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Thursday, 28 February 2013

Light Years

The Law Commission's consultation on reforming rights to light law, launched on 18 February, has been welcomed by most in the industry and has already sparked an interesting debate.

I can't help wondering though, will anything actually happen at the end of it?

The consultation document, which runs to 132 pages, is an impressive analysis and explanation of the current law and serves as a useful primer on the subject.

It also makes very cleverly argued suggestions for reform, particularly setting out clearly in chapter 3 the arguments for and against the recommended abolition of the creation of rights to light by prescription (the enjoyment of light through a window without interruption for a period of 20 years).

We've been here before though with easements.

The Law Commission reviewed the general law of easements and other rights over land in 2008 and produced another impressive report and draft bill in June 2011, this time running to 257 pages (which included rights to light, although it acknowledged at the time they needed looking at again separately in more detail, which is where the current consultation comes in).

The 2011 report and draft bill now gather dust somewhere in a dimly lit Whitehall building.

The Law Commission says in its latest consultation: "We are currently awaiting Government's response to the recommendations made in that Report".

I hope they're not holding their breath.

The current consultation, which closes on 16 May 2013, is probably a once in a lifetime opportunity for a full discussion of these ancient rights to light.

Anyone with an interest in these things should try and respond.

The law relating to rights to light is a mess, making it very difficult to advise anyone (landowners and developers) with, ironically, any clarity.

That goes for the ways rights to light might be acquired when they are not expressly documented, such as by prescription or the surreal imagination of lost modern grant; and for the ways they might be enforced - by injunction or damages.

As Nicky Richmond comments on her Saying it Straight blog, developers now often have to design two schemes at the same time, one that interferes with these rights, and one that doesn't.

The mainstream press however has adopted a different angle - for example the Telegraph  on 19 February had the story on its front page - "Historic laws which guarantee householders the right to enjoy the light which comes into their homes could be scrapped to encourage the building of large developments".

The Law Commission is actually taking a more nuanced approach, and expressly states that the primary aim of the consultation is to investigate whether the current law provides an appropriate balance between the important interests of landowners and the need to facilitate appropriate development of land.

The government is keen to help developers, but what happens after the consultation and the Law Commission's final report is anyone's guess.

At the moment they'd probably rubber stamp anything that hinted at promoting growth.

Without any political will and parliamentary time however, this could end up being an academic debate, in more ways than one, with the next report on light joining the 2011 report on easements - on the shelf.

Wednesday, 27 February 2013

Law Commission Says No Right to Light for Solar Panels

The Law Commission (LC), in its consultation on reforming rights to light law launched on 18 February, has stated solar panels are "almost certainly not capable of benefitting from a right to light" and it concludes they should not be afforded this protection.

I last looked at this issue in my post in May last year - What if New Buildings Overshadow Your Solar Panels?

The point hasn't been tested in the courts.

The LC's opinion however is that it's difficult to see how the law relating to rights of light can be extended to guarantee the flow of light to a solar panel, particularly bearing in mind the anomalous nature of negative easements and the reluctance of the courts to extend this class of easements any further.

The LC says the protection of solar panels by easements of light would be problematic.

"The “channel” through which the light protected under the current law passes is defined by the aperture in the building on the dominant land. By contrast a panel benefits from light from all angles, so it would be difficult to define the extent of the easement. The fact that solar panels enable a landowner to harvest solar energy rather than to illuminate a room would also raise difficult questions about the extent of protection provided by the right"

The LC argues it's already possible to create an express interest in land for the protection of a solar panel, by the use of restrictive covenants, although they think this would be unusual.

If solar panels were allowed to acquire rights by prescription (continuous use for 20 years), the LC argues, then the difficulties that arise from a proliferation of rights to light would be made even worse.

The LC concludes that allowing prescription for solar panels would be particularly problematic as it would be difficult for the affected landowners to establish the channels of light that benefit the panel.

As a consequence, the extent of the right would be uncertain and, potentially, very wide.

There is it seems no legal right to sunshine.

Those hoping for reform will be disappointed, both with the fact there's no recommendation for change and with the firm views expressed by the LC on the current law.

It's not surprising though given the LC's proposals on rights to light in general.

The LC is, after all, advocating that the creation of all rights to light by prescription (the enjoyment of light through a window without interruption for a period of 20 years) should be abolished, so anyone hoping for more protection for solar panels is clearly adrift of the prevailing trend.

Owners of solar panels will have to rely on what protection, if any, may be afforded by the planning system.

As  with tv aerials and satellite dishes, it's a case of caveat emptor – buyer beware.

