Managing property - overviewRent review

The most common approach is for the rent to be reviewed by reference to the market rent for comparable properties at the review date. Market rent reviews take place at three- or five-year intervals. They require the parties (or the valuer appointed to determine the rent if the parties cannot agree) to assume a new lease of the property on the relevant review date by a willing landlord to a willing tenant. The starting point for valuation will be the actual property and the terms of the existing lease, but the valuer will be required to make various assumptions (for example, that the property is in good repair) and to disregard some matters (such as improvements made by the tenant).

Repairs and alterations

The scope of a repairing obligation can vary unexpectedly according to the specific wording of the clause and in the circumstances of the letting. The tenant's repairing covenant relates to other provisions (including those dealing with insurance, rent review and service charge) and if it is not satisfactory it could affect the parties' liability or remedies in the event of a dispute.

The meaning of 'repair' is found in case law. The key principles are:

The standard formula is 'such repair as having regard to the age, character and locality would make it reasonably fit for the occupation of a reasonably minded tenant of the class likely to take it'.

The standard is fixed when the lease is granted. A covenant to 'keep in repair' will include the obligation to put the property into the appropriate standard repair.

In a case concerning social housing, condensation had given rise to mould on furniture and decoration inside the property but caused no damage to the structure. Perhaps because of the type of tenancy, the Court of Appeal held that 'condition' went beyond and added to the obligation to 'repair', and that the landlord was liable to deal with the cause of the condensation.

The purpose of a schedule of condition is to limit, modify or clarify a repairing obligation. The schedule must provide accurate evidence of the required condition, as it will be used to determine the reinstatement and other works that the tenant must carry out and also the level of any damages recoverable during or at the end of the term.

The schedule of condition must be kept with the lease and must be in a form that provides meaningful evidence. A photographic schedule may be more useful than one giving only a verbal description.

Practical difficulties can arise where a schedule of condition is used to limit the obligations of an undertenant. If the head tenant remains liable for the full repairing covenant then it will be necessary to reserve a right of entry to carry out works that go beyond those required by the schedule of condition. It is not certain that an injunction would be granted to compel the undertenant to allow access, and so the head tenant might be faced with a claim for damages. In those circumstances the head tenant would have to rely on the statutory cap on damages imposed by the Landlord and Tenant Act 1927, s 18 and/or on the protection conferred by the Leasehold Property (Repairs) Act 1938.

Alterations

Leases usually prohibit or restrict the tenant's right to alter the property. The purpose of the covenant is to protect the landlord from the tenant effecting alterations and additions that damage the property interests of the landlord.

Alteration will usually be construed as something that alters the form or construction of the building. Where the proposed alteration is an 'improvement', consent cannot be unreasonably withheld (Landlord and Tenant Act 1927, s 19(2)). An improvement is an alteration that enhances the premises from the tenant's point of view by, for instance, increasing their value or utility. Consequently, where the lease specifies that an alteration requires the landlord's consent, it will almost certainly not be able to withhold that consent unreasonably.

It is for the tenant to show that the landlord has unreasonably withheld consent to the proposals which the tenant has put forward. The tenant must make sufficiently clear what their proposals are, so that the landlord knows whether it should refuse or give consent to the alterations or additions.

'Reasonableness' is a spectrum, not a single point. It is not necessary for the landlord to prove that the conclusions that led it to refuse consent were justified, only that they might be reached by a reasonable landlord in the particular circumstances. However, consent cannot be refused on grounds of pecuniary loss alone. The proper course for the landlord to adopt in such circumstances is to ask for a compensatory payment. Further, the landlord is not entitled to refuse consent on grounds that have nothing to do with its property interests.

Improvements

Regardless of any prohibitions in the lease, the Landlord and Tenant Act 1927 allows the tenant to carry out improvements and, on quitting, to get compensation for them. The tenant must comply with the correct procedures and strict time limits:

The tenant may carry out the improvement if no notice of objection is received from the landlord or the court certifies the improvement as 'proper', ie that, among other things, it adds to the letting value of the premises. The works must be carried out by the tenant in accordance with the specification and plan provided, and in compliance with conditions imposed by the court, as otherwise the right to compensation will be lost.

Once the works are completed, the tenant should request a certificate that the improvement has been properly completed, in order to show compliance with the Landlord and Tenant Act 1927 on any future compensation claim. The landlord must (at the tenant's expense) give the certificate of due execution within one month of that request, failing which the tenant may apply to the court for one.

When a tenant serves a notice of their intention to make an improvement, and the landlord serves a notice of objection on the ground that it wishes to carry out the improvement itself in consideration of a reasonable increase in rent (or such as the court may determine), the tenant is permitted to change their mind and decide not to proceed with the improvement. The landlord is not then entitled to proceed with carrying out the improvement. The provision is designed to allow the tenant to carry out improvements not to compel them to accept works that the landlord wants to carry out.

Service charge and outgoings

Residential landlords aim for a clear lease, ie where the costs of repair, maintenance and provision of services are met by the tenants rather than being deducted from the rent received.

Where a building is in multi-occupation it is sensible for repair, maintenance and services to be controlled by the landlord, with the costs being recovered from tenants through the service charge.

In residential leases the tenant's obligation to pay depends on there being a contractual service charge clause, but the landlord's ability to appoint managing agents, carry out works and to recover costs is heavily regulated by statute.

Eviction and repossession

Residential occupiers enjoy significant statutory protection from eviction or harassment. Harassment and illegal eviction are criminal offences, and a person who is harassed or illegally evicted can also claim damages through the civil court.

The Protection from Eviction Act 1977 makes it an offence to:

It is an offence to do any of these things intending, knowing or having reasonable cause to believe that they would cause the tenant to leave their home, or stop using part of it, or stop doing the things a tenant should normally expect to be able to do.

It is also an offence to take someone's home away from them unlawfully.

A person who is convicted by magistrates of an offence under the Protection from Eviction Act 1977 may have to pay a maximum fine of £5,000, or be sent to prison for six months, or both. If the case goes to the Crown Court, the punishment can be prison for up to two years, or a fine, or both.

The Criminal Law Act 1977, s 6 prohibits violent re-entry. An offence under this section is committed only if the tenant or some other person is present at the time of re-entry.

Tenants

A landlord's right to get property back from a residential tenant can normally only be enforced through the courts.

A landlord seeking possession from:

In either case, the tenant is not required to leave the property until the notice expires and even then may not be evicted without an order of the court.

Anti-social behaviour

A court may make an ASBO in respect of a person aged 10 or over if both of the following tests are satisfied:

ASBOs are made for a minimum period of two years and can be in an open-ended ‘until further order’ format.

A court may grant an injunction if the defendant has engaged, or threatens to engage, in housing-related conduct capable of causing a nuisance or annoyance.

‘Housing-related’ means directly or indirectly relating to or affecting the housing management functions of a relevant landlord.

Injunctions under the breach of tenancy section can only be sought against a tenant, but this includes conduct that a tenant has ‘allowed, incited or encouraged’ to take place.