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Property Briefing Notes
The growth of Islamic Banking
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Liability for defective premises: Zennstrom v Fagot and Others
Residential property owners and developers.
Pursuant to the Defective Premises Act 1972 (“DPA”) those who refurbish or rebuild residential property with the intention of re-selling owe a duty to a purchaser for defects in the property which make it unfit for habitation. In the case of Zennstrom v Fagot and Others  EWHC 288 (TCC) the Technology and Construction Court has recently considered when a refurbishment or rebuild is carried out in the course of a business thereby making an individual liable under the DPA and when it can be said that the refurbishment or rebuild is for personal use only.
Facts of the Case
Ms Moseley and Ms Wilks (“the Defendants”) purchased 22 Crowsport, Hamble in Southampton in 2004. The property was on a much coveted private road overlooking a marina. The Defendants said that they purchased the property with the intention of living there. After a while living in the property they had it demolished and they built a new property in its place. Having done so, and due to a change in circumstances, they were unable to continue servicing their mortgage. They therefore had to sell the Property to Mr Zennstrom and another (“the Claimants”).
Following the sale it transpired that there were a number of substantial defects in the new property they had built. The Claimants brought a claim against the Defendants under the Defective Premises Act 1972 (“DPA”). The Claimants stated that the Defendants had built the property purely for profit rendering them liable under the DPA for any defects which made it unfit for habitation.
Section 1(1) of the DPA provides that:
‘A person taking on work for or in connection with the provision of a dwelling (whether the dwelling is provided by the erection or by the conversion or enlargement of a building) owes a duty-
(a) if the dwelling is provided to the order of any person, to that person; and
(b) without prejudice to (a) above, to every person who acquires an interest (whether legal or equitable) in the dwelling;
to see that the work which he takes on is done in a workmanlike or, as the case may be, professional manner, with proper materials and so that as regards that work the dwelling will be fit for habitation when completed.’
The Claimants had to prove that:
1. When the Defendants entered into the contract with the builder to carry out the works they intended to sell the property once the works were completed; and
2. That the Defendants did not intend to occupy the property as their home for any period of time that was more than minimal.
In seeking to prove these elements of their claim, the Claimants relied on previous purchases made by the Defendants; their alleged difficulties in paying for the building works and their financial position before and during the works generally, which suggested that they could never have realistically afforded to live in the property after it was built; and the fact that the Defendants had received a significant inheritance shortly before the sale of the property which had actually put them in a financial position to service the mortgage had they genuinely intended to remain living there.
The Defendants pointed out that they had never carried on a business as property developers; that the installation of unusual features in the property were particular to the Defendants and demonstrated that they were building for themselves and not for the market; their subsequent purchase of a property within 100 yards of the property; and the absence of an NHBC or similar certificate.
Mr Justice Edwards-Stuart found in favour of the Defendants. He stated that he was completely satisfied that when the Defendants embarked on the rebuilding of the property they did not have any intention to sell it. He was also satisfied that the Defendants were not aware of any defects of significance when they sold the property.
This decision was watched closely by those who have rebuilt or refurbished properties for their own use as if it had been found that the Defendants’ had been liable for the defects there would have been a departure from the general rule of caveat emptor – let the buyer beware. The case provides a useful guide to the type of factors that may be taken into account in determining whether the DPA applies.
Calculating turnover rents
The most successful retailers now operate via multi-channel levels, aiming to create a seamless experience between on-line, mobile and in-store shopping. Retailers do not mind how you buy their products as long as you buy them! However, how does this change in our shopping habits affect the turnover reported by retailers for turnover rent calculations?
Living in a conservation area – what does it mean?
You may never have heard of the term “Conservation Area” until your solicitor tells you that he has the result of his local authority search and this indicates that the property you hope to buy is in a conservation area.
As you will be aware, if you want to make alterations to a property you may need to obtain local authority consent (planning permission). However, if the property is in a conservation area, you may also need consent to carry out works which might not otherwise need consent, such as putting in windows, installing a satellite dish visible from the street, adding a conservatory or other extension, laying paving, building walls. Even works which require planning permission in the usual way may well also require conservation area consent and building control approval.
Each local authority will have different requirements and practices about conservation areas and you should contact the Conservation officer to discuss any plans you have to alter your property.
You will also find that if you want to cut down or carry out any works of pruning, lopping, etc. to mature trees within the boundary of the property you must obtain prior local authority consent (usually six weeks before you wish to carry out the works). The local authority may, as a result of its inspection, decide to make a tree preservation order to protect the tree.
If your applications for consents are refused you can appeal. Note however that it is a criminal offence to carry out works without consent. Retrospective consent may be given but this is not guaranteed.
So why do local authorities designate some areas with conservation area status? Normally it is to maintain and preserve the character and appearance of the neighbourhood. The areas tend to be designated because of historical or architectural interest. The conservation status protects the overall character of the area as well as individual buildings. Of course, this can enhance the value of the neighbourhood and avoids unsympathetic alterations which can detract from historic streets or the local character.
The most important thing to do is, as always, to check with your solicitor first if you think the property may be in a conservation area. Please speak to Suzanne Middleton-Lindsley, partner in Druces LLP’s Property team, for more information.
