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Staunton v Kaye & Anor [2010] UKUT 270 (LC)

This is a rather confused matter from the Upper Tribunal (Lands) sitting in Manchester. It is made all the more confused by a transcript which muddles parties and at one point suggests the LVT was in error in remitting the matter to itself.

At issue was the payability of a demand for £1,227.47. The questions were variously whether it was a service charge, whether the s.20 Landlord and Tenant Act 1985 notification procedure had been complied with, or could be dispensed with, and particularly whether the demand complied with s.47 Landlord and Tenant Act 1987 (and, on appeal, also s.48 L&T 1987 and s.21B of the Landlord and Tenant Act 1985).

Mr Staunton, the appellant, is the leaseholder of a flat in Barracks Square, Macclesfield, unsurprisingly a former barracks. Kaye and Taylor, the respondents, owned the freehold of the flat and, together with a Mr & Ms Dykstra, the freehold of the former parade ground around which properties were set.

The brief outline of events was:

Beneath the parade ground is a sewer, to which the drains of 28 of the properties are connected, 15 of them via a further length of sewer serving only those 15 properties. The respondents told the LVT that in 2005 and 2006 a company called Genie Developments that owned buildings on the northern side of the square had commissioned surveys from Jet Rod Drainforce and Dyno Rod Drain Services. The surveys showed considerable tree root incursion into the sewers and suggested that rehabilitation was urgent. Genie Developments called several meetings of residents, encouraging the formation of a management company to raise funds and carry out the works that were needed, but they lost interest, and in November 2006 an informal committee called the Barracks Square Renovation Committee was formed by residents. Having obtained estimates from two companies for the remedial works the committee initially decided to accept the higher quotation on the basis that the specification was better. They divided the amount relating to the part of the sewer serving the 15 properties equally between those properties, and the rest they divided equally between the 28 properties. The total attributable to the subject property on this basis was £1,227.47. In the event the contract was let to another company that carried out the work in November 2007 and charged less. The amount attributable to the subject property on this basis was £999.32.

A demand for the sum of £1,222.47 was sent to the appellant on 21 January 2008. It did not state the name of the landlord. It included the note: “Payee details: Barracks Square Renovation Committee”.

Mr S refused to pay as he had seen no problems with the drains and thought the works were to increase the value of another area of the barracks for developers. A claim was brought for £1,222,47 in the County Court in the name ‘Barracks Square Renovation Committee’. Eventually in that claim Kaye and Taylor were substituted as claimants. Mr S defended on grounds that the demand was invalid as a demand for a service charge as it did not give the name and address of the landlord, contra s.47 L&T 1987 and the s.20 L&T 1985 consultation requirements had not been met.

The County Court transferred the case to the LVT for determination of whether the service charge was payable; and if so whether it was reasonable; and whether the s.20 requirements and been met, or if not whether a dispensation under s.20za(1) should be made.

The LVT found that there was no provision in the lease to allow for the creation of a fund by service charge for repairs to the common parts. Although the lease contained a provision for the tenant to contribute to the costs of repairing the sewer, there as no corresponding obligation for the landlord to repair or keep in repair the sewer.

The ‘Barracks Square Committee’, which issued the demand and brought proceedings was not the landlord. Nor were Kaye and Taylor. The landlords were Kaye, Taylor and the Dykstras, jointly. There was no evidence that the costs claimed had been incurred by the landlords.

In the circumstances, there was no need to decide the s.47 issue, nor the s.20 consultation point, although had it been necessary, the LVT would have granted a dispensation and would have found a reasonable charge was £999.32.

Given that the tenant used the drain, there was an equitable obligation to pay. There was also the clear clause in the lease, but this was for the County Court to decide.

Mr S appealed to the Upper Tribunal (Lands Chamber) and permission was given on 3 grounds: whether the respondents are the appellant’s landlords; whether the service charge claimed is in respect of a relevant cost; and whether the amount due is made not payable by sections 47 and 48 of the 1987 Act and section 153 of Commonhold and Leasehold Reform Act 2002.

