PREDICTIONS 2014: PROPERTY

21 Dec 2013Feature

A major equity release appeal and the abolition of the law of distress are just two of a series of significant developments in property law this coming year, says Peter Petts

A major equity release appeal and the abolition of the law of distress are just two of a series of significant developments in property law this coming year, says Peter Petts

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 WLR 1521, which is due to be heard in March.

Mortgagees not bound

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 purchasers 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, the court 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.

Service charge

Residential landlords and the Property Chamber will be relieved that permission to appeal has recently been granted in Phillips & Goddard v Francis & Francis [2012] EWHC 3650 (Ch).

Sir Andrew Morritt's valedictory hand grenade as Chancellor was to hold that if landlords wish to recover more than £250 per tenant in 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 neigh 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 grenade, before it does too much damage.

No more distress

6th April sees the abolition of the law of distress and the introduction of commercial rent arrears recovery (CRAR), by Part 3 of and 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 and reg. 51).
The lease under which the rent is due must be evidenced in writing (s. 74).
None of the demised premises can be let, underlet or occupied as a dwelling, unless the occupation is in contravention of the lease (s. 75).
Only pure rent may be enforced against, regardless of the reservations in the lease (s. 76).
A minimum 7 days' rent must be in arrear (s. 77 and 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 (s. 78).
Control of goods may only be taken between 6 a.m. & 9 p.m. (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 (s. 81 and rr. 53 - 55).

Property proceedings

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).

While 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.

Peter Petts is a barrister practising from Hardwicke chambers