Wednesday 3 July 2013

Paving the Way to Yet Another Concern for Conveyancers

Recent changes in Permitted Development rules aim to apply sustainable drainage (SuDS) to new or replacement paving around existing homes protect against flooding of properties.

Coveyancers can find useful guidance at here.

Historically conveyancers need not concern themselves with enquiries about such works. Paving anywhere in a garden related to a house or bungalow with any materials was considered to be ‘permitted development’ – effectively, planning permission without a planning application was automatic But not any more. As awareness of the restrictions grows, there are calls for the legality of recent paving to be covered in conveyancing pre-contract enquiries.

Permitted development rights no longer apply for new or replacement drives or other paving unless permeable paving has been used or unless the water drains into a ‘rain garden’ area within the curtilage of the property. In England, these measures took effect in October 2008 and apply to paving over 5m2 and in the front garden only. But in Scotland, they apply to work initiated after 6th February 2012 for paving of any size between the house and any street-not just to front gardens.

To satisfy the requirements, there is a growing choice of concrete block systems available from manufacturers, designed specifically for permeable paving. Essentially they have the same impressive performance as conventional precast concrete paving products, being slip resistant, durable, strong and sustainable. If, as a conveyancer, you discover that new paving has been put down at the property, you will need to check whether planning permission was obtained or if work falls within Permitted Development rules.

Building Regulations do not generally apply to paving. However, you will need to make sure that any alterations do not make access to the dwelling any less satisfactory than it was before. So, for example, changing levels to introduce steps where none existed before would be a contravention of the regulations. If a new access has been created into the garden across a footpath,you will need to obtain copies of the  permission from the local council to drop the kerbs, and the pavement may need strengthening. This regulation protects any services buried in the ground such as water pipes.

Tuesday 2 July 2013

BTL Lenders set out new Tenancy Requirements via CML Handbook P2 changes

One might expect a simple ‘Yes/No’  answer to the following question within the CML Handbook Part 2 : Does the lender require counterpart/certified copy tenancy agreement to be sent to you? 

In recent years lenders have shoehorned in all sorts of obligations into their Part 2 requirements and last night’s changes are a good example of how lenders utilise Part 2’s to expand their legal conditions to conveyancers.

Investec and The Mortgage Works in answering question 6.6.3 as to whether they require a copy of the tenancy state as follows:

No,not required for properties let under a standard Assured Shorthold Tenancy within the meaning of section 20 of the Housing Act 1988 as amended by the Housing Act 1996 and subject to a maximum tenancy term of up to 36 months. If the AST is of 13-36 months duration please notify TMW/Investec accordingly but there is no requirement to send in the tenancy agreement.

Where the tenancy is not in the standard form(non AST)and let to a Local Authority,Housing Association, Government Department or Corporate Company we will require a copy of the agreement to be sent to us to verify the suitability of the tenant. In such cases you must confirm that the tenancy agreement meets the following requirements:

1)the tenant must be letting the property to a current employee of its organisation (if NHS, government department or limited company).
2)the tenant must use the property to provide accommodation for homeless persons under the Housing Act 1996 or similar legislation (if local authority or housing association).
3)the tenant must not use the property for business or create any business tenancy.
4)there must be no security of tenure afforded to the occupier or tenant.
5)the agreement recognises the existence of a mortgage and the potential for the mortgagee`s right to repossess.
6)the agreement provides for rent to be diverted to the mortgage lender or their representatives.
7)the tenancy is no more than 3 years in duration.
8)the agreement must contain no other provisions which adversely affect the lender`s security or its right to enforce its remedies under the mortgage deed executed by the borrower.
Tenancy agreements or tenants that do not meet the above requirements are not acceptable and TMW/Investec  must be informed immediately.

Ivestec and The Mortgage Works panel solicitors can see full details of the change here.

Monday 1 July 2013

Why Conveyancing Lawyers Need to Get a Grip on CPR

No, I am not talking about cardiopulmonary resuscitation,but rather Consumer Protection from Unfair Trading Regulations 2008 (known as CPR).

Whilst estate agents have long been obliged to tell the buyer the truth if asked a direct question, the difference is that now they should give information that they suspect may affect the buyer's opinion of a property–-even before the prospective buyer comes to view it.

