A qualifying long-term agreement is where a third party (eg a managing agent or maintenance contractor) agrees to provide services to a building for more than 12 months. If the annual cost to any individual T is more than £100, then L must follow a strict two-stage consultation (similar to the one for qualifying works, and possibly give a third notice of ‘reasons for appointment’).

L must serve a notice on the Ts and secretary of any RTA, describing in general terms the nature of the goods or services and any qualifying works to be provided under the agreement, and stating why they are necessary. Any T, or RTA, has a right to nominate contractors, from which Ls should try to seek estimates, and also has a right to make observations within a period of 30 days from the date of the notice. L must have ‘regard’ to those observations.

L must consult residential Ts when carrying out ‘qualifying works’ (works of repair, maintenance or improvement which will require any T to pay more than £250). There is a compulsory two-stage consultation procedure, and L may possibly have to serve a third notice of ‘reasons for appointment’.

L must serve notice on the Ts (and on any recognised tenants association (RTA)). The notice must describe the proposed works in general terms (or specify a place in time where a description can be inspected); state why L considers it necessary to carry out the works; invite written observations and provide an address and timescale for a receipt; and invite the nomination of parties through whom L should try to obtain estimates).

To what extent can you imply a ‘reasonableness’ provision into the service charge provisions of a lease?

The answer is that there is no clear requirement for ‘reasonableness’ to be taken into account; as always, it depends on the wording of the lease. One of the useful guides is Universities Superannuation [1998], where a lease had been granted to M&S as anchor T of a shopping centre. L’s agent made an error when apportioning the rateable values used for calculating the service charge.

The maximum rent threshold for HA 1988 tenancies increases to £100,000 on 1 October (it is currently £25,000). See our May 2010 issue (p24) for some of the problems this creates.

One key question will be the position of tenancy deposits taken by Ls in respect of tenancies that started prior to 1 October and which were not assured shortholds at that time – but which will become assured shortholds on 1 October. In the view of most commentators, the trigger for the protection of a deposit is the date it is received (in connection with an assured shorthold).

L had a long lease of a flat (£195 pa) which expired in 2003. In about 1990, she carried out extensive improvements (with L’s consent).

When the lease expired, L served a notice to bring the long tenancy to an end and proposed a new short tenancy. The RAC fixed a rent – ignoring the improvements she had carried out in the 1990s. But, subsequently, L served a notice proposing a new rent, and the RAC fixed an increased rent – taking into account the improvements carried out by T in the 1990s. The catch was that the value of those improvements meant her rent increased to more than £25,000 pa, and thus she did not have an assured shorthold (and thus she had no security).

The rules on Houses in Multiple Occupation are now more complex than they were a few years ago; firstly, a licensing regime was introduced in 2004, and secondly, planning restrictions were introduced in 2010. The end result is that a group of students may well end up forming an HMO. Accordingly, a note in PLC looks at the hypothetical situation of a client who wants to buy a three-bedroom house to be used by their son whilst he is at university; the spare bedrooms and the dining room will be let to three of the son’s friends who will pay rent to the parents. The four students will live as one household sharing means, as well as outgoings. They will probably go home during the holidays and for occasional weekends. Will this fall foul of the HMO rules?

Prior to the dissolution of parliament, the Mortgage Repossessions (Protection of Tenants) Act 2010 was pushed through. What the Act does is to give protection to Ts who find themselves being evicted by L’s mortgagee (when L has failed to get proper consent for the let).

If the annual rent is more than £25,000 pa, then it cannot be an assured shorthold. But, that figure increases to £100,000 as from 1 October [2010]. Whilst this change is not retrospective, it will affect all tenancies already in place on 1 October. Thus, a tenancy started before 1 October for rent of more than £25,000 pa, but less than £100,000 pa, will automatically convert to an assured shorthold on 1 October. But, commentators have highlighted a number of potential problems:

tenancy deposit: tenancies that convert to assured shortholds on 1 October will have had deposits taken on them prior to that date. Those deposits will not have been protected under a tenancy deposit scheme within 14 days of receipt. It is arguable that the deposits will not need to be protected, since they were taken at a point when protection was not required (and it is usually the act of taking the deposit that is seen as the trigger for protection).

When selling the freehold (or long leasehold) interest in a property subject to short residential tenancies, the T’s right of pre-emption under LTA 1987 must be considered. In particular, notices may have to be served on ‘qualifying Ts’.

LRA 1967 allows long lessees to acquire the freehold or be granted a lease extension, provided they occupy a ‘house’ – which is defined as ‘any building designed or adapted for living in and reasonably so called’. Some examples:

a property that had originally been a house and its associated mews (which were linked by a shared basement) was not a single ‘house’ (Malekshad [2002]);

In Sportelli [2008] the discount rate for leasehold enfranchisement calculations was fixed at 5% for prime central London locations and all other locations.

It is worth noting that in Zuckerman [2009], the Lands Tribunal allowed a discount rate of 6% for some flats in Birmingham. However, a detailed article in Property Law Journal makes the point that it would be wrong to interpret this as a general retreat from Sportelli. What can be said, however, is that:

The threshold for tenancies to be within the scope of HA 1988 will be increased from £25,000pa to £100,000 (as from 1st October)

This change will apply to currently existing tenancies (ie not just new tenancies after that date). Thus, the bulk of tenancies already in place where the annual rent is above £25,000 but below £100,000 will automatically become assured shorthold tenancies (unless they are otherwise excluded from HA 1988 – such as company lets).

Some obvious problems seem to arise:

Suppose you have an assured tenancy for a year from 19 January. The agreement provides for a monthly rent payable in advance on the first of each month. On the expiry of the fixed term, a statutory periodic tenancy arises. But, are the monthly periods of the tenancy from the 19th to the 18th, or from the first to the last day of the month? The answer is unclear. There are two conflicting county court cases. In Baynes [2005] it was said the actual date on which the rent falls due is irrelevant, it makes no difference to the date on which a valid s21 notice should require possession. On this basis, the period of the tenancy would be from the 19th to the 18th. But, Vodecca [2005] took the opposite view.

If T gets into financial difficulties, L should consider whether there is a sub-T. If so, then L can serve a notice on sub-T under s6 Law of Distress (Amendment) Act 1908. That notice would state that the head-T has failed to pay its rent to L, and that the sub-T has to therefore pay all future rent direct to L until the arrears have been paid.