Commercial rent and the Pandemic – what next for landlords?

Back in 2020, when the Covid-19 pandemic was in full swing, the government brought in a range of measures that effectively curbed the right of landlords to recover rent arrears from commercial tenants, regain possession of premises from those who had fallen behind in their payments, and prevented landlords from forfeiting leases. Commercial solicitors for landlords up and down the country were inundated with queries and were busy providing commercial landlords advice for those affected.

Initially, there was an ‘end date’ in sight when landlords could start to try and recoup the losses and arrears they’d incurred during the height of the pandemic. However, recently the rug has been pulled out from underneath landlords, as under the Coronavirus Act 2020, the moratorium that prevents eviction or foreclosure of commercial leases on the grounds of non-payment has been extended to the 25th March 2022.

A moratorium on debt recovery

Prior to the Covid-19 crisis and the instigation of the 2020 Act, landlords were entitled to remove goods under the Commercial Rent Arrears Recovery clause if a total of 544 days’ rent was outstanding. Now, the right to carry out recovery has been postponed until March 2022.

The Corporate Insolvency and Governance Act 2020 had also stopped landlords from presenting a winding-up petition (unless they believed that Covid-19 was not the primary cause of the debtor’s financial insolvency). That has now been rescinded and may be one of the only ways commercial landlords can begin to claw back some of the losses they’ve incurred over the past two years.

An uneven playing field

The government is aware that certain sectors, such as retail, catering, and hospitality, have suffered far more of an impact than others, and sector-specific legislation is due to be introduced that will help landlords (and their tenants) tackle rent arrears without devastating the tentative shoots of recovery that we’ve seen in the past couple of months. The new system will apply only to businesses that have been directly affected by the pandemic, and those who have carried on trading normally will be subject to the previous legislation, meaning landlords can take action to recover overdue rent payments.

One of the elements is a ‘ringfenced arrears’ concept, which means that the new legislation will only apply to debts built up from March 2020 onwards. Debts or arrears before that period (and any that are accrued after the moratorium has been lifted) are not protected and landlords are well within their rights to pursue these outstanding payments. Commercial property solicitors in London are recommending that both landlords and tenants tackle these earlier outstanding debts first through negotiation and if things escalate, arbitration when a resolution cannot be reached between the landlord and the tenant.

If outstanding debts date back to before March 2020 then landlords also have the right to circumvent the ‘no eviction’ rule, especially if the tenant has breached other conditions of their tenancy agreement or lease.

Is it going to work?

There’s concern on both sides that the extension of the moratorium will result in tenants building up ever greater levels of debt, and landlords struggling to stay afloat while having almost no income from their properties. However, the pandemic has changed everything, and commercial solicitors for landlords are seeing an influx of queries from property owners desperate for guidance on what to do next. Currently, the situation is at a stalemate, and while the full range of rent debt recovery options is not available, the only other option that landlords have is to pursue the claims through the civil courts. The capital has been particularly badly affected by the commercial rent arrears crisis, and commercial property solicitors in London are advising landlords to consider all the options available to them, including civil action.

Of course, the time and additional costs of this method of debt recovery have to be factored into the overall cost, but there have been a series of successful civil cases recently where the courts have found in favour of the landlord. Acting now may also allow landlords to take full advantage of the renewed availability of winding up proceedings post-September 2021, as the judgement can be used as proof of inability to pay on the part of the tenant.

Nobody has come out of the Covid crisis unscathed, and both commercial tenants and landlords have been hit hard. If you’re a commercial landlord and you’re worried about rent arrears and how to recoup your losses, talk to one of our commercial solicitors for landlords and get expert, no-nonsense and up-to-the-minute advice today.

If you would like to talk in confidence to a Commercial Property expert, please email or phone 020 8349 0321.

End of stamp duty holiday cools property market

A recent surge in property prices is coming to a close as the stamp duty holiday is withdrawn, bringing an end to a boom that has seen increases in the cost of housing hit a 17-year high.

