1) The term “dilapidations” refers to breaches of lease covenants that relate to the condition of the property, and the process of remedying those breaches.
2) Some Definitions
A “Schedule of Dilapidations” is a document prepared by the Landlord (or their surveyor) which lists the allegations, suggests remedial works and sometimes estimates the costs of those
A “Quantified Demand” is a document prepared by, or on behalf of, the Landlord which sets out further details of the allegations. It is only issued after the end of the lease. It includes details of what the Landlord considers to be its likely loss as a consequence of the tenant’s alleged breaches. The likely loss does not always equate to the cost of the works set out in the Schedule of Dilapidations.
A “Response” is the reply from the Tenant (or their surveyor) to the Quantified Demand and/or Schedule of Dilapidations. This normally takes the form of a covering letter / email and a Scott Schedule.
A “Scott Schedule” is an extended version of the Schedule of Dilapidations which allows space for the Tenant’s surveyor to comment on the content of the Schedule of Dilapidations
3) Prior to signing the lease
Familiarise yourself with the lease terms and their dilapidations implications prior to signing the contract. A chartered building surveyor can advise you of the implications of the clauses you are signing up to.
4) During the lease term
Consider their potential future dilapidations liability in good time, and budget for that future obligation.
If you undertake alteration works to the premises then it is likely that your landlord may require you to reinstate those alterations shortly before the end of the lease. A Licence for Alterations (or Licence to Alter) is often agreed which sets out the obligations.
5) Near the end of the lease term
Dilapidations disputes can ultimately end in a court.
You may be advised to make offers to settle at various stages, and should consider such advice carefully, as it may be referred to later in court.
You should be aware of the extent of dilapidations work you have committed to complete.
It is normal to engage a chartered building surveyor, experienced in the field of dilapidations and familiar with the case law, to advise you.
Unless you have completed all the building work which the lease and any licences for alterations require of you then you should expect to receive a Schedule of Dilapidations from your Landlord.
Even if the Landlord does not send you a Schedule of Dilapidations you still have potential dilapidations obligations and a chartered building surveyor can give you advice as to the scope and potential cost of the obligations.
If you do not complete the dilapidations works before the end of the lease term then your landlord can claim damages from you to recompense them for the adverse financial position they find themselves in, because you did not complete the dilapidations works.
6) After the end of the lease term
You should have received a Schedule of Dilapidations and, within about 56 days after the end of the lease, also a Quantified Demand.
However, you should be aware that the landlord’s entitlement to start a court claim will not become legally time-barred for six or 12 years (depending upon how the lease is signed) after expiry of the lease. Some leases contain a specific timescale for service.
The Landlord or their Surveyor should have endorsed the Schedule of Dilapidations to confirm that it is reasonable and reflects the Landlord’s intentions for the building.
You are expected to respond to the Schedule of Dilapidations and/or Quantified Demand within about 56 days of receipt. Your Response should also be endorsed by you or your Surveyor.
Normally, the surveyors appointed by the Landlord and Tenant meet and can narrow the differences sufficiently to recommend a settlement figure to their respective clients.
If such a settlement is not possible then you may be faced with potential litigation from your former landlord. The Dilapidations Protocol states that the parties should consider alternative dispute resolution (ADR) in dilapidations cases.
Landlords beware – what constitutes “sufficient notice of proceedings” to enforce possession orders using High Court Sheriff enforcement procedure.
The High Court has recently provided guidance to what constitutes ‘sufficient notice of proceedings’ by Landlords seeking to enforce a possession order by High Court Sheriff enforcement method.
In Partridge v Gupta 2017 the Landlord served a S.21 notice and obtained an order for possession in the County Court. The landlord subsequently applied for the case to be transferred up to the High Court in order to speed up the enforcement procedure.
The landlord wrote a letter to the tenant notifying him that:
• They had made an application to transfer the case up to the High Court
• They had an intention to make an application for a writ of possession
The High Court granted the writ of possession and the tenant appealed the decision seeking to have the writ set aside on the basis that they he not have ‘sufficient notice of proceedings’ that were being issued against him notwithstanding the fact that he was fully aware of the County Court possession proceedings.
