Ben Barrison shares his thoughts on potential reforms to the Landlord and Tenant Act 1954
21 November 2024
News
Partner and Head of Real Estate Disputes, Ben Barrison, shared his thoughts with CoStar, Property Week, and BE News, on The Law Commission launching a consultation on potential reforms to the Landlord and Tenant Act 1954.
The overall consultation focuses on Part 2 of the Act, dealing with ‘security of tenure’ for business tenancies. Discussion points focus on the security of tenure model, alternatives to this, and how this reflects the rise of online retail and sustainability needs. This follows 70 years on from the introduction of the Act, and 20 years since the last review.
‘Of the four options they are considering, a modernised contracting-out regime, to reflect the 20 years of tech advancement since it was last updated, would be an important first step and this would retain the balance the Act brings to commercial landlord and tenant relationships. Apart from security of tenure, there is a great deal of additional work for the Law Commission to do in terms of the other mechanics of the 1954 Act to deliver a modern regime for determining the lease terms and opposing renewal/termination cases. The 1954 Act is currently too slow and cumbersome for the digital age, but the overarching intent remains good.’
Forsters advises Fiera Real Estate UK and Wrenbridge on the acquisition of an urban logistics development site in Waltham Cross
15 December 2023
News
Forsters has advised Fiera Real Estate (“Fiera”) and Wrenbridge on the acquisition of a 2.6-acre site in Waltham Cross for the proposed development of a new 60,473 sq.ft. urban logistics scheme with a GDV of £25m.
The site was purchased through the Fiera Real Estate Logistics Development Fund UK (“FRELD”). All assets in FRELD’s portfolio will meet the rigorous environmental and social requirements set out by FRE UK’s Sustainable Design Brief, which align with its ambition to drive positive change and contribute to a low carbon economy. The scheme will have ESG considerations embedded at all stages of its design process and along with future projects for the fund, it will be targeting net-zero carbon construction, BREEAM Excellent and EPC A.
The site is situated off Britannia Road in Waltham Cross, which is a prime industrial location and two miles from junction 25 of the M25.
Chris Button, Head of Investment Management, UK at Fiera, said, “We are delighted to complete the acquisition of this prime logistics site in joint venture with leading developers Wrenbridge and ably advised, as always, by the magnificent team at Forsters.”
Harry Gibson, Associate Director at Wrenbridge, added: “This is our third deal locally and we look forward to preparing a planning application in the new year to be on site as soon as possible.”
Commercial Real Estate Partner, Jade Metcalf, led on the purchase, assisted by Senior Associates, Alexandra Ringrose and Daniel Steele, and Planning Associate, Sophie Smith. Property Litigation Partner, Ben Barrison, also advised on the deal.
On 3 November 2022, The Court of Appeal published its decision in O G Thomas Amaethyddiath v Turner & Ors [2022] EWCA Civ 1446 which concerned a narrowing of the scope of the Mannai Principle, a rule that can be relied upon in certain circumstances to save a defective notice.
The decision highlights the potential pitfalls in relation to the service of notices and emphasises the importance of taking proper legal advice when serving notices to ensure compliance with service requirements.
Mannai Principle
Parties serving notices must adhere to any contractual and/or statutory requirements that govern the service of the notice. However, if a party has failed to comply with these requirements, there are circumstances in which they may be able to rely upon the Mannai principle established in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] UKHL 19.
The Mannai principle may be relied upon to save a defective notice if the reasonable recipient “would not have been perplexed in any way by the minor error”.
This doctrine was tested in Trafford Metropolitan Borough Council v Total Fitness UK Ltd [2002] EWCA Civ 1513 and a two-stage test for the applicability of the Mannai Principle was established as follows:
Consider what the notice says on its true construction.
Compare the notice to the relevant requirements for that notice to establish whether the notice meets the requirements.
O G Thomas Amaethyddiath v Turner & Ors [2022] EWCA Civ 1446
The facts of the case were that:
Mr Thomas had a tenancy of an agricultural holding which he had assigned to a company without his landlord knowing.
He was the sole director and shareholder of the company and its registered address was the same as his home address.
Following the assignment, the landlord of the holding served a notice to quit at Mr Thomas’ home address and which was addressed to Mr Thomas rather than the assignee company.
