Category: Uncategorized

Overview of the Bill

The most noticeable proposals of the Bill are as follows:

1. The abolition of Section 21 evictions.
2. The end of Assured Shorthold Tenancies (ASTs).
3. Changes in rent increases.
4. The establishment of a new private rental sector Landlord Ombudsman.
5. The right for tenants to request permission to keep a pet.
6. The establishment of a Private Rented Sector Database

 

The Abolition of Section 21 evictions

The abolition of the section 21 ‘no-fault’ eviction was widely expected and is designed to provide greater security to tenants, allowing them to reside in their properties without fear of eviction, except in a few circumstances, namely:

Rent Arrears

Ground 8 of the Housing Act 1988 (the ‘1988 Act’) is to be amended so that:

• if rent is payable weekly/ fortnightly, at least thirteen weeks’ rent must be outstanding (up from eight weeks), and
• if rent is payable monthly, at least three months’ rent must be outstanding (up from two months).

The notice period that landlords must give tenants will increase from two to four weeks. After this period, tenants must either vacate the property, or landlords may start court proceedings to regain possession.

Sale of Property

A new statutory provision enables a landlord to regain possession if they intend to sell their property.  This is a mandatory ground and therefore if evidenced, the court must award possession.  Notice of four months is required, but possession cannot be obtained until after the first 12 months of the tenancy.  Once possession has been recovered, landlords are unable to re-let their property for a period of 12 months from the date on which the notice period expires.

Occupation of Property

Possession can be obtained if the landlord or their family intend to occupy the property as their only or principal home. Possession cannot be obtained during the first 12 months of the tenancy and landlords are prohibited from re-letting their property for a period of 12 months from the date on which the notice period expires.  Notice of four months must be given to tenants.

The s.21 procedure will remain effective until the Bill comes into force.  The transition provisions of the Bill confirm that if a valid s.21 notice is served prior to the commencement date of the Bill, landlords will be able to bring proceedings to request an order for possession before the date that is the earlier of (i) six months from the service of the notice, or (ii) three months from the commencement date of the Bill.

The end of ASTs

ASTs are to be abolished and replaced by periodic tenancies with a rental period not exceeding one month.  There are to be no transitional provisions, but rather a single date when all private tenancies will automatically revert to periodic assured tenancies, save for tenancies which are the subject of existing possession proceedings.

Tenants will be entitled to terminate their periodic tenancy at any time by giving two months’ notice.  To mitigate losses arising from tenants terminating their tenancy early, landlords could seek to agree with agents that any fees paid will be refunded if the tenant does not stay in occupation for at least 6 months.

Rent increases

Landlords are entitled to serve a statutory notice to increase rent not more than once in each calendar year, with the increased rent taking effect two months after the date of service of the notice.

Tenants are entitled to dispute the increase in rent if they consider it to be more than the market rate for the property. Such dispute shall be referred to and determined by the First Tier Tribunal (FTT).  The FTT’s determined rent can only be the lower of (i) the market rent for the property, or (ii) the landlord’s proposed rent.  The FTT no longer has the power to determine a rent that is higher than the landlord’s proposed rent.

The rent determined by the FTT will take effect from the date of determination or such other date as the FTT directs, but not later than two months from the date of determination by the FTT.

By removing the risk of the FTT determining that the open market rent is higher than the landlords’ proposed rent, the Bill may incentivise tenants to challenge even the fairest of rent increases, as the new rent will only be payable once the FTT has made its determination, which could take several weeks, and will in any case be either the landlord’s proposed rent or a lesser amount.

All existing rent review clauses that are not in line with the Bill will be of no effect.

Establishment of a new private rental sector Landlord Ombudsman

The creation of an Ombudsman is designed to offer tenants greater access to redress services through which they can challenge the conduct of their landlords, particularly to issues relating to property standards, repairs, maintenance and poor landlord practices.  The Ombudsman shall have the power to compel landlords to take remedial action, issue apologies, provide information, and/or pay compensation of up to £25,000 and their determination shall be binding on all parties.

All landlords with assured and/or regulated tenancies will be required to join the Ombudsmen service, regardless of whether an agent has been appointed to manage the property on their behalf. The Ombudsman service will be introduced shortly after the Bill receives Royal Assent and it is expected that landlords will contribute a fee towards its operating costs. A failure to join the Ombudsmen service will lead to possible financial and criminal sanctions.

Whilst the introduction of the Ombudsman will benefit tenants, it is an additional cost for landlords which, coupled with the introduction of the Private Sector Rental Database (see section 6 below) and the increase in the number of local authorities requiring landlords to obtain licences to rent, will add further economic uncertainty.

Right to keep a pet in a rental property

The Bill will give tenants right to request a pet, which landlords must consider and cannot unreasonably refuse.  The Bill provides two examples of circumstances in which it would be reasonable for a landlord to refuse consent, both of which relate to situations where granting consent would place them in breach of an agreement with a superior landlord.  Such examples are not exhaustive.

