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Friday, 5 December 2014

Law Commission Publishes Reforms to Rights to Light Law - Will They Ever See the Light of Day?

The Law Commission has published its long awaited proposals for the reform of rights to light law.

But will they ever see the light of day?

The Commission began its project in March 2012 and published a consultation paper on 18 February 2013. 

The final report, Rights to Light (Law Com No 356), published on 4 December 2014, contains its recommendations for reform, and also a comprehensive explanation of how the often complex and confusing laws operate today.

The Commission's key recommendations are:-

·         A statutory notice procedure which would allow a landowners to require their neighbours to tell them within a specified time if they intend to seek an injunction to protect their right to light, or to lose the potential for that remedy to be granted.

·         A statutory test to clarify when courts may order damages to be paid rather than halting development or ordering demolition.

·         An updated version of the procedure that allows landowners to prevent their neighbours from acquiring rights to light by prescription.

·         Amendment of the law governing where an unused right to light is treated as abandoned.

·         A power for the Lands Chamber of the Upper Tribunal to discharge or modify obsolete or unused rights to light.

The report is a masterly and worthwhile attempt to try and tackle this contentious subject.

Responding to replies to its consultation head on, the Commission seeks to strike a balance between private rights to light and development that's in the public interest.

The protection of light in the context of planning law is outside the scope of the report and the Commission makes no recommendations about it.

So why the scepticism?

The report concludes that the recommendations will not take effect in full unless and until the government responds to, and gives effect to, the recommendations made in the Commission's 2011 report, Making Land Work, which has been gathering dust ever since.

This week's report says the Lord Chancellor reported to Parliament in May this year that the government intends to respond to the 2011 report in 2014.

There's not much time left for that promise to be fulfilled...and then of course there's the small matter of an election next year too.

Meanwhile, the report is an excellent place to start for anyone trying to get to grips with this subject.

Thursday, 4 December 2014

Office to Residential Conversions - Is Time Running Out?

Time may be running out to implement changes of use from office to residential under permitted development rights, particularly for large schemes.

The PDR was introduced in May 2013* to allow a change of use from office to residential without the need for planning permission, provided external alterations are not required.

Only buildings actually used as offices have the benefit of the PDR.

Development under the PDR is not permitted if the building was not used for offices immediately before 30 May 2013 or, if the building was not in use immediately before that date, when it was last in use.

There are other exclusions from the PDR, including listed buildings and buildings in some exempt areas.

However, the relaxation of the planning regime was only temporary.

Under the current scheme, there must be actual residential use following the conversion by no later than 30 May 2016.

If the use starts later than this, there's a risk the local planning authority could take enforcement action.

Developers must submit prior notification to the local authority before taking advantage of the PDR.

The authority then has eight weeks to consider the impact of the development, but only in relation to the specific issues of contamination, flooding, transport and highways.

In view of how long it will take to implement large-scale conversions, time must be running out for schemes that haven't yet been notified to the planning authority.

What will happen if a scheme is not completed and in use by 30 May 2016, or is only partially completed and in use?

There's currently little guidance on this from central government.

A consultation on extending the PDR period, or even making it permanent, has recently been closed and the results of this are expected soon.

It also proposed enabling further changes of use in addition to those already permitted (I won't go into those here).

The consultation proposed that, in addition to the existing prior approval criteria, local authorities will also be entitled to consider the potential impact of the loss of the most strategically important office accommodation.

This would address concerns raised by some local authorities about the loss of high grade office stock to residential use.

The danger though is that this could take away the benefit of the PDR.

It depends what is meant by "strategically important office accommodation".

There were no announcements on PDR in yesterday's autumn statement.

Whatever the outcome of the consultation, it might get lost in the wake of next year's general election.

If that happens, the deadline for the PDR remains 30 May 2016.

Without guidance from central government on how conversions that have not been fully implemented will be treated following the deadline, the safer course of action on large schemes will be to seek full planning permission for conversion to residential.

Which could mean the PDR soon ceasing to be of use for such schemes altogether.

 Photo by William Warby via Flickr

Wednesday, 3 December 2014

New Stamp Duty Rates

The Chancellor has just announced the following new rates of stamp duty on residential purchases:

  • No tax on the first £125,000 paid
  • 2% on the portion from £125,001 up to £250,000
  • 5% on the portion from £250,001 up to to £925,000
  • 10% on the portion from £925,001 up to £1.5 million
  • 12% on everything above that

For the first time you only pay the rate of tax on the part of the property price within each tax band, like income tax. Under the old rules, you had to pay the tax at the highest rate applicable to the price on the entire property price.

