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A B C D E F G H I J K L M N O P R S T V W Y

Real Estate

Why we shouldn’t dismiss tech, innovation and disruption in the property sector
Thursday 19th January 2017

To a commercial property solicitor, sitting in sight of various 200+ year old deeds ready to send off the Land Registry, tech in the property sector can sometimes feel like an alien concept. However, despite the derision of the portmanteau, ‘PropTech’ occasionally encountered on Twitter, innovation and technology are already playing an important role in shaping the industry and its future direction. 

Disruption through technology started with a sea-change in the way house-buyers compare property with the offerings of the likes of Zoopla. Subsequent steps forward have thoroughly permeated the property industry. House Crowd and its democratisation of investment through crowd-funding is a good example with its various development projects, bridging finance and both commercial and residential developments all having been financed by crowd-funded SPVs. 

Adoption of Prop-Tech does not only make for an efficient marketplace, it can help to develop new markets entirely. Start-up, Appear Here, which allows users to search for ‘pop-up’ retail space, has arguably contributed to the creation of a new sector based on filling previously uneconomical-to-let short-term voids. 

Such examples of increasing agility in the market and increased confidence in being able to replace short-term tenants has led to a proliferation of flexible lettings and co-working spaces. The £8m investment Bruntwood pumped into the upgrade of its flagship co-working space, Neo, both demonstrates the confidence within this sector and a new-found ability to incubate potential future long-term tenants while profiting from a burgeoning area of the property market. The recent entrance to the market of Manchester-based Watch This Space, which focuses on co-working spaces for tenants within the property industry itself, typifies the changes brought about by connectivity through technology.

While improvements in bringing together investor/investment and landlord/tenant are notable, property tech is not limited to connectivity. A few months ago, I met Mark Gallimore who told me how his company, LivingCity, were using UAVs (drones to you and I) to assist with their building surveying. This equipment upgrade is not only far more cost-effective and convenient than hiring a cherry picker but a lot less nerve-racking for any surveyors who share my nervous-at-height disposition. Even the, still relatively recent, Land Registry and HMRC’s ‘e-portals’ represent a solid technological improvement. These services, which streamline registration of property ownership and payment of SDLT, make each transaction slightly more efficient, but, when multiplied across the profession, result in nothing short of a dramatic improvement.

To me it is these small and gradual improvements in the way those within the property sector carry out their activities which are the most important. Few organisations are going to come up with ground-breaking innovations to change the way we do business. However, embracing the concept of property tech and seeking to take advantage of relevant advances is all important in continuing to remain competitive, efficient and profitable both in good times and bad.


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Pokemon Go!
Thursday 14th July 2016

I suppose I’ll come right out and admit it. I spent the better part of the past weekend playing Pokémon Go. This incredibly popular app had as of this morning been installed upon over 5% of all android phones in the US. According to the BBC nearly twice as many as Tinder. This, Nintendo’s first foray into smartphone gaming, has been an incredible success. So much so that, as of this morning, its shares have risen by an amazing 56%.

I’ll assume you’re all familiar with Pokémon in general. However, for those unfamiliar with the game, ‘Pokémon Go’ I’ll do my best to explain it. Players walk around in real life and look for the usual array of Pokémon which appear and disappear on the in-game map. When a Pokémon is spotted, players try to capture them in order that it can be trained for battle against other real life players’ Pokémon at ‘gyms’.

Using the game map (essentially, a Google Maps style representation of the real world) players are encouraged to walk between various notable locations, called ‘Pokéstops’ to receive bounties of useful in-game items. Pokéstops are relatively common. Rarer are ‘gyms’. These are generally landmarks at which players can do battle with their creatures. Manchester’s Beetham Tower, the site of the Hilton Hotel, is one such gym location.

Whilst obviously, I’m a fan of the game. The already incredible popularity of the app does raise one or two concerns in the part of my mind not taken up with reliving a high school Pokémon obsession. There have already been reports of private property being designated as Pokéstops or gyms much to the owners’ dismay. As far as I have been able to glean, ‘private property’ is not supposed to be designated as a location within the game. However, from my limited experience of a walk around Manchester, this does not appear to apply to commercial property.

Whether the game’s utilisation of real life premises as part of the game remains to be seen. At first blush, I can’t imagine some landlords would be overjoyed to find a huddle of smartphone-holding youths inexplicably taking up-semi permanent occupation outside of their properties. However, operators and owners of leisure and food and beverage premises are no doubt already benefitting from this unexpected windfall.

