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Property matters to look out for in 2014

4th February 2014

Lenders and those involved in equity release schemes will be keen to see the decision of the Supreme Court in Mortgage Business plc v O’ Shaughnessy [2012] 1 W.L.R. 1521, which is due to be heard in March. Owners sold their properties at reduced prices in return for the right to remain in possession under various forms of tenancy. The purchases were funded by mortgages, the applications for which did not disclose the vendors’ interests. The purchases defaulted on the mortgages and the mortgagees instigated possession proceedings. Following Abbey National Building Society v Cann [1991] 1 AC 56, both at first instance and on appeal, it was held that the mortgagees were not bound by the vendors’ tenancies, as at no time did the purchasers own properties unencumbered by the mortgagees’ interests. To succeed, the vendors will have to persuade the Supreme Court that Cann should be distinguished on policy grounds.

Residential landlords and the Property Chamber will be relieved that the appeal in Phillips & Goddard v Francis & Francis [2012] EWHC 3650 (Ch) is due to be heard in May. Sir Andrew Morritt’s valedictory hand grenade as Chancellor was to hold that if landlords wish to recover more than £250.00 per tenantin any one year, by way of service charge for works, they must comply with the statutory consultation process or obtain dispensation from the Property Chamber. Thus, brushing aside the perceived wisdom that the cap applied to individual items (“major works”), rather than cumulatively. As a result, it is now near impossible for a landlord to predict when consultation will be required, necessitating applications for retrospective dispensation. It is to be hoped that the Court of Appeal will fall on the former Chancellor’s hand grenade, before it does too much damage.

6th of April sees the abolition of the law of distress and the introduction of commercial rent arrears recovery (CRAR), by Part 3 of & Schedule 12 to the Tribunals, Courts and Enforcement Act 2007, brought into force by the Taking Control of Goods Regulations 2013.  Important points to note:

  • Only authorised enforcement agents may take control of goods (para 2(2) of sched 12 & reg 51).
  • The lease under which the rent is due must be evidenced in writing (s74).
  • None of the demised premises can be let, underlet or occupied as a dwelling, unless the occupation is in contravention of the lease (s75).
  • Only pure rent may be enforced against, regardless of the reservations in the lease (s76).
  • A minimum 7 days’ rent must be in arrears (s77 & reg 52).
  • A minimum of 7 clear days’ notice must be given by the enforcement agent, before taking control of goods, unless the court orders otherwise (reg 6).
  • The tenant may apply to the court to set aside or stay the notice (s78).
  • Control of goods may only be taken between 6.00am & 9.00pm (reg 13).
  • Walking possession is replaced by a controlled goods agreement (para 13 of sched 12).
  • The Law of Distress Amendment Act 1908 is replaced by new provisions for recovering rent from sub-tenants (s81 & rr 53 – 55).

Finally, as the Property Chamber beds in, we wait to see if it applies its new rules with the same rigour as the Court of Appeal has advocated for the post Jackson CPR (Mitchell v NGN Ltd [2013] EWCA Civ 1526 and the superabundance of zealous decisions following it). Whilst such a draconian approach may not be suitable in a forum widely populated by litigants in person, it is to be hoped that firm application of the new rules will lend some structure to procedure, leading to greater certainty and fairness.

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Sally Wollaston
Sally Wollaston
Business Development and Marketing Director
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