There was an interesting article in today’s Guardian on the legacy of Right to Buy, not exactly an in-depth piece, but featuring a number of the issues familiar to anyone who practicises in housing - from dodgy short term letting to major works charges on leaseholders. And above all, the lack of available decent stock for renting.
Tag Archive for 'right-to-buy'
Sheffield City Council v Hazel St Clare Oliver LRX/146/2007 [links to PDF]
This is a case which touches on an issue familiar to those involved with right to buy leases: replacement of windows by the landlord.
The landlord council wished to replace metal framed windows with new uPVC in the leaseholder’s block. The terms of the demise in the lease were clear: the windows were part of the leaseholder’s property. Consistent with that, the leaseholder’s covenant to repair required her to keep the windows in repair. The covenant to repair looked like this:
“(3) To keep the demised premises and every part thereof (except those parts of the demised premises which the Council are by virtue of the covenant implied by paragraph 14(2)(a) of Schedule 6 to the 1985 [Act] liable to keep in repair) and all fixtures and fittings therein and all additions thereto and all (if any) sewer drains cables pipes wires ducts radiators tanks cisterns and valves and channels within and serving the demised premises and all doors and windows (including the glass and frames thereof) floors ceilings internal walls and surfaces and skirtings therein in good repair AND where necessary to renew or replace all worn or damaged parts of the demised premises which the lessee is liable as hereinbefore provided to repair”.
The council’s covenant to repair was complementary:
“(3) To keep in repair (the definition of repair where appropriate including decorative repair) and (if desirable in the opinion of the Council) to improve (a) the structure and exterior of the demised premises and of the Building (including drains gutters and external pipes) and to make good any defect affecting that structure …”
The LVT decided that, on a straightforward construction of these covenants, the “exterior of the demised premises” did not include the windows so that replacement of them could not be said to fall within the council’s covenant to repair and improve. As a result, the council could not include a charge for their replacement in the service charge bill.
On appeal to the Lands Tribunal, the President thought otherwise. The Lands Tribunal reached its conclusion based on its construction of Paragraph 14 of Schedule 6 to the Housing Act 1985 which is implied into every right to buy lease by s.139 of the same act. Paragraph 14(2)(a) reads:
“(2) There are implied covenants by the landlord— (a) to keep in repair the structure and exterior of the dwelling-house and of the building in which it is situated (including drains, gutters and external pipes) and to make good any defect affecting that structure;”
The Lands Tribunal found that for the purposes of paragraph 14(2)(a) the windows were within the meaning of “structure and exterior of the dwelling-house”, based on a long line of authorities starting with Irvine v Morgan [1991] 1 EGLR. The fact that the windows were part of the demised premises would be of no relevance.
As it happens this was not enough. The council’s reasons for doing the window replacement work (for instance to improve the thermal properties of the flats) indicated that the works were improvements not repairs — a suggestion not denied by the council. In that case the council would have to rely on their duty to improve (found in the council’s covenant) not on the statutory implied duty to repair.
The Lands Tribunal went on to find that the council’s covenant was to be construed in the same way as paragraph 14(2)(a), so that “structure and exterior of the demised premises” included the windows. The windows fell within the council’s duty to improve and hence the LVT had erred and the council would be able to recover the costs of replacing the windows via the service charge bill.
This part of the appeal had become academic because, as a result of the Respondent’s objection to the work being done, the Council had agreed not to replace her windows. For the leaseholder at least, the case had a happy ending.
The decision is not entirely satisfactory. The lease appears to have quite carefully specified that the responsibility for repair of the windows fell on the leaseholder. It would be reasonable to conclude that the corresponding freeholder covenant was meant to exclude the windows. Such a view is buttressed by the fact that the windows were a part of the demise. All the term implied by the Housing Act 1985 could do is override the tenant’s duty to repair. It should have no effect on the duty of the council to improve.
The Lands Tribunal appears to have moved dangerously close to using the meaning of a statutory implied term as a determinant for the meaning of a term in the lease, rather than constructing the lease itself.
