2001 - A Tenant's Year?

Profession:Herbert Smith

2002 looks set to be a year of important legislative changes for real estate with the enactment of a new Land Registration Act, a much awaited Commonhold Act, reforming legislation for the Landlord and Tenant Act 1954 and a DTLR review of planning use classes - but what happened in 2001? OK, not a year for legal milestones, but there have been a number of developments in the landlord and tenant arena which mark an apparent pro-tenant trend. Government-led initiatives included a consultation on a landlord's right to levy distress, an investigation into upward-only rent reviews, draft legislation for landlord and tenant reform and a new Insolvency Act. The decisions in a number of key cases also illustrate the growing importance of human rights in dealings between landlord and tenant.


In May 2001 the Government issued a consultation paper outlining its proposals to reform the remedy of distress. Following the basic premise that the common law right to seize goods and sell them no longer belongs in our modern rights-based society, the proposal is that distress will be abolished for residential properties and significantly curtailed in the commercial sector making it more accessible and fairer for tenants. This came in the wake of Fuller v Happy Shopper Markets, where the tenant successfully sued its landlord for wrongful exercise of the remedy when it had seized goods and sold them in respect of arrears against which the tenant had a right of set-off. In this case, distress was described as an "ancient (and perhaps anachronistic) self-help remedy" which "involves a serious interference with the right of the tenant, underthe European Convention on Human Rights". The Judge concluded: "The human rights implications of levying distress must be in the forefront of the mind of the landlord before he takes this step, and he must fully satisfy himself that taking this action is in accordance with the law".

Dealing with the insolvent tenant

The Insolvency Act 2000 was enacted (in part) this year. It enables small companies to use the Company Voluntary Arrangement scheme and the associated moratorium (preventing landlords from taking action against their tenants for a limited period) and it has clarified the position as regards forfeiture by peaceable re-entry during the Administration process. Prior to the Act, a landlord could still exercise its right to peaceable re-entry during a corporate tenant's moratorium, subject to the possibility...

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