The Practical Lawyer

Landlord and tenant – residential

Service charges – company structure

One way of avoiding problems with service charges (in particular, being bogged down in the consultation procedures) is to use a corporate structure. If there are existing lessees who over-use the provisions of LTA 1985, then a majority might support a move to a corporate structure. Typically, this will happen where the lessees manage the block themselves (usually with a managing agent). In that situation it may be preferable to run the financial aspects of block management through a company, rather than in accordance with the terms of the lease. In simple terms there is virtually no defence to a claim for a debt owed pursuant to a company’s articles of association, and you can neatly side-step s18-30 LTA 1985. But:

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Service charges – VAT on staff costs?

The Upper Tribunal has recently summarised the rules on when VAT should be charged on staff costs incurred as part of the service charge. In summary, if L employs staff directly, and passes the cost onto Ts through the service charge, then no VAT is payable on the staff salaries. But, if similar staff are employed by a managing agent, who then invoices L for those services, VAT is payable on the salaries and the cost may be passed onto Ts through the service charge. Thus, using a managing agent who employs staff can significantly increase the cost of the service charge. See Ingram v Church Commissioners [2015] UKUT 0495 (LC) (access free at


Wales – Rent Smart

As a further indicator of the way in which the laws in Wales are evolving differently from those in England, Wales is now introducing a system of compulsory registration and licensing for the domestic private rented sector.

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Section 21 – retaliation evictions

New provisions protect Ts from retaliatory evictions, resulting from them complaining about the condition of the premises. In essence, L will not be able to serve an s21 notice to obtain possession if T has complained about the condition of the premises or the common parts, if L (a) did not respond within 14 days, or (b) provided an inadequate response, or (c) responded by serving an s21 notice.

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Section 21 – new notice

Previously, there was much case law on errors in the drafting of s21 notices. Now, since 1 October 2015, there is a prescribed form that must be used.

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Smoke – alarms

There has been considerable confusion over the introduction of the new rules on compulsory smoke alarms and carbon monoxide detectors. In early September 2015, the HL refused to pass the Regs, but it now seems that they have gone ahead and been introduced. In essence, they apply to Ls of all residential rental properties (subject to a small number of exemptions – such as licensed houses in multiple occupation, and properties where there is a residential L). The requirements are:

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Energy efficiency – timetable

Minimum energy efficiency standards are being introduced into the residential and commercial private sector. Key dates:

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Tenancy deposit – summary

Following the reforms introduced earlier in 2015, the current position with the Tenancy Deposit Scheme is:

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Residential – smoke alarms

From 1 October 2015 residential Ls must install smoke alarms. These need not be wired into the mains but can be battery operated. There must be an alarm on each floor of a rented property, with L checking that the alarm is working at the start of the letting (but there is no responsibility to keep checking throughout the tenancy – unless T tells L during the tenancy that the alarm is no longer working).

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L’s costs – service charge clause

Modern leases usually contain a provision allowing L to recover its costs in litigation or proceedings before the tribunal as part of the service charge. But, many older leases do not have such clear provisions. In that situation, you have to look at the wording of the service charge to see whether it can include L’s costs.

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