Landlords will be advised to judge requests on a case-by-case basis, and where there is disagreement, a tenant may escalate their complaint to the Ombudsman.

As a condition for granting consent to keep a pet at the property, a landlord is entitled to demand that either (a) the tenant has insurance to cover the risk of pet damage against the property, or (b) the tenant contributes towards the landlord’s costs of having insurance that covers against the risk of pet damage. The latter option appears to be most sensible to ensure that satisfactory cover is in place for the duration of the tenant’s occupation of the property.

Private Sector Rental Database

All landlords of assured and regulated tenancies will be required to register themselves and their properties to a new private rented sector database.  For landlords, this will provide a centralised database where they can access guidance to better understand their obligations.

Tenant’s will benefit from being able to access key information prior to agreeing a tenancy.  It is likely that the database will include gas safety certificates, EPCs, electrical installation certificates, as well as any penalties, banning orders or similar adverse orders made against the landlord.

Landlords will be required to pay to register on the database but no indication has been given as to the anticipated cost.  If a landlord fails to register their property and/or is in breach of the requirement to keep active entries up to date, they are not permitted to market or advertise their property and a court is not permitted to make an order for possession. Local housing authorities will have the power to fine landlords between £7,000 and £40,000 if they are satisfied beyond reasonable doubt that a landlord has breached a requirement of the act or knowingly or recklessly provided false information to the database operator.

 

Landlords, tenants and letting agents are advised to follow the Bill’s progression closely.  If enacted in its current form or thereabouts it will have far reaching consequences.  It is important to understand your rights and obligations once the Bill comes into force, but also, it may be prudent to consider what steps ought to be taken now, in anticipation of that date, in relation to any existing tenancies to protect your position.

The Government is clearly keen to push the Bill through and, as mentioned above it seems likely that it will become law by Summer 2025.  It remains to be seen if the (limited) protections built into the Bill will be sufficient to keep a nervous landlord in the market for much longer.

If you have any queries regarding this note or require further information about anything covered in this briefing, do get in touch with Paul Twomey, Henry Braithwaite or your usual contact at the firm on +44 (0)20 7526 6000.

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances. 

The government’s Employment Rights Bill, described by prime minister Sir Keir Starmer yesterday as “the biggest upgrade of workers’ rights in a generation”, has been released today. There are a number of regulations proposed intended to help employees, the most significant of which are:

 

• Unfair dismissal becoming a right from the first day of employment (a protection which is currently only achieved after two years’ continuous service). There will still likely be a degree of flexibility for employers to assess new employees’ suitability for a role with a statutory probationary period in which it is suggested employees could be fairly dismissed. It now seems like the length of this probationary period could be up to nine months (up from the six previously mentioned) but there will now be a period of consultation with businesses on this and how this probationary period will work and what could constitute a fair dismissal.

 

• Employees will be entitled to receive statutory sick pay from the first day of employment (currently, they are only entitled to it from their fourth day of sickness).

 

• “Exploitative” zero-hours contracts will be banned. Preventing the ‘exploitative’ nature of these appears to be addressed through rights including to guaranteed hours, to reasonable notice for shifts and to payment for cancelled, moved or curtailed shifts.

 

• Flexible working rights will be strengthened and the default position, where this is practical, and requests will seemingly harder for employers to refuse. There is however no increased penalty against employers for any breaches, which had been a possibility.

 

• Pregnant women and new mothers will receive further protections from dismissal while they are pregnant, on maternity leave, or on return to work within the first six months.

 

• Enhanced rights to paternity leave, unpaid parental leave and bereavement leave (widening the scope from its current form ‘parental bereavement leave’).

 

• Almost stopping altogether the use of the controversial practice of dismissing and re-engaging employees on new terms (i.e. ‘fire and rehire’), other than in limited and exceptional circumstances. A new Statutory Code (set in motion by the former government) setting out employers’ responsibilities when carrying out this practice was released in July. Labour have deemed the Code inadequate and want to stop the practice entirely.

 

There has been a great degree of concern from businesses that this raft of new and enhanced rights will deter businesses from taking on new hires. They say that economic growth, which is the key driver behind these reforms, will in fact be stymied by this. While they may not necessarily discourage new hires, and employees will feel emboldened to take up and change roles more frequently if they achieve unfair dismissal protection sooner (positive for economic growth), the more likely adverse impact that will be felt by small to medium size businesses from these reforms is a financial one. This could particularly come from the right to sick pay from day one and banning of zero hours contracts. Small to medium sized businesses, whose requirements for a role often change and need to remain flexible (which zero hours contracts give them), lose that degree of flexibility.

 

The Bill will not be passed until summer 2025, and many of the new rights (including unfair dismissal from day one) is not expected to be implemented until autumn 2026 (according to the BBC), so there are no immediate changes coming into force. There will also be a period of consultation for the finer details.