Estate agents have been told by the OFT that they need to comply with the Consumer Protection from Unfair Trading Regulations 2008 (CPR) and the Business Protection from Misleading Marketing Regulations 2008 (BPR). And these are more powerful in terms of the protection afforded to the buyer than the current Property Misdescriptions Act, which will be repealed in October.

This new requirement may potentially impact conveyancing because CPR erodes the doctrine of ‘caveat emptor’, thus offering a new layer of protection to the buyer’s conveyancer. Already one agency, part of the Countrywide group in Wales, has been prosecuted by Trading Standards under CPRs, for omitting to tell a prospective purchaser about the existence of a mine shaft.

Perhaps the greatest irony in this story is that estate agents were vehemently against HIPs which, once abolished, resulted in CPR coming into sharper focus. Agents were somewhat protected via the Property Information Questionnaire that introduced the concept of caveat vendor. The abolition of HIPs has, therefore, resulted in greater exposure. It’s a classic case of ‘be careful what you wish for’.

Of course, it's the seller who ultimately pays the estate agent, and it's the agent's job to get the best price for the property. However, operating under CPR and BPR, the estate agent has to understand that the buyer is also a consumer in the process, so there is a tortious liability of a duty of care and a responsibility to tell the truth. The regulations state that it is the 'consumer' who must be treated fairly. Logically if the duty of care to make disclosures to the buyer is extended to the agent, then the duty of care to discover on the part of the buyer’s lawyers is diluted.

Stuart White, managing director of estate agent Century 21, said: "This is a fundamental change to the Property Misdescriptions Act 1991, under which an agent was only obliged to disclose something if asked. It has never been the case that an agent has had the ability to hide information, however the new rules change this status by ensuring that the consumer is treated fairly, which in essence means potentially adverse information should be disclosed."

In a potential erosion of ‘caveat emptor’, the new rules mean that agents need to be up front about problems. So if there is a sewerage plant at the end of the garden, the agent who deliberately crops this construction from a photo could be breaking the rules.

To complicate matters, the new regulations don't specify precisely how the legislation applies in individual scenarios. Instead, it is left open to interpretation by the agent, and according to the Property Ombudsman Christopher Hamer, agents should err on the side of caution by openly describing all aspects of the property.

Buyers should be told of the reasons behind previous abortive transactions if they were due to a problem that interfered with the sale.. This would typically be something that comes up during the survey, but it could also be a problem that has been highlighted during the conveyancing process--i.e. something the previous buyer’s solicitor has found. For example, if the survey highlighted a structural defect, the Ombudsman says this is something that the agent should make clear to all interested parties, not only if they are asked.

Agents should no longer hide material facts that might put off someone viewing  or offering on a property. For example, according to the Ombudsman, if a motorway is 200 yards from the door, this should be clear on the picture and description it shouldn't be left to the buyer to notice it from the map alone.

He even reckons that it should be mentioned if a property is next door to a primary school, because some buyers would not want to travel a distance to view a property with potential noise.

However, Hamer does give an example where the agent would not be required to disclose a potential issue. He said that if a neighbor kept a large number of pets (in this case seven dogs and 14 cats), the agent wouldn't need to disclose this fact up front, although it should be mentioned if a potential buyer asks about the neighbors.

But he offers the following examples of things that agents should disclose: a previous murder having taken place in the property, woodworm infestation, loud church bell ringing nearby, lack of planning permission or building regulations on an extension, or previous flooding.

So what should conveyancers do in light of the above? First, familiarise yourself with the legislation and use it as a form of defense. If your client complains because something negative about the property was not picked up, you should consider whether CPR was applicable and whether the agent had a duty of care to make a disclosure. Secondly, you should carefully consider introducing a Property Information Questionnaire (PIQ) into your conveyancing process and sending it to the agent to complete. Would it be remiss of you not to extend the representations beyond that of the seller but also to their agent? It is conceivable that, in time, lenders via the CML Part 2s will require a PIQ to be completed by the agent (where there is any agent involved). I am starting to talk to lenders about the benefits to them of a specifically drafted PIQ. For an example of an agent-focused PIQ, please email your request to