Photo by Pink Dispatcher via Flickr

Monday, 25 February 2013

Rent Deposits: Clock Ticking on Requirement to Register at Companies House

A change in regulations affecting companies and limited liability partnerships is in the offing which will mean that from 6 April 2013 charges created over rent deposit deeds will no longer need to be registered at Companies House.

The draft regulations*, introduced in September 2012 and amended in January 2013, are still only in draft form and so the clock is ticking to get them passed in final form in time for April. [Update 20/3/13 - they have now been passed, see the end of this post.]

The regulations introduce changes to the whole system for registering UK company charges - one that's been with us for over 100 years.

I'm not going to look at the whole system for registering charges in this post (here are some notes from BIS) - but briefly there'll be a single UK-wide registration system for charges created by UK companies and LLPs - so it'll apply to England and Wales, Scotland and Northern Ireland.

The 21-day limit for registering charges (that well-known and much-feared negligence trap which the Law Commission had wanted to abolish) remains (so failure to register still leaves a charge at risk of being invalid against a liquidator, administrator or creditor of the security provider), although criminal sanctions for failure to comply will be removed.

The system will be modernised too by enabling a new e-system for electronic registration of charges, although a certified copy of the whole charge will have to be lodged rather than the statutory form (MG01) currently used.

So what about rent deposits?

All charges must be registered at Companies House, unless exempt, and one of the exemptions is “cash taken or held by a landlord as security for the due performance and observance of a tenant’s obligations under a lease of land.”

So a charge in a rent deposit deed created after 6 April 2013 (assuming the regulations are in force by then) will be exempt from the requirement to register.

What will this mean?

The change doesn't mean a charge in a rent deposit won't be effective security, but it does mean it won't be either discoverable or open to inspection in a public register.

So it won't be immediately clear to third parties whether a charged rent deposit exists.

How will it affect landlords?

Registration used to offer some protection if the tenant became insolvent, as it would put the tenant's insolvency practitioners on notice that the charge over the money existed. Landlords usually want control over a rent deposit account, but they are now likely to insist that the account is also held in their name, rather than the tenant's name.

How will it affect tenants?

If the account is in the landlord's name, it may be vulnerable if the landlord becomes insolvent. The landlord's insolvency practitioners may not be aware of the nature of the money being held in the landlord's account.

The rent deposit is also one of the tenant's assets, which might be more difficult to spot if the tenant itself becomes insolvent.

How will it affect buyers?

It makes due diligence more difficult, as you won't be able to search for the charges at Companies House. A buyer will therefore be more reliant on replies to enquiries, which might be non-existent if you're buying from receivers or other insolvency practitioners.

It's not clear at present when these regulations will be given parliamentary approval.

The latest mention I've found in Hansard is of a House of Lords Grand Committee on 6 February, when Lord Popat moved on behalf of the government that the regulations be supported.

Although broadly welcomed by all sides, there seem to be some concerns on the regulations in general (not specifically with regard to rent deposits), especially how they will be applied in Scotland.

It doesn't look like there's going to be much time for practitioners to get used to the new regime.

*The Companies Act 2006 (Amendment of Part 25) Regulations 2012 and the Limited Liability Partnerships (Application of Companies Act 2006) (Amendment) Regulations 2012.

UPDATE 20/3/2013 - the regulations have now been passed and are known as The Companies Act 2006 (Amendment of Part 25) Regulations 2013.

Thank you to the anonymous reader who commented on this post for letting me know.

Wednesday, 20 February 2013

BRC Calls for Business Rates Freeze

The British Retail Consortium (BRC) has today called on the Chancellor, George Osborne, to freeze business rates in his upcoming budget to help save the beleaguered high street.

The BRC warns in its budget submission that the costs of doing business on the high street have risen by 21% since 2006, the equivalent of £20bn across the industry, whilst during the same period sales have increased by just 12%, causing high street retailers to feel the squeeze across the country.

Rates are calculated on the rateable value of a property and are increased in April each year in line with the Retail Prices Index.

The BRC is calling for business rates to be frozen in 2013 and for future increases to be aligned to an average 12 month increase in the Consumer Prices Index, rather than a single month's RPI snapshot.

If you agree with them, you can petition your MP here.

Perhaps councils could also be encouraged to stop charging extortionate amounts to park on Britain's high streets - as well as some of the lunatic schemes they have installed in some areas for paying those charges (mobile-phone-only metres for example).

I'll stop before I get beyond the foothills of this rant.

Photo by timo_w2s via Flickr