 

Other employment law pledges that have been made by Labour during the election campaign, in their manifesto, or in the July King’s Speech, which are not part of this Bill include the right to switch off and a ‘simplified’ status of worker (as part of a two-tier framework self-employed). These are not included in this Bill and will be implemented in the future, as set out in the ‘Next Steps’ document published by the government.

 

It is a busy time in employment law reform – new laws on employers’ obligations to prevent sexual harassment come into effect shortly on 26 October 2024 and new legislation on tipping came into force on 1 October 2024.

 

If you require further information about anything covered in this briefing, please contact Michael McDonnell, William Gubbins or your usual contact at the firm on +44 (0)20 7526 6000.

 

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances

Following the recent release of Labour’s possible plans for compressed four-day working weeks (which we covered in a previous post), Labour’s significant plans for employment law reform have had further light shed on them by business secretary Jonathan Reynolds in an interview with The Times published late yesterday evening. Reynolds endorsed Labour’s upcoming Employment Rights Bill and defended their plans to enhance flexible working laws, pledging to end the “culture of presenteeism” in offices which will, according to Reynolds, boost productivity in the workplace.

 

Employees have had the right to request flexible working for years, and from their first day of employment since 6 April 2024, but the government would like to go further to ensure that flexible working becomes a default right for employees from the first day in their job. There is also a proposed right to switch off, where businesses will be compelled to set out their normal working hours and allow staff to be uncontactable after a specified time.

 

While the government have said that employers will only be required to accommodate any flexible working requests so far as they are reasonably practicable, what this exactly means with regards to the specific changes that will be made to the legislation is unclear at present.

 

Some campaigners in favour of flexible working reform have argued that “reasonably practicable” is unlikely to be enough to prevent employers from refusing flexible requests on the grounds of business needs. However, there will be concern to employers if there is an introduction of a presumption in favour of a flexible working request or a narrowing of the grounds on which an employer can refuse a request and an increase in the powers of the tribunal when reviewing those decisions.

 

Reynolds accepted that there was a balance to be struck both in terms of the right to switch off and how employers will be required to accommodate requests for flexible working, such as working from home or a four-day working week. The government is adamant that their proposed rights and Employment Rights Bill will improve the work-life balance of employees and consequently encourage more resilient, loyal and productive staff. Yet, there are the competing concerns of employers as to how productivity, client expectations and operational costs might be impacted.

 

Therefore, when Labour present the framework of their Employment Rights Bill next month, which will meet the 100-day deadline they committed themselves to, they will have to fully and comprehensively consult with businesses to ensure that the resulting legislation achieves that balance that Reynolds mentions. He said that “there is genuinely nothing to worry about for any business in this area”. Time will reveal whether that is the case.

 

If you require further information about anything covered in this briefing, please contact William Gubbins, Michael McDonnell or your usual contact at the firm on +44 (0)20 7526 6000.

 This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances. 

The contents of any plans for legislative change are just that – speculation – at this stage and will likely remain that way until October 2024 and the release of the government’s draft Employment Rights Bill, which will then be consulted on. This Bill should cover a number of Labour’s ‘Make Work Pay’ employment law proposals, some of which we covered in our article in June earlier this year.

 

Labour’s four-day working week plans appear to comprise of compressing contracted working hours into fewer working days, i.e. for an employee who works 8 hours a day for five days (40 hours a week), they could then compress their hours by working 10 hours a day for four days. Employees would still receive the same full pay.

 

This is nothing new and employees have been able to request such compressed hours for years under the statutory flexible working regime, and which employees have been able to do from the first day of employment since earlier this year (6 April 2024). The right to request flexible working consists of an employee making a written request, the employer then having two months to consider the request, consult with the employee, and inform them of the outcome, dealing with the request in a reasonable manner. If the employer refuses the request, they must do so for at least one of eight prescribed reasons. If the employee disagrees, they can make a tribunal claim. Employees are limited to two flexible working requests in a 12 month period.

 

The concept of four-day working weeks is also not unheard of. These have been trialled by a number of firms and companies over the past two years, with mixed results and employers and employees split as to the benefits and drawbacks.

 

It therefore remains to be seen what the government’s plans are in respect of compressed hours working and how the law in this area may be changed or strengthened. Currently, the possible compensation that the tribunal can award in the event of a breach is low (8 weeks’ pay), so this may be raised. Alternatively (or additionally), the tribunal’s ability to scrutinise the employer’s decisions may be enhanced. Currently, a tribunal cannot question commercial or business decisions for a request being refused, nor can they form their own view as to whether the request should have been granted or not. Their review is limited strictly to the employer’s following of the statutory procedure only, so their remit may be extended in this regard.

 

For businesses and employees, there is no change at this stage. It is very much a case of watch this space for October 2024 and the months of consultation that follow.

If you require further information about anything covered in this briefing, please contact William Gubbins or your usual contact at the firm on +44 (0)20 7526 6000.

 

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances. 