In truth, assuming the game’s creators have been careful enough to avoid incentivising visiting construction sites and the like, I don’t imagine the game is going to cause too many problems with trespassers. From what I’ve seen, the games are based around highways and I would imagine the UK’s delightful climate will see off all but the most waterproofed Pokémon enthusiasts.

What though is of greatest concern is the potential for proliferation of the bumps and scrapes that Pokémon Go players have already gotten themselves into. The temptation to stare at a phone rather than pay attention to traffic is great even for a self-branded level-headed individual. More terrifying are the stories of Pokémon-related car crashes.

Incidentally, does anyone know where to find a Pikachu? 


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The Buds of May: Prime Ministerial Certainty Benefits Property Sector
Wednesday 13th July 2016

As David Cameron thumbs through the Yellow Pages in search of house movers, perhaps rueing a referendum too many, there is a glimmer of hope for the property sector which seemed set to be particularly hard-hit by Brexit blues.

The elevation of Theresa May to Prime Minister-elect (or perhaps un-elect) appears to have buoyed the share prices of a number of notable companies in the real estate sector. Whilst FTSE 100 gained 1.4% overall, the news of May’s imminent assumption of office saw a share price gain of 7.1% for housebuilding giant, Taylor Wimpey. The more heavily domestically-constituted FTSE 250 jumped 3.3% with another notable beneficiary, Crest Nicholson, having seen a 14%+ change over the week.

Housebuilders aren’t the only ones bathing in the sunlight of May’s perceived safe pair of hands. Notable real estate development and investment companies, British Land and Land Securities also saw a similarly significant hike in share prices as did buildings materials supplier Grafton PLC.

It is perhaps unlikely that the property industry sees Theresa May as a panacea for the nervousness which has accompanied the UK’s vote to leave the EU. However, it could well be an indication that investors, far from seeing the UK’s forthcoming departure from Europe as an imminent disaster, were more concerned about the instability and absence of direction which a protracted leadership contest might bring about.

Although it remains to be seen how Brexit will affect the economy in the long-term, the markets appear to have seen Theresa May’s forthcoming reign as being good news for property. One would now hope that the sector can capitalise on the news that we will be spared a period of noisy Conservative infighting and use this as a catalyst to resume nurturing the green shoots of our long-awaited recovery. 


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Immigration Act 2014: Does your tenant have the right to rent?
Thursday 11th February 2016

1st February 2016 marked the day when the provisions of the Immigration Act 2014 (the Act) were rolled out across the country following pilot schemes in Birmingham, Walsall, Sandwell, Dudley and Wolverhampton.

The Act prohibits private landlords of residential properties from allowing certain people to occupy properties based on their immigration status. A landlord will be liable for an offence either:

  1.  if they know or have reasonable grounds to believe that their premises are occupied by an adult disqualified from renting as a result of their immigration status; or
     
  2.  a tenant’s leave to remain in the UK has expired during the course of the tenancy and the landlord is aware of this, or has reasonable cause to believe this has happened, and fails to notify the Secretary of State as soon as possible.

There is a positive obligation on a landlord to carry out checks against their prospective tenants to ensure that all adults proposing to use the property as their main home have the right to rent. Doing so will ensure that a landlord has a statutory excuse against liability for a civil penalty. Those who have the right to rent are individuals who fall into one of the following categories:

  1. British nationals;
     
  2. European Economic Area or Swiss nationals; or
     
  3. Non-EEA nationals with the right to be in the UK indefinitely.

In order to check a tenant’s immigration status, landlords will need to view original immigration documents in the presence of the applicant, make copies of the documents, and keep those copies for 12 months after the tenancy expires.

For applicants whose immigration documents are held by the Home Office and are therefore not available, the Home Office has created a Landlords Checking Service. Further checks are to be carried out if the tenant’s stay in the UK is time limited to make sure they are still eligible to rent property in the UK. Any landlord found to be in breach of the provisions under the Act could be fined up to £3000. Any agents who manage or let a property can carry out the checks on the landlord’s behalf provided there is a written agreement stating as such.

Critics of the Act have feared that landlords will begin to make and act upon assumptions about a person’s immigration status based on their colour, nationality or ethnic origin. It is essential that checks are carried out against all new tenants in a fair, justifiable and consistent manner, otherwise landlords could be accused of unlawful discrimination under the Equality Act 2010.

The aim of the Act is to ensure that tenants living in private rented housing are not doing so illegally whilst also preventing rogue landlords from exploiting the migrant situation. Landlords could now be required to tread a fine line between immigration compliance and avoiding race discrimination with the potential of liability waiting beneath should they fall foul of either.