The Court of Appeal held that this was not an instance in which the Mannai principle could save the defective notice. The notice was addressed to a previous tenant of an agricultural holding and so was not given to the current tenant. This is despite the fact that the landlord could not have known about the assignment and the current tenant was a company of which the previous tenant was the sole director and shareholder and both the company and the tenant were registered at the same address.
This case demonstrates how difficult it can be to serve notices correctly, given the strict requirements that apply. Not many cases will involve a concealed assignment but it remains important to ensure proper legal advice is always sought in relation to the service of notices and all available investigations are undertaken to ensure the correct party receives the notice at the correct place.
Forsters continues with top tier ranking in the 2023 edition of The Legal 500
30 September 2022
News
Forsters, the leading London real estate and private wealth law firm, has been ranked in its key practice areas in the latest edition of the Legal 500 UK directory.
“Forsters is a firm that really nurtures and brings on its next generation, enabling them client contact and the ability to build their network and express themselves. This is quite unique. They pride themselves on providing a tailored and bespoke personal service where the client feels valued and they are very good at problem solving.”
“Its commitment to its clients is exceptional. Its style is communicative and collaborative.”
The Legal 500 2023
In the latest edition, Forsters is profiled as follows:
Ranked in 18 practice areas
Top ranked in four areas: private wealth, contentious trusts and probate, residential property and agriculture and estates
70 ‘Recommended Lawyers’ which includes
Nine Partners in the ‘Hall of Fame’
Six ‘Leading Individuals’
Seven ‘Next Generation’ Partners
Four Counsel and Senior Associates recognised as ‘Rising Stars’
Henry Cecil leads a large and specialist team at Forsters LLP that is recommended for its vast experience of handling both transactional and strategic matters including complex tax and estate structuring advice and disputes. It has real strength in depth with key practitioners such as Penny Elliott, Christopher Findley and Andrew Lane. Catherine Hill and Rupert Mead also garner praise for their expertise on tax and trusts matters. Clients include sizeable landed estates, families and trusts with significant property and chattels as well as domestic and international private and commercial investors, wealthy individuals and landowner groups. Other strengths include advising on the establishment of holding structures for family wealth through companies, partnerships and trusts in addition to acting for landowners in relation to development work. It is also rated for its work on capital tax planning matters and on all aspects of the acquisition and disposal of estates, farms and country houses. It is a team of ‘problem solvers’.
Forsters LLP has a strong track record in this area and advises fiduciaries, protectors and beneficiaries on the full remit of disputes involving trusts, trust structures, wills and estates both in an onshore and offshore context. Other key clients include high-net-worth/high-profile individuals, charities and other professionals and intermediaries. The international side of its practice continues to thrive under the direction of Roberta Harvey. Other key figures include Emily Exton, who is praised for her handling of disputes in the private wealth arena. The team is skilled at advising high-net-worth individuals, family offices, trustees and protectors on trust vehicles and other succession planning structures.
‘It is the level of expertise’ at Forsters LLP ‘combined with its ‘can-do’ attitude that attracts clients’ with Xavier Nicholas at the helm. It has a large private wealth practice with a pre-eminent reputation for its advice to domestic and international HNW and UNHW clients on a range of complex cross-border and high-value taxation, estate planning and trust structuring matters. It continues to enjoy a regular stream of instructions on multi-billion pound matters for its international client base. Clients include major entrepreneurs, multi-generational families, trustees of significant cross-border estates and well-known artists. Carole Cook is well-regarded for her work on complex tax and trust issues. Kelly Noel-Smith acts for some of the world’s richest families, including Middle Eastern royalty, Greek shipping families and entrepreneurs. Anthony Thompson is among the leading advisers to Middle Eastern UNHW clients. James Brockhurst has recently been promoted to the partnership. ‘For such very clever people, they are also incredibly nice and easy to deal with’.
Under the excellent leadership of Lucy Barber the team at Forsters LLP continues to be active in transactions involving super prime and prime properties in London as well as on the sale and purchase of country houses. It has a diverse client base of wealthy clients who are based in the UK and abroad as well as prime residential developers, banks, property funds and investors. Charles Miéville is considered a ‘go-to’ adviser for particularly complex conveyancing and property financing matters for a client base that consists of a number of high-profile UHNW individuals and landed families. Robert Barham has been busy advising on various high-value transactions on behalf of international clients. Helen Marsh handles a broad spread of issues from high-value sales and purchases to advising on financing issues and landlord and tenant matters.