The holiday, brought in alongside a raft of other measures designed to cushion the impact of COVID-19 restrictions on ordinary families, has been credited with causing the surge, alongside a general desire for more living space caused by the realities of lockdown life. This surge sent house prices soaring to a level 10.5% higher than the same time last year, with the average residential property now costing £244,229, as buyers rushed to make purchases in anticipation of the measure’s tapered withdrawal.

However, that effect is beginning to wane, as houses worth more than £500,000 which led the boom with a 37% year on year increase become eligible for the full level of stamp duty payments again. This is likely to halt the steep rise in prices seen in recent months, but it may not puncture a hole in the market as some have feared.

Martin Beck, a senior economic advisor to the EY Item Club, said: “The pandemic has had potentially long-lasting effects on property preferences, not least raising demand for larger homes in a world of more home working. Combined with fuel for property deposits provided by the substantial savings accumulated by households during lockdowns, the ingredients are in place to maintain house prices at current, elevated, levels.”

Brought in during July 2020, the stamp duty holiday was designed to help people whose circumstances were affected by COVID to move house and brought the cost down to zero for houses worth less than £500,000. After almost a year, the holiday is now being slowly withdrawn and only affects houses worth less than £250,000 from 1 July 2021, and from 1 October the cost will go back to pre-pandemic levels.

Need to make your move before it’s too late, or do you want to strike while the iron is hot and get the most value for your assets? Get in touch with OGR Stock Denton. With 50 years of experience providing residential property services to thousands of families across London and the UK, we have the experience and skills to make your purchase or sale as quick and easy as possible.

To make an appointment to discuss any aspect of residential property law please email or phone 020 8349 0321.

Ban On Commercial Lease Evictions Extended Until March 2022

The Government has announced that the moratorium on commercial lease evictions has been extended until March 2022.  The decision has resulted in considerable controversy, with those in the arts, hospitality, and events sectors welcoming the news, and property companies furious that their legal rights are being further curtailed.

James Raynor, chief executive of the British and Irish arm of Grosvenor Property Group, told the media:

“I find it astonishing that one whole industry is being targeted by government intervention in this way and being deprived of their rights under the law. Owners and occupiers clearly need to work together in sensible partnership. I don’t see this helping, sadly.”

Melanie Leech, head of the British Property Federation, also condemned the move, telling City AM:

“The government has failed to recognise that commercial property owners are essential to the health of our town centres.”

“Another blanket extension to the moratoriums will provide further opportunity for those well-capitalised businesses who can afford to pay rent, but are refusing to do so, to continue their abuse of government and property owners’ support and will cast a long shadow over investment to build back better.”

It has been estimated that firms in retail and hospitality already owe £5bn in unpaid rent.

Full re-opening delayed

The announcement comes on top of the government’s decision to delay the final step in re-opening Britain following the Coronavirus pandemic lockdown measures that have been in place in some form since March 2020.  Prime Minister, Boris Johnson has delayed the dispensing of masks, social distancing, and limits on numbers allowed to attend sporting events, theatres, and cinemas will remain in place until 19 July 2021.  Nightclubs will also remain shut and the work from home edict will continue.  However, the rules on the number of guests allowed at weddings have been relaxed albeit with several restrictions such as facemasks to be worn indoors and table service only for food and drinks at hospitality venues.

The four-week delay to the end of lockdown measures will put even further pressure on the hospitality, cultural, and tourism sectors.  It is hoped that the extension on Commercial Lease Evictions will allow tenants time to re-establish their business and rebuild cashflow so they can pay off rent arrears and other debts whilst continuing to trade.

Landlord concerns on Commercial Leases 

Although the extension of the ban on commercial lease evictions provides relief to tenants for unpaid commercial rent, landlords argue that they have been expected to act as a bank to ensure the economy keeps functioning.  There is also the knock-on effect on pension funds which are heavily invested in the commercial property sector.

