It’s that time of year again when I gaze into my crystal ball and predict what the year ahead holds in store. This year all I see is a rather murky fog. While the plans for reform to leasehold law trundle on and the various government announcements still hang in the air, no destination is yet in sight.
Coronavirus
Coronavirus is still with us but the extended notice periods for terminating tenancies under section 8 and section 21 of the Housing Act 1988 have gone and the court bailiffs have been able to resume enforcement of evictions in non-serious cases. At the time of writing, the impact of the Omicron variant is still unknown, but the return to lockdowns, furlough and restrictions on possession claims is not currently predicted.
Leasehold reform
In the past couple of years there have been multiple proposals for the wholesale reform of leasehold law. The Law Commission has produced recommendations for major reforms to the law on leasehold enfranchisement and the right to manage and for the reinvigoration of commonhold. The work continues apace, but the only legislation yet to be produced is the Leasehold Reform (Ground Rent) Bill. If enacted, the bill will mean that new long residential leases can only have a peppercorn rent. The government remains keen on the idea of commonhold and set up a Commonhold Council comprising various leasehold groups and industry experts last May. It will be interesting to see whether adoption of this form of tenure will become compulsory for new flats – I suspect only compulsion will make the proposed new system catch on.
Building safety
According to government statistics, by the end of September 2021, 94% (445) of all identified high-rise residential and publicly-owned buildings in England had either completed or started remediation to remove and replace unsafe aluminium composite material cladding and 90% of private sector buildings had either completed or started remediation.
The Private Residential ACM Cladding Remediation Fund has now been increased to £4.5bn to provide funding to “entities who will be responsible for remediation”. The fund is expressly for the benefit of leaseholders who would otherwise incur the cost through service charge arrangements, but the claim must be made by the landlord. The money comes with strings attached, which include actively pursuing all reasonable claims against those involved in original cladding installations and claiming any insurance or warranty available. Some landlords have refused to claim because they don’t like the conditions. It seems likely that such landlords will face a claim under section 19 of the Landlord and Tenant Act 1985 that recladding costs have not been reasonably incurred.
The Building Safety Bill continues to make its way through parliament.
The courts
The courts also have a busy year ahead.
The decision of the Supreme Court in FirstPort Property Services Ltd v Settlers Court RTM Co Ltd [2019] UKUT 243 (LC); [2019] PLSCS 180 is expected in early 2022. The statutory right to manage has provided fertile grounds for litigation since it was introduced by the Commonhold and Leasehold Reform Act 2002. The issue in this case is whether the RTM extends to shared areas of an estate or is narrowly confined to the curtilage of a block of flats. Readers may recall Gala Unity Ltd v Ariadne Road RTN Co Ltd [2012] EWCA Civ 1372; [2012] EGLR 79 in which the tenants of a single block on an estate acquired the right to manage all the private access roads, gardens and communal areas benefiting the subject block and the rest of the estate. The Law Commission recognised in its recent report that this decision has caused a certain amount of chaos as both the RTM company and the landlord of the rest of the estate are liable for repair and maintenance, with a resulting mismatch in the service charge provisions.
The Supreme Court will also be deliberating on whether the law of tort should be extended to include a right of privacy in Fearn v Board of Trustees of the Tate Gallery [2020] EWCA Civ 104; [2020] EGLR 14. The claim was brought by the owners of luxury flats adjacent to Tate Modern who say their privacy has been ruined as a result of thousands of peering eyes from the gallery’s viewing platform. So far, the neighbours have been unsuccessful, but a win could open the floodgates to multiple claims by homeowners unhappy about being overlooked by their neighbours.
In January, the Court of Appeal is due to hear the appeal in another case called Fearn – Northwood Solihull Ltd v Fearn [2020] EWHC 3538 (QB); [2020] PLSCS 236, which concerns how a notice seeking possession served under section 8 of the Housing Act 1988 and a confirmatory certificate under the Housing (Tenancy Deposits) (Prescribed Information) Order 2007 have to be signed where there is a corporate landlord. Does it have to comply with the requirements of the Companies Act 2006?
Alberti v Cadogan Holdings Ltd [2021] UKUT 85 (LC); [2021] PLSCS 72 is listed in the Court of Appeal for early February. The Leasehold Reform Act 1967 requires tenant’s improvements to be disregarded when valuing the price payable for the freehold. Alberti will address how this disregard is to be applied when the tenant’s improvement is the conversion of five separate flats into a house. Does section 9(1A)(d) of the 1967 Act require the tribunal to assume that it was unlawful as a matter of planning control to use the property as a single house on the valuation date? The First-tier Tribunal will also consider whether a holiday house where the lease does not allow for all-year-round occupation is a “house” for the purposes of the 1967 Act.
The Upper Tribunal is due to hear what is believed to be the largest service charge to a single leaseholder to come before the tribunal involving a bill of £430,000. The enormous charge relates largely to the legal costs incurred the landlord in conducting the case of Hicks v 89 Holland Park (Management) Ltd [2020] EWCA Civ 758; [2020] EGLR 28 with the block’s neighbour over a restrictive covenant. This could provide useful guidance on what legal charges can be claimed via a service charge provision.
Nicola Muir is a barrister at Tanfield Chambers
