Your business may be involved in selling goods or services to consumers via a website (including through an Ebay shop), mail order, telesales, interactive TV or text.

If it is, you should have already made sure your procedures are compliant with the laws and regulations of a ‘traditional trader’ together with the additional laws that apply to distance traders (failure to comply could result in increased consumer claims, bad publicity or action by the Office of Fair Trading).

These include the Electronic Commerce (EC Directive) Regulations 2002 and the Consumer Protection (Distance Selling) Regulations 2000 (DSRs).  The Regulations apply to all businesses that are supplying products or services to consumers without face-to-face contact and are equally applicable to an e-commerce giant like Amazon as they are to a sole-trader operating vie the Internet from home in Ealing.

Traders must ensure that end users are provided with the full name of your business, its geographical address and contact details, including an email address, to enable direct and rapid communication.

If you belong to a trade organization whose register is open to the public (eg CORGI) you must provide end users with the name of the register and your registration identification.  If your online business activities are subject to VAT, you must also publish your VAT number.

Traders have to provide the consumer with practical details, including, a meaningful description and the price of the goods or services, and the arrangements for payment, delivery or performance, as well as delivery costs. If a contract creates a long-term arrangement for the supply of goods or the performance of a service, the minimum period has to be disclosed. The DSRs also give the consumer a right to cancel during a ‘cooling off period’, and this right has to be specifically mentioned in the contract.

Consumers must be informed if the trader proposes to provide substitute goods or services in the event of an order being unavailable, and that in those circumstances, he will not have to pay the cost of returning unwanted substitute goods.

All of this information should be included in websites, in catalogues and on order forms. The trader’s commercial purpose in offering the goods or services also has to be made clear, and this specifically includes telephone sales, where the trader’s intention has to be disclosed at the beginning of the conversation. (No more claims of “I’m not trying to sell you anything”).

The DSRs require the trader to confirm this information in a durable form, which can be by e-mail, and to give further details including arrangements for the return of goods, a geographical address for complaints, and information on the conditions and procedures relating to the exercise of the right to cancel the contract.

Where the trader has complied with the DSRs, the cooling-off period is seven working days from the day after the date of the contract, in the case of services, or from the day after the date of delivery of the goods, but if the trader has fallen short of what is required, the cooling-off period is extended by three months. The supplier must have sent written confirmation of the order no later than the time of delivery of the product or performance of the service. If they did not, then the 7 day cooling off period will not begin until they do, and may be extended by a further 3 months.

Many businesses are still not compliant with the Distance Selling Regulations.

The Distance Selling Hub, provides practical guidance and useful checklists for retailers and business support organisations on the law that governs buying and selling goods and services via the internet, phone, mail order, email, interactive TV or text.

Consumers rights are to be further enhanced next year following the publication of the Consumer Rights Directive.

Some key provisions of the Directive are as follows:

-           New Cooling off periods (distance sales, e.g. Internet sales, mobile phone, catalogue sales and doorstep sales): Cooling off period of 14 calender days when consumers can change their mind when making online purchases or purchases away from business premises.

-           Pre-contractual information: The Directive obliges the trader to provide the consumer with minimum information requirements (e.g. the main characteristics of the product, geographical address and identity of the trader, the price inclusive of taxes, all additional freight, delivery or postal charges).

-           Rules on delivery and passing of risk to the consumer: There will be a maximum of 30 calendar days for the trader to deliver the goods to the consumer.

-           Digital Content: Information on digital content will have to be clearer at the point of sale, including about its compatibility with hardware and software and the application of any technical protection measures.

-           Ban on tick boxes: Ban on “pre-ticked” boxes on websites.  Consumers can no longer be required to “untick” boxes to avoid extra goods and/or services when shopping online.

-           Credit/Debit Card Charges: When a given means of payment is used (such as a debit/credit card), traders will be prohibited from charging consumers fees that exceed the cost borne by the trader.

In the light of the expected approval of the Directive, plans were announced recently by the Government Consumer Minister Edward Davey to merge all existing UK consumer protection laws and regulations, together with the requirements of the finalized Consumer Rights Directive, into a single new ‘Consumer Bill of Rights’.

Businesses should take this opportunity to review their sales practices, both online and offline, together with the content of their sales literature and websites, to ensure they are and will be compliant with existing and new legislation.

If you would like an audit of or advice on your e-commerce procedures or business terms and conditions to ensure legal compliance, please contact us.

John Soper

Solicitor

jsoper@prince-evans.co.uk

 There have been recent cases which emphasise the importance of ensuring that the terms of the lease are properly considered in relation to service charge collection and that statutory requirements are met.  The Upper Tribunal has also made interesting observations on apportionment of service charges within a lease

1.         A clause provided for management to include employing, amongst others, “other professional persons as may be necessary or desirable for the administration of the building” but did not specifically mention legal costs.  Did this mean that the costs of solicitors in advising could be recovered?   The Upper Tribunal found that the terms of the particular lease did not cover legal fees even if the engagement of solicitors and recovery of legal fees may be desirable. As with every issue concerning service charges, the starting point is always the Lease itself.  This is a useful reminder that the Courts and Tribunals will  adopt a restrictive approach to the interpretation of a lease including for legal charges.  (Greening –v- Castlenau Mansions Ltd)

2.         Similarly, where a lease provided that a Certificate by the Lessor’s surveyor was a pre-condition for any liability to pay final service charges a certificate from a Chartered Accountant was not considered sufficient.  In those circumstances, no service charges were payable as the pre-condition had not been satisfied.   (Akorita –v- Marina Heights (St Leonards) Ltd.)

