Statutory Instruments
1. Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007
Number: 2007/991Enabling power: Building Act 1984
Commencement: 19 April 2007
Summary: Implement articles 7, 9 and 10 of the Energy Performance of Buildings Directive, which lays down requirements for the production of energy performance certificates when buildings are constructed, sold or rented out, display of certificates in large public buildings, and regular inspections of air-conditioning systems.
Relevant legislation: Housing Act 2004
Back to top2. Home Information Pack Regulations 2007
Number: 2007/992Enabling power: Housing Act 2004
Commencement: 1 June 2007
Summary: Prescribes the documents to be included in home information packs and the circumstances in which they are. They provide for exceptions and enforcement and make further provisions in relation to home condition reports.
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Features
1. Developers apprehensive about effects of new common land rules
The Commons Act 2006 was intended to identify and protect common land to promote sustainable farming and public access and to protect wildlife habitat. The Act repealed the Commons Act of 1285, which had formed the basis of protection and regulation of common land since the reign of Edward l.Within the wider definition of common land the 2006 Act established a system for registering town and village greens where there has been an established recreational use. The Order giving effect to the new criteria for registering town and village greens came into force on 6 April, 2007.
There has been speculation that land already purchased for development might be blighted by the new system. The Order allows for applications to be lodged for the next five years to register land that may have had a recreational use in the past, although that use might not have been perceptible at the time the Order cam into force on 6 April.
Rynd Smith, Head of Policy and Practice at the Royal Town Planning Institute, is sceptical. "Anecdotally, I've heard there is some interest in the potential for people to use the new Act to register common land on an opportunistic basis, but that is mostly in cases where there's a planning dispute already underway. I've heard it has been attempted in a wind farm application in Wales, for example. If opponents of a proposed development can establish some low level recreational use of the land in question, the Act may provide an extra strand of argument. It might not be definitive, but you can see it would be worth trying."
Rynd Smith says the advantage of the Act is that it will be more than a weapon in the armoury of opponents to development. "We all have to realise in the fraught world of planning there will be fractious disputes, but the Act cuts both ways. Registering a village green or common land under the Act also sets out a line of responsibility for its management by requiring the creation of a Common Council."
Department for Environment, Food and Rural Affairs figures produced during the Parliamentary progress of the Commons Bill indicated that the quality of wildlife habitat provided by common land is generally poor and neglected.
"Our hope is that the criteria for registration as common land in general, but village and town greens in particular, will concentrate the minds of planners, owners and developers. It will be critical for all parties to do thorough due diligence on the status of land they may wish to sell, lease or develop. They may wish to be proactive — even as far as taking affidavits from community members about what is locally understood to be the status of unfenced, accessible land."
(24/04/07)
Back to top2. New lease code for business premises is last chance for industry
The voluntary Code of Practice for Commercial Leases is seen as the last chance for the property industry to self-regulate and avoid government legislation on leases. Charles Woollam, partner at Donaldsons, the commercial property consultants, says that the revisions are part of a growing trend for the industry to tackle issues that have blighted relations between landlords and tenants for more than half a century, driven in part by the threat of legislation and in part by landlords’ appetite to derive out-performance against their peer group through exploiting better relationships with their tenants.Changes to the code will have two distinct benefits, argues Mr Woollam. One, to remove those situations where canny landlords have been able to rely on technicalities to take unforeseen; and two, to provide a framework where leasing deals can be more directly tailored to individual tenants’ needs while safe-guarding capital values — for example, by allowing different bases for rent reviews and more flexible lease terms.
“Removing traps that tenants unwittingly fall into has to be applauded,” says Mr Woollam. “Break clauses with conditions that effectively make the break clause inoperable, for example, have long been a feature of the market, and one that we can do without.
“If both parties agree that the tenant will have the right to determine the lease after an agreed period, often in return for some form of consideration, such as higher rent or softer lease incentives, it seems out of step with the modern world for a break to be frustrated on a legal technicality,” he says.
Mr Woollam also welcomes the move towards giving landlords and tenants the flexibility to agree whatever commercial terms suit them, and removing the necessity to adhere blindly to old-fashioned “institutional terms”. However, he points out that tenants will still need to take care. “This increased flexibility will surely have a price, and it is not always going to be worth paying,” he says. Upwards only rent reviews are a case in point. It is almost universally accepted, he says, that in agreeing to abandon upward only rent reviews — often known as “ratchet clauses” — landlords are entitled to offset the reduced certainty of income by asking for higher initial rents.
“Rather then rushing headlong into new arrangements simply to escape the perceived horrors of the dreaded ‘upward only’ rent review, each opportunity will need to be carefully assessed on its own merits. Our research has shown that, historically, for some property types in many parts of the country, the premium on the initial rent would have been disproportionate to any saving from having the perceived benefit of an ‘up/down’ review,” he says.