The High Court, in Partridge, distinguished between a sole tenant and a tenant having other occupants.
Where there is a sole tenant who is the subject of the possession order and he has full knowledge of the possession proceedings, a reminder of the terms of the court order and a request that possession is given up under the order is, generally speaking, sufficient notice.
Where the sole tenant has played no part in the possession proceedings, a letter or other suitable form of communication containing all of the above information should ensure that sufficient notice has been given.
Where there are occupants other than the tenant to the possession proceedings known to occupy the property then a letter addressed to them (if known by name) or to “the occupants” (if the names are not known) is necessary and needs to include reference to the intention to apply for permission to issue a writ of possession if express possession is not delivered up by the date prescribed in the order and that eviction will follow.
Partridge v Gupta 2017 highlights the importance for Landlords to be vigilant when seeking to enforce possession orders by writ in the High Court as the wording of the notice, in the case of multi-occupants, is very important and must include reference to the “intention to apply for permission to issue a writ of possession if possession is not delivered up by the date prescribed in the order and that eviction will follow”.
Upper Tribunal rules that student accommodation that shares communal areas is not a dwelling for
the purposes of section 27A of the Landlord and Tenant Act 1985.
Section 27A of the Landlord and Tenant Act 1985 provides that an application may be made to the
First Tier Tribunal for a determination as to whether a service charge is payable, if so by whom, the
amount payable and the date by which it is payable.
Under section 18(1) of the said Act a service charge is defined as being an amount payable by a
tenant of a dwelling for services of various kinds. Dwelling is defined by the Act as a building or part
of a building occupied or intended to be occupied as a separate dwelling, together with any yard,
garden, outhouses and appurtenances belonging to it or usually enjoyed with it.
In JLK Ltd v Emmanuel Chiedhu Ezekwe and others (2017) UKUT 277 (LC) the Upper Tribunal (Lands
Chamber) has concluded that student accommodation in which the students had the right to share a
kitchen, lounge, shower and w.c. with every other tenant on the same floor did not amount to a part
of a building which was occupied or intended to be occupied as a separate building.
The specific facts are that the property comprised 93 units of accommodation of which all but six
had en suite facilities (the remainder sharing communal showers and toilets). Each unit was let on a
long lease comprising the unit plus the right to use communal kitchens, bathrooms, showers and
other areas. The lease included a covenant to pay a maintenance charge in respect of the sums
spent by the landlord in the maintenance of the building. A dispute arose and an application was
made by a number of the students to the First Tier Tribunal (FTT) for determination of the sums
The FTT concluded that the units were dwellings and that it therefore had jurisdiction to determine
the applications. The landlord appealed this decision on the basis that the units could not be a
dwelling as they were not a home and that they were not separate dwellings because of the
The Upper Tribunal rejected the argument that to be a dwelling, a unit of accommodation must be
someone’s home. Then Act did not require this, however the Upper Tribunal accepted the argument
in respect of the units not being a separate dwelling. In reaching this decision it concluded that it
must have regard to the meaning given to the phrase “as a separate dwelling” for the purpose pf the
Rent Acts and the Housing Act 1988.
Accordingly the Upper Tribunal decided that the FTT did not have jurisdiction to deal with the
This is a decision that could have ramifications for other types of property where similar
circumstances exist in relation to section 27A of the 1985 Act and for other areas of the law in
relation to long leasehold residential property which depend on the same or a similar definition of
The basic position is that for claims which have been allocated to the Small Claims Track, usually with a monetary value of less than £10,000, the Court will not order a party to pay fees or expenses to the other party, subject to certain exceptions.
One of those exceptions is if the Court thinks a party has behaved unreasonably.
The question of what constitutes unreasonable behaviour was considered recently in the case of Dammermann v Lanyon Bowdler Solicitors (2017). In short, the Court considers whether rejection of a reasonable offer by one of the parties during the course of proceedings could amount to unreasonable behaviour. Usually, a party that rejects a reasonable offer can expect to be penalised by the Court and find itself subject to an adverse Costs Order. However, in the context of this case, the rejection of what was perhaps considered to be a reasonable offer was not automatically considered to be evidence of unreasonable conduct as the Court took into account a number of other material factors to the case.