Landlords are also expected to make allowances for the ringfenced rent arrears when businesses were forced to close completely during lockdowns and ‘share the pain’ with tenants.  This has resulted in landlords writing off millions of pounds in debt.

The other concern landlords have is that large, profitable companies have been refusing to pay rent despite being allowed to trade through the pandemic.  Furthermore, many large companies are using CVAs to reduce their commercial property liabilities through closing stores, writing off arrears, and demanding rent be reduced in low-profit locations.  However, this month landlords won a rare victory concerning CVA’s when the High Court ruled in Carraway Guildford (Nominee A) Ltd and others v Regis UK Ltd and others (2021) that Regis Hairdressing Group’s CVA was for the benefit of its company shareholders, finance creditors, and trade suppliers at the expense of the company’s landlords.  Regis was proposing that rents would be reduced by between 25% and 75%, and arrears reduced to just 7% of their value.  Meanwhile, a long list of ‘critical creditors’ including shareholders and International Beauty LTD (which is also a shareholder) were left entirely unaffected by the CVA.  Mr Justice Zacaroli ordered the CVA to be revoked.

How a Commercial Property Solicitor can help commercial landlords and tenants

The continuing economic effects of the biggest pandemic in a century continues to be felt by everyone. What is essential for both landlords and tenants is that they are aware of their legal rights and have professional support to ensure their business interests are protected.

To make an appointment to discuss any aspect of commercial property law please email us or phone 020 8349 0321.

New 95% Mortgage Scheme Launches

The new government-backed 95% mortgage scheme launched on 19 April 2021.  High street lenders including Lloyds, Santander, Barclays, HSBC, and NatWest have all signed up to the scheme.  OGR Stock Denton’s residential conveyancing team are highly respected panel members on all four aforementioned lenders.

With studies showing that 80% of renters are now actively saving for a deposit, the ability to borrow up to 95% of the value on a property will ensure more people realise their dream of owning their own home.

How does the 95% mortgage scheme work?

With rents rising every year, the challenge to getting a foot on the property ladder is saving the necessary deposit.  During the Coronavirus pandemic, 95% mortgages virtually disappeared, putting a further barrier between Generation Rent and their desire for homeownership.  At the most recent Conservative Party Conference Boris Johnson made a promise to tackle inequality in the housing market.  By providing a government-backed low deposit scheme for properties purchased for £600,000 or less, thousands more will be collecting keys from an estate agent between April and when the scheme closes in December 2021.

Susan Allen, CEO of Retail and Business Banking at Santander gave her backing to the scheme, stating:

“We know that raising a large deposit can often be challenging for potential home buyers, so we’re pleased to be part of the government’s Mortgage Guarantee Scheme offering a range of 95% mortgages to help both first-time buyers and home movers.

As one of the UK’s largest mortgage lenders we see how important homeownership is to our customers and we use our wide experience and expertise to support them throughout the home buying process.”

How OGR Stock Denton’s Conveyancing Lawyers can help you with the 95% government-backed mortgage scheme

 With years of experience in the residential property market, our Residential Conveyancing Solicitors will ensure your 95% mortgage application and property purchase transaction goes through smoothly.  You can be confident that we will apply for all the necessary property searches and carefully examine the title and explain any issues that may affect your future enjoyment of the property.  As a full-service law firm, we can also assist you with other legal issues relating to your new home, for example drafting a Will or a Pre or Post-Nuptial Agreement.

Reacting to the news that the 95% mortgage lending scheme has been launched, Michael Stock, who heads up our Property Department comments:

“The Government’s Mortgage Guarantee Scheme will provide the boost many prospective home-buyers need to get on the property ladder.  However, no property acquisition is without risk.  It is essential to have an experienced Conveyancing Solicitor examine the mortgage offer and the details of the property to ensure the risk of falling into negative equity is mitigated.  Most of our clients and their families remain with us long-term because they appreciate that we take the time to get to know them and trust that they will be swiftly notified regarding any concerns around their property purchases.”

