Property litigation weekly update 30 July 2020 -Trowers & Hamlins

This week we provide a snapshot of the latest Law Commission reports on residential leasehold and commonhold, a recent case preventing discrimination by lettings agents and residential landlords against those receiving benefits and the Court's temporary measures for an anticipated influx of residential possession proceedings. With the usual positive news and insight from our colleagues around the firm follows.

Law Commission reports on residential leasehold and commonhold

On 21 July, the Law Commission of England and Wales published their recommendations which they say will transform home ownerships for millions of people in England and Wales.

The reforms are laid out in three comprehensive reports and are expected to work together with Government changes. The reports provide a range of proposed options for reform and seek to make leaseholder rights easier and cheaper to exercise, reducing the complexity, cost and barriers that leaseholders currently face.

Changes include the reinvigoration of the commonhold regime and crucially the report draws attention to the fact that commonhold cannot compete with leasehold as it currently stands without significant changes from Government.

The reforms also attempt to simplify the process by which leaseholders can enfranchise their property and include the new right to extend the lease of a residential unit for a term of 990 years, replacing the current option of 90 years for flats or 50 years for houses. In addition, the report recommends that the 2 year ownership period required in order to enfranchise is removed meaning leaseholders would be able to enfranchise immediately following acquisition of the lease (if the proposals are enacted into legislation).

Most notably, the reports recommend banning the use of leasehold for most new houses – a practice which has come under much scrutiny over the years with Government having already suggested a ban will become law.

See below links to the Law Commission's reports. If you have any questions, a member of our Leasehold Enfranchisement team would be happy to give you a call.

Resuming residential possession proceedings after the current stay – action required!

A temporary Practice Direction has been introduced to deal with residential possession claims once the current stay on possession proceedings is lifted.

Detailed in Practice Direction 55C of the Civil Procedure Rules, the measures will come into force on 23 August 2020 and end on 28 March 2021.

For proceedings issued at Court before 3 August 2020 and which have been affected by the current stay, a party must file and serve a “reactivation notice”. This is a written notice which must:

confirm that the party filing and serving the notice wishes for the case to be listed, relisted, heard or referred to a Judge; and
set out any knowledge that party has as to the effect the Coronavirus pandemic has had on the Defendant and their dependants.
If no reactivation notice has been filed and served by 4pm on 29 January 2021, the claim will be automatically stayed.

Where case management directions have been made, a party filing and serving a reactivation notice must also file with it:

a.) a copy of the last directions order, together with new dates for compliance; and

b.) a draft order setting out any additional or alternative directions, including a proposed new hearing date; or a statement in writing that no new directions are required and, if applicable, that any existing hearing date can be met.

The party filing must also confirm whether the matter could be heard via a video or audio link. The other side have a window of 14 days to respond if they do not agree with the terms proposed.

For new claims and stayed claims that were brought on or after 3 August 2020, the Claimant must bring to the hearing two copies of a notice confirming:

i.) that the Pre-Action protocol for Possession Claims by Social Landlords has been complied with (if applicable); and

ii.) set out the knowledge that party has as to the effect the Coronavirus pandemic has on the Defendant and their dependants.

The Claimant must also serve a copy of this notice on the Defendant no less than 14 days prior to the hearing.

Practice Direction 55C contains other additional requirements and it is important that all requirements are met in order to progress a claim for possession of residential property.

Case law update - "No DSS" letting bans ruled unlawful

Until recently, all discrimination claims brought under the Equality Act 2010 against letting agents advertising properties with a ban on applicants in receipt of benefits have settled out of court.

The case in question was heard by District Judge Mark in the County Court at York. The Claimant was a single mother with a disability. She was looking for a new tenancy and therefore contacted the Defendant letting agency. In response, she received an email stating that the agency had a policy of not accepting tenants in receipt of housing –related benefit.

The Claimant brought a claim for sex and disability discrimination under Sections 19 and 29 of the Equality Act 2010, seeking a declaration in the County Court. Section 19 concerns indirect discrimination by one person against another whilst Section 29 addresses discrimination by a person concerned with the provision of a service to the public or a section of the public.

District Judge Mark made a declaration that "The Defendant's former policy of rejecting tenancy applicants because the applicant is in receipt of housing benefit was unlawfully indirectly discriminatory on the grounds of sex and disability contrary to Sections 19 and 29 of the Equality Act 2010".

The District Judge's reasoning was that a "No DSS" policy puts women at a particular disadvantage. 53.1% of female, single, adult households renting privately claim housing benefit compared to 34% of male, single, adult households. When households with couples are included, 18.8% of women renting privately claim housing benefit compared to 12.4% of men. This therefore means that women are 1.5 times more likely than men to rely on housing benefit and therefore to be excluded by a "No DSS" policy.

In relation to disability, a "No DSS" policy puts those who are disabled at a particular disadvantage. 44.6% of households who claim Disability Living Allowance or Severe Disablement Allowance claim housing benefit compared to 15.1% of households who do not claim these benefits. This means that disabled households are almost three times as likely to rely on housing benefit and thus be excluded by a "No DSS" policy as opposed to those in non disabled households.

Therefore, landlords and letting agents who continue to refuse to rent to those in receipt of Housing Benefit/Universal Credit are likely to face similar legal action. It may be that some landlords can rely on a defence that their actions are "a proportionate means of achieving a legitimate aim" in that they have mortgage agreements, a condition of which is not letting properties to housing benefit tenants. However, most bigger lenders have now changed their policies on this. Landlords will also face the related issue that Universal Credit is paid in arrears which may cause difficulties for those landlords who rely on these payments to meet their own monthly mortgage repayments.

Insight from around the firm:

Positive news:

The conservation charity, Rewilding Britain, aims to re-wild 300,000 acres of land in the UK in a bid to boost biodiversity and tackle climate change.
Two women have broken the world record for the fastest time tandem biking around-the-world. Ms Dixon and Ms Marsden completed the task in just 263 days, beating the previous record of 281 days. The pair left Oxford last June, arriving home in March, cycling 18,263 miles through 25 countries.
Wild bison are to be re-introduced into the UK for the first time in over 6,000 years. A small herd of the endangered species are set to be released into the Kent woodland in spring 2022 in an effort to re-introduce lost species into UK countryside and aid conservation.