The question therefore is whether this case sets a precedent that the rejection of a reasonable offer on its own will ever justify a finding of unreasonableness. This should not be considered to be the “golden rule” and each case is likely to be determined on its own facts.
One must never ignore the general principle that the Small Claims Court procedure is designed so as not to deter individuals from pursuing claims without legal representation or for fear of receiving an adverse Costs Order.
There is clearly a difference in claims which may be considered ‘optimistic’ to claims where litigation is pursued unreasonably. On the other hand however, this does not mean that you should be put off from seeking costs if your opponent’s conduct is such that it is clearly inappropriate.
Depending upon which side of the table you sit, the threat of a costs order for unreasonable conduct can still be a useful tool in your negotiating armoury.
For further advice on small claims disputes or recovering costs, please contact our Litigation Process Team on 0333 0300 200 or email firstname.lastname@example.org.
As we have mentioned in a prior article (link below) it is essential that a Landlord making a “relevant disposal” of a building containing flats should comply with the requirement to offer the tenants the interest first (by serving a section 5 notice on them) as they have a right of first refusal under the Landlord and Tenant Act 1987 (“the Act”).
For the Right of First Refusal (RFR) to exist the building must:
The requirements apply to all “relevant disposals” BUT the RFR only applies where the tenants’ immediate landlord is selling, so where there is an intermediate landlord, the freeholder could dispose of their interest without invoking RFR.
Creation of a new head lease, sale of the reversion and a disposal of common parts of the property ALL constitute a “relevant disposal” for the purposes of the Act.
Where the disposal is subject to a contract the disposal occurs on the date of the contract and NOT on completion of the sale.
The legislation does however provide for some disposals to be exempt including (but not limited to)
WHERE LAND IS HELD BY A COMPANY
In respect of the last point, a company is “associated” with another company within the meaning of the Companies Act if one company holds a majority of the voting rights in it OR is a member of that company and has the right to appoint or remove the board of directors.
A tenant who receives notice that a disposal is exempt for this ground should investigate at Companies House whether the companies are in fact “associated”. Simply having the same directors will not be sufficient.
Currently if a landlord in a qualifying building wants to avoid the provisions of the Act he must:
If these steps are followed, the disposal will not be a “relevant disposal” for the purposes of the Act as transaction (2) above was exempt and in transaction (3) only the shares in the company, not the property itself was transferred. However, this must be treated with extreme caution. Transfer (3) must take place after the transfer of the land. A landlord must take particular care that – where they have entered into an agreement with a purchaser for the sale of the shares conditional on the purchase of the land – at the time of the transfer the landlord must not be deemed to hold the shares in a fiduciary capacity for the purchaser. If this fiduciary capacity exists then the disposal would not be to an associated company and would be a “relevant disposal” for the purposes of the Act.
SLC solicitors have recently been involved in a case where a landlord company transferred a qualifying property to an individual “on trust” for an associated company and argued that this met the exemption criteria. Unfortunately the case settled before being tested at court. However, if the landlord has an associated company available to it, then it would seem a safer option to transfer the property directly to that company, rather than risk reliance on the provisions of a trust to ensure that the transaction fell within the exemption to the Act.
A landlord who does not comply with the requirements of the Act commits a criminal offence and is subject to a Level 5 fine on conviction. The tenants’ remedy is to compel the new landlord to transfer the property to them for the same terms as the original sale – including the purchase price -and time only starts to run from when the tenants became aware that the RFR applied to the transaction.
The purchaser of a freehold property where RFR is likely to apply should therefore insist on evidence that RFR has been complied with and serve notice on the tenants as soon as possible stating that RFR applied to the transaction or risk being compelled to give up the property to the tenants later.
If you would like advice on the Right of First Refusal please contact Leanne Donoghue, Property Solicitor at SLC Solicitors: email@example.com.