Our previous briefing [Labour plan to make work pay. What does this mean?] covered some of Labour’s intended employment law proposals and what the consequences of a General Election 2024 Labour victory may be for individuals and businesses alike. The Conservatives, Reform UK and the Liberal Democrats are the other parties averaging over 10% in the polls. What do they propose for employment law reform?

 

Please note that this piece is not exhaustive in terms of covering each of these parties’ proposals in this area.

 

Conservatives

 

The Conservative Party do not propose changes as  radical as those intended by Labour in this area and instead would continue with current government plans and draft legislation in this area should they win the General Election. Of note, their manifesto includes:

• Overhauling the fit note process. While not new, with reforms having been suggested earlier this year to “change the sick note culture”, responsibility for issuing fit notes would shift from GPs to specialist work and health professionals. This has the aim of helping people stay in or return to work.
• Amending the Equality Act 2010. The protected characteristic of sex would be clarified to mean an individual’s biological sex. This has the aim of protecting women and girls by ensuring single sex services and spaces can be provided, with examples of in healthcare and sports settings given.
• Continuing to implement the Minimum Service Levels legislation. This came into force last year, intended to strike a balance between the right to strike but also enabling regulations providing for minimum service levels of public services (eg education, health, transport etc) to be introduced.
• Cutting employee National insurance to 6% by April 2027. This would be a continuation of recent cuts put in place by the government, with the long-term goal of abolishing NI altogether.

 

Reform UK

 

Reform UK’s ‘Our Contract with You’ (the equivalent of their manifesto) is briefer than both Labour and the Conservative’s manifestos and so lacks detail on their proposals for employment law, but their plans include:

• Raising income tax starting threshold to £20,000 per year. This would have the aim of “getting people off benefits”, relieving up to 7 million people from the tax, and saving workers about £1,500 per year. The basic rate would stay at 20% and higher rate starting threshold at £70,000.
• Cutting Corporation Tax. Reform want to free small and medium sized businesses from the tax and would lift the minimum profit threshold to £100,000. They would also cut the tax rate from 25% to 20%, ultimately to 15% in year 3.
• Abolishing IR35. Reform want to support sole traders and the self-employed, who they say work longer and take more risks.
• Scrapping existing laws. No specific laws are referenced, but there is a general pledge to “Scrap thousands of laws that hold back British business and damage productivity, including employment laws. We must make it easier to hire and fire so that businesses can grow”.
• Scrapping EU Regulations. Reform propose to rescind the over 6,700 retained EU laws, citing employment as one of the areas in which they will do so.
• Replacing the Equality Act 2010. Reform propose to “replace” the “2010 Equalities Act” [sic], which they say requires discrimination by way of performing ‘positive action’ and getting rid of such rules that they say have lowered standards and reduced economic productivity. They do not elaborate on the proposed replacement.

 

Liberal Democrats

 

Like Labour, the Liberal Democrats’ manifesto has considerable employment law reform focus.

There is intention to match employment rights to the “age of the ‘gig economy’”, and enhance parental, disability, sickness, and carers’ rights by:

• Establishing a new dependent contractor status. This would sit between employees and the self-employed, with minimum earnings rights, sick and holiday pay. We currently have ‘worker’ status in that space, and so it would remain to be seen how this new status would tie in or differ there.
• Raising minimum wage for zero hours contracts. To compensate individuals on zero hours contracts for their uncertain fluctuating working hours, they would receive a 20% higher minimum wage at time of normal demand.
• Giving a right to request a fixed-hours contract. Zero hours and agency workers would have the right to request a fixed-hours contract after 12 months, to not be unreasonably refused.
• Shifting the burden of proof. In employment tribunals, proving (or disproving as the case may be) employment status would be on the employer, rather than the employee.
• Doubling Statutory Maternity and Shared Parental Pay. These would be paid at £350 a week.
• Increasing paternity leave pay. This would be increased to 90% of earnings, higher earners capped.
• Introducing ‘use it or lose it’ month. For father and partners, this would be an extra month on top of paternity leave paid at 90% of earnings.
• Requiring large employers to publish parental policies. ‘Large’ is not specified, but large employers would have to publish their parental leave and pay policies.
• Making day one parental rights. All parental pay and leave would become a day one right and include those self-employed.
• Increasing availability of statutory sick pay. Making more than one million workers earning less than £123 a week (mostly made up of women) eligible, and payment available from first day of sickness (rather than the fourth as it is currently).
• Introducing specialist disability employment support. Employer awareness of the ‘Access to Work’ scheme would be raised (and the application process sped up and simplified). ‘Adjustment passports’ would be introduced to record a disabled person’s adjustments and modifications, which would carry over with the individual to any new job, together with their Access to Work support.
• Introducing caring and care experience as protected characteristics under the Equality Act 2010. This would be to require employers to make reasonable adjustments for those with caring responsibilities to support those providing care, and to enhance the rights of those in or have been in care.

