Real estate

Sleep out for LandAid
6 March, 2018

As you may be aware from our twitter feed (@CrippsPropLaw) a hardy group of eight souls from across our Real Estate division took part in LandAid’s Sleep Out last Thursday 1 March.  On one of the coldest nights on record, we braved the weather warnings and South Eastern trains’ reduced timetable with our sleeping bags and hand knitted orange beanies to spend the night sleeping out in Old Spitalfields market, along with 200 other property professionals from across the industry.

It was all to raise funds for LandAid, specifically to help City YMCA to rebuild and refurbish their hostel in London, and also to raise awareness of youth homelessness.  The chief executive of City YMCA, Gillian Bowen, came to speak to us about their ambitious plans to rebuild their Errol Street hostel, a 1970s build that was no longer fit for purpose.  5 young people who are currently living in the hostel also told us their stories.  To say that their tales were heartbreaking is an understatement; the girl whose mother chose her abusive stepfather over her and threw her out with nowhere to go; the boy who said he didn’t even realise that living in a violent home wasn’t normal until someone at his apprenticeship placement told him it didn’t have to be like that.  He ended his story by telling us that until he went to the City YMCA he didn’t know that kind people existed and couldn’t believe that 200 of us would put themselves out to help someone like him.  For all 5 of them, and the hundreds of others like them who have been helped and supported by the City YMCA, none of this was their fault.  They had been let down by their families and the system, had no other support network to fall back on, but had been saved by the City YMCA.  “We all have dreams” one girl said, “we just need a chance”.

For all of us it was an amazing (but very chilly!) experience.  It really brought home the plight of those without a permanent home, the often ‘hidden’ homeless who go from sofa to sofa or (in one case Gillian spoke about) bus stop to bus stop every night just to survive.  The windburn on my face has faded, but the impact of that night will stay with me much longer.

We would like to say a huge THANK YOU to everyone who donated; our current total is an amazing £2,500 and over £140,000 was raised on the night.  Our fundraising page is still open:

Some photos of the night are below (never has a hashtag been more apt) but do have a look at our twitter feed, @CrippsPropLaw, to see more tweets and photos of the night.

Paws for thought …
13 February, 2018

Victory Place Management Company Limited v Kuehn

It was, perhaps, inevitable that a case involving a High Court battle between a couple of tenants and a management company over a dog would lead to articles with titles such as this one.  But behind the humorous headline lies a decision that should not just be of interest to dog owners.  It is an indication of the way that the court may choose to interpret certain tenant covenants in leases, and it is not particularly good news for landlords.

Keeping it in the family

Mr and Mrs Kuehn purchased the lease of a flat in Victory Place, Limehouse, in September 2014.  The couple owned a young Yorkshire/Maltese terrier, named Vinnie.  They wanted Vinnie to live in the flat with them.  He was, as the court would later hear, “part of the family unit”.  But there was a looming threat to the family bond on the horizon.  It took the form of a covenant in their new lease, which read:

No dog bird cat or other animal or reptile shall be kept in the [Property] without the written consent of [Victory Place Management Company]

The Kuehns applied to the Management Company for consent to keep Vinnie at the property, as they were required to do.  But their request was refused.  The company said that it operated a strict no-pets policy within the building and intended to enforce it.  Vinnie would have to live elsewhere.

A day out in court

The Kuehns did not accept that decision.  Their lawyer wrote to the company, asking it to reconsider.  He said that in addition to being part of the family unit, Vinnie’s presence was “helping my client clinically”.  The company seemed unimpressed, however.  It noted that the couple had failed to provide medical evidence to support their position.  On that basis, it presented them with two options.  Either confirm, within a short space of time, that Vinnie had been removed from the flat or face injunction proceedings.  The Kuehns decided to defend their position in court.

After a three-day hearing in the Central London County Court, the judge found that the company’s decision was lawful and granted the injunction it had sought.  Vinnie had been given his marching orders.  Undeterred, the couple filed an appeal.  They felt that the trial judge had been wrong to find that the company’s decision was reasonable.

The appeal was heard in the High Court, before Sir Geoffrey Vos.  He agreed with the trial judge’s assessment.  The company’s decision making process was sound.  It was entitled to consider the Kuehns’ application within the context of a general no-pets policy.  The mere existence of that policy was not enough to show that it had been acting unreasonably.  The appeal was dismissed.

This outcome is unsurprising.  The terms of the lease were clear.  No pets were to be allowed in the flat without the consent of the company.  In reaching its decision on that point, the company had considered the relevant factors and had not been swayed by irrelevant ones.  Ultimately, the Kuehns failed to persuade the court that Vinnie should be an exception to a well established rule.