In Willow Court Management Company (1985) Ltd v Alexander  UKUT 290 (LC) the Upper Tribunal (Lands Chamber) (UT) gave guidance on Rule 13 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013. In three conjoined appeals the UT considered, for the first time, how the Tribunal should exercise its discretion to award costs pursuant to Rule 13 and in particular when costs should be awarded where a party has acted unreasonably in bringing, defending or conducting proceedings.
In each of the appeals the First-tier Tribunal (FTT) had found unreasonable behaviour and awarded costs pursuant to Rule 13(1)(b). In Willow Court Management Company (1985) Ltd v Alexander, the management company had not properly implemented the contractual procedure for determining the service charge, notwithstanding this having been explained in previous tribunal decisions. The FTT found this to have been unreasonable and Mrs Alexander was awarded £13,095 plus VAT as a contribution towards her costs.
In Sinclair v 231 Sussex Gardens Right to Manage Ltd, the FTT found that Miss Sinclair had behaved unreasonably by failing to pay her service charges, defending herself on what was considered to be spurious grounds, unsupported by sufficient evidence, and in general, behaving unreasonably. She had been ordered to pay £16,800 towards the costs incurred by the right to manage (RTM) company.
In Stone v 54 Hogarth Road London SW5 Management Ltd, Mr Stone had withdrawn his application for a determination of the service charge shortly before it was due to be heard by the FTT. The FTT was satisfied that he had had reasonable grounds for commencing his application but nevertheless considered that he had acted unreasonably in not withdrawing the application at an earlier stage, after concessions had been made by the landlord and when fewer costs would have been incurred. Mr Stone was ordered to pay £2,260.80 towards the costs incurred by his landlord.
The UT allowed all three appeals (setting aside the order for costs in each case), stating that the standard of behaviour expected of parties in tribunal proceedings ought not to be set at an unrealistic level. The Tribunal then proceeded on giving general guidance on how the tribunal should approach Rule 13 applications.
The UT held that when exercising any power under the 2013 Rules, the tribunal had to give effect to the overriding objective, namely dealing with cases justly and fairly. The UT set out a three stage test:-
Firstly, the tribunal must first assess (as an value judgment and not as the exercise of its discretion) whether the conduct complained of is objectively “unreasonable”.;
Secondly, if the conduct meets the “unreasonable test” threshold, the tribunal must consider whether, in the exercise of its discretion, and taking account of all relevant factors, it is appropriate to make a cost order.
Thirdly, if the tribunal considered that it is appropriate to award costs the tribunal must, as a further exercise of discretion, consider the form and quantum of the costs award.
The UT stressed that each case would turn on its own facts. However, “rule 13(1)(a) and (b) should both be reserved for the clearest cases and that in every case it will be for the party claiming costs to satisfy the burden of demonstrating that the other party’s conduct has been unreasonable”.
The UT held expressly that a party does not have to show “causation”; thus a party would not have to establish a causal nexus between the costs incurred and the behaviour to be sanctioned.
The UT held that the standard of reasonable conduct between represented parties and unrepresented parties would differ, recognising that legal advice was often only available at a disproportionate cost to litigants in the tribunal.
The behaviour of an unrepresented party with no legal knowledge should be judged by the standards of a reasonable person who does not have legal advice. The fact that a party “acts without legal advice” is therefore relevant at the first stage of the inquiry. This may also be relevant, to a lesser extent, in the second and third stages.
Parties, especially unrepresented parties, should be assisted to make sensible concessions and abandon less important points, or where appropriate, their entire claim. Such behaviour should not be discouraged by the fear that it will be treated as an admission that the abandoned issues were unsustainable and ought never to have been raised (and thus would arguably be justification for a claim for costs).
In a more recent case, Matier v Christchurch Gardens (Epsom) Ltd  UKUT 56 (LC), the Upper Tribunal (UT) considered whether to uphold a cost order under rule 13(1)(b) of the Property Chamber Rules 2013 (Rule 13) against a litigant in person (M) on the basis that he acted unreasonably in conducting proceedings.