In order to ensure that landlords are able to adjust to the new provisions as smoothly as possible the Home Office have issued a Code of Practice with comprehensive guidance on the right to rent scheme.


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MIPIM 2015 Review
Thursday 2nd April 2015

Once again, Brabners supported Liverpool’s delegation to MIPIM and it was a really positive experience for both the city and firm.

As members of the steering group we were involved from the very early stages in discussions with Liverpool Vision, Liverpool City Council and Marketing Liverpool about the city’s presence at MIPIM in 2015 and the programme planned.

There was a strong and focused presence at MIPIM with the delegation seeking to attract inward investment to the city (and therefore, hopefully our own firm) using the international stage of the event. It was evident that last year’s International Festival for Business had helped to raise the profile of Liverpool and there was real innovation in terms of how the city is now perceived and compared to other cities in attendance. We are now able to distinguish ourselves as a major European city competing on an international stage with the likes of Shanghai, Barcelona and Prague.

The number of private sector partners in the Liverpool delegation doubled from last year to 30 businesses including Arup, Bruntwood, Deloitte, Glenbrook, Grosvenor, Peel, Pochin and Redrow. Being part of the team of partners we got access to all key events during MIPIM including conferences and networking events such as a delegation and leadership networking event, a regional debate hosted by Liverpool Mayor, Joe Anderson and the Chief Executive of Manchester City Council, Sir Howard Bernstein and a Northern Powerhouse event with Leeds, Sheffield, Newcastle, and Liverpool chief executives.

There were several major projects announced during MIPIM which helped to further raise the profile of the city with influential players from the property sector across the globe. One of those, a hot topic, was the launch of private rented sector schemes. We act for Glenbrook who are transforming a 300,000 sq ft vacant office building on the Liverpool waterfront into a private rented scheme and they are one of the first to do so in the country. As such, their development attracted the attention of potential investors keen to know more.

Brabners has had a strong presence at MIPIM since 2001 and had no difficulty making a business case for supporting Liverpool at MIPIM 2015. The event has always worked well for us in terms of raising profile and bringing in new business. It was great opportunity to build on the long standing relationships which we have with the other businesses involved within the city as we work closely together on attracting global investment into the city.


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Borrower Beware – The Potential Pitfalls of Interest Only Mortgages
Wednesday 4th March 2015

An interest only mortgage is a type of home loan whereby the normal monthly repayments only cover the interest payable on the loan. The amount borrowed remains static, and is repayable in full at the end of the repayment term.

In the past 20 years, this type of mortgage has been extremely popular, due to the comparably low monthly repayments, along with rapidly increasing house prices. This has enticed buyers into thinking they can sell the property for a profit, or remortgage for a higher amount at the end of the term, therefore freeing up funds to pay off the mortgage balance. Not surprisingly, there was a sharp increase in 2006-2007 at the peak of the property boom – with approximately a third of all mortgages taken out around this time being interest only.

As the day-to-day running and repayment of an interest only mortgage during the term is identical to a capital repayment mortgage, it can be easy to forget that the capital is immediately repayable at the end – and this is where potential problems can arise. Mortgage companies are fully entitled to demand the full repayment when the term ends, and are not always sympathetic to those who find themselves with difficulties.

The FCA state that there are over 2.6 million interest only mortgages which are due to expire in the next 30 years, and have estimated that 10% of the borrowers have no repayment plan in place at all, with a further 50% facing a significant shortfall in repayment funds.

The FCA has also predicted that there will be three peaks in the interest only mortgage market – which could mean three potential peaks of problems. The first is expected in 2017/2018, when endowment mortgages sold in the 1990s and linked to these products expire, the second in 2027/2028 when those interest only mortgages typically sold from 2003 to 2009 mature, and a third estimated in 2032, from mortgages sold at high loan to value ratios between 2005 and 2008.

If you have an interest only mortgage, it would be good practice now to:

  • Find out when the repayment term expires

  • Find out whether there is a repayment plan in place, for example an endowment fund, or a savings account set up for this purpose.

In most cases, this will provide peace of mind, and allow enough time to put a savings strategy in place to cover any shortfall.


Party Wall Guidance
Thursday 19th February 2015

The Department for Communities and Local Government (DCLG) have recently updated their booklet offering guidance on Party Walls Act (etc) 1996 disputes.

The booklet is intended to be used as a general guide to party walls but admits that it is not an authoritative interpretation of the law.

Party walls are walls that stand on land owned by of two or more owners.  They can either form part of a building or be walls such as a garden wall but they will not include timber fences.  A party wall can also be a wall that is on one owner’s land but that is used by two or more owners to separate their buildings. 