Listening to reason

What is surprising, though, is the way that the couple were able to question the reasonableness of the company’s decision.  Take another look at the wording of the covenant in their lease.  Nowhere does it say that the company’s decision should be reasonable.  Yet the condition of reasonableness was central to the couple’s case.  So where, exactly, did that requirement come from, if not the lease itself?

The answer to that question is the decision of the Court of Appeal in Associated Provincial Picture Houses Limited v Wednesbury Association.  This well-known case, dating from 1948, set out the basis for assessing the reasonableness of decisions made by public bodies.  But the claimant company in this case was not a public organisation.  Why then, should its decision to ban Vinnie from its building have been subjected to the “Wednesbury Test”?

Where one party has sole discretion over a decision making process mentioned in a private contract, it will have a conflict of interest.  There will be a clear temptation to decide the point in its own favour.  In such cases, the courts have shown a willingness to regulate the imbalances between the parties, by applying the Wednesbury Test.  Even if that means blurring the lines between public and private law.

So what exactly does the Wednesbury Test involve?  There are two parts, or “limbs” to it.  The first limb requires that the decision making process must be reasonable.  The second limb requires that the outcome of the process is also reasonable (i.e. the result is not one that no other decision maker could have arrived at).  On appeal in Kuehn, the parties agreed that only the first limb of the Wednesbury Test should apply.  But the court said that it would have applied the second limb as well, if it had been asked.  So the working assumption must be that any exercise of discretion by a landlord under the terms of a lease could be open to challenge in this way.

Nothing wrong with that, you might think.  But the loss of certainty in contractual agreements is never a good thing.  If, as appears likely, the Wednesbury Test is capable of applying to all discretionary consents in leases (not just pet clauses!) the potential for disputes is significant.


Landlords should be careful to explain the way in which they have exercised their discretion under the terms of existing leases.  Adopting a measured and logical approach is equally important.  Referring to existing policy is fine, but not if it is used to dismiss a tenant’s request out of hand.

When drafting the terms of a new lease, it would be preferable to express certain types of tenant covenants in absolute terms (i.e. remove any reference to landlord consent).  Tenants can (and should) resist that level of restriction on key subjects, such as alienation or alterations.  But it is still worth trying to minimise the potential for disputes over ‘minor’ covenants, such as pet clauses.  After all, landlords can still give personal consents to tenants without having to consider each and every request out of contractual obligation.

Overage: beware
9 February, 2018

This week, Development Associate Franco Lambiase explores the recent Court of Appeal case of Burrow Investments Ltd v Ward Homes Ltd [2017] EWCA Civ 1577  highlighting the need for a developer, and its advisers, to be alert to the pitfalls of poorly drafted overage provisions.

What can you do to ensure your overage provisions will withstand the test of time and, possibly, interpretation by the court?

First things first; what is an overage?

Generally, the term ‘overage’ (sometimes ‘clawback’) is used to describe the situation where a seller retains a share in the increase in value in a property that is realised after the property has been sold.

A seller is likely to impose an overage obligation on the buyer in a variety of circumstances.  There may be a reasonable expectation that the property may be redeveloped at some point.  A more valuable planning permission may be granted in the future.  Improved market conditions may mean that sale proceeds generated by plot sales are greater than assumed at point of sale.  The seller may simply want to avoid the embarrassing situation of seeing the property ‘turned’ for a higher price.

An overage payment represents a share of the increased value of, or receipts from, the property after the occurrence of a trigger event, such as the grant of a planning permission, the disposal of the property at a higher price within a fixed period of time, or the disposal of a completed development.

There may be many other instances where an overage payment is triggered, too many to list here.  However, suffice to say that an overage obligation enables a seller to sell at the current value of the property, without having to forego a share in its future potential.

Getting the drafting right

In most instances, overage provisions reflect complex commercial arrangements.  Particular care has to be taken at the drafting stage to ensure that the documentation correctly reflects what has been agreed.

What makes drafting overage provisions particularly tough is having to consider all reasonably foreseeable circumstances in which the overage may or may not become payable.  This can be problematic given the difficulty in predicting future events over what may sometimes be many years.

By way of example, an owner sold a site to a developer who agreed to pay overage within the next 21 years if it:

  1. Bought the land next door; and
  2. Got planning permission for its development; and
  3. Developed it; and
  4. Accessed it through the site.

The developer could avoid paying overage by various means, such as:

  1. buy just part of the land next door;
  2. get planning permission for only part of the site;
  3. ask the neighbour to get the planning permission before buying the site;
  4. get someone else to carry out the development.

Where the express terms of an agreement are unclear, the court may be required to interpret what was intended by the parties to the agreement.  The case of Burrow Investments Ltd v Ward Homes Ltd is a recent example of how drafting can make or break an overage arrangement.