The team at Forsters LLP is ‘incredibly well respected – and for good reason. The team does everything with real class’. It is led by Joanne Edwards who is a ‘dynamo’ and has a ‘good stable of associates’. It is continuing to see an increased flow of complex cross-jurisdictional work in nuptial agreements; child arrangements and financial cases (which often have complicated trusts and financial structures). Rosie Schumm is frequently instructed in complex litigation for families with substantial wealth across multiple jurisdictions. Simon Blain has a particular strength in difficult financial cases often involving trusts, family business and assets in more than one jurisdiction.
The team of ‘first-class lawyers’ acts for a large number of landowners, estates and funds alongside property companies, developers and occupier clients. Its workload is equally diverse and has recently included easement and service charge disputes, dilapidation claims, forfeitures and other issues arising from CVAs and insolvencies, in addition to development matters concerning rights to light, vacant possessions and an increasing number of cladding-related instructions. Ben Barrison recently took over as head of the property litigation practice from Natasha Rees, who is now the firm’s senior partner. Barrison is described as ‘one of the very best property litigators around – great on the law, but does not let it distract him from seeing the bigger commercial and tactical picture.’ Another reputable individual is Jonathan Ross; his specialisms lie within rent review and dilapidation claims. Anna Mullins was promoted to partner in April 2021, while the team was also recently boosted by the arrival of Julia Tobbell from Herbert Smith Freehills LLP.
Ben Barrison comments on rent arrears and new arbitration code in The Telegraph
9 November 2021
Views
Ben Barrison, Partner in our Property Litigation team, has provided commentary on rent arrears in The Telegraph on the new arbitration code.
Ben stated that “a lot of outstanding rent arrears cases involve situations where landlords have asked for financial information but it has not been provided by tenants.”
The new arbitration code is due to finalised by the Department For Levelling Up in the next few weeks and is intended to reduce the number of cases taken to court between landlords and tenants.
Since the onset of the COVID pandemic, many businesses have been considering their space requirements. In some cases, tenants will have leases that include break clauses which will let them terminate their leases before the contractual expiry date.
We expect to see a lot of parties exercising their break rights with a view to either leaving or seeking to negotiate more favourable terms for the same space. Despite the fact that break clauses have existed for many years, they still give rise to widespread confusion and costly disputes between landlords and tenants.
Problems arise because break clauses are treated by the Courts as options, which means strict rules apply. Most break clauses contain pre-conditions which must be met. If they are not met, the lease will continue unless the landlord (or tenant) waives compliance with the unfulfilled pre-conditions.
Typical pre-conditions include:
Service of a break notice
Service of a notice in the form required by the lease:
In the right manner.
To the right person.
At the right time.
At the right place.
Classic mistakes – delivering the notice to the landlord’s managing agents; sending it to the landlord but at the wrong address; miscalculating the break date; sending it by email to the wrong party.
Making payments
Paying all sums falling due before the break date including:
Annual rent.
Service charges.
Insurance.
Interest.
Other sums.
Classic mistakes – apportioning rent up to the break date; failing to pay interest which has become due on historic late payments of rent even if not demanded.
Complying with covenants
Complying with the tenant’s covenants such as:
Repair.
Redecoration.
Reinstatement.
Other covenants.
Classic mistakes – misunderstanding pre-conditions requiring “material” or “substantial” or “reasonable” compliance, failing to follow the absolute requirements for external decoration; leaving it too late to reinstate alterations.
Vacant possession
Delivering vacant possession on the break date involving:
Vacating other occupier including sub-tenants.
Handing back the keys and secure entry equipment.
Classic mistakes – sub-contractors completing last minute works beyond the break date; leaving office furniture behind.
A PDF copy of the article above is also available to download here.
Jonathan Ross and Ben Barrison are Partners in our Property Litigation team.
Forfeiture Moratorium on UK Commercial Leases and restrictions on CRAR extended to 30 June 2021
11 March 2021
News
The government has announced that the measures which were put in place last year to assist commercial tenants during the Covid-19 pandemic will be extended, once again, to 30 June 2021.
