Property Law Update September 2020
We’re nearly into Q4 of 2020 and hasn’t this year not only seen the most irritatingly used word “unprecedented”, yet really apt – with global changes because of Covid 19 and for the UK, in particular, we have Brexit to contend with.
When it comes to housing however, August was a busy month. In the first week of August, sales subject to contract (SSTCs) nearly doubled their number for the same time last year, indicating a significant demand for change possibly?
For anyone not sure about when we came out of the EU…here’s the BBC’s reminder.
We are currently in the “transition period” keeping most pre-departure arrangements in place ends on December 31, 2020.
Property Manager Life in Lockdown
It’s been a massive challenge for property managers staying Covid Safe, keeping their tenants’ safe, secure and of course managing contractors too, whilst contending with furlough and general employment law issues.
When it came to Tribunal Matters, the COVID-19 guidance in relation to First Tier Tribunal (Property Chamber) cases (“FTT”) was released here FTT Property Guidance for users during COVID-19 pandemic.
Major Works and projects currently in progress, particularly those of an essential nature such as cladding replacement and fire safety projects, could go ahead as detailed in government guidance.
Section 21 and Coronavirus: What are the rules around evictions?
Eviction is the legal process used when a landlord wants a tenant to leave their property.
If the landlord wishes to take back possession of a property either at the end of a fixed-term tenancy agreement, or during a tenancy with no fixed end date, they will issue a Section 21 notice. The government did its best to ban evictions and we were looking to see if it changed as at today’s date (21 September) but we believe that everyone has been given sufficient notice now and therefore landlords can begin their process to evict tenants.
As at the date of this blog being published (21 September 2020), the Government’s ban on evictions has come to an end.
Building Safety Bill
The Grenfell Tower fire claimed 72 lives on 14 June 2017. The tragedy exposed serious failings across the whole system of building and managing high-rise homes.
What is a draft Bill? Parliament quote a draft bill as:
Draft Bills are issued for consultation before being formally introduced to Parliament. This allows proposed changes to be made before the Bill’s formal introduction. Almost all Draft Bills are Government Bills. Government departments produce Draft Bills and issue them to interested parties. MPs and Lords can also consider them in committees.
ARMA and its CEO, Nigel Glen, have been working hard on the Draft and he was on BBC Radio 4’s “You and Yours” discussing the implications of the new Draft Building Safety Bill.
Here’s the link to the interview if you’d like to hear it.
The Law Commission updated Leasehold Enfranchisement was all the talk in July. Here’s a quick recap of the background of the project:
It involves a review of leaseholders’ rights to:
- purchase the freehold of their house
- participate, with other leaseholders, in the collective purchase of the freehold of a group of flats
- extend the lease of their house or flat
Nb. Enfranchisement is different to Commonhold, which is a new form of property ownership (heavily used in the US and France already). It’s an alternative to the long leasehold system.
Build to Rent
Build to Rent is still very much in demand with Savills showing some great stats on the rise of the BtR sector.
B2R starts and completions slowed down over the year as the construction industry grappled with the logistics of operating in a pandemic.
While there has been little concrete evidence on let up rates for schemes leasing up during lockdown, post lockdown tenant demand has improved across the rental market.
Service Charges and Ground Rents
The team here at LMP Law have been busy with helping property managers all over the UK, and our property management clients have never stopped their work (although have had to adapt) throughout the pandemic.
Covid has affected jobs and therefore cashflow. We know that so many PMs have been doing as much as they feasibly can to communicate with their tenants to set in place payment plans if there are struggles.
As we know, leaseholders have a legal responsibility to pay their leasehold dues to their freeholder, most importantly the ground rent, service charge and major work bills, so it has been challenging as so many leaseholders have been struggling to pay their current service charge bills and ground rent.
Louis Burns, who very sadly passed away in June and was a brilliant MD of The Leasehold Group of Companies, had said shortly before his death:
“It appears that freeholders have no intention to take any proactive steps to reduce the hardship and financial burden on leaseholders during the current pandemic. With nearly six million leasehold properties in the UK, it is incumbent upon the Government to correct this shocking ethical failure and introduce legislation to suspend freeholders’ right to collect ground rent and service charges until the lockdown is eased and furloughed workers are able to safely return to work.”
When it comes to new developments and services charges there was a brilliant article in the FT (you can read it here) that we loved.
With new developments on the horizon and more luxurious apartments, service charges will only be going up because of the demand for a gorgeous open vista (ie glass instead of wall), which, of course, is so much harder to maintain!
The first eight months of 2020 have seen some extraordinary changes in all our lives. January blues turned into a bulk toilet buying bonanza in March, followed by uncertainty for our jobs and concern for our health and that of our loved ones.
Typically British however, we have all looked after one another, neighbours have become closer and those previously isolated and lonely have been cared for. There have been some minor neighbour disputes we have handled, but in the main litigation has been mediated or settled.
However, furlough and cashflow is an on-going concern, major works and contractors still need to carry out their works with extra safety measures in place, and property managers still need to ensure their services are carried out, in turn need their charges paid.
It’s very much a case by case scenario, and how we’ve been communicating to our audience is by reaching out and helping with our monthly webinars, which have proved really successful. We will email the link to our next webinar soon.
See you then.