The facts

Burrows Investments (Burrows) sold land to Ward Homes (Ward) with planning permission for residential units.  The parties agreed that Burrows would receive overage if Ward disposed of the units at a price exceeding a certain sum per square foot.

Ward was precluded from making a disposal of the property (other than ‘permitted disposals’) without first procuring that the transferee entered into a deed of covenant with Burrows in respect of the overage.

‘Permitted disposals’ included:

  1. disposals in the open market at arm’s length (i.e. sales to individual purchasers of dwellings);
  2. the transfer/dedication/lease of land for the site of an electricity sub-station, gas governor kiosk, sewage pumping station and the like, or for roads, public open space, or other social/community purposes.

The original planning permission contained no provision for social housing.  Ward subsequently obtained a revised permission for the development, which required Ward to provide five units of affordable housing.  The units were built and sold on to a registered provider of social housing.

Ward claimed that the disposal of the five units to the registered provider was within the definition of permitted disposal under the overage.  Burrows disagreed, arguing that Ward had breached the overage agreement.

The case reached the High Court, which ruled that the disposal to the registered provider was not a disposal within paragraph (a) because it has not been made in the open market.  It held, however, that the provision of affordable housing achieved an important social purpose of substantial benefit to the community, and was therefore caught by paragraph (b).

Burrows successfully appealed.  The Court of Appeal held that any land that was transferred within the remits of paragraph (b) (e.g. for the site of an electricity sub-station etc) would be unlikely to have any buildings on it at the date of transfer – and certainly not dwellings.

It went on to say that the overage agreement included a definition of “Market Units”, being a flat, house, cottage, maisonette, bungalow or any other construction intended for residential use.  Had the parties intended paragraph (b) to include a dwelling house, they could have used the term “Market Units” in paragraph (b).

Properly construed, therefore, a “transfer of land” as referred to in paragraph (b) did not include the transfer of a completed dwelling, and Ward lost.


The reality is overage agreements are usually very specific to the facts of the transaction, which means interpreting what the parties may or may not have meant can be a difficult business – even for the judges.

In the case at hand, changes in planning policy to require on-site provision of affordable housing should have been within the contemplation of the parties prior to entering into the agreement.  The parties could, therefore, have expressly provided for disposals of affordable housing to be a permitted disposal, however no such provision was made.

Careful drafting is required to ensure that the transferee cannot avoid making an overage payment or structure events so that only a token overage payment becomes payable.  All reasonably foreseeable circumstances must be considered so that the overage provisions will remain effective for the whole of the overage period – having a broad overview of what may or may not reasonably change over the course of the overage period (be that from a planning policy or more practical perspective) is essential.

For more information…

If you are a developer, landowner or investor and require any assistance with overage or other property development matters contact  Franco Lambiase at or 01892 506199.

Mundy v Trustees of the Sloane Stanley Estate: Court of Appeal rules in favour of landlords
2 February, 2018

Landlords and tenants alike have been eagerly awaiting the Court of Appeal’s decision in Mundy v Trustees of the Sloane Stanley Estate.


The case centres on the method of valuing the premiums to be paid by tenants to landlords for lease extensions and collective enfranchisements under the Leasehold Reform Housing and Urban Development Act 1993 (“the 1993 Act”).  It is felt by campaigners that the current method of calculation of the premium can lead to landlords receiving an inflated premium.


The alternative method of calculating the premium for lease extensions and collective enfranchisements proposed in this case, if endorsed by the Court of Appeal, would have affected over a million leasehold properties, putting billions of pounds at stake and affecting landlords throughout the country.  The decision is out; the Court of Appeal has upheld the decision of the Upper Tribunal, dismissing the alternative method of calculation.


Landlords everywhere can finally breathe a sigh of relief.




The 1993 Act provides tenants with less than 80 years remaining on their lease with a statutory right to extend their lease at a fair price.  Tenants pay a premium to the competent landlord in return for the landlord granting an extension of their lease.  The process for calculating the premium is complex, but broadly speaking it is based on the difference between the value of the lease before and after being granted an extension, known as the ‘marriage value’.  Therefore, the increase in value of the lease is shared between the landlord and the tenant.


Mr Mundy was the long leaseholder of a flat in Elm Park Road, London, SW3.  He had 23 years remaining on this lease, and applied to the landlord to extend his lease under the 1993 Act.  The parties having failed to agree the premium, the matter came before the Upper Tribunal in 2016.