If you require further information about anything covered in this briefing, please contact Michael McDonnell, William Gubbins or your usual contact at the firm on +44 (0)20 7526 6000.

 

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances. 

With two weeks until the General Election and the polls favouring the Labour Party, Labour propose to ‘Make Work Pay’ and to ‘Deliver a New Deal for Working People’. But what do they intend to do and what does it mean individuals and businesses?

 

Labour’s manifesto sets out a number of areas in employment law that they propose to address should their lead in the polls translate to an election of a Labour government following election day on 4 July 2024. However, it is worth noting that this briefing is not exhaustive in terms of covering all of Labour’s proposals in this area.

 

End zero hours contracts

 

Labour’s view is that zero hours contracts offer “one-sided flexibility” (in favour of the business) and are exploitative. They propose to ban them (or at least those which are exploitative,) in place of a contract reflecting hours regularly worked, to offer security and predictability of hours for the individual. Such a move would reduce the flexibility according to demand that both employers and employees have previously enjoyed by working and engaging under such contracts. Employees’ costs to employers could also increase due to a more regular salary.

 

End ‘fire and rehire’

 

A controversial practice that earlier this year saw a statutory Code of Practice published for employers to follow. ‘Firing and rehiring’ is a process by which employers have sought to force through changes to employees’ terms and conditions; by terminating their employment and immediately offering a new contract on the changed terms. The Code offers protections to employees through consultation and considering alternative solutions. Labour claims the current Code to be “inadequate” and propose a strengthened version to end this practice.

Introduce a single status of worker

 

There are currently three different classifications of staff: employees, workers, and self-employed, with differences between each in terms of their legal status, rights and the protections they have, with employees enjoying the greater of those. Labour wants to simplify this framework to abolish employee status and have a worker status (under which those currently employees and workers would sit) and self-employed status. Labour accepts that this will require significant further consultation. It is unlikely that a ‘one size fits all’ for the new worker category, encompassing current employee rights such as holiday pay, sick pay and family leave, would be straightforward to roll out, given the flexible working regimes of those who are currently workers There are considerable questions around the taxation structure for this new classification of worker. This is one change which is potentially significant.

Unfair dismissal protection from day one

 

Currently an employee only acquires the basic right of protection against unfair dismissal after two years’ continuous service. This leaves employees in a somewhat vulnerable position during this time, with no recourse (in terms of unfair dismissal) against their employer if dismissed. One of Labour’s more eye-catching proposals is to remove the two-year period and give this protection against unfair dismissal from day one. This would increase the number of people with the right to bring an unfair dismissal claim (even more so with the new ‘worker’ status, above, in place). While this would place additional burdens on employers to follow fair and proper procedure when dismissing any individual, which employers have not been obliged to do for those in their first two years, it is a welcome development for individuals working as employees/workers having greater security in their role with a new employer.

 

Extend time limit for employment tribunal claims

 

Labour plans to generally overhaul and improve the employment tribunal service, but notably have said that they will increase the limitation period in which an employee may bring a claim in the employment tribunal from three to six months. The change is not so excessive that it would make defending a claim any more difficult or expensive than it currently is, and it would increase the time in which the parties can resolve a matter before recourse to the tribunal. However, it could still see an overall increase in tribunal claims being brought against employers and uncertainty hanging over employers for longer.

 

What do these changes mean for you?

 

In short, the proposals would grant more individuals greater rights, which could result in increased litigation and claims, and generally it would appear that the changes will increase costs and uncertainty for employers. However, in a positive for employers, their workforce may be strengthened by more individuals (particularly those currently self-employed) wishing to be afforded these greater worker protections and changing to worker status.

 

When would these changes come into effect?

 

Labour say that they will start to introduce legislation within 100 days of entering government, but don’t expect any of the changes to be in force by then. There is a significant amount of consultation to take place on some of their proposals. We often see employment law issues fall down the list of a government’s policy priorities and it remains to be seen how a newly formed government prioritises these matters together with their other manifesto pledges.

 

However, all indications are that these proposals are a fundamental part of Labour’s manifesto pledges and we can expect fairly prompt action.  Furthermore, given the inclusion of these proposals in Labour’s manifesto, the House of Lords would not vote down legislation which has its roots in the manifesto (known as the Salisbury convention), which would speed up the process of passing legislation through the House.

 

While some of the changes could therefore be in place fairly quickly, they are worth bearing in mind at this stage and, whatever the outcome, there will be further changes to be aware of going forward.

 

We will release a further piece to cover the employment law proposals raised by the other major parties in this election.

If you require further information about anything covered in this briefing, please contact Michael McDonnell, William Gubbins or your usual contact at the firm on +44 (0)20 7526 6000.

 

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances. 

The third and final tranche of provisions of the Charities Act 2022 (the ‘2022 Act’) came into force on 07 March 2024.  Designed to reduce unnecessary regulation on charities in England and Wales, saving them both time and money, the 2022 Act implements many of the recommendations made by the Law Commission in its 2017 report Charity Law: Technical Issues in Charity Law.