3.         Proper attention must be given also to the statutory requirements.   Where a summary of the tenant’s rights and obligations, which must be sent with any demand for service charges was sent 11 days after the demand itself it did not represent “sufficient accompaniment”.  In addition sending a photocopy of the 2007 Service Charge Regulations did not constitute compliance.  A specific document entitled “Services Charges – Summary of Tenants Rights and Obligations” and a specific text had to be sent to meet the statutory requirements.  Tingdene Holiday Parks Ltd –v- Cox

4.         The need to properly consult with tenants has been emphasised by the Court of Appeal.  When the landlord sends a second notice under the major works consultation procedure, it should include estimates and particular information together with the Landlord’s response to the Leaseholders written observations.   The landlord did not provide a summary of the observations or his response, did not make all the estimates available to the Leaseholders and cut short the 30 day consultation period by advising the Leaseholders that he had instructed the one contractor whose details he has sent.  The Leasehold Valuation Tribunal found the Leaseholders had been causing substantial prejudice.   In those circumstances it would never be appropriate for the LVT to grant dispensation regarding that notice.  On appeal the The Upper Tribunal agreed with the LVT’s decision and whilst noting that the failures for the most part were minor and did not cause significant prejudice and it was not appropriate to consider the financial consequences arising from the decision.   As a result the landlord recovered only £1250.00 against the £270,000 sought.  (Daejan Investments Ltd –v- Benson).

5.         Finally, the LVT have considered the Leaseholders’ liability to pay a “fair and reasonable proportion” of service charges when a flat had been converted from a three bedroom property to a two bedroom property.  The service charges originally were apportioned on bed spaces with each bed space representing a fixed percentage of 5% of the service charges.  When the Landlord gave consent to the alterations,  it was a condition that the Leaseholders original liabilities remained the same.  As the alterations the Leaseholder made to his flat meant there was one less bedroom, there was a shortfall in the total service charges recovered. The Landlord wanted to amend the method of apportionment of service charges to percentages as a result.  The  Landlord therefore asked the LVT firstly to determine that the amended percentages (to take account of the reduced number of bedrooms) was a reasonable method of calculating the service charges and secondly that the lease should be varied by changing the fixed percentages.  It was argued that apportioning service charges by bed space was wrong as the leaseholders could change the configuration of their living rooms and bedrooms,  the difference between a single and a double bedroom was arbitrary and a studio flat had combined  living and sleeping space.   The LVT found that the method adopted was a fair and reasonable one even if not the only one.   The Upper Tribunal found that the landlord who had given the licence for the alterations must determine the fair and reasonable proportion by reference to the state that the flats were in prior to the alterations being carried out.  The President also found that an application for determination of the service charges payable must relate to an actual amount that the Leaseholder was paying, not the principle on which the service charges were calculated.  The LVT does not have jurisdiction to interpret leases unless they relate to a specific amount of money payable.   (Mehra –v- Citywest Homes Ltd)

Jeremy Teall

Solicitor 

In these difficult economic times, it remains the ambition of most people to own their own home.  Housing Associations have worked with governments for many years now to provide schemes to assist first time buyers to get onto the Property Ladder.  These schemes have taken various forms over time but the aim remains the same – to assist those who would not otherwise be able to buy.

At Prince Evans Solicitors LLP, we have worked alongside Housing Associations to help our clients achieve their goal of home ownership.  The need for schemes to make buying a property affordable is greater than ever, particularly in London where prices remain high and banks are looking for much larger deposits than they did in the days before the Credit Crunch.

The good news is that there are plenty of opportunities to buy.  The best place to start is the website of First Steps which is the umbrella organisation overseeing the schemes currently on offer in London.  Their website is at www.firststepslondon.org.

Once you are accepted as eligible, you will have the chance to view properties available through the many housing associations operating in and around London.

As soon as your offer on a property is accepted, you will need to confirm details of your solicitors to the Housing Association and so it’s a good idea to have someone lined up and ready.  We will give you a free no obligation quote for our services setting out our costs and the other information you need to get the conveyancing process under way.

There are two main types of affordable schemes on offer at the moment.  The first type is Shared Ownership or Part Rent/Part Buy.  With these properties, the Housing Association will grant you a lease of the property for a share between 25% and 75% and you will pay rent on the remaining share.  The rent is at lower level than the market rent would be.  The second type of scheme is known as Shared Equity.  Here, you buy the property outright but with an additional loan at a low cost from the housing association or developer.