Mr Mundy argued that the current method used for calculating premiums results in landlords being effectively overpaid, and is therefore an inappropriate method of calculation.  To alleviate the alleged unfairness to tenants, Mr Mundy proposed to the Upper Tribunal an alternative model for calculating the premium, known as the ‘Parthenia model’.  The Parthenia model calculates the marriage value based on sales data between 1987 and 1991, the idea being that relying on data from pre-1993 would give a figure for the true value of the extension without the impact of the 1993 Act, thereby eliminating the effect of the 1993 Act on relativity.


The Parthenia model was rejected by the Upper Tribunal in May 2016 on the basis that it failed to satisfy economic and market logic.  They held that the model did not distinguish between the relativities of longer leases and that consequently it produced results that were out of line with “real world” transactional evidence and market practice.  They held that, although the model might be theoretically sound, due to reliance on archived data, it failed to match current market values, producing an impossible figure.  Mr Mundy was granted permission to appeal to the Court of Appeal.


On 24 January 2018 the Court of Appeal gave its verdict, dismissing Mr Mundy’s appeal and refusing permission to appeal to the Supreme Court.


It was held that the Upper Tribunal had been right to hold that the Parthenia model was a “clock which strikes 13” and produced an impossible result.  It suggested that the value of a lease without 1993 Act rights was worth more than the lease was actually sold for with 1993 Act rights.  The Court of Appeal found that the Upper Tribunal, having carefully examined the Parthenia model at a 9-day hearing with extensive expert evidence, was entitled to conclude that it was defective.  In view of the sustained criticism of the Parthenia model by the experts, the Court of Appeal supported the Upper Tribunal’s rejection of the model and banned its use in future 1993 Act cases.


However, it was noted by the Court of Appeal that the Law Commission has been asked by the Government to consider the simplification of values under the Act, and that the “holy grail” may one day be found.


What this means for you


This decision will undoubtedly come as a relief to landlords, who can now proceed with negotiations safe in the knowledge that the calculation of the premium remains the same for the time being.


This is decisive blow for campaigners, particularly given that permission to appeal to the Supreme Court has been refused.  However, they may take comfort in the fact that enfranchisement under the 1993 Act has been specifically included in the Law Commission’s 13th Programme of Law Reform with the aim of simplifying valuations.


Watch this space …

PropTech – Are you behind the curve?
17 January, 2018

10 ways Real Estate is embracing the tech revolution…

The property industry has, over the past 18 months, seen a massive uptake in embracing tech to make efficiencies. From Purple Bricks and other online agents changing how we buy and sell to Datscha’s use of Big Data and analytics to the use of tech within buildings, PropTech companies have entered and disrupted the way the property industry works.  Attitudes of the larger real estate operators are changing (as seen in a recent KPMG survey) and, in light of this, we take a look at some examples of tech adoption now and in the not too distant future …


  1. Ever switched the light on only to be greeted by darkness, or reached halfway through that urgent print job to see the message ‘Toner Empty’? Predictive maintenance is one way to combat such frustrations. One example of this is a hospital in Milan, where predictive maintenance is used on heating, ventilation and air conditioning to anticipate when something is about to break before it happens … think Minority Report, but for air con.

  2. Companies are finding more innovative ways to save energy. One way includes having chemical sensors to turn lights on/off. Perhaps this means the end to the infamous “Switch the light off and save the planet” you find plastered on some office toilets. 

  3. Tracking individuals’ health through wearable technology is also being explored (one company looking into this is KPMG) although there could be privacy issues if these sorts of initiatives are introduced.

  4. Employee trackers are also being investigated as to whether it would be appropriate to collate data to drive decisions about office layouts and facilities. The Bolton Consulting Group is even piloting a programme where employees’ badges contain a microphone and location sensor to monitor how office layout impacts communication. Follow this link for more information.

  5. Cleaning Robots? Sign me up I hear you say! A patent is pending for “Outobot” in Singapore. The robot can scan the exterior of a building using a camera and automatically plot areas to spray or paint.

  6. With a growing rental market, companies are finding innovative ways to assist landlords manage their properties to give the owners both peace of mind and higher returns. An example of this is Zenplace in Silicon Valley which takes care of all the aspects of property management from finding tenants to maintaining the property adopting adaptive algorithms used by companies such as Google.

  7. Developers and landlords have been partnering with Uber to provide rides to residents rather than including the price of parking within the purchase price.

  8. Drones are changing real estate (see link for 9 ways this is happening) . These include providing photography and videos of properties on the market.

  9. A Seattle hotel has introduced iPods and earpieces in order for staff to seamlessly communicate with each other to improve customer experience.

  10. Always find the heating too hot or cold in the office? Technology company Arup may have the answer. They are trialling a desk which will be controlled by smartphones so individuals will be able to change their environments…power to the people!

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