The 2022 Act has wide ranging implications for trustees, employees and indeed legal professionals working in the charity and not for profit sector.  In this article, we examine some of the key changes made by the 2022 Act which charity trustees should be aware of when selling charity land.

1. Designated Advisors

As was the case prior to the 2022 Act, trustees must obtain a written report on the proposed disposition from an advisor acting exclusively for the charity.  Importantly, however, the 2022 Act has widened the category of advisors who can provide such a report to include fellows of both the Central Association of Agricultural Valuers and the National Association of Estate Agents in addition to members of the Royal Institute of Qualified Surveyors (collectively referred to as ‘designated advisors’).  Section 21 of the 2022 Act has further confirmed that trustees, officers or employees of the charity can act as designated advisor so long as they have the requisite qualifications and experience.

By expanding the choice of advisors who can be instructed, trustees have greater discretion to choose the most suitable advisor for the transaction in question.  In the case of the disposal of residential property, for example, it is likely that a local estate agent may be most suited (and offer better value for money) to advise on a marketing strategy than a surveyor.  Furthermore, in lower value transactions, the ability to instruct an internal officer to act as designated advisor offers a cost-effective alternative to external professional advisors. Charity trustees should, however, ensure that they are always acting in the best interests of the charity and that no conflict of interest arises.

2. Designated Advisors Report

The content of the designated advisor’s report has been simplified by The Charities (Dispositions of Land: Designated Advisors and Reports) Regulations 2023 which has replaced the previous ‘one size fits all’ approach under the Charities Act 2011 regulations.  The designated advisors report must now cover the following points:

1. The value of the relevant land and any steps which could be taken to enhance that value;
2. Whether and, if so, how the relevant land should be marketed;
3. Anything else which could be done to ensure that the terms on which the disposition is made are the best that can be obtained for the charity;
4. Any matters the designated advisor believes should be raised with the trustees.

The above requirements are less prescriptive than under the previous regulations, allowing the designated advisor to give more tailored advice to the charity trustees.

Charity trustees must consider the designated advisors report and be satisfied that the terms of the disposition are the best that can be reasonably obtained for the charity before committing the charity to the relevant disposal (s.119(1)(c) CA 2011).

3. Advertisement of Charity Land

Prior to the 2022 Act, charity trustees were required to advertise the disposal of land in the manner that was advised in the surveyor’s report, regardless of whether such advertisement was out of proportion to the transaction in question.  The 2022 Act has granted charity trustees more discretion as to whether, and how, they advertise the disposal of land.  Charity trustees should still consider the advice of the designated advisor and importantly, where they choose to ignore such advice, keep accurate minutes of the charity’s decision-making process to be used if questions as to the sale process arise after the event.

4. Statutory Instruments

Section 23 of the 2022 Act has given further guidance on the information to be included in certain statutory instruments. Section 23(2) of the 2022 Act has confirmed that a contract for the sale of charity land must include a statement which confirms that the land is held by or on trust for a charity and that the disposal has been made in accordance with the provisions of s.117-121 of the Charities Act 2011 (as amended by the 2022 Act as described above).  HM Land Registry Practice Guide 14 sets out the specific wording that should be included.

Where such a statement is omitted from a contract for sale, section 122(6) of the 2022 Act provides protection to the purchaser of charity land who has acted in good faith by confirming that the contract will remain enforceable.

5. Impact of the Charities Act 2022

The changes made as a result of the 2022 Act are welcome and should result in more tailored and useful advice to charities on the disposition of charity land. The trustee’s legal duties remain the same: generally speaking, to obtain the best value for the property in question.

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances.

The Levelling-Up and Regeneration Act 2023 (LURA 2023) is designed to “speed up the planning system, hold developers to account, cut bureaucracy, and encourage more councils to put in place plans to enable the building of new homes.”

 

One significant feature of the Act (section 115) is the abolition of the ‘Four Year Rule’. This rule, which currently gives local authorities just four years to act against certain planning breaches, was revoked on 25 April 2024 (England only).

 

What was the Four Year Rule?

 

Section 171B of the Town and Country Planning Act 1990 (TCPA 1990) gave local planning authorities (LPAs) strict time limits to take enforcement action for breaches of planning control. There was:

 

• A four-year limit to start enforcement action against unauthorised operational development, including building, engineering, mining, and other operations;
• A four-year limit to start enforcement action against unauthorised changes of use to a single dwellinghouse.

 

LPAs could not initiate enforcement action after four years from the date of breach. So, if owners procure Certificates of Lawfulness, those developments could be regularised (apart from some specific circumstances).

 

What has changed?

 

After 25 April 2024, LPAs in England will have a decade to take enforcement action against unauthorised development or the change of use of a building to a single dwelling. This aligns with the current ‘Ten Year Rule’ for other planning control breaches such as unauthorised material change and breaches of condition as well the recent changes to the building control regime.

