Court ruling will impact on buy to let

An Appeal Court ruling means buy to let landlords can no longer rely on property valuations carried out on behalf of mortgage lenders. Emma Dancer looks at the implications.

Many landlords buying new property rely on the valuation carried out by the surveyor acting on behalf of the mortgage lender.

Until now they have been reasonably secure in doing so because the law accepted that these surveyors owed a duty of care to the purchaser. It meant that if the valuation was way out, the purchaser would have a legal comeback against the surveyor.

This principle was established in the case if Smith v Bush in 1990. The reasoning then was that the purchaser was effectively paying for the valuation and so was entitled to rely on it, even though it was being carried out primarily for the lender.

However, the Court of Appeal has now ruled that this principle only applies when the purchaser is an ordinary household buying to live in. It doesn't apply to buy to let landlords who buy to rent out a property.

The issue arose when landlord Emmet Scullion bought a property he wished to let out. The mortgage lender engaged a firm of surveyors who provided a report on the value of the property and the monthly rent that could be achieved.

The landlord relied on these figures but they turned out to be over optimistic. The rental value didn't even meet the cost of the mortgage repayments.

The landlord sold the property four years later at a loss and sought damages from the surveyors claiming they had been negligent.

The case went all the way to the Court of Appeal which ruled against the landlord. It held that people who bought properties to let were likely to be richer and more commercially astute than owner occupiers, and would be able to afford an independent valuation.

They could not therefore bring a negligence claim in the same way as an ordinary householder.

The court also held that a valuer in these circumstances would expect a prudent buy to let purchaser to obtain his own advice about issues such as how easy it would be to rent out the property, the rent that could be achieved and other terms or fees that would need to be agreed.

The ruling may seem a little harsh but means landlords will need to commission their own surveys if they want to be legally protected in the future.

For more information on this please contact Emma Dancer by emailing edancer@andersonssolicitors.co.uk.

Breaking point - landlord retains thousands in rent

A commercial landlord has retained thousands of pounds in rent following a dispute about when do vacant premises become legally vacant. Peter Sutherland explains why other landlords are studying the case so carefully.

The number of legal disputes about break clauses has soared during the recession and with tens of thousands of pounds at stake, it's not hard to see why.

In a recent case, commercial landlord Ibrend Estates BV managed to win an extra six months rent event though its tenant NYK Logistics had emptied the premises and moved out by the due date.

The dispute centred on when do vacant premises actually become vacant in legal terms.

NYK had rented a warehouse from Ibrend that had two break options.

The first date was for April 2009 and the second was for December 2009.

NYK decided to exercise the break clause on the April date. Ibrend drew up a schedule of dilapidation repairs that needed to be carried out in accordance with the lease.

A site inspection was carried out two days before the termination date. The warehouse was then empty and all the tenant's fixtures and fittings had been removed. NYK agreed that a few more minor repairs were needed and arranged for the work to be done.

However, its contractors didn't complete the repairs until six days after the termination date. Ibrend said this meant the break clause had not been properly exercised and demanded rent until the next termination date in December.

NYK disputed this but the court found in favor of the landlord.

NYK appealed on the basis that it was unjust to to say a failure to complete a few minor repairs on time amounted to a failure to give up vacant possession. It also submitted that it had not tried to exclude the landlord from the premises after the break clause termination date.

The Court of Appeal, however, upheld the original decision. It held that the fact that the tenant had not tried to exclude the landlord from the premises was irrelevant. What mattered was that the tenant had failed to satisfy the conditions of the break clause. These demanded that the tenant had to give up possession to the landlord by midnight on the designated date and not a minute later.

Landlord and tenants disputes over technical legal points have increased over the last few years and with the economic climate remaining difficult, that trend is likely to continue over the next few years.

For more information please email Peter Sutherland psutherland@andersonssolicitors.co.uk.

Be wary when buying legal services

The Legal Ombudsman has urged people to be wary of getting legal services from unregulated and often unqualified providers. The call has been backed by Andersons Solicitors in Nottingham who say the problem has got much worse over the last few years. Chief ombudsman Adam Sampson revealed that he has received 40,000 complaints about law practitioners since his office was set up six months ago. His team has not been able to deal with many of the complaints because they are against people who are not qualified solicitors. He said: "We've seen lots of cases where people have had deficient wills where we haven't been able to help. This problem will only increase as the legal services market reforms, and Internet-based provision and commoditisation of legal services increases." Alex Brooke-Smith of Andersons Solicitors said problems arose because there is no regulation covering some legal services such as conveyancing or divorce. "It means anyone can set up in practice offering these services even though they may may not be properly qualified or have any insurance. Consumers may be attracted by cut price deals but then they may have no form of redress if things go wrong." Solicitors, by contract, are strictly regulated which means they can be held accountable if they make mistakes. The legal services market is to be opened up to more providers in October. Alex Brooke-Smith said: "It will enable a wide range of businesses to enter the market and could further blur the distinction between regulated and unregulated providers. "Many of the new providers will be completely legitimate but some may not, leading to more complaints to the legal ombudsman. People will need to think very carefully before making life affecting decision based on legal advice from providers who may not be qualified or insured". For more information please contact Alex Brooke-Smith on 0115 947 0641 or email abrooke-smith@andersonssolicitors.co.uk or visit www.andersonssolicitors.co.uk