The Act also covers building work on, or at the boundary of two properties; work to an existing party wall or party structure; and or excavation near to and below the foundation level of neighboring buildings.  Accordingly you will see how common party wall issues can be.  

The new booklet provides further details in respect of party wall awards, unsafe buildings and noisy works plus further information in respect of the surveyor’s role.   Although the booklet provides some helpful examples of how to deal with simple matters, party wall disputes are renown for their complexity and are costly to deal with, often because those effected have put off taking legal advice. Party wall disputes are also notoriously emotive matters, especially if they are not managed or conducted effectively with many people describing the feeling of not being able to escape the litigation when dealing themselves, not least because you may be living next door to the other party in the litigation. 

Our Property Solutions Team at Brabners have vast experience in dealing with party wall disputes and can assist you from the outset to hopefully save you time and money.

For advice in respect of a party wall please contact Brabners.


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Taking care of your exterior - More responsibility for landlords of residential property
Tuesday 17th February 2015

The recent decision in Edwards v Kumarasamy [2015] EWCA Civ 20 (28 January 2015) (Bailii) has determined that a residential landlord must keep in repair the structure and exterior of their property, even if they were not aware of any problems with it.

Facts

The Landlord agreed in the Lease to keep the pathway and communal areas in good order and condition, provided that the Tenant gave him notice of any defect and the Landlord had a reasonable opportunity to fix the problem.

The Tenant sublet the flat to E on an assured shorthold tenancy. E tripped over an uneven paving stone when taking rubbish out to the bin store and injured his knee.  Neither the immediate Landlord or the Head Landlord had been made aware that there was a problem with the path.

Whilst the County Court held that the Landlord was not liable under section 11(1A) of the LTA 1985 because it was a pre-condition to liability that notice of the defect had to be given, the Court of Appeal has just ruled in favour of the Tenant.

The general rule is that a covenant to keep premises in repair obliges the covenantor to keep them in repair at all times, and the obligation is breached immediately a defect occurred. However, there was an exception for landlords where the defect occurred within the demised premises themselves. The landlord would be in breach of its obligation only when it had information about the existence of the defect such as would put a reasonable landlord on inquiry as to whether works of repair were needed and it had failed to carry out the necessary works with reasonable expedition.  The Court has ruled that this exception does not apply to the exterior of the property. The Landlord had a right to mend the path and should have done so.  Notice was not required as, the general principle was that this applied only where the defect was within the demised property itself.

This decision will be of concern to all landlords particularly those at a distance who may not visit the property regularly and are not aware of the condition of the exterior of the property.  If the assured shorthold tenancy were to provide that the landlord's liability was subject to the tenant giving prior notice of the defect, this would presumably be ineffective.

Landlords would appear to be stuck with this decision unless section 11 is amended, or the Supreme Court overrules this decision.

For more advice on residential tenancies please contact Brabners. 


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Tenant has left belongings - what should a landlord do?
Wednesday 28th January 2015

A question that crops up time and time again is how a landlord should deal with the chattels or belongings of a former tenant which are left on premises after giving up possession.

Where such chattels are left on the premises, the owner who takes possession becomes an involuntary bailee of any such chattels and, as such, has a duty to deal with those items as is ”right and reasonable”. 

Usually, the owner of the premises will serve a notice under Schedule 1 of Part 1 of the Torts (Interference with Goods) Act 1977.

The notice should:-

  1. Specify the name and address of the person holding the goods and give details of the goods and where they are housed; and
  2. State that the goods are ready for delivery; and
  3. Specify any amount which is payable in respect of the goods before giving the Notice.

Once the aforementioned notice is served, a further notice may be served upon the owner of the goods giving them notice of:-

  1. The intention to sell the goods and the date of the intended sale if they remain uncollected; and
  2. Details of the goods to be sold and the address at which they are held; and
  3. The name and address of the person sending the notice; and
  4. Details of any sum of money owing in respect of the goods at the time the Notice was sent.

This Notice must be served at least three months prior to the date of any intended sale.

Of course, most property owners/landlords do not wish to delay the sale or the letting of the property and may not have anywhere else to store the goods.  Therefore, this can be a difficulty.

Additionally, the goods themselves may not be worth selling, in the opinion of the property holder which can cause a further difficulty where, in the opinion of the owner of the goods they do have value.  This causes a particular difficulty where the goods have been disposed of and it is then the word of one party against the other as to the value of those goods.

Where the goods are sold, then the seller must account to the owner of the chattels for the proceeds of sale less any sum owing to him in respect of the chattels or of the cost of their sale.