Furthermore, the Tribunal’s conclusion is odd. The council were able to remove items of property that belonged to the leaseholder (the windows) and replace them with others as they saw fit. The lease in question could like many right to buy leases have reserved the windows to the council. The fact that it did not suggests that the lease was intended to preclude the council’s interference in just such a fashion.
The decision may have wider implications because the President expressed his surprise and unhappiness with a clause which both required and empowered the council to carry out arbitrary improvement works (in my experience invariably present in right to buy leases). At the end of the decision he said:
“I would hope that, as a matter of practice, the council would not without the lessee’s approval carry out improvement works to the demised premises for which the lessee is to be charged unless the works are no more than a limited extension of works of repair.”
The disapproval the Lands Tribunal have expressed may be useful in persuading councils against interfering with their leaseholder’s property when carrying out works of improvement.
There is an all too common situation. A tenant with the right to buy is offered a capital sum and the mortgage payments for the (in this case) three years needed to avoid repaying the RTB discount on transfer. In the meantime, they either get to stay or hand over control of the property to the shadow. Recent RTBs have provisions in the lease to make this more difficult, as well as a much reduced discount, but there remain a lot of sharks circling.
McGuane v Welch [2008] EWCA Civ 785 was an appeal of a County Court judgment awarding an equitable interest of 100% in a lease of the property concerned to Mr Welch (W), against the title of Mr McGuane (M), the erstwhile tenant.
I’ve not got time to do a detailed report, but the appeal succeeded, largely on the basis that there was an express trust, not a constructive trust, and that the claimant did not come to equity with clean hands. In particular the Claimant had engaged a not entirely reliable solicitor, May & Co, supposedly to act for the Defendant in the arrangement. They never met their supposed client or advised him directly in person or in writing. One trusts the SRA have taken note.
The Defendant pleaded the whole arrangment being the act of “a poor and ignorant man”, (Creswell v Potter (1968) [1978] 1 WLR 255, Backhouse v Backhouse [1978] 1 WLR 243). But the judgment left the erstwhile tenant liable to repay all the monies that the Claimant had spent on the property in mortgage and refurb, so effectively meaning a plague on both your houses.
There are a number of issues in this judgment that I want to return to - in particular the requirement for ’stamped’ trust deed and transfer for admission as evidence, and the way in which express trust is dealt with. But that will have to wait for a fortnight or so. No time now, I’m afraid.
In the meantime, it is clear that the Court deeply disapproves of the ‘transaction’, but absent evidence or argument on breach of statute, can’t say much more.
Hanoman v London Borough of Southwark [2008] EWCA Civ 624
Where a local authority landlord has failed to respond to a tenant’s notice in time under the Right to Buy procedure, the tenant can serve an ‘operative notice of delay’ under s.153A(5) Housing Act 1985. The effect of this notice is that the landlord must deduct from the purchase price an amount based on the rent paid during the period of the delay (s.153B).
Does housing benefit, whether as payment, or as rebate on rent payable to local authority, count as rent for the purposes of s.153B?
Simple answer - yes. S.153B makes no prescription as to the source of rent payments and it would be ludicrous to distinguish between housing benefit as payment and housing benefit as rebate.
There is also an interesting side issue on preserving rights in a dispute over RTB terms after completion of the sale by way of collateral contract.
Honeygan-Green v London Borough of Islington [2008] EWCA Civ 363 (22 April 2008)
A quick note on this Court of Appeal case. What happens when a secure tenant who has begun the right to buy process subsequently has a suspended possession order made against them, and then later has the SPO discharged?
The Court of Appeal’s answer, following Enfield London Borough Council v. McKeon [1986] 1 WLR 1007 and Lambeth London Borough Council v. Rogers [1999] 32 HLR 361 and indeed Burrows v. Brent London Borough Council [1996] 1 WLR 1448, was that a revived tenancy brought with it retrospectively all of the rights of the tenant as if the tenancy had never ended. So s.121(1) HA 1985 is of temporary application, while the SPO is in effect.