Nottingham lawyers welcome improved legal support for families

Reaction to Government announcement on Childhood and Families Task Force.

Family lawyers in Nottingham have welcomed the announcement that the Government is setting up a Childhood and families Task Force to provide a wide range of support for children, parents and grandparents.

Sarah Perkins of Andersons Solicitors in Nottingham says the announcement covered several key areas that could help to improve family life including shared parental leave, extending the right to request working and greater support for disabled children.

"It is particularly encouraging to see that the Task Force will examine ways to provide better protection for children in the event of a family breakdown.

"It is often children who suffer the most as their estranged parents become entrenched in a bitter separation. There is already a review of family law underway which is looking at ways to use mediation between couples as a way of reducing the trauma both for parents and for their children.

"It's encouraging that the Task Force will also look at ways to provide greater contact rights to non-resident parents and for grandparents too.

"As the law stands at the moment, grandparents have no automatic right to have contact with their grandchildren.

"This means they can face a difficult battle if a family breakdown means they are denied access by a son or daughter-in-law.

"The Task Force will hopefully address this. There is already evidence that the courts are increasingly willing to recognise the valuable role that grandparents can play in their grandchildren's lives.

"In a major case, the Supreme Court recently ruled that a child would be better off living with his grandmother rather than be returned to his biological father. In another separate case, a grandmother won the right to be paid the full rate as her granddaughter's carer.

"These were important landmarks in recognising the role of grandparents and hopefully this new Task Force will improve the situation further, to the benefit of children, parents and grandparents.

For more information on this or any aspect of family law please contact Sarah Perkins on 0115 947 0641.

Neighbour disputes can lead to financial disaster

A restaurant owner has been presented with a bill for £160,000 following a dispute with his neighbour over a small patch of lawn. Marcus Brown says the case shows how seemingly trivial disagreements can snowball out of all proportion had have devastating effects.

There's something about neighbour disputes that will make many people dig their heels in and fight to the bitter end to prove they are right - even if it leads to financial disaster.

It's hard to see how someone could pursue a case all the way to the Court of Appeal when the only thing a stake was a tony area of lawn. Had the restaurant owner won he would have gained an extra few yards of garden. Instead he lost and was ordered to pay costs leaving him with a massive bill.

Such cases are not uncommon, prompting Lord Justice Mummery to say recently that "there are too many calamitous neighbour disputes in the courts".

It doesn't have to be that way. If people can overcome the rest mist of emotion that sometimes envelopes them in these situations they would see that it's usually much better to talk than to run to the courts.

The most common dispute arise over things such as boundaries, shared amenities and access to carry out repairs. The law has something to say on all of them but it's probably best to tread lightly at first so any disagreement can be resolved amicably.

Make sure you always check the legal position before you dig your heels in. For example, you may not want your neighbour to come on to your land to carry out repairs but he may be entitled to do so if a legal right of entry is specified in the property's legal documents. Even if there is no automatic entitlement he can still apply to the county court for an access order allowing him to enter your land.

Boundary disputes can often be resolved simply by referring to the title of lease documents. If they are not clear then it may be necessary to call in a solicitor or surveyor who should be able to help you reach a sensible solution.

The same applies to shared amenities such as drains and pipes, driveways and roofs. Your right to use them and your responsibility to maintain them should be laid down in the property's legal documents. The situation may be more complicated if a person's right to use a facility such as a chimney, for example, to erect an aerial is not written down but has become established though long and continuous use. If that use has not been challenged over the years then it could become an entitlement.

The best way to deal with neighbour disputes is to prevent them happening in the first place. You don't have to love your neighbour but it does help to at least talk to him in a polite and civilised way.

If that doesn't work then there are still things you can do before heading for the courts.

Lord Justice Mummery urged people to use mediation with the help of specialists such as solicitors and surveyors. This has several advantages.

It will be far cheaper than court action and less stressful. Trained mediators can help bring both parties together to negotiate a settlement that is fair to both sides. This is particularly important in neighbour disputes because you may go on living next door to each other for several years. It helps to maintain a civilised relationship and avoid disputes in future.