The conveyancing process is similar to the purchase of a property on the open market but with some key differences.  You will need a solicitor who is familiar with the way that such purchases work and Prince Evans Solicitors LLP has an experienced team dealing with these transactions on a daily basis.

The Shared Ownership lease will deal with the matters which are different from an open market purchase – the rent on the unowned share, the arrangement for selling on and the ability to staircase or purchase more shares in the property until eventually you do own it outright.

The Shared Ownership property you are buying may be a newly built property on a brand new development or it may be a resale of a property purchased a few years ago, where the shared owner is now moving on to a bigger property or to outright ownership.

The main advantage of Shared Ownership is that you can buy as little as 25% and so finding deposit of perhaps 15% or 20% of the price for the share is much more achievable.  This often enables you to obtain a really good deal from a mortgage lender.

Shared equity schemes are closer to normal open market purchases in that you do purchase the property outright.  You will still have to find a deposit in most cases but you will be able to borrow less on your mortgage and this could make all the difference in enabling you to purchase a property where you want to live.

More information about Affordable Schemes can be found in Home Focus – the magazine for first time buyers. See the link from our website.

Mary Ridgeon

Solicitor

The Localism Act (which amends the Housing Act 2004) received Royal Assent on 15 November 2011 and is thought likely to come into force in April 2012.  The most significant changes are:

• The time period for complying with the initial requirements of a scheme and providing the prescribed information is to be extended from 14 to 30 days after receipt of the deposit;

• The penalty will be payable if the Landlord fails to comply with the time limits imposed by statute, i.e. within 30 days of receipt;

• The Landlord will no longer escape liability for the penalty if he/she complies with the requirements before the day of the hearing of the tenant’s claim for the penalty, (the Localism Act 2011 has reversed the Court of Appeal’s decision in Tiensia v. Vision Enterprises Limited);

• A person who was the tenant, will be able to bring a claim for the penalty, (the Localism Act 2011 has reversed the Court of Appeal’s decision in Hashemi v Gladehurst);

• The penalty will not necessarily be “equal to three times the amount of the deposit” (and will not be in addition to the Court ordering the repayment of the deposit, or that it be paid into a scheme).  The amount of the penalty will be at the Court’s discretion but no more than three times;

• The restriction on the service of a s21 Notice has been removed where the deposit has been returned in full, or else returned less any agreed deductions and if a tenant has brought a claim, that claim has been either determined by the Court, withdrawn or settled

Anthony Best

Partner

Under English Law, almost all flats are sold on a Leasehold basis and houses, in most cases, will be Freehold. The legal side of buying a property can be confusing and full of jargon. This even applies to the most important document which sets out all the terms of your ownership of your new flat – the Lease itself. In order to avoid problems after you have completed your purchase, it makes sense to take a bit of time to understand why you have a Lease and what it contains.

The Landlord is the overall owner of the building and the land that it stands on. They will then grant a Lease which gives you the right to live in the property for a fixed length of time. The Lease will usually start off being for a term of 99 or 125 years – plenty long enough for most of us! If you are buying a flat from someone who already lives there, rather than a newly-built property, then it will have been ‘running’ for a few years and have got shorter accordingly. Beware of Leases that have 80 years or less remaining – most mortgage lenders will not lend on these ‘short’ Leases. It is possible to extend your Lease after you have owned your Property for at least 2 years – look out for a future blog with more details of this process.

The Lease will describe the property you are buying and will include a car parking space and/or garden if there is one. It will also define what you are responsible for (eg the repair if the interior of the property) and what the Landlord will continue to repair and maintain, such as shared hallways and communal dustbin stores.

You will have to pay the Landlord an annual rent under the Lease. This could be as low as £10 a year or it could be several hundred pounds a year. The Lease may also state how often the rent is to be reviewed by the Landlord and how this will be calculated.

Any repair and maintenance works carried out by your Landlord will be paid for by you as part of the Service Charge. This is a contribution towards the costs incurred by the Landlord in carrying out their responsibilities under the Lease and will be paid by all of the Leaseholders in the block. This may be shared equally between each flat, or may be split according to flat size. The Lease will set out how your particular contribution is to be calculated. The Landlord will also usually be responsible for providing Buildings Insurance for the block as a whole and the premium for this will form part of the Service Charge. The Service Charge may be payable monthly, quarterly or once or twice a year.

You will also have important responsibilities under the Lease, which will contain a list of what you can and can’t do in the property. Although these may seem numerous and restrictive, remember that they are there in order to maintain the value of the property and the block as a whole, to benefit both you and the Landlord in the future.

It is your solicitor’s responsibility to check that the Lease is acceptable to your mortgage lender and also will be a suitable investment for you. The Lease may look like a complicated document, but it has practical implications for you once you move into your new home. At Prince Evans, we take special care to fully advise you on every aspect of your Lease before your purchase goes ahead.

I hope that this overview has given you a good idea of what it means to buy a Leasehold property. If you would like any further information, please do contact me.

Rachel Turner
Solicitor
rturner@prince-evans.co.uk