Property UPDATE

Issue No.4 January 2006

Landlords - Take care not to accept a surrender by doing nothing!

What happens if your Tenant vacates the property and hands the keys back before the Lease term is due to expire?

Such a situation could well be considered to be an implied surrender which, if accepted by the Landlord, will bring the lease to an early (and possibly unwanted) end.

Landlords should take care to avoid acting in a way that could be considered as an acceptance of the surrender.  Some comfort can be derived from a recent Court of Appeal case, Belcourt Estates Ltd v Adesina, which decided that there has to be some ‘unequivocal’ conduct by both the Landlord and the Tenant showing that the tenancy has come to an end.

In this case the Tenant vacated the premises leaving arrears of rent.  The Landlord did not take any action – it did not take possession of the Premises nor did it chase for payment of the arrears, but the Court of Appeal decided that these acts of omission alone did not amount to an unequivocal acceptance by the Landlord of the surrender.  The Landlord was therefore able to claim arrears of rent dating back to when the Tenant had vacated as the tenancy continued in force.

That said, it is worthwhile noting the following tips should you be faced with a Tenant seeking to surrender the lease where you do not wish to accept it:-

• Continue sending out rent demands
• Immediately return to the Tenant any keys that the Tenant returns to you (and make sure that your managing agents are instructed to do likewise)
• If you need to secure the premises do so, but before doing so tell the Tenant that that it what you are doing; make it clear that you are not taking possession and that you consider the tenancy as continuing
• Refer the Local Authority to the Tenant for business rates due

Of course, it may be the case that you are willing to accept the surrender, perhaps at a premium, and remarket the property.  In that situation our advice would be to accept the surrender expressly by deed.

Houses in Multiple Occupation (HMOs): Do you need a licence under the new regime?

In an effort to raise standards in the privately rented sector, from April 2006 a new licensing regime is being introduced.  Failure to register where required will result in Landlords being unable to recover rent or to obtain possession from their Tenants.

What types of properties are caught?
The rules are complex but very broadly privately rented residential properties of three or more storeys (including attics and basements) occupied by five or more tenants who comprise more than one household which share certain amenities such as toilet, bathroom and cooking facilities.  Some self contained flats may also be caught if more than one third are let on short tenancies and they fail to meet certain standards.  In addition, Local Housing Authorities (LHA) can extending the licensing requirements to specific areas and are most likely to do so where housing standards in that area are poor.  It will therefore be necessary to check the requirements of each LHA.

Properties affected must have a licence. The Landlord or its managing agent must be approved by the LHA as a fit and proper person to be a licence holder and the management arrangements must be satisfactory. The property must also be reasonably suitable for the number of occupants, and have adequate facilities and fire precautions.

Licence fees are yet to be set, but for many Landlords the largest expense may be in having to meet raised accommodation standards. Failure to obtain a Licence will result in a potential fine of up to £20,000 as well as the drastic consequences outlined above.

Given the potential consequences of operating unlicensed HMOs, Landlords should consider the possible implications of the new regime in advance of the legislation coming into force and ensure that all of the HMO requirements are satisfied.  We will be happy to advise further on request

Owners of Listed Buildings – Moves to limit your liability?

Remember that it is an offence to carry out works to demolish a listed building or which would affect its character as a “building of special architectural or historic character” without first obtaining listed building consent from the local authority.  Even minor non-structural works should not be undertaken on a listed building without prior approval.

A local planning authority may issue a listed building enforcement notice if it considers there has been a breach.  The notice is served on the owner and occupier of the building.   At the moment the owner and occupier will also be liable for any breaches committed by previous owners and occupiers, however long ago those works were carried out.  This is because there are currently no time limits on the local planning authority’s right to serve a listed building enforcement notice, which can require the building to be reinstated to its original “listed” condition.

It is also a criminal offence to carry out unauthorised works, with maximum penalties of an unlimited fine and/or two years imprisonment.  This is in contrast to planning controls where criminal offences only follow failure to comply with enforcement procedures. 

The recent Heritage Protection Review has made a number of recommendations for possible improvements to the listed buildings system.  We have recently learned that English Heritage have recommended that the unlimited time for the issue of a listed building enforcement notice should be abolished and replaced with a time limit of four years from the carrying out of the works.  We understand that this recommendation is likely to be included in the White Paper due this Spring.

Following publication of the White Paper we will look at more of the changes which are proposed

Note:

Please note that this newsletter is not intended to be a comprehensive statement of the law and should be used for guidance purposes only. If you require specific legal advice please contact Alastair McClean, Michael O’Shea or Sharon Rutter or by telephone 020 7493 2903.