The effect of the latest announcement is as follows:
Landlords will not be able to forfeit commercial leases on the basis of rent arrears until after 30 June 2021. Forfeiture for other breaches is still permitted.
Commercial Rent Arrears Recovery (CRAR) may only be exercised:
Between 25 March 2021 and 23 June 2021, if at least 457 days’ rent (i.e. five quarter’s rent) is outstanding when the notice is given and when the goods are taken control of for the first time.
On or after 23 June 2021, if at least 554 days rent (i.e. six quarter’s rent) is outstanding when the notice is given and when the goods are taken control of for the first time.
The government continues to encourage landlords and tenants to agree their own arrangements for paying or writing off debts, following the guidance set out in the Code of Practice governing commercial property relationships (“the Code”), which was introduced in June 2020. The Code seeks to promote open and constructive discussions between the parties where the tenant cannot afford to pay sums due. If arrangements are agreed, landlords should take care to ensure third parties like guarantors are not inadvertently released from liability.
Landlords remain able to pursue debt claims through the Courts in respect of unpaid rent and other sums. This is likely to remain the only option available to a landlord wishing to recover payment from tenants who can pay, but refuse to do so. A Judgment secures interest at 8% per annum on the sum due and can be enforced in various ways.
Landlords can still take action against guarantors.
There has been no comment on whether the restriction on using insolvency proceedings to recover sums due will be extended, but this seems highly likely to follow suit.
The government had previously said that the restrictions would end on 31 March 2021, and so the announcement is likely to come as a disappointment to many landlords. They do now appear to be looking to the future, however, and the press release gives some insight to the approach that may be taken when the restrictions are eventually lifted.
The government has confirmed that it intends to track the extent to which landlords and tenants are reaching their own arrangements under the Code. They indicate that they may take additional steps to protect business tenants if large numbers of landlords and tenants do not reach their own agreements, and there remains a significant risk to jobs. Both a phased withdrawal of current protections, and legislation to protect those businesses most at risk, are being considered.
Charlotte is a Senior Associate, and Ben and Jonathan are Partners in our Property Litigation team.
Restrictions on forfeiture of business tenancies and CRAR extended to 31 December 2020
17 September 2020
News
The Government has announced that the current legislation which prevent landlords from forfeiting commercial leases, or levying execution on the tenant’s goods by way of CRAR to recover outstanding rent, will be extended from 30 September 2020 until 31 December 2020 to provide further protection for tenants who have not paid their rents or other sums due under their leases.
These restrictions had already been extended once before and this further extension was strongly opposed by landlords who feel that this is allowing tenants who can afford to pay to continue not to pay. However, the government’s priority is to protect vulnerable businesses, and it hopes that retailers and restaurants and the like can make some recovery over the autumn and Christmas period if protected from eviction or the use of CRAR.
The changes means that between now and 31 December 2020, CRAR may only be exercised:
On or before 24 December 2020, if at least 276 days’ rent (i.e. 3 quarter’s rent) is outstanding when the notice is given and when the goods are taken control of for this first time.
On or after 25 December 2020, if at least 366 days’ rent (i.e. a year’s rent) is outstanding when the notice is given and when the goods are taken control of for this first time.
The government’s latest press release does not comment on whether the restriction on using insolvency proceedings to recover sums due will also be extended, but this seems highly likely to follow suit.
The government continues to place faith in landlords and tenants reaching agreement for deferrals or rent reductions by following the guidance in the Code of Practice governing commercial property relationships (“the Code”) that was introduced in June 2020. The Code seeks to promote open and constructive discussions between the parties where the tenant cannot afford to pay sums due. Where payment is not possible, a number of possible compromises are suggested. But many tenants are unwilling to engage fully with the Code and, in particular, to disclose their true financial position.
Landlords do remain able to pursue debt claims through the Courts in respect of unpaid rent and other sums. Their right to do so has been unaffected by the current restrictions, and it is the only remaining option available to landlords wishing to recover payment from tenants who can pay, but who refuse to do so. If nothing else, a Judgment secures interest at 8% per annum on the sum due and can still be enforced in various ways.