The upshot is that a right to buy procedure begun before the possession order is merely suspended and revives with the tenancy - so that the original market price valuation still applies.
However, there are some oddities in this case. Firstly, Ms Honeygan was very lucky to have her possession order discharged before Swindon v Aston [2003] happened, as she had breached the terms of her SPO, and under Aston, would not have been able to have the possession order discharged.
Secondly, the Court of Appeal judgment expressly approves the broad discretion of the Court under s.85 HA 1985 in Rogers
Simon Brown LJ made the point that the court’s order reviving the secure tenancy could have been made subject to a condition that the tenant’s damages claim should not be pursued
Hmm. I haven’t got access to the details now, but I seem to recall a recent appeal from a County Court decision at Lambeth County Court that said that conditions set on a s.85 revival/postponement of possession could only be related to the grounds of the original possession order - e.g. rent arrears, where the DJ had set a ‘no disrepair’ condition. It was in Legal Action, I’ll try to find it tomorrow.
Plus, as far as I can tell, this will only apply to discharged SPOs and - presumably - paid off PPOs.
Where a possession order is sought under Ground 16 Schedule 2 Housing Act 1985 (under-occupation on succession), what happens to the tenant’s right to buy? And is this a factor in weighing the suitability of alternative accommodation and the reasonableness of making an order?
Manchester City Council v Benjamin [2008] EWCA Civ 189, a Court of Appeal judgment out today, has some answers, but far from all of them.
The situation was, briefly, that the Defendant had succeeded to her mother’s secure tenancy of a six bed house. The only occupants, post succession, were the Defendant and her one child, although evidence was heard that she intended to foster. The Claimantserved an NSP on grounds that the property was more extensive than the tenant reasonably required, the Claimant applied under the right to buy shortly afterwards.
At first instance, there was no dispute that the property was more extensive than required. Alternative 2 and 3 bed accommodation was offered (but this was due to be transferred to a housing association under a stock transfer some months later).
The Defendant maintained that the alternative property was neither suitable nor reasonable and counterclaimed for an order compelling the Council to convey the property to her.
Proceedings were under s. 85 HA 1985:
“(1) The court shall not make an order for the possession of a dwelling house let under a secure tenancy except on one or more of the grounds set out in Schedule 2.
(2) The court shall not make an order for possession–
…
(c) on the grounds set out in Part III of that Schedule (grounds 12 to 16) unless it both considers it reasonable to make the order and is satisfied that suitable accommodation will be available for the tenant when the order takes effect;
The Defendant held that if her tenancy of the property was ended by possession order, she would not be entitled to the right to buy at the new property until a fresh qualification period had expired (5 years) or, if the new tenancy was an assured tenancy, under more limited and less advantageous terms.
“The right to buy cannot be exercised if the tenant is obliged to give up possession of the dwelling-house in pursuance of an order of the court or will be so obliged at a date specified in the order.”
The first instance Judge held that this meant that the Defendant would have to start afresh and the 5 year period would not have expired by the time of the transfer to the HA. This in itself was enough to render the alternative accommodation unsuitable.
On reasonableness, the Judge found that the Council had not provided sufficient evidence to make clear that possession was required for the better managment of its housing stock, or the length of the waiting list for such properties. Instead it looked like the Council was simply seeking to avoid the loss of the property under the RTB provisions and, following the statement of Neuberger J in Basildon District Council v Wahlen [2006] 1 WLR 2744, held this was an impermissible jsutification.
At first instance the claim was dismissed and an order for conveyance made. INitial permission to appeal by the Council was refused, and again on the papers, but a renewed application to Arden J suceeded.
The Court of Appeal, in three separate judgments, found that it was both reasonable to make a possesion order and the alternative accommodation was suitable.