 

The change is not retrospective, so, as long as affected projects were substantially completed before the new rule takes effect, the ‘Four Year Rule’ will still apply.

 

Other legislative changes implemented on 25 April 2024 include (but are not limited to):

 

• Giving LPAs the power to issue temporary stop notices where they believe works are being carried out to a listed building without the required consent;
• Increasing the duration of new temporary stop notices from 28 to 56 days;
• Giving LPAs the power to issue enforcement warning notices when it appears a development has taken place in breach of planning control, thus inviting applications to regularise the position;
• Limiting the circumstances in which an appeal against an enforcement notice can be brought on the basis that planning permission should be granted for a development;
• Giving the Planning Inspectorate the ability to dismiss appeals against enforcement notices and certificates of lawfulness when the appellant is causing undue delay to the appeal process; and
• Increasing the financial penalties for a range of planning enforcement offences.

 

What does the ‘Four Year Rule’ change mean for developers?

 

Any developers carrying out work without the required authorisation should seek legal advice to determine whether the old or new immunity timeframes will apply.

 

• For works completed (or substantially completed) by 24 April 2024, LPAs will have four years to take enforcement action
• For developments not substantially completed by 24 April 2024,the new ten year time period will apply.

 

While the full impact of LURA 2023 is unknown, the extension from four to ten years may lead to increased action from local authorities as there is a greater period of time for them to become aware of planning breaches. There may also be insurance considerations as providers tighten their requirements to protect themselves from the changes.

 

At Underwoods, we have extensive experience in commercial property matters. By taking the time to understand your situation and particular requirements, we can oversee a smooth process and deliver the right outcome for you. For further advice, please contact our commercial property team.

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances.

 

 

Whilst it is relatively common knowledge that the Transfer of Undertaking (Protection of Employment) Regulations (“TUPE”) apply to the sale of a business as a going concern, TUPE also applies to service provision changes. TUPE will transfer employees “wholly or mainly engaged” in the provision of the services and preserves their terms and conditions of employment.

In relation to property management this can present unique challenges for those practicing and working in this area which we will summarise below.

Change of managing agent

When there is a change in the managing agent of a property, the employment terms and benefits which had been provided to the staff by the incumbent managing agent will often be at odds with those typically provided by the incoming agent to their existing workforce. This can mean that the managing agent is engaging staff working under a variety of different terms. This can be commercially unattractive and administratively burdensome.

Furthermore, the incoming managing agent may be unable to replicate certain benefits that it is required to (for example if it is a different type of corporate body), even though these benefits are in theory preserved by virtue of TUPE.

For example, the employee may have the benefit of an employee share scheme but the incoming agent is not a company, and therefore does not have shares to offer. To replicate this benefit, it may need to look at “buying out” the right from the affected employees. The value of any right may be very difficult to quantify, require specialist advice, and may not have been anticipated when the tender was submitted at the outset.

Change of client with change of property manager

The cases of McCarrick v Hunter [2012 EWCA Civ 1399] and Taurus v Crofts [UKEAT/0024/12] established the principle that where there is a simultaneous change of ‘client’ and incoming service provider/managing agent, then TUPE will not apply. In relation to property transactions this means that if a property is sold and the new owner simultaneously changes managing agents, then the site-based staff who work at the property will not necessarily transfer under TUPE. It is important to note that this does not affect circumstances where a property is owned by a corporate body and there is a sale of shares in that body. In such circumstances the owner or client remains the same, albeit with a change in shareholders, and TUPE would not be applicable.

Furthermore, who is the client is a question of fact, as opposed to law and it is important to look to see who is the ‘ultimate’ client. In your typical property management scenario, the ‘client’ would be the owner of the property who would employ a management company or managing agent to manage the same. However, difficulties arise where there are sub-contractors involved, for example, where the managing agent employs cleaners or security staff for the property. These would be deemed as ‘sub-contractors’ and the managing agent would be their ‘client’, with the property owner being the managing agent’s ‘client’ (Jinks v London Borough of Havering [UKEAT/0157/14]).

So, which ‘client’ needs to remain the same for TUPE to apply? Each situation will need to be looked at on its facts but, when considering if TUPE should apply on a property sale, it is important to look beyond the initial client and identify the end client for whom the services provided ultimately benefit.

Who bears the employee risks in a property management agreements?

Whilst certain management costs are usually recoverable through service charges, one of the key issues is which party (the owner, or the managing agent) should bear the risk of claims or disputes, especially any claims which could arise on termination if TUPE does not apply. The provision of appropriate indemnity protection (whatever side you are working for) is therefore crucial.

It is important to note that if TUPE does not apply when there is a change in managing agent, if the outgoing managing agent cannot relocate its staff to other properties it manages, the default position is that is required to cover the costs of redundancy of these staff members (some of whom may have been inherited from an outgoing agent and never have worked elsewhere).