Doubling your rent – how to maximise returns when tenants hold over wrongfully
You may not have come across the Landlord and Tenant Act 1730 or the Distress for Rent Act 1737 and it might seem anachronistic today to rely on statute that is nearly 300 years old. However these Acts contain valuable provisions relating to tenants who fail to give vacant possession of premises at the expiry of their tenancies.
On the expiry of a tenancy which is not subject to any statutory continuation regime, such as the security of tenure provisions relating to business tenancies contained in the Landlord and Tenant Act 1954, the tenant is usually obliged to give vacant possession back to the landlord. If the tenant fails to give vacant possession and holds over following the expiry of the tenancy, the landlord may in certain circumstances be entitled to recover double rent or double the yearly rental value for the premises for the period of the tenant’s holding over. Typically a claim for double rent or double value would be made as part of the landlord’s court proceedings to get vacant possession of the premises from the tenant.
Double Value under section 1 of the Landlord and Tenant Act 1730
Double value may be demanded from a tenant under section 1 Landlord and Tenant Act 1730 where the tenant wilfully remains in occupation of premises after the expiry of its tenancy and the landlord has given the tenant notice in writing demanding vacant possession of the premises. Typically the landlord will give the tenant notice demanding vacant possession to be given on the contractual expiry date of the tenancy. The notice should specify that the landlord will claim double value if the tenant does not give up vacant possession to the landlord on that day.
If the tenant does not give up possession on the due date, the landlord can claim double the yearly value of the premises for the period in which the tenant remains in occupation following the giving of the notice.
Note that the provision applies to tenancies for fixed terms and for tenancies from year to year but not to shorter periodic tenancies. It is also important to remember that the provision has no application where the tenant is entitled to stay in the premises after the expiry of the tenancy by reason of the security of tenure provisions contained in the Landlord and Tenant Act 1954.
Double Rent under section 18 of the Landlord and Tenant Act 1737
If a tenant has the ability to give notice to quit under the terms of its tenancy and has given the landlord a valid notice to quit and thereafter does not give vacant possession of the premises to the landlord on the date of expiry of its notice, the landlord is able to demand double rent from its tenant under section 18 of the Landlord and Tenant Act 1737. This provides that where the tenant refuses to deliver up possession at the time stipulated in the tenant’s notice, the tenant must pay the landlord double the passing rent and such double rent must continue to be paid while the tenant remains in occupation.
Obtaining vacant possession
Landlords should ensure that recovery of double value or double rent from their tenants in the circumstances outlined above is carried out hand in hand with the process of obtaining vacant possession of the premises. If the tenant remains in possession of the premise following expiry of the tenancy and the landlord accepts rent from the tenant in respect of the tenant’s occupation without taking steps to obtain vacant possession, a new periodic tenancy could be created, entitling the tenant to remain in occupation of the premises on the terms of the new periodic tenancy and, potentially, subject to the security of tenure provisions of the Landlord and Tenant Act 1954.
The provisions in these Acts are often overlooked in circumstances where a landlord can rely on them. Notwithstanding the age of these provisions, they remain a useful tool in landlords’ armouries. Tenants who overstay their welcome in rented premises should be aware of the potential cost of doing so.
This note does not constitute legal advice but is intended as general guidance only. It is based on the law in force in November 2012.
Issues in commercial service charges
One of the aims of the RICS Code of Practice for Service Charges in Commercial Property (the Code) is to reduce tenant disputes by improving communication and transparency. At a time when everyone is ‘feeling the pinch’ service charge expenditure is being scrutinised more closely than ever before. It is therefore important that costs incurred by a landlord are properly recoverable in accordance with the lease.
Herrmann v Withers LLP: negligence in the conduct of a property transaction
Summary: In the recent case of Herrmann and Another v Withers LLP  EWHC 1492 (Ch) the Court held that a firm of solicitors had wrongly advised their clients that the high value property they were purchasing had communal garden access rights. This advice was negligent and the solicitors were liable to their clients in damages.
Relevant to: Property owners, Legal practitioners
Oliver v Symons: Extent of a right of way
The Court of Appeal has ruled that, in the absence of evidence to the contrary, a right of way does not extend beyond the verges of the track over which it runs and does not include a right to swing space for wide loads extending beyond the verges of the track. The determination in the case of Oliver and another -v- Symons and Another  EWCA Civ 267 provides useful guidance as to how the Courts interpret the extent of rights of way. Please speak to Julian Johnstone, Partner and Head of Druces LLP’s Litigation & Dispute Resolution team for further information and read our briefing note below.
Residential lettings: landlords’ obligations
Summary: With reports of rents hitting all-time highs, you may currently be considering whether to become a landlord. The law imposes a number of obligations on landlords and this briefing note provides an overview of some of the regulations of which you should be aware.
The obligations of a landlord depend on the type of property involved. The regulations discussed below apply to landlords of private residential property. Landlords of houses in multiple occupation (houses in which unrelated occupiers live independently from one another but share common areas of the building, for example bedsits) have additional responsibilities.
Relevant to: Individuals considering letting a property and existing landlords.
Priority between charging orders and prior beneficial interests in property
Charging Orders allow judgment creditors to secure judgment debts against property. However the security is limited and this has been highlighted in the recent case of Hughmans Solicitors v Central Stream Services Limited , where a charging order was found not to have priority over a prior unregistered beneficial interest in the property. Speak to Julian Johnstone, Partner in Druces LLP’s Litigation & Dispute Resolution team and see our briefing note below for more information: