Property Roundup – April 2023
Many leases, both of commercial and residential property, contain a service charge provision. This is the method by which the landlord recovers the cost which it has incurred in maintaining, for example, the structure of the building or the common parts. Usually, the landlord prepares a certificate of the expenditure that has been incurred and many leases say that certificate is conclusive, both as to the amount incurred and of the tenant's liability to pay it. In the recent case of Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd, in which a retail tenant challenged the service charge which was nearly eight times as much as in previous years, the Supreme Court held that the tenant's liability to pay was an absolute one. The Court said that in such circumstances, even though there may be other provisions in the lease which allow the tenant to challenge the amount, tenants should not withhold payment of service charge, but rather pay it (to comply with the strict terms of the lease) and then take matters up with the landlord afterwards. Otherwise the tenant is at risk of successful court action being taken by the landlord and most likely a liability for additional costs. In other words “pay now, argue later”.
Under new rules from 1st April this year, a landlord must not continue to let most non-domestic property with an energy performance certificate rating of F or G. This is known as a sub-standard property. This applies not only to new lettings but existing ones as well. If the landlord continues such lettings then it runs the risk of being liable for a fine of up to £150,000. This is unless the landlord has a “legitimate reason” under the MEES regulations and has registered the property as exempt on the PRS exemptions register. Commercial landlords should be aware that this regime is by no means standing still and there are consultations in hand which may mean that the minimum standard for non-domestic property will rise to C by 2027.
In the residential sector there has been much discussion in recent times of the proposal by the Government to remove the ability of a landlord to serve a “no fault” section 21 eviction notice. This is a notice under the Housing Act 1988 which gives the landlord the right to bring an assured shorthold tenancy to an end by giving a minimum of two months’ notice. The notice expires either at the end of the fixed term of a tenancy or at any time thereafter where the tenancy is continuing on a month by month basis. The Sellers Reform Bill is due to be introduced to Parliament in this session and the Government intends to change the residential tenancy system so that future tenancies will not have a fixed term and will simply run from month to month. As presently proposed the tenant would have to give two months’ notice to the landlord to leave. The landlord would have the ability to terminate the tenancy, but only on specific grounds. This is expected to include limited rights when the landlord wishes to move into the property or sell it or where there are prolonged rent arrears. The landlord is expected to be entitled to increase the rent once a year but must give two months’ notice of the intended increase. It is likely that this system will be put into place in two stages with it applying to new tenancies in the first stage and to all existing tenancies at a later date.
We hope this article was interesting and useful to you. Please don’t hesitate to contact us if you have any questions regarding the content of the article or your property matters generally. We would be delighted to help. You can contact our Commercial Property Team via the details below: -
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