The managing agent can therefore be reluctant to take on such risk if the staff have been inherited from a previous managing agent if appropriate indemnities cannot be obtained, and further, if the fee negotiated does not cover the potential risks. The owner can be reluctant to assume the risk given that they have little control over the managing agent or its staff and feel that staff should not be their responsibility or cost.

An additional  challenge can arise given that management agreements can often provide that the client can compel the agent to remove a member of staff from the property. The agent, as the employer, must be mindful of the employment rights of its employees, particularly if the agent considers that the request could result in an unfair or discriminatory dismissal. This results in a tricky challenge of balancing its contractual requirements and the wishes of its client, together with the employment rights of the individuals engaged by it.

Negotiation of Agreements

The above are all factors that come into consideration when negotiating property management agreements. Underwood Solicitors LLP have extensive experience in all aspects of property management agreements, from both the managing agent’s and the landlord’s perspective, and in respect of both residential and commercial properties and portfolios. Please contact Michael McDonnell, William Gubbins, or your usual contact at the firm, if you would like assistance with this.

This article is for general purpose and guidance only and does not constitute legal advice. It should not replace legal advice tailored to your specific circumstances.

 

 

According to the Ministry of Justice, the number of inheritance challenges is rising. Legal rows over inheritances have risen 34% in five years, with court cases involving contested wills increasing by 140% over the past decade.

Cohabiting couples, second marriages, and blended families can make inheritance tricky. But, with a properly drafted will, most disputes can be avoided, or at least easily resolved. Nevertheless, life can change quickly, and factors such as shifting relationships, families, and finances could mean that your carefully drafted will no longer reflects your situation and wishes.

Estate planning is not a one-time task. You should review your will at least every five years or, after a significant change in your personal or financial circumstances, such as those outlined here.

On marriage

Most people do not know that getting married (or entering into a civil partnership) automatically invalidates a will. Unless your will makes specific reference to your intended marriage, it will be revoked after your marriage or civil partnership, and intestacy rules will apply. This means that:

• If you are married and your estate is worth up to £322,000, your spouse will inherit everything, even if you have children;
• If you are married with children (not including stepchildren), and your estate is worth more than £322,000, your spouse will inherit the first £322,000 plus personal belongings. Anything remaining will be split 50/50 between your spouse and your children*. Your children will all inherit an equal share of the remaining 50%.

*Your grandchildren and great-grandchildren will inherit in their place if any of your children die before you.

On divorce

Divorce does not automatically revoke your will. If you end a marriage or civil partnership, your will treats your spouse as if they have died. This means that anything you have left to them will no longer take effect.

Of course, the divorce process can take a long time. It is therefore often a sensible precaution to review your will at the earliest stage, to mitigate the risk of your spouse inheriting should you die before the divorce is finalised.

When cohabiting with a partner

Contrary to popular belief, there is no such thing as ‘common law’ marriage. If you establish a household with your partner, you should consider what ought to happen if one of you were to die. Should financial provision be made for each other? Should a partner have rights over your share of any property?

A cohabiting partner will have no rights or inheritance under English succession law.  Naturally, if you have provided for a cohabiting partner, you should review your will if that relationship ends.

When welcoming new children to the family

You should review your will once you have children, to consider when they might inherit, who should manage funds for them during their youth, and who should act as their guardian(s) if you die whilst they are young.

You should also consider updating your will if a new partner has their own children. You will, between you, need to consider the possibly competing interests of all family members.

If you become a grandparent

It is common for grandparents to add their grandchildren to their wills so they inherit directly. As such, the birth of grandchildren may require a will review.

On a change of financial circumstances

Significant changes in the value and makeup of your estate may impact the planning your current will implements. There can also be tax consequences to factor in. You should consider updating your will if:

• You purchase/ sell property, or your property changes in value significantly;
• You inherit or are gifted assets;
• Your business interests change in value, or your business changes in nature.

If your health or personal circumstances change (or that of a loved one)

Deteriorating health is often a distressing event, and reviewing your will may not be the priority it should be.  If you or a dependant needs care, you may want to use your will to help you do this and protect your estate from care fees.

You will also want to update your will if the executors you have named are in poor health, so that new people are appointed to administer your estate.

Should a beneficiary die

If a beneficiary should die, you should review your will to ensure that the assets you planned to leave them are redistributed according to your wishes. The death of potential beneficiaries will often have been provided for in a solicitor-drafted will, but it is always sensible to check.

Unfortunately, most people are unaware of the impact life changes can have on the distribution of their estate. According to recent research, only 56% of people have updated their will within the last five years, meaning around half of UK wills are out of date.

At Underwoods, we help ensure your loved ones are taken care of when you pass on. In addition to drafting, reviewing, and amending your last will and testament, we can also advise you on several other key areas of law that may impact your estate planning. For further advice, please contact James McLean, Alex Shah or Shirin Wright in our private client team.

 

This article is for general purpose and guidance only and does not constitute legal advice. It should not replace legal advice tailored to your specific circumstances.