S.121(1) did not mean that the right to buy was extinguished by a possession order under Ground 16. Apparent findings to the opposite in Basildon v Whelan and in Kensington & Chelsea RLBC v Hislop [2004] HLR 434 were not part of the ratio of the decisions in those cases. LJ Dyson found that:
56. The use of the definite article in the phrase “give up possession of the dwelling-house” is significant. It is in respect of that dwelling-house that the right to buy cannot be exercised. If it had been intended that an order to give up possession should be a bar to the exercise of the right to buy any dwelling-house, then the subsection would have been drafted rather differently. It would have provided that, where a tenant is obliged to give up possession of a dwelling-house in pursuance of an order of the court, the right to buy cannot be exercised in respect of any dwelling-house.
Sir Peter Gibson gave the lead judgment, finding that the right to buy was not extinguished and the the first instance Judge had not performed the balancing exercise of ‘reasonableness’ properly. In particular, it was not right to set out a stark distinction between the better managment of the housing stock and the wish to avoid a reduction in that stock, particularly in the circumstances of a single person and child occupying a six bedroom property (para 37)
Sir Robin Auld agreed with the conclusions of the others, but considered that there was an issue that had not been addressed, at first instance or in the appeal, which is whether the loss of the right to buy would, per se, render alternative accommodation unsuitable. The circumstances, he considered, may well arise where alternative accommodation is offered that does not carry the right to buy (para 47).
I must confess myself puzzled here, as para 1 of Part IV of Schedule 2 requires that any alternative accommodation proposed must be consist of premises to be let as a separate dwelling under a secure tenancy. Surely, it would also therefore carry the right to buy?
So, as far as I can see, loss of right to buy is gone as a defence to Ground 16 possession claims, but, on the plus side, the right to buy already established is preserved into the new tenancy.
Wragg & Ors v Surrey County Council [2008] EWCA Civ 19 is an appeal on the refusal of some Right to Buy applications, but the main issue is when a tenancy falls under Schedule 1, para 2(1) Housing Act 1985, which provides:
“… a tenancy is not a secure tenancy if the tenant is an employee of the landlord or of –
a local authority,
…
and his contract of employment requires him to occupy the dwelling-house for the better performance of his duties.”
Some notes:
An assertion in the contract of employment that the acommodation is provided for the better performance of the employee’s duties is not sufficient to satisfy this provision.
The proper approach is a two stage test. First - is occupation of the accommodation required by the contract of employment? Second- is this for the better performance of the duties?
‘Better performance of duties’ raises a question of fact, outside the terms of the contract.
Where it is clear that occupation is for the better performance of duties ‘it would be surprising if the omission of this express requirement from the contract meant that the statutory exception did not apply.
‘For the better performance’ is not a question of subjective intention of the parties.
“The statutory provision should be construed as including an objective test: “for” is to be read as “to enable”, the essential question being whether the required occupation of the property is intended to promote, and is reasonably capable of promoting, the better performance of the employee’s duties. (para 44)”
Para 46 sets out what is to be considered in the objective test:
“the court will look at all the circumstances in deciding whether the required occupation is for the better performance of the employee’s duties. Those circumstances will include the reasons given for the imposition of the requirement to occupy the property and the considerations taken into account in imposing that requirement, scrutiny of which is likely to be particularly important in determining whether occupation of the property was reasonably capable of leading to better performance of the employee’s duties. It will also be relevant to consider the factual history in so far as it casts light on whether occupation of the property was or was not reasonably capable of leading to better performance of the employee’s duties. But I would stress that the test is not whether, in the particular case, the requirement to occupy the property has in fact led to the better performance of the employee’s duties. Thus, if occupation of the property was reasonably capable of leading to better performance, it is immaterial that the particular employee has not used the property in such a way as to produce that better performance in practice. “
The test is to be applied to the situation as at the date notice is given under the 1985 Act (or the relevant date in other proceedings)
“Better” is not a synonym for ‘efficent’ or ‘proper’ performance of duties. It is a comparator, the comparison being with the situation if there was not a requirement of residence in the property concerned. However, there is no requirement for the occupation to be necessary for the performance of duties, unless the residence condition is being implied into the contract.
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