For more information please contact Marcus Brown on 0115 947 0641 or email mbrown@andersonssolicitors.co.uk

Businesses facing ‘a blizzard of fresh red tape and taxes’

Red tape has long been a thorn in the side of small businesses and despite numerous efforts to reduce the burden, somehow it just seems to keep getting worse.

The much vaunted Legislative and Regulatory Reform Act 2006 was supposed to make life easier for businesses and save £12bn over ten years. There have been some improvements no doubt, but overall, the general impression is that the burden is increasing - and it seems there are even greater problems just around the corner.

New research carried out by the British Chamber of Commerce (BCC) claims that employment regulations will cost UK businesses £25.6bn over the next four years.

The BCC refers to a "blizzard of fresh red tape and taxes" coming into effect between April this year and April 2014. Some of the more costly new laws include the Equality Bill which the BCC believes will have a one-off cost to business of £190m.

There is also the Agency Workers Directive which will create an annual recurring cost of £1.5bn from 2011, and the 2012 Pensions Reform which will create an annual cost of £4.8bn.

The BCC fears the cost of complying with the new regulations could deter companies who want to create jobs. That fear is given extra urgency because of research by the Federation of Small Businesses (FSB) which shows that many firms are choosing not to expand because of concerns over complex regulations.

A survey of its members showed 27% of those who wanted to expand did not go ahead because they are afraid of tackling the regulations involved. The same survey revealed that half of businesses planning to downsize or close said their decision was strongly influenced by regulatory burdens.

The FSB has also called on the Government to put a freeze on all new regulations - a move it estimates would help create 258,000 jobs and prevent a further 55,000 from being lost.

The Government has given no indication that it is prepared to introduce a freeze although it says it has saved businesses £3bn a year through its programme to simplify regulations and remove unnecessary paperwork.

In spite of this, small businesses are spending a total of £12bn a year on complying with various regulations, according to research by the Forum of Private Business (FPB).

A recent FPB survey of its members shows that employers in small to medium sized firms are spending an average of 37 hours a month on compliance.

Employment law provides the greatest challenge and costs small businesses £2.4bn a year dealing with issues such as dismissals and redundancy, discipline, absence controls and management, parental leave and holidays.

Health and safety administration costs £1.2bn and small firms also find themselves bogged down in tax administration, building and property regulations, and equality and diversity.

The costs seem enormous when quoted in this way and it's not surprising that many firms will try to save money by dealing with these issues in-house, or even by ignoring them and hoping they go away. However, it is usually safer and more cost-effective to get good legal advice to ensure that compliance matters are dealt with quickly and correctly.

This can save money in the long term and reduce the risk of creating problems unnecessarily - particularly in the area of employment law where failure to follow the correct procedures can lead to costly tribunal claims.

For more information contact Peter Sutherland on 0115 988 6714.

Leading law firm awarded membership of Qualitysolicitors.com

Leading local firm, Andersons Solicitors, has been awarded membership of an exclusive nationwide alliance of high quality solicitor firms, QualitySolicitors.com.

QualitySolicitors.com is the UK’s first ever truly national legal brand and promotes the use of real solicitor firms over “call-centre law” soon to be provided by supermarkets and banks. It has initially selected just one hundred of the best solicitor firms nationwide to form the founder membership and has chosen Andersons Solicitors as one of those recognised firms.

QualitySolicitors.com will match users of its free service to the best high quality solicitor for their particular issue. The QualitySolicitors.com innovative website, www.QualitySolicitors.com aims to address all possible legal needs by including extensive legal resources, DIY documents, online legal advice as well as referring users to the telephone legal advice service from consumer organisation, “Which?” Members of the public wishing to use a solicitor will be directed by QualitySolicitors.com’s legally trained case handlers to the best matching solicitor from within the organisation’s members firms.

Andersons Solicitor’s Managing Partner Andrew Kelly, said, “we are delighted that our high quality of service has been recognised by being accepted into this exclusive organisation. We have always prided ourselves on putting our clients first and this is recognition of that”.

QualitySolicitors.com Chief Executive and Barrister, Craig Holt, told us, “I am extremely pleased to welcome Andersons Solicitors into our alliance. For too long members of the public have had to face a lottery when choosing a solicitor. All our member firms are specifically selected for their exceptional quality and are then subject to continual public feedback, with any firm not meeting our high standards forced to leave the organisation”.

QualitySolicitors.com can be found at www.qualitysolicitors.com. Chief Executive, Craig Holt, can be contacted on 0845 520 40 88.

Andrew Kelly is Managing Partner at Andersons Solicitors he can be contacted on 0115 988 6712 or by emailing: akelly@andersonssolicitors.co.uk