Whether you are buying a pre-existing home or a new build, our North London based Property Lawyers will provide expert advice and ensure your interests are fully protected.

To make an appointment to discuss any aspect of residential property law please email or phone 020 8349 0321.

 

What The 2021 Budget Means For Homebuyers, Employers, and Investors?

On 3 March 2021, Chancellor Rishi Sunak delivered this year’s budget. A year ago, two weeks before the first Coronavirus lockdown, the Conservative Party was promising to spend enormous sums in order to ‘level up’ and reward the so called ‘red-wall’ voters. Then everything changed almost overnight, and most of the money set aside for infrastructure spending etc was diverted into saving the economy, people’s jobs, and the NHS. This year’s budget was about continuing to provide Coronavirus support and paying for the mountain of debt accrued in fighting the pandemic. However, given the circumstances the country (and the world) are in, there was some surprisingly good news from the Treasury.

Residential Property Solicitors in London can help more people buy their home

Those looking to purchase a home have been given a double-shot of good news. Not only is the Stamp Duty Land Tax (SDLT) holiday being extended to the end of June, first home buyers are also set to benefit from a government-backed low deposit mortgage scheme.

Stamp Duty Land Tax

Introduced in July 2020 to help the residential property market recover after it came to a virtual standstill in the first lockdown, the SDLT raised the tax-free threshold to £500,000. This meant most homebuyers have not had to pay SDLT when buying a new home, saving them thousands of pounds. There was concern that the property market would fall off a cliff-edge if the tax break was abruptly ended on 31 March, as many transactions would not have completed, leading to buyers pulling out of sales as they would not be able to afford to pay SDLT. Thankfully, the Chancellor announced that the tax-free threshold would remain until 30 June 2021. From 30 June to the end of September 2021, the nil rate band will be set at £250,000 – double its standard level.

Low-deposit mortgages

Low-deposit mortgages have essentially disappeared over the last 12 months (although the number of lenders offering them has been declining since the 2008 financial crisis). This has made it almost impossible for first-time buyers, especially in London and the South-East, to save enough for a minimum 10% deposit. The government has said it is determined to turn ‘generation rent’ into ‘generation buy’.

To help all home buyers (not just those trying to get on the property ladder), the Chancellor confirmed that:

“several of the country’s largest lenders including Lloyds, Natwest, Santander, Barclays, and HSBC will be offering these 95% mortgages from next month.”  

Buyers will pay just 5% deposits to buy homes worth up to £600,000. The government will offer lenders a guarantee to provide mortgages covering the remaining 95%.

Businesses can continue to benefit from the Furlough Scheme

For both employers and employees, the Budget announcement that the Government’s Job Retention Scheme is being extended until September will be welcome. 

Speaking in the Commons, Mr Sunak said:

“As businesses reopen, we’ll ask them to contribute alongside the taxpayer to the cost of paying their employees. Nothing will change until July when we will ask for a small contribution of just 10% and 20% in August and September.”

Mr Sunak told the Commons: “As businesses reopen, we’ll ask them to contribute alongside the taxpayer to the cost of paying their employees. Nothing will change until July when we will ask for a small contribution of just 10% and 20% in August and September.”

Despite this positive news, there is likely to be redundancies when the Furlough Scheme does come to an end. For employees, this may mean seeking employment law advice on Settlement Agreements and whether they have a claim for unfair dismissal. Employers may need to see an employment lawyer for advice on ensuring the strict statutory redundancy process is correctly followed.

Inheritance Tax Solicitors can advise on the best estate planning strategies

For some, the budget did not bring good news. Although the Chancellor did not raise Income Tax, National Insurance, or VAT, a freeze was put on Inheritance Tax, pension ‘lifetime allowances’, and the personal tax allowance thresholds. As wages and the value of assets increase over the next few years, more people will be subject to increased taxes.

To protect your wealth, tax planning is essential. An Estate and Inheritance Tax Planning Solicitor will carefully evaluate your investments and advise on actions to take to avoid paying more tax than is necessary. Because the government’s need to repay the deficit will become more pressing over the coming years, it is vital to get your tax planning in order immediately.

To make an appointment to discuss any aspect of residential property, employment, or tax planning law please send us an email or phone 020 83490321.

UK Stamp Duty Holiday set to be extended?

It has been widely reported that the Chancellor of the Exchequer, Rishi Sunak is likely to extend the Stamp Duty Land Tax (SDLT) holiday for a further three months.  This will occur when he presents his budget on 3rd March 2021.

With the looming threat of over 200,000 current residential property transactions collapsing when the SDLT holiday ends on 31 March 2021, estate agents, solicitors, mortgage lenders, as well as buyers and sellers welcome the news of a possible extension.

Residential property solicitors in London are urging people not to make any financial commitments on the back of the reports that the SDLT holiday will be extended.  One thing that the Coronavirus pandemic has taught us is that government promises and policies can swiftly change.

In this article, we explain what stamp duty is and why not extending the holiday poses a serious risk to the property market.

What is Stamp Duty?

If you buy land above a certain price threshold in England or Northern Ireland, either freehold or leasehold, you may have to pay SDLT.  Scotland and Wales have different but equivalent taxes.

What is the Stamp Duty holiday?

During the first lockdown in March 2020, the residential property market virtually ground to a halt.  To help it recover, Rishi Sunak introduced a SDLT holiday, waiving the tax on the first £500,000 of the property price. 

SDLT over the first £500,000 is calculated as follows:

Property Value Stamp Duty Rate
£500,001 to £925,000 5%
£925,001 to £1.5 million 10%
above £1.5 million 12%

The above applies to people who are purchasing a property that will be their only home.

If you are purchasing an additional home, the SDLT rates up until 31 March 2021 are as follows:

Property Value Stamp Duty Rate
Up to £500,000 Up to 3%
£500,001 to £925,000 8%
£925,001 to £1.5 million 13%
above £1.5 million 15%

 

Why are residential property lawyers and estate agents so concerned about the end of the SDLT holiday?

There is pressure on the Treasury to extend the SDLT holiday in some form to avoid a ‘cliff-edge’ situation of thousands of house sales falling through because buyers cannot afford to pay normal stamp duty.

The time for a sale and purchase transaction to complete has become significantly longer due to the sheer number of house purchases and the fact that many organisations and businesses involved in real estate transactions have had staff off either sick or self-isolating.

Obtaining property searches is one of the main reasons for delays.  In December 2020, around 8% of local authorities were reporting significant delays in returning searches with turnaround times for all of these local authorities exceeding 26 working days.

There have also been major delays in processing mortgage applications.

A stable property market is essential to the UK economy.  Residential property represents the largest proportion of most people’s consumer wealth.  The Bank of England puts it succinctly:

“The housing market is closely linked to consumer spending. When house prices go up, homeowners become better off and feel more confident. Some people will borrow more against the value of their home, either to spend on goods and services, renovate their house, supplement their pension, or pay off other debt.

When house prices go down, homeowners risk that their house will be worth less than their outstanding mortgage.  People are therefore more likely to cut down on spending and hold off from making personal investments.”

Will the stamp duty holiday be extended?

The government has given no assurances that the SDLT holiday will be extended.  And even if it is, it may not continue in its current form, as doing so would merely ‘kick the can down the road’, leaving the property market vulnerable to another ‘cliff-edge’ in June.

To mitigate the risk of the property market plummeting, the Treasury may extend the holiday only to those who have reached a certain stage in their residential property transaction, for example, agreeing with solicitors to exchange contracts.  Alternatively, the tax relief available may be tapered down between March and June.

Either of the above scenarios will result in transactions becoming more complicated, and therefore, the Chancellor may decide on a blanket extension to the existing relief, taking a chance that the vaccine programme and easing of lockdown will boost confidence enough to ensure the market stays buoyant throughout the summer.