Thus, if a decision is made to dispose of the goods to be selling them or otherwise, any property owner would be well advised to take photographs of them and, if appropriate, even a video recording.  Moreover, a detailed list should be prepared and consideration could be given to obtaining independent evidence of the value of the goods.  Although this may be costly, it could protect a landlord against a potential claim.

This point was re-visited in the recent case of Campbell –v- Redstone Limited [2014] EWHC 3081 (Ch).  The Claimant whose property was repossessed by Redstone Mortgages Limited claimed damages against the mortgage company for disposing of chattels which had been left behind at the property. 

The Court was critical of the Claimant mortgagor who had made no attempt to clear the property with a view to complying with her obligation to give vacant possession.  The Court felt that by leaving her goods she was deliberately causingg inconvenience, as it may have caused the mortgage company difficulties in marketing and selling the property. The Court concluded that the mortgage company had not hindered the Claimant in removing her chattels, and the mortgage company was justified in clearing the property and disposing of the goods.  In this case, the goods appeared to have no intrinsic value.

Thus, it would appear that there is no need for property owners who find themselves in the possession of goods belonging to a former tenant or owner of the property to find themselves as inconvenienced as previously may have been thought.  Nonetheless, there is no guarantee as to how the circumstances of any particular case would be interpreted and, therefore, it is recommended that property owners continue to apply the procedure set out in the Torts (Interference with Goods) Act 1977 as, even if the claim has no merits, it can be extremely inconvenient for a property owners to find themselves having to defend proceedings for conversion of goods.


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Competition Law - The effect on the retail world
Wednesday 28th January 2015

http://www.bailii.org/ew/cases/Misc/2013/32.html

Despite the clarification provided by His Honour Judge Dight in the case of Martin Retail Group Limited v Crawley Borough Council  [2013] in which Rachel Watkin of Brabners LLP successfully represented the Claimants, it appears that the message is not filtering through.

In the Martin case, the Courts provided the much needed clarification as to whether the Competition Act 1998 (the “Act”) applies to letting schemes that exist at neighbourhood shopping parades.

For example, in villages or on the outskirts of a town, a small parade of shops may exist in which the landlord has asked each shop owner to agree not to compete with the next. That is, the off licence and florist are not to sell newspapers and the newsagent and florist and not to sell alcohol, and so forth.

Sadly, for the consumer (who would benefit from more competition on price) and for the shop owner who may need to diversify, the news does not seem to be filtering through. More often than not, the small business owner is struggling on in ignorance of the fact that the covenants in the lease may no longer be lawful.

In the case of Martin Retail Group Limited v Crawley MBC, His Honour Judge Dight was asked to consider whether a user clause which Crawley MBC (“Council”) sought to have included in a new lease was lawful. The clause suggested by the Council included the words:

“that the permitted uses should expressly exclude the sale of alcohol, grocery, convenience goods and other uses falling with Class 1 as set out in Part A of the Schedule of the Town and Country Planning (Use Classes) Order 1987”

Simon Booth, instructed by Rachel Watkin of Brabners LLP invited His Honour Judge Dight to declare that this clause would be unlawful under the Act.

After detailed consideration of the point, His Honour Judge Dight concluded:

“It seems to me that having regard to the type of goods that the claimant wishes to sell, which I have referred to as convenience goods, the market which is relevant to my considerations is that…within a relatively short walking distance from the parade. It seems to me highly likely that potential customers would be reluctant to walk further for a pint of milk, box of eggs or packet of washing powder and I agreed that if it was intended to undertake a weekly shop of a variety of household goods the Premises and indeed the Parade would not be a likely destination and customers would be prepared to travel a greater distance by private vehicle or public transport if available. The Proposed User clause as part of the letting scheme, clearly provides a means of eliminating competition in convenience goods on the parade and within a relatively short walking distance…..”

“For the reasons which I have given above I have come to the conclusion that the Proposed User Clause, within the context of the current letting scheme, would contravene s.2 of the Competition Act 1998 and the Defendant has not satisfied me that it would be an exempt agreement….”

Although this case relates only to the sale of convenience goods and looks at the relevant “market” in respect of convenience goods, it provides a fair argument that the Competition Act would be applied in the same way in relation to other goods provided that no other competition already exists in the market.

Thus, where competition already exists, e.g. where there are already 2 convenience stores or 2 (or more) outlets selling alcohol or groceries (or any other categories of products) in the same parade or within a relatively short walking distance of the parade, the clause may not be unlawful. On each occasion, and in respect of each lease, the nature of the particular parade needs to be considered and legal advice should be sought.


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