable for the landlord to withhold consent?

Firstly the Court decided that ANSA had not parted with
possession and so had not breached the covenant.

The landlord then gave a further reason for withholding
consent concerning Ford’s financial standing. The
Court found this to be unreasonable as only 11% of companies had a lower risk of failure at that time.

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Leaseholder tenant service charges – or not.

John Pattrick — Wed, 10 Apr 2013 19:51:18 +0000

Camden Council leaseholder tenants may not have been charged for service charge works carried out via district (housing) management committee’s since at least 2001.

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Council to prioritise homes for employed people

John Pattrick — Wed, 20 Feb 2013 14:24:55 +0000

Alex Wellman of Inside Housing reports that Westminster Council is to give housing priority to people who have been in employment for more than two years, as it wants to reward those actively seeking work while at the same time discouraging a ‘benefits culture’. Currently residents are given priority according to need including factors such as homelessness, medical needs and young children. People on temporary contracts will have to prove they have been employed continuously for the same time with no more than one month’s gap between contracts. People who have been seeking work for the same period of time will also be eligible for extra points, if they have been engaged with the council’s homelessness employment learning project.

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Residential service charge consultation: who knows what the future holds

John Pattrick — Wed, 20 Feb 2013 12:41:26 +0000

Russell-Cooke has highlighted a recent court case that could cause turmoil for those who manage residential service charge property
It is well known that landlords of residential properties are required to consult with lessees prior to committing to works where expenditure would result in any lessee paying more than £250 and the common understanding was that low cost, low key works did not require prior consultation. In an attempt to avoid what was sometimes perceived as being the tiresome, time consuming and costly exercise of consulting, landlords would sometimes split the cost into separate projects, each of which would be low enough not to trigger the consultation requirements. However, in the case of Phillips v Francis, it was decided that works should not be split, but treated collectively over the service charge year. However the small print of the decision needs to be examined……………

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Reminder to Landlords – no presumption of 100% service charge recovery

John Pattrick — Wed, 13 Feb 2013 14:11:26 +0000

The recent Court of Appeal case of Campbell v Daejan Properties Limited [2012] EWCA Civ 1503 has served as an important reminder to landlords that there is not a presumption that they should receive full recovery of their maintenance and repair costs from a tenant through the service charge.

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