The First-tier Tribunal (FTT) determined proceedings between M and M’s landlord (C) concerning payment of a service charge. It then granted C a cost order against M under Rule 13 on the basis that M had acted unreasonably in conducting proceedings by:
The UT upheld the costs order. In doing so, it was heavily influenced by M’s failure to follow the FTT’s directions about the preparation of submissions and hearing bundles. The UT held that:
The UT made clear that similar cases will turn on their facts. It noted that where a litigant in person acts in good faith in their defence (even if misconceived), this would rarely amount to unreasonable conduct. However, this case is a powerful reminder to litigants that acting inconsistently with tribunal directions may lead to an adverse costs order.
These are incredibly interesting and tumultuous times politically and economically but also within the property sector.
Traditional markets such as those in the leasehold and ground rent world and also the residential sales and rental market seem to be about to go through some considerable changes from market pressures and also parliamentary scrutiny.
It is reported today that a fifth of estate agents could go out of business. Research from accountancy firm Moore Stephens suggests the growth of online rivals could leave one in five estate agents at risk of going out of business, with almost 5,000 agents showing signs of financial distress. It warns that with higher staff and property costs, traditional agents are struggling to compete with online challengers such as eMoov, Tepilo and Purplebricks. Mike Finch of Moore Stephens said: “Traditional high street estate agents’ profit margins are being squeezed from both sides, from cut-price online competitors to their larger counterparts on the high street who are forcing them to up their spending or give up the race.” The report comes in a week where Countrywide and Foxtons reported declines in profit.
Last week also saw an increase in reporting on the leasehold ground rent sector as evidenced in particular by parliamentary and media scrutiny of the way in recent years that ground rents have been attached to houses (and of course flats) and the formulaic way in which those ground rents increase periodically over the life time of a lease to appear to make the ground rent disproportionate to the value of the property. Only last week The Guardian reported that the communities secretary, Sajid Javid, had outlined plans to ban developers from selling new-build houses in England as leasehold, and restrict ground rents on new flats to as low as zero. The newspaper went on to describe how victims of the so called ground rents scandal are demanding ministers go further in tackling unfair abuses of the leasehold system, amid claims that as many as 100,000 existing homeowners remain trapped in properties that are “unsellable”.
Neil Shearing, legal services consultant of SLC Solicitors, says “there will need to be some out of the box thinking from a broad strand of property entrepreneurs and investors. Markets that were once a secure and long term investment and relatively recession proof are now under some pressure. Within the leasehold sector there will always be a thriving and competitive marketplace for those interested in block management and service charge work and relationships with ground rent investors will remain in place and I expect will continue to thrive. However, certainty of ground rent incomes will now be a subject of interest and scrutiny and it would not surprise me if there was to be a consolidation of the market place by very large institutional investors once a clearer idea of the returns for this sector are known. That will take time but as we have seen in the private rented sector the emergence of institutional investors replacing smaller traditional investors has taken place over a very short period.”
Whatever happens next, and all of the above is without factoring in economic and political events such as Brexit and the possibility of increased inflationary pressures and interest rate rises, SLC Solicitors will continue to support its clients across the leasehold and private rented sectors and will react to the prevailing circumstances of the time and adapt and enhance its services to maximise and protect our clients’ interests at all times.
The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 were made on the 26th March 2015. They introduced a change in the law whereby from the 1st April 2018, it will be unlawful to privately let residential and commercial properties with an EPC rating of ‘F’ or ‘G’, unless one of the exemptions detailed below applies.
It is important to note that the Regulations will not apply to properties that are not required to have an EPC or where a property is let for a period of less than 6 months or for a term of more than 99 years.
What are the Exemptions?
Relevant Energy Efficiency Improvements – applicable if a landlord can demonstrate that there are no energy efficiency improvements that can be made or where all the available energy efficiency improvements have been undertaken and the property still falls below an EPC rating of ‘E’.
Third Party Consent Refused – applicable if a tenant, superior landlord or local authority refuse consent or such consent is subject to conditions that cannot be reasonably complied with.
Reduction in Value – applicable if an independent surveyor confirms energy efficiency improvements would result in a reduction of more than 5% of the market value of the property.