(19/04/07)
Back to top3. New tenancy deposit protection rules come into place
Since 6 April 2007, all deposits taken by landlords for assured shorthold tenancies in England and Wales must be protected by a tenancy deposit protection scheme. The new laws are meant to weed out rogue operators. A national survey suggests hundreds of thousands of tenants claim to have been cheated by landlords refusing to pay back their rent deposit.Under the new regime, landlords will have to participate in either a “custodial” or “insured” scheme and provide tenants with the contact details. Christina Smith, a solicitor at Churchers Solicitors, says: “Under the custodial scheme, the tenant pays the deposit to the landlord, who then has 14 days to send it to the scheme and give the tenant certain information.”
She adds that, at the end of the tenancy, the scheme returns the deposit. “If there is a dispute over damage, amounts, and so on, then the scheme will hold the amount until the dispute resolution service or courts decide what is fair,” she says.
“Under the alternative insurances schemes, the tenant pays the deposit to the landlord, who retains this amount. However, the landlord must pay a premium to the insurer,” says Ms Smith. However, Ms Smith adds that, again, certain information required by law must be given to the tenant. “If there is a dispute, then the landlord, at that point, only hands the deposit to the scheme to deal with and resolve the dispute. If, for any reason, the landlord fails to comply, the insurance arrangements will ensure the return of the deposit to the tenant, if they are entitled to it,” she says.
Interest accruing on deposits in the scheme will be used to pay for its running, and any surplus will be used to offer interest to the tenant, or to the landlord if the tenant is not entitled to repayment of the deposit. Both custodial and insured schemes feature alternative dispute procedures that can be called on to settle disputes. Landlords who do not take deposits will not have to participate in tenancy protection schemes. However, simply not requiring a deposit means losing the security they bring. A number of alternatives have been suggested to taking deposits, such as taking post dated cheques or charging higher rents but offering cash back at the end of a tenancy if there are no problems.
The Residential Landlords Associations had advised that such schemes are unlikely to be effective and will, in any case, require tenancy protection scheme participation. One possibility that would work would be to charge two month’s rent in advance. However, while this might give some comfort, rent in advance could not be used to make good damage, says Ms Smith.
Find out about the Law Society's related campaign
(11/04/07)
Back to topArticles
1. Budget and Finance Bill 2007 – SDLT
Journal: Tax Journal,
Citation: Issue 882, 11
Issue date: 23 April 2007
Author: Patrick Cannon
Summary: This article examines the changes to SDLT contained in the Finance Bill 2007.
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2. Construction's moveable feast
Journal: Building
Citation: 13 April 2007, 62
Issue date: 13 April 2007
Author: David Gill
Summary: The construction industry is faced with a crime epidemic, with an estimated £400 million per year lost to fraud, theft and criminal damage. Some of the UK's stolen plant resurfaces as far away as Australia. Site security needs to be actively managed and an effective security strategy is essential.
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3. Pillaged property
Journal: Taxation
Citation: 19 April 2007, 433
Issue date: 19 April 2007
Author: Alun Oliver
Summary: This article suggests that the Chancellor, in his latest Budget, has launched an extremely costly raid on property investors. Additionally, plant and machinery allowances are being reduced from 25 per cent to 20 per cent from April 2008. Lastly, a new category of “integral fixtures” at a rate of only 10 per cent is due to be created following further consultation.
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4. Rethinking possession orders
Journal: New Law Journal
Citation: 157 NLJ 506
Issue date: 13 April 2007
Authors: Jon Holbrook and Nick Billingham
Summary: This article explains how to strike a proper balance between landlords and tenants.
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5. Budget 2007 — property
Journal: Tax Journal
Citation: Issue 879, 11
Issue date: 2 April 2007
Author: Charles Beer
Summary: This article looks at the key issues in the Budget relating to property. The changes in the corporation tax and income tax regimes are unlikely to be beneficial overall. However, there was some good news in the potential changes to authorised investment fund taxation and also the consultation on land remediation relief.
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6. Tenancy deposit protection
Journal: Legal Action
Citation: April 2007, 31
Issue date: 1 April 2007
Author: Jacky Peacock
Summary: This article describes how, from 6 April, 2007, it will be unlawful for a landlord to accept a tenancy deposit in connection with an assured shorthold tenancy without safeguarding it in line with one of the three deposit protection schemes available. The aim of the new schemes is to safeguard tenants' deposits and ensure that they are returned swiftly (within 10 days) at the end of the tenancy, where tenants have kept the property in good condition and where there are no rent arrears.
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This e-alert is not intended to provide comprehensive records of information concerning the property sector. If you have any feedback or suggestions, please email propertysection@lawsociety.org.uk. This e-alert was created in conjunction with LexisNexis UK Legal Updater Service. For further information about any of the articles, please contact sabina.smith@lexisnexis.co.uk. The views expressed by the Legal Analysis interviewees are not necessarily those of the proprietor.
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