We will update you as soon as a decision is made. In the meantime, if you are concerned about your current house sale or purchase or want advice on how to take advantage of the SDLT holiday, please get in touch with a member of our conveyancing team today.

To make an appointment to discuss any aspect of residential property law please email or call us on 020 8349 0321.

Bank of Mum and Dad – Top three things to consider

The plight of young people trying to get on the housing ladder is well known. The days of being able to borrow 100% of the property price disappeared in the fog of the 2008/9 financial crisis.  Furthermore, the cost of housing has risen dramatically, increasing by 1,145% since 1980 and predicted to rise a further 17% over the next decade. London residential property solicitors are seeing more young people funding first home purchases through the ‘Bank of Mum and Dad’. 

But before handing over a significant sum to your children so they can purchase a property there are several things to consider to prevent a bitter family dispute developing in the future. For example, your son or daughter may be buying a property with their cohabiting partner. If their relationship ends, you may find it difficult to recoup your money if the loan and property purchase has not been structured to protect your interests as a lender.

The top three things to consider when lending or borrowing from the ‘Bank of Mum and Dad’ are:

Ask your property Solicitor to structure the loan to ensure you are repaid

If you have decided to lend rather than gift house deposit money, your residential conveyancing Solicitor will advise that you draw up a loan agreement detailing how the loan is to be repaid. You can also put a legal charge over the property in the same way a bank would if it were providing a mortgage. This will give you the power to sell the property (as a last resort) if your son or daughter and their partner do not repay you, provided there is sufficient equity in the property at the time of sale.

You may also choose to have your name registered on the property’s title, which would give you more control.  You and your child and their partner/spouse can purchase the property as tenants in common, with you holding a proportionate share of the property related to the size of the loan.  For example, as tenants in common, your son or daughter could hold 40% of the property, their partner 40% and you 20%.

If you are gifting the deposit money, make sure you understand the tax implications

You may choose to gift your children money for house deposits with no expectation of repayment. Whilst this is a wonderful gesture, it can have significant consequences in terms of tax. Inheritance Tax is payable if your estate is worth £325,000 after your death. Married couples can ‘inherit’ each other’s tax-free allowance, raising the amount to £650,000.  And if you leave your family home to your direct descendants, you can benefit from the Residence Nil Rate Tax Band of £175,000. 

You can give away £3,000 per year tax-free.  However, given that the average bank of mum and dad loan/gift is £24,100, rising to £31,000 in London, it is crucial to invest in estate/tax planning advice so you can gift house deposit money without incurring Inheritance Tax at a later date. Our private client team can work closely with your accountant to also plan for second-home Capital Gains Tax if you choose to own part of your child’s property as a tenant in common.

Have your property law Solicitor explain the legal implications of being a guarantor or taking out a joint mortgage

If you do not have the money available to gift or loan part or all of your children’s house deposits, you could consider being a guarantor on their mortgage.  Although fewer banks allow for guarantors these days, a mortgage broker will undoubtedly be able to find a willing lender. If you choose to be a guarantor, you must have the lending agreement checked by an experienced Conveyancing lawyer and ensure they fully explain the small print relating to your obligations to repay the mortgage if your child defaults on their mortgage payments.

You can also take out a joint mortgage with your child and their spouse/partner.  This will result in you owning part of the property.  Some banks will insist that you are aged under 70 at the end of the mortgage term and others will only provide a joint mortgage for interest-only loans.

Want to know more?  Come to our live webinar on How Secure Is The Bank Of Mum And Dad?

The above is simply a brief overview of the legal considerations and implications of the ‘Bank of Mum and Dad’. There are many other considerations such as whether or not a lending parent may have an interest in the property under trust law, Consumer Credit Act issues should the relationship between the parents and their child or their child’s partner break down, and allegations of undue influence in the case of a future dispute developing.