Temporary Exemption (Landlord Forced into a Letting) – compliance with the Regulations is postponed for 6 months where:
If one of the exemptions applies, it must be registered in the PRS Exemptions Register. Failure to register an exemption will lead to it being ineffective. An exemption must be re-registered every 5 years.
Timescale for Compliance – Residential Properties
From the 1st April 2018, Landlords cannot grant a new tenancy or let the property as a result of an extension or renewal of an existing tenancy.
From the 1st April 2020, Landlords cannot continue to let the property.
Timescale for Compliance – Commercial Properties
From the 1st April 2018, Landlords cannot grant a new tenancy or let the property as a result of an extension or renewal of an existing tenancy.
From the 1st April 2023, Landlords cannot continue to let the property.
Penalties for Non-Compliance – Residential Properties
The total penalty imposed must be no more than £5,000.00.
Penalties for Non-Compliance – Commercial Properties
The Regulations do not provide for the minimum EPC rating to be reduced at any time in the future however it is likely to be considered to meet the UK’s carbon reduction targets for 2020 and 2050. The Secretary of State is under an obligation to review the operation and effect of the Regulations at intervals of no more than 5 years i.e. the first review must be conducted by 2020.
Advice for Landlords
It is imperative you begin an immediate review of your portfolio to identify any properties that fall into the ‘F’ and ‘G’ EPC ratings.
Once the relevant properties have been identified, it must be considered whether any exemptions will be applicable. If not and energy efficiency works are required, you will need to consider whether the terms of the tenancy allow the landlord to enter the property to carry out works. Careful planning is essential to ensure works coincide with regular maintenance or void periods.
SLC Solicitors is ready to provide expert advice and assistance in minimising the potential impact of these Regulations on your portfolio of properties.
If you would like to discuss the changes further, please contact us on 0333 0300 200 or email firstname.lastname@example.org with your queries.
On 1st October 2017, a Pre-Action Protocol for debt recovery claims will come into force.
The Pre Action Protocol applies to any business, including sole traders and public bodies, claiming payment of a debt from an individual, including a sole trader.
The Pre Action Protocol does not apply to business to business debts, that is unless the debtor is a sole trader.
What is the aim of the Pre Action Protocol (PAP)?
The aim of the PAP is to:
What do you need to know?
The impact of these changes could have a dramatic impact on a business’s cash flow. You may need to re-consider your credit control policies to prevent any unnecessary delay. This may include the ‘tightening’ up of your procedures and enforcement of stricter time limits.
We would recommend an early referral to solicitors so that the clock can start to run sooner rather than later as this will inevitably assist cash flow if the debt is paid promptly following receipt of a Letter of Claim from solicitors.
For further guidance on this pre-action protocol, please do not hesitate to contact our Process Litigation Team on 0300 0200 300, or email us on email@example.com.
It is not uncommon for tenants to want to make changes to their property during their ownership perhaps to maximise the space available or to accommodate changes in family life. The extent to which tenants can make those changes will depend on whether the lease contains absolute or qualified covenants; absolute covenants prohibit alterations completely and qualified covenants relate to alterations which are not allowed save with the landlord’s consent. Our bulletin dated 14 February 2017 deals with this more fully.
If you do want to make alterations to your flat, obviously the first step should be to check whether such alterations are allowed under the lease and whether you need your landlord’s consent. If you undertake work on your property without the requisite consent then you are exposed to a breach of lease claim.
Work such as internal redecoration does not usually need the landlord’s consent. However, alterations involving changes to the fabric or structure of the building, external redecoration or changing around of rooms which involve plumbing changes (eg bedroom to a bathroom/kitchen) will usually require landlord’s consent which is provided for in a Licence to Alter.
The Licence to Alter should protect the interests of both the landlord and the tenant. As such, some of the points it should cover are:
The Licence to Alter will often require the involvement of both the landlord’s and tenant’s own solicitors to agree a final draft. However, from a tenant’s point of view, obtaining a Licence will mean that a breach of lease for unauthorised alterations can be avoided and it will also provide security to a new buyer should the tenant wish to sell. If you have any further queries, please contact one of the team on firstname.lastname@example.org.