Held:
It was clear that the respondents were the landlords. They held the freehold title from which Mr S’s lease was demised. The LVT was in error in saying that Kaye, Taylor & the Dykstras were the landlord jointly.

The charge was a service charge:

The lease includes the following tenant’s covenant in clause 2:

“(ix) At all times hereafter to contribute and pay a proportionate part of the expense of maintaining repairing or renewing a) the gutters pipes and other things for conveying rain water from the demised premises b) the gas and water pipes drains conduits and electric wires and other gas water and electric installations in under or upon the upper flat or the reserved property or any part thereof enjoyed or used by the Lessee in common with the Lessor or other the owners and occupiers of the upper flat of the other reserved property …”

Under clause 2(iii) “the reserved property” includes “so much of the Barracks Square as is coloured brown” on the plan annexed to the lease and other land over which there are rights of way. The land coloured brown is the old parade ground.

The landlord’s covenants in clause 3 include the following:

“4) Not to cause or permit obstruction of any drain or pipe used in common with the Lessee for the passage of water or soil in connection with the reserved property.

5) Not to do or permit or suffer to be done in or upon the reserved property anything which may be or become a nuisance annoyance or cause damage or inconvenience to the Lessee or neighbouring owners or occupiers …

9) To pay a proportionate part of the expense of maintaining and repairing so much of the Barracks Square as is shown coloured brown on Plan Number 1 annexed…”

On the s.47. s.48 and s.21(B) point, the Court’s reference to the LVT had not included the s.47 point, however this did not preclude the LVT from considering the point. While on a referred case the LVT could go no wider than the pleaded cases, it was not limited to the expressly referred issues. The LVT had found that the claimants had provided no evidence that section 47 had been complied with. It also found the same in relation to section 48 and found that the relevant summary required by section 21B had not been provided.

However, it was clear that by the time of the LVT hearing, indeed by the County Court hearing, the landlords had provided their names and address. Mr S could be under no doubt that:

the claim was being pursued by the respondents and he had received correspondence from them as landlords. Since, therefore, the information had been furnished, under section 47(2) the amount demanded was no longer to be treated as not due.

LVT’s decision set aside
Dispensation under s.20ZA given for the reasons given as hypothetical by the LVT
Service charge payable by Mr S in respect of the works
Service charge limited to £999.32

Comment
With all due respect, I think this decision illustrates a few difficulties in the transfer of cases between County Court and the LVT/Upper Tribunal. While the LVT and Upper Tribunal focus on the s.47 issue in terms of whether the charge could be said to be due and payable at the time of their hearings – the LVT finding no, but the Upper Tribunal finding that notice of landlord’s name and address had been given by ‘at least the time of the county court hearing’ – this doesn’t deal with the issue facing the County Court, which surely has to be whether the demand was payable at the date the claim was issued. On the apparent evidence, and in view of the claim being issued in the name of the ‘Barrack Square Renovation Committee, this would not appear to be the case.

There was also no apparent evidence that the s.21(B) requirements had been met.

“21B Notice to accompany demands for service charges
(1) A demand for the payment of a service charge must be accompanied by a summary of the rights and obligations of tenants of dwellings in relation to service charges.
(2) The Secretary of State may make regulations prescribing requirements as to the form and content of such summaries of rights and obligations.
(3) A tenant may withhold payment of a service charge which has been demanded from him if subsection (1) is not complied with in relation to the demand.
(4) Where a tenant withholds a service charge under this section, any provisions of the lease relating to non-payment or late payment of service charges do not have effect in relation to the period for which he so withholds it.”

However, it may be that there was evidence that suitable details had been provided.

I’m also not sure that the issue of the landlord is quite so clear cut. While Kaye and Taylor were certainly the landlords of Mr S’s flat, the affected drain was in the freehold held by Kaye, Taylor and the Dykstras. While this area was covered by ‘the area coloured brown’ in the plan to the lease, it is not clear, without more, how the costs of the drainage works were incurred by Kaye & Taylor as landlords of Mr S’s property, given the separation of the freehold interests since the grant of Mr S’s lease. But again, they may have been further evidence on this not referred to in the transcript.