On Tuesday, 2nd March 2021, London-based property Solicitors from OGR Stock Denton LLP will be presenting a live webinar discussing all these matters and more. For further information please visit our events page.

What are Commercial Property landlords’ rights around recouping rent arrears?

The Coronavirus pandemic has hit many sectors such as hospitality, beauty, and retail with savage force.  Throughout 2020, attention has been focused mainly on the plight of tenants who have seen their customer footfall and/or turnover plummet.  However, many landlords are also struggling to cover their own financial commitments due to tenants being unable to pay rent.  Our North London commercial property solicitors regularly advise landlords who are treading a fine line between collecting rent to cover their liabilities and at the same time supporting tenants’ businesses to ensure investment properties remain occupied once the pandemic ends. 

If you and your team are preparing a strategy for collecting rent on the March quarter day, below are some answers to questions our commercial property solicitors are being asked by clients.

What are my legal rights regarding collecting rent from my commercial property tenants?

At present, commercial landlords are restricted regarding the legal actions they can take against a tenant who cannot or will not pay rent.  Until 31 March 2021 landlords cannot evict commercial tenants for rent arrears or use the Commercial Rent Arrears Recovery (CRAR) procedure unless an amount of 366 days’ rent is owing.  These restrictions have been in place since March 2020; however, when extending the restrictions in December 2020, the government made it clear that no further extensions would be announced:

Secretary of State for Housing Rt Hon Robert Jenrick MP said:

“I am extending protections from the threat of eviction for businesses unable to pay their rent until March 2021, taking the length of these measures to one year. This will help them recover from the impact of the pandemic and plan for the future.

“This support is for the businesses struggling the most during the pandemic, such as those in hospitality – however, those that are able to pay their rent should do so.

“We are witnessing a profound adjustment in commercial property. It is critical that landlords and tenants across the country use the coming months to reach agreements on rent wherever possible and enable viable businesses to continue to operate.”

Restrictions on insolvency measures including statutory demands and winding up petitions have also been extended until the end of March.

If I cannot evict a commercial tenant or take legal action for payment of rent arrears, what are my options?

In June 2020, the government published a code of practice for commercial landlords and tenants.  The voluntary Code is designed to “support businesses to come together to negotiate affordable rental agreements. It builds upon the discussions already taking place by giving those tenants and landlords affected by the crisis the tools to come to a mutually beneficial agreement; ensuring that best practice becomes common practice.”

The Code asks both landlords and tenants to be flexible, act in good faith, and support the long-term viability of businesses and the jobs they provide.  For example, tenants who are seeking concessions must be transparent as to why such concessions are required and provide relevant financial information to the landlord if requested.  In turn, landlords should provide concessions where they can, considering their own fiduciary duties and financial commitments.  If a landlord refuses to allow requested concessions, they/it should give reasons for doing so. 

In another example of mutual support, landlords can elect to reduce service charges during lockdowns when a premise is not occupied.  And in return, tenants can agree to pay additional service costs to fund Coronavirus-related health and safety requirements that landlords are required to comply with. 

Specialist Landlord and Tenant Solicitors in North London

Both landlords and tenants are being asked to ‘share the pain’ during the pandemic and co-operation will be needed for many months to come.  A commercial property solicitor can advise you on your rights as a landlord under the existing commercial lease agreement.  They can also assist you with re-negotiating terms per the principles of the government’s Code of Practice.

For further advice please get in touch with one of our North London Commercial property solicitors by email or on 020 8349 0321.

Webinar – How secure is the Bank of Mum and Dad?

OGR Stock Denton LLP would like to invite you to join our live webinar – How secure is the Bank of Mum and Dad?

1.00pm, Tuesday 2nd March 2021

Zoom webinars

With the introduction of the Stamp Duty Land Tax (SDLT) holiday in England & Wales there has been a surge of applicants borrowing money from their parents to purchase either their first and second home

This webinar will look at the legal and tax implications of parents lending money to their children to purchase a home, particularly where spouses and cohabitees are involved, including some recent case examples of how we helped clients in similar situations.