New rates take effect from midnight.

If you have already exchanged contracts, you have a choice about whether to use the old or new rates.

These changes do not affect commercial properties, so the old rates and method of calculation continue to apply to them.

Here is a link to the HM Treasury announcement.

Monday, 24 November 2014

Supreme Court to Review Break Clause Case

The Supreme Court has given permission for M & S to appeal the Court of Appeal's decision* that it couldn't recover from its former landlord excess rent relating to the period between a break date in its lease and the end of the rental quarter in which it fell. 

The Court of Appeal had overturned a High Court decision that ruled in favour of M & S.

The break clause had required M&S to pay a full quarter’s rent in advance for it to be validly exercised. 

There was no express clause in the lease entitling M&S to a reimbursement.

The Court of Appeal refused to imply such a clause.

It reasserted the orthodox view that a term can only be implied into a contract if it's necessary to achieve the parties’ express agreement, construed against admissible evidence.

The decision to allow an appeal may cause some surprise.

The Supreme Court only entertains appeals which “raise an arguable point of law of general public importance which ought to be considered by the Supreme Court at that time, bearing in mind that the matter will already have been the subject of judicial decision and may have already been reviewed on appeal.”

This case turned on its facts - whether the landlord had already been adequately compensated by a penalty payment.

Which seems too specific to amount to a point of law of general public importance.

We shall see.

Could it be that the Supreme Court wants to look at break clauses and/or the rules of implying unwritten terms into leases more generally?

Tuesday, 18 November 2014

Nuisance Tenants - When is a Landlord Liable?

A recently reported case from the Supreme Court* has given further guidance on when a landlord can be held liable for nuisance caused by its tenant.

An earlier decision by the Supreme Court in the same case concerned a couple who had bought a house near a speedway and motocross stadium and track, and whether the suitable remedy was an injunction or damages.

As the Court had held that the tenants operating the track were liable in nuisance, the question following on from that was whether the Judge at first instance was right in holding that their landlord was nonetheless not liable.

The general principle established at law is that in order to be liable for a nuisance caused by its tenant, a landlord must either:

·         be taken to have authorised it by letting the property in circumstances where nuisance was inevitable; or

·         participate directly in the commission of the nuisance.

The Court dismissed any argument that the landlord had authorised the nuisance because it was an inevitable consequence of letting the stadium.

Even though the intended use of the stadium was known to the landlord at the time of the letting and nuisance did in fact result from the letting, this was not in itself sufficient to make the landlord liable in nuisance.

The use could be, and could have been, carried on without causing a nuisance.

Nor did the Court consider, on the evidence, that the landlord had participated in the nuisance, although on this the Lords only agreed on a 3:2 majority, with Lord Neuberger delivering the main judgment for the majority.

What degree of participation is required for a landlord to be held liable?

Accepting rent and refraining from taking any proceedings against the tenant, once it knew the tenant was creating a nuisance, isn't sufficient.

If a claim in nuisance against a landlord is to succeed, there must be actual "active" or "direct" participation in the nuisance by the landlord.

Even if a landlord has the power to prevent the nuisance, inaction or failure to act cannot, on its own, amount to authorising the nuisance.

Other than in very unusual circumstances, attempts by a landlord to mitigate a nuisance shouldn't imply that the landlord has authorised the nuisance.

Inevitably, this means each case will turn on its facts as to what amounts to "active" or "direct" participation.

It was the differing interpretations of the facts that split the Lords in this case.

What about those standard tenant covenants against causing nuisance that are usually found in commercial leases?

Lord Neuberger distilled the interpretation of those covenants into the following logic.

·         A landlord does not become liable for its tenant's nuisance simply by failing to enforce a covenant which would put an end to the nuisance.

·         If a landlord would otherwise be liable for its tenant's nuisance, it should not escape liability simply by including such a covenant in the lease.

·         Conversely, in a case like this one where the proposed uses would not necessarily result in nuisance, the landlord's position would not have been weaker if the lease had contained no covenant against nuisance.

It therefore seems that the primary relevance of nuisance covenants in leases is to record the contractual position between the landlord and the tenant, rather than to influence the outcome of any third party claim.

This case makes it clear that nuisance cases will turn on their facts.

A nuisance covenant should nevertheless always be included in leases.

Where a tenant is carrying on a use which may result in a nuisance claim, landlords need to tread carefully, and may need to take steps to enforce a nuisance covenant against their tenant before a third party action arises.