We have recently come across another unanticipated issue which may become a problem after 1 October. A number of properties in London are let on ‘short lets’ to individuals working or holidaying in London. In the past the high rents charged on these properties meant that they were excluded from the Housing Act 1988. However, with the increased rent threshold this exception will apply to far fewer of these properties.

Premises being let for the purposes of a holiday in London will still fall outside the Housing Act 1988 and these will not present a problem. However, properties being let to individuals who are working in the UK for a short period and where the rent is below £100,000 per annum (pro rata) will now fall under the Housing Act 1988. This of course means that the tenant is entitled to 6 months security of tenure in the property.

To clarify, there is no requirement that a property which falls under the Housing Act 1988 is let for 6 months as is sometimes believed. It is perfectly possible to let such a property for a shorter term. However, a Court is simply not empowered to give possession on a section 21 notice any sooner than 6 months from the start of the initial tenancy. Therefore letting a property for a shorter period is a calculated risk on the part of the landlord as he is at risk of the tenant continuing to pay the rent and simply staying for 6 months with little or no recourse.

What options does the landlord have? If the landlord has resided in the property before as his main residence then he can give a notice before the tenancy begins under ground 1 of Schedule 2 to the Housing Act 1988. This would allow a section 8 notice to be given at any stage giving the tenant 2 months notice to vacate provided that the landlord wishes to reside in the property again as their main home. Otherwise the only option will be to avoid creating a tenancy at all. If a landlord wishes to do this then they will need to provide some services as a part of the agreement which will require access to the property. A landlord who was providing regular cleaning and fresh towels and linen as a part of the agreement should be able to argue that he has not created a tenancy at all but has only created a licence and so the provisions of the Housing Act 1988 will not apply at all. Of course, this will involve a lot more organisation on the part of the landlord but it may be worth it if it is necessary to be sure that vacant possession of the property can be obtained.

And now for a housing-related post …

Anybody reading the Sunday Times will have seen Grant Schapps talking about an allocations Consultation Paper that CLG are preparing.  Apparently, this will propose giving local authorities the power to set up their own allocations policies with their own priorities, allowing local people priority over those nasty foreigners (other than those nice EEA nationals to whom we owe Treaty obligations, although that was on the inside page of the Sunday Times).  It was a joyous reminder of Royston Vasey speak – this is a local town for local people; “Welcome to Royston Vasey – You’ll never leave” (for lovers of the League of Gentlemen).  Now, don’t get me wrong, I’m all for law reform on allocations but anybody who has read the Cullingworth Committee report from 1969 will know that localism may not be all that it is cracked up to be and, anyway, don’t we have other equalities obligations etc now.  By way of preface to that CP, the National Housing Federation have issued their own discussion document (hat tip to AM for this link) which broadly proposes greater flexibility in the allocations process.

My problem with all this chat and very clever people seeking to rethink allocations is that I thought it was unnecessary as the 2009 Code of Guidance and impact statement (on which we have commented previously) made clear.  We already have localism, mobility, flexibility, a form of the big society consultation about allocations, etc etc.  I readily admit to being not that clever so can somebody tell me what’s going on – it really is perplexing.

A recent article in Planning magazine suggested that landlords did not have to seek planning permission for HMOs.

This was on the basis that a simple change in use class was not a trigger for the making of a planning application. This is true, in a sense, but the reality (of course) is that it is a little more complex than that.

The trigger for the making of a planning application is a “material change of use” in a property. Section 55(3) of the Town and Country Planning Act 1990 makes clear that changing the use of a building from a single dwellinghouse to multiple dwelinghouses is always a material change of use. However, changing use of a property to HMO status does not automatically involve changing the number of dwellinghouses. A property will generally only consist of multiple dwellinghouses if it is being let under a number of different tenancy agreements. Therefore section 55(3) will not capture a change to HMO use which simply involves three or more people sharing in a property.