If you would like to join this webinar, please email Ali Kabani:

akabani@ogrstockdenton.com

 020 8349 5514

Combustible cladding ban set to effect all houses over four stories

The UK government is putting out consultation plans to ban combustible cladding on all residential buildings with four or more stories.  This follows a 2018 snap ban on putting combustible materials in cladding systems for buildings over 18m tall, a move that many of London’s best property solicitors supported following the Grenfell Tower tragedy.

Speaking in Parliament on 20 January 2021, Housing Secretary Robert Jenrick issued a dire warning to building owners that the government would start naming those who had not started work to remove unsafe Aluminium Composite Material (ACM) cladding from their buildings.

Housing Secretary Rt Hon Robert Jenrick MP said:

“The government is committed to bringing about the biggest change in building safety for a generation.

“Progress on improving building safety needs to move significantly faster to ensure people are safe in their homes and building owners are held to account.

“That’s why today I’m announcing a major package of reforms, including establishing the Building Safety Regulator within the Health and Safety Executive to oversee the new regime and publishing consolidated guidance for building owners.

“Unless swift progress is seen in the coming weeks, I will publicly name building owners where action to remediate unsafe ACM cladding has not started. There can be no more excuses for delay, I’m demanding immediate action.”

In addition to the consultation plans, the Minister also announced:

  • As mentioned in the Minister’s comment above, a Building Safety Regulator would be established immediately in shadow form before being fully created by legislation. The Health and Safety Executive (HSE) has been asked by the government to establish a Building Safety Regulator.  It will be responsible for overseeing building standards, including a more robust regime for high-risk buildings. Dame Judith Hackett will preside over the creation of the new regulatory body.
  • The government-appointed independent expert advisory panel (IEAP) has clarified and updated advice to building owners regarding the safety measures that must be implemented and emphasised the focus should be on cladding. The advice makes it clear that building owners must address safety issues on residential buildings 18m or under.  AMC and other metal composites with an unmodified polyethylene core must not be used on any residential buildings of any height and removed from existing structures.
  • A construction expert will be appointed to review AMC cladding remediation timescales and identify how the process can be sped up. To remove the barrier of costs, a factor which has seen many property litigation lawyers managing disputes between building owners and leaseholders/tenants or building owners and local authorities, the government is examining options to mitigate costs and provide alternative financing pathways to the already existing £1.6bn Building Safety Programme.
  • The proposed height threshold for sprinkler system requirements in new buildings will be announced in February 2021.
  • Further details have been provided on the Fire Safety Bill which is being introduced in Parliament. The proposed legislation will amend the Regulatory Reform (Fire Safety) Order 2005 (‘the Fire Safety Order 2005’) to make building owners accountable for not complying with the necessary fire safety guidelines.  Residential building owners will have a legal obligation to consider and mitigate the risks of any external wall systems and front doors to individual flats.

Finding a specialist lawyer for landlord and tenant disputes 

Solicitors specialising in property law are working closely with landlords and leaseholders/tenants to resolve disputes around cladding removal.  Many leaseholders are living in flats that are unsalable (not to mention unsafe), and it has become clear that there is a significant shortfall between the cost of the cladding removal and associated repairs and the government funding available.

According to the BBC, a clause in the contract the Ministry of Housing, Communities and Local Government requires applicants to the fund, usually managing agents or building owners, to sign states that applicants themselves will be liable for any repair costs not covered by the fund.  This has led to many managing agents and building owners understandably refusing to sign until the government clarifies the extent of their liability. 

The Housing Minister’s announcement concerning measures to fix the ongoing cladding crisis will be welcome by property lawyers, building owners, and leaseholders/tenants alike.  However, with the threat of naming and shaming freeholders who have not started to undertake work or whose building repairs are progressing slowly, the pressure is mounting on the government to swiftly provide clarity and additional funding schemes.

Get in touch today with one of our property litigation solicitors for further advice.