A review of residential property changes

A series of recent legislative changes that affect residential tenancies make it far more onerous for residential landlords in relation to short-term lettings and add to the disincentive on buy-to-let properties brought about by the additional stamp duty surcharge on buy-to-lets and second homes set to be imposed from April 2016.

The widely publicised 'right to rent' scheme applies to the whole of England from 1 February 2016. Under the Immigration Act 2014, landlords now have to check the immigration status of prospective tenants and other authorised occupiers of the premises before granting a tenancy and ensure that the right to occupy does not lapse. Failure to take these steps could lead to a civil penalty of up to £3,000. The Home Office has published guidance in the light of concerns expressed by landlords as to the lengths that they may have to go to in order to comply with the Act. Further details can be found in 'A short guide for landlords on right to rent' and 'Right to rent document checks'.

The Deregulation Act 2015 also brought in changes in the section 21 notice procedure (which relates to eviction) from 1 October 2015, placing further restrictions on when a landlord can serve and enforce a section 21 notice for assured shorthold tenancies granted on or after 1 October 2015. There is a new prescribed form and the Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 provide that the landlord cannot serve a section 21 notice unless they have complied with obligations to provide an energy performance certificate (EPC), a copy of a gas safety certificate, and the government booklet 'How to rent: The checklist for renting in England'.

From a more practical viewpoint, the Smoke and Carbon Monoxide Alarm (England) Regulations 2015, in force from 1 October 2015, impose yet further obligations on private sector landlords regarding the provision of carbon monoxide detectors.

This date also saw changes for conveyancers
in the residential leasehold sector as the Law Society published its revised leasehold property enquiries questionnaire (LPE1), and the new buyers' leasehold information summary (LPE2) was launched to provide information to
leasehold property buyers about the financial obligations they are taking on. This followed recommendations made by the Competition
and Markets Authority (CMA) to the industry, trade associations, the government, and the
legal profession in a study published earlier in
the year. The CMA subsequently gave an update on progress on 4 December 2015, indicating
that work is continuing to ensure other recommendations are implemented in as
full and timely a manner as possible.

There is also a push for further transparency
in the retirement housing sector with the Law Commission consultation on fees for transfer
of title, change of occupancy, and other events, which closed on 29 January 2016 and aims to
lead to strengthened codes of practice for estate agents and developers.

Reported decisions

The latter part of 2015 and early 2016 have seen a new raft of reported decisions relating to residential property.

In Regency Villas Title Ltd and others v Diamond Resorts (Europe) Ltd and another [2015] EWHC 3564 (Ch), a case involving timeshare villas, the High Court held that there was no legal impediment to the grant of an easement to

golf course, swimming pool, or tennis court. Judge Purle QC held that the right to use such facilities in this case took effect as an easement and he granted declaratory and injunctive relief to reflect and protect the timeshare owner's rights to use such facilities, along with damages for nuisance.

Practitioners received further useful guidance, which has been welcomed by freeholders claiming leasebacks in collective enfranchisement claims under section 13 of the Leasehold Reform Housing and Urban Development Act 1993, in the Court of Appeal decision in Tibber v Buckley and another [2015] EWCA Civ 1294. The court helpfully clarified that, while it is a statutory requirement for the leaseback to be claimed in the counter notice, and the physical limits of the leaseback premises should be described as precisely as possible, freeholders are not obliged to spell out leaseback proposals themselves. The terms of any leaseback are a matter of negotiation in the drafting of the documentation and the issues should only be referred to the tribunal if they cannot be resolved.

Further Court of Appeal guidance for enfranchisement practitioners came in the case
of Sinclair Gardens Investments (Kensington) Ltd
v Ray [2015] EWCA Civ 1247, where the status of Upper Tribunal decisions that are not formally designated as 'guidance cases' was considered.
As the Upper Tribunal has not yet set out any guidelines as to the precedent effect of its decisions for different purposes, it is for the relevant tribunals to decide how much weight
to give these in any particular case, depending
on the facts.

Of significance to conveyancers acting for lenders and borrowers more generally was the decision in Aldermore Bank plc v Rana [2015] EWCA Civ 1210, where the borrower's solicitors had misappropriated the lender's funds and failed to redeem an existing charge. This case clarifies the point at which a re-mortgage transaction completes and a borrower becomes contractually liable to repay the loan. Normally, completion requires the redemption of existing charges, and up until that point the mortgage advance is held by the solicitor on trust as an agent for the lender.

Another useful reminder of the importance of sellers and their advisers keeping buyers up to date with changes in replies to enquiries, as well as not glossing over issues to attempt to make the property look more attractive, came in the High Court decision in Greenridge Luton One Ltd and another v Kempton Investments Ltd [2016] EWHC 91 (Ch). While this was a case relating to commercial premises which turned on its own facts, it was decided that the deposit should be returned and that the damages to be awarded should be the wasted costs in relation to the prospective purchase rather than any form of punitive damages.

Practical updates

On a more practical note, conveyancers should be aware that on 16 February 2016, the Law Society reiterated its announcement, first made in October 2015, that the revised CON 29 and CON 29O forms will go live on 4 July 2016. The new CON 29 forms are now available to view on the Law Society's website, and the accompanying guidance notes for the revised forms will be published in due course. It is important to note, however, that the specimen forms are substantially the same as the versions published in February 2014.

Conveyancers should also be aware that an amendment was made to the Council of Mortgage Lenders (CML) Handbook on 1 February 2016 regarding the effect of submitting the certificate of title by the borrower's conveyancer to the lender.

Finally, those dealing with disputes over title will be aware of the announcement in December 2015 of the change in Land Registry policy. From January 2016, the Land Registry allows six months for a disputed application to be resolved before referring it to the First-tier Tribunal (FTT). Crucially, Land Registry lawyers will have discretion to extend the six-month period only
in exceptional circumstances.

The aim of this change is to avoid long-running disputes between applicants and objectors to their applications. The Land Registry will only contact the parties twice, once after three months and once after five months. If either party states that negotiations are not in progress, or fails to reply, the matter will be referred to the FTT.

Belinda Walkinshaw is a partner at SA Law @SA_Law salaw.com