The current global crisis is evolving rapidly, and the rules and guidance for individuals, companies and other entities to manage its implications are similarly fast moving. Notes such as this may be out of date almost as soon as they are published. If you have any questions prompted by this article or on any other matter relevant to you, please get in touch with your usual contact at Forsters.
With substantial sums still outstanding for the March Quarter, landlords face an even tougher battle collecting rents for the coming June Quarter. This Guide looks at the options likely to be available in light of Government action to date and future likely restrictions. If you need help or support with these issues or other contentious property matters, our experts are on hand to help.
Our Guide looks at the options likely to be available in light of Government action to date and future likely restrictions:
Forfeiture
Present position: Not permitted before 30 June 2020 (23 August 2020 for residential properties).
Likely future position: Extended for retail/hospitality premises and possibly all premises.
CRAR (i.e. Distress)
Present position: 90 days arrears i.e. cannot use for March quarter until 24 June 2020.
Likely future position: Extended for retail/hospitality premises and possibly all premises.
Winding up petition
Present position: Not permitted under proposed Corporate Insolvency & Governance Bill pursuant to a statutory demand served from 1 March 2020 i.e. for March quarter – Bill will prevent Petitions before end of July in all probability. Also limitations on generally using Winding Up to recover debts from coronavirus affected tenants.
Likely future position: Extended for retail/hospitality and, possibly, all premises – only debt proceedings will be permitted to recover arrears.
Debt proceedings
Present position: Permitted but it takes at least 14/28 days to apply for Judgment, and possibly considerably longer, and then further time is needed to enforce a Judgment. Landlords can claim interest and costs as well. Useful step though to seek to make tenant focus on position regarding your premises above others and for pursuing guarantors.
Likely future position: To continue to be permitted as tenants can always ask the Court for further time to pay if this is needed and appropriateand Courts will consider position in light of the Code (see below).
Government code for High Street/Retail/Hospitality premises
Present position: To be finalised by June quarter and to place emphasis on landlords and tenants agreeing payment plans and concessions where warranted.
Likely future position: Will come into effect but be voluntary (at least to begin with whilst it is seen whether it works). It may require tenants claiming they can’t pay to disclose relevant financial information and will encourage mediation to resolve any dispute.
Statutory moratoriums
Likely position: To be introduced by proposed Bill and will allow tenants some breathing space from any enforcement action (initially 20 working days but can be extended) to save themselves as a going concern with the help of a Licensed Insolvency Practitioner).
Likely future position: Will be used by tenants who cannot reach agreement for credit with landlords and/or suppliers. Unfortunately, many companies will not survive as going concerns and will enter Administration or CVAs.
Government loans scheme
Present position: The Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, Coronavirus Large Business Interruption Loan Scheme, and the Covid Corporate Finance Facility provide tenants, and some landlords, with substantial financing to pay rents and other liabilities.
Likely future position: Landlords will press tenants to use the loans they have obtained to pay rents or to explain why they have not sought such financing if they cannot pay their rent.
Business interruption insurance
Present position: Many tenants have business interruption insurance cover but the Financial Conduct Authority is bringing test cases to be heard in July 2020 to establish whether such cover applies to Covid-19 (particularly where premises are unaffected thereby).
Likely future position: There should be substantial clarity by end of July/early August (assuming there is a speedy Judgment) and tenants may have substantial insurance cover to assist paying landlords and suppliers.
Sub-tenants
Present position: Where the tenant has not paid the rent, landlords should serve a Section 81 Notice on the sub-tenant so that the sub-tenant pays its rent direct to the landlord.
With so much focus on rent concessions for tenants and the new forfeiture moratorium, landlords should make sure they also protect their rights to recover rents and other fixed charges from former tenants and guarantors by serving notice under section 17 of the Landlord and Tenant (Covenants) Act 1995 within 6 months of the sums falling due.
It would be easy to overlook this important step in the current climate and forgetting to serve the notice within 6 months prevents recovery action against former tenants and guarantors.
Section 17 applies to former tenants and former guarantors under “old” leases [pre-1 Jan 1996] as well as former tenants and guarantors who have liabilities under Authorised Guarantee Agreements relating to “new” leases.
Please get in touch if you would like to discuss these issues.
