The British Property Federation (BPF) has endorsed the Property Litigation Association’s (PLA’s) proposal that the Landlord and Tenant (Covenants) Act 1995 should be reviewed as part of the Law Commission’s next programme of law reform.
In a letter to the Law Commission, BPF chief executive Liz Peace drew attention to Good Harvest v Centaur Services and KS Victoria Street v House of Fraser, which she said had “not only made landlords reluctant to agree to intra-group assignments but has impacted transactions involving joint partnerships”.
The PLA’s proposed amendment to the Act covers four areas:
1. Guarantors guaranteeing assignees by way of a sub-guarantee (ie codification of the decision in K/S Victoria);
2. Repeat direct guarantees in intra-group assignments (including assignments between companies, LLPs and partners);
3. Assignments from tenants to guarantors; and
4. Certain transactions in partnership situations (including assignments between and repeat guarantees by different groups of partners).
The Law Commission finished consulting on it 12th programme of law reform on 30 October. Areas selected for review will be confirmed by it in 2014.
Commenting on the BPF endorsement, PLA committee members, Paul Barker, senior associate at Wragge & Co, and Mathew Ditchburn, partner at Hogan Lovells, said:
“The PLA is very keen to see the perceived shortcomings of the Act being addressed, particularly those concerning repeat guarantees on intra-group assignments. It is hoped that the BPF having come out in support of the PLA’s proposals will lead to the Law Commission recommending reform.”