Of course, use for letting to three or more unrelated sharers does fall into a separate planning class, the new C4 planning class and movement between classes is indicative of a material change of use. It is not, however, conclusive evidence and consideration must be given to whether the actual use has changed.

In March 2010 an interesting planning appeal decision on this issue was made. Here planning consent had been refused for letting a property as an HMO under the old (pre C4) use class system. The appeal officer overturned that refusal asserting that the change to HMO use from use by a single family would not cause significant extra disturbance to surrounding residents.

Looking at all these factors it becomes clear that for some HMOs planning permission may simply not be required. Of course, for properties where the use was already established prior to 6 April 2010 then there is no change of use by continuing to let as an HMO and these properties do not require consent. However, even if there has been a movement from the C3 to C4 use classes after that date this may not count as a material change of use for planning purposes. A lot will depend on the actual use being made of the property and whether it constitutes an actual change in the use of the property. For example, it could be argued that simply letting a property to a couple and a friend is not a material change of use even if it involves a movement from a C3 to C4 use class.

Equally, a route of appeal against a local authority refusal to grant C4 consent is opened up by the appeal decision described above if it can be shown that the proposed C4 use is little different from prior use under the C3 class and will have a limited impact on the surrounding residents.

Of course, a lot of this discussion may be irrelevant if the new government alters the permitted development orders as they have previously suggested they will. However, it will remain relevant until then and may be an issue in some areas where the local authority intends to opt out of the permitted development changes.

In short therefore, an HMO is only an HMO for planning purposes if it involves a change of use from that which has gone before.

Landlord responsibilities are not the first thing most people think about when they consider investing in property. But it is important to realise that if you become a landlord, you are taking on legal obligations as well as an income stream.

Landlord responsibilities – what are they?

There are many legal obligations that you will have from the first moment your tenants go through the door of your property, clutching their new keys and freshly signed tenancy agreement. However here are three of the most important things you need to remember:

1. Its not your property any more. When you grant a tenancy to a tenant, you are effectively selling it to your tenants for a period of time. So you can’t go in and out as you want, in fact you can’t go in at all unless your tenant agrees. So one of your most important landlord responsibilities is to allow your tenant to live in the property without interference.

2. You are responsible for keeping it in good condition. There are repairing obligations set out in section 11 of the Landlord and Tenant Act 1985 which you cannot contract out of. So your landlord responsibilities will include keeping in proper repair the structure and exterior of the property, the installations for the supply of water, electricity, gas and sanitation, and space and water hearing. You also need to comply with numerous regulations, including the gas and furniture regs.

3. You can only evict your tenant through the courts. Yes, even though your tenant may only have signed up for six months, he has the legal right to stay on if he wants, and the law will continue his tenancy indefinitely. So he will not be a squatter, he will be a tenant.

Even if you previously agreed that he would move out on the due day, if your tenant wants to stay on, you will have to serve the proper form of notice on him and then go to court to get an order for possession. If you try to evict your tenants in any other way, this is harassment which is a criminal offence.

Landlord responsibilities are constantly changing

Housing is important politically, and governments often introduce new regulations in response to problems that may arise, manifesto commitments (particularly with a new government) or as a result of a report they may have commissioned. Sometimes also they are obliged to introduce legislation as a result of EEC directives.

For example in the last five years there have been new laws relating to houses in multiple occupation, tenancy deposits, and energy performance certificates. So you need to keep your landlords responsibilities under constant review.

How do you do this? Well here are a few suggestions:

• Sgin up to get posts from this blog sent to you by email
• Sign up to my free monthly newsletter
• Join my Landlord Law information site
• Join a landlords association
• Subscribe to one or more of the landlord periodicals – for example the Buy to Let Magazine is free

Or better still, do all of them! If you do not comply with your landlord responsibilities, you can be sometimes prosecuted or sued by your tenants for financial compensation. So take care.

Have you been caught out by failing to comply with your landlord responsibilities?