July Business Client Web Articles
Articles included
Government scraps plans to tighten regulations on private rented sector
The new Government has scrapped plans to impose tighter regulations on the private rented sector.
The previous Labour administration had intended to implement the proposals put forward in the Rugg review. That would have involved setting up a National Register of Landlords, making written tenancy agreements compulsory and introducing stricter regulation of letting and managing agents.
However, the new Housing Minister Grant Shapps believes that the current regulatory system is sufficient and strikes the right balance between the rights and responsibilities of landlords and tenants.
Mr Shapps said that rather than introduce new regulations, councils should make sure they use the powers they already have to crack down on the minority of rogue landlords who cause most of the problems.
Local authorities can already force landlords to remove hazards from their properties. If landlords resist, they can prohibit the use of the affected part of the property. They can also choose to make the improvements themselves and pass the cost on to the landlord.
Mr Shapps said: "With the vast majority of England's three million private tenants happy with the service they receive, I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords."
Please contact us if you would like more information about landlord and tenant issues.
More than £62bn now owed in overdue invoices
More than £62bn is now owed in overdue invoices in the UK, according to new research by NatWest and Royal Bank of Scotland.
The survey shows that 71% of SMEs in the UK have suffered because of late payments. Larger companies may have a higher value of invoices paid late but in terms of proportion of turnover, it is the smaller firms that are worst affected.
Approximately 1 in 5 businesses with an annual turnover of between £250,000 and £500,000 has suffered compared with just 1 in 15 larger companies.
Peter Ibbetson, Chairman of Small Business, NatWest and RBS, said: "The reality for most small businesses is that they are too busy to spend time chasing payment and managing debtors."
A total of 235,000 SMEs say that the time they have spent chasing debts has had an adverse effect on their business yet less than half have take action to deal with the problem.
This is unfortunate because some simple steps can often lead to early settlement. For example, a solicitor's letter will often be enough to secure payment because people realise you are serious and they don't want to run the risk of court action.
Firms should also be aware that they are entitled to levy statutory late payment fees and impose punitive interest charges. Taken together, this can earn more than enough to pay any legal fees involved and turn credit control into a profit making operation.
Please contact us for more information and advice on how you can ensure prompt settlement of overdue invoices.
Builder's warning about faults not enough to avoid liability
A builder who installed an inadequate drainage system has been found liable in damages even though he warned the client that it may not work properly.
The builder had been hired to carry out some improvement works at a farm. The project involved installing a lavatory and drainage system.
Before beginning work, the builder informed the farm owner that the proposed new drain was inadequate but that it would probably work. The owner decided to proceed on that basis.
When the system then started to overflow and leak, the owner refused to pay for the work. The builder took legal action which led to a court hearing.
The judge held that although the builder had told the owner the drainage system might be inadequate, the warning was not sufficiently clear. It was not strong enough to remove the implied warranty that the system would be fit for purpose.
The builder was therefore liable in damages for having installed a defective system.
Please contact us for more information about the issues raised in this article.
Commercial tenant failed to exercise break clause correctly
The importance of following the correct legal procedures when trying to exercise a break clause in a commercial lease was illustrated in a recent case before the High Court.
The tenant in the case had a ten-year lease on commercial premises that were no longer needed. He decided to exercise a break clause which enabled him to terminate the lease after five years.
The provisions of the lease required that he served notice on both the landlord and the property management company within a specified time frame. The tenant served notice on the landlord as required but failed to serve notice on the management company on time.
The landlord responded by saying that the notice was not effective as it had not been served on both parties as laid down in the provisions of the lease.
The tenant submitted that the notice to the landlord should be sufficient but the High Court ruled against him. It held that the terms of the break clause were clear and so service on the landlord alone could not be considered as effective.
Please contact us if you would like more information about the issues raised in this article.
Council wrong to refuse planning permission for housing development
The High court has ruled that a local authority was wrong to refuse outline planning permission for a housing development on a greenfield site.
The court heard that the authority had identified the site as being suitable for development but still decided to refuse planning permission. This was because it believed that there was a sufficient supply of nearby brownfield sites available. It submitted that developing greenfield sites in preference to brownfield sites would have a detrimental effect on the regeneration of urban areas.
The developer appealed to the planning inspector who overturned the authority's decision and gave several reasons for doing so. He said there weren't enough homes to meet the anticipated future demand in the area. The authority had already identified the site as suitable for development and had failed to show that there was an adequate supply of brownfield sites.
The inspector concluded that in this particular case, the site was too small to have any significant effect on the regeneration of urban areas. It was therefore appropriate to grant outline permission, subject to conditions.
The authority appealed to the High Court but that has now upheld the inspector's decision.
Please contact us if you would like more information about development issues.
Minister introduces action plan to cut red tape
The Business Secretary Vince Cable has put an action plan in place to cut unnecessary red tape which he believes is stifling business growth.
He will chair a new Reducing Regulation Committee to enforce a stricter approach to regulations and ensure that the cost to business of new laws is properly addressed. New regulations will be "stress-tested" to make sure that only those of suitably high quality can proceed.
There will also be an immediate review of all new regulations inherited from the previous Government which are now coming up to implementation. There are 200 new regulations which, if fully implemented, would cost over £5bn before next April and £19.1bn annually thereafter. This will be the first priority of the new committee.
The Action Plan also involves creating a new "challenge group" which will be asked to come up with innovative approaches to achieving social and environmental targets in a non-regulatory way.
The Government says it will also adopt a "one in, one-out" approach to ensure that new regulatory burdens on businesses are matched by reductions to existing regulations. The cut in regulatory cost in the existing regulation must be greater than the cost of the new regulation.
Mr Cable said: "The deluge of new regulations has been choking off enterprise for too long. We must move away from the view that the only way to solve problems is to regulate."
We shall keep clients informed of developments.
Small firms are losing £5bn to insolvent trading partners
New research shows that more than 40% of small to medium enterprises (SMEs) have lost money to trading partners who've gone out of business in the last two years.
A survey carried out by CreditPal revealed that the average amount of money owed to individual firms by insolvent partners is £7,500. The total figure owed to all SMEs is estimated at £5.3bn.
The figures highlight the need for firms to take early action when faced with overdue invoices. Excessive delay can mean missing out on vital payments being made in the months leading up to a trading partner becoming insolvent.
Once the partner becomes insolvent, it is highly unlikely that creditors will receive all of the money they are owed. It will usually only be a percentage and in many cases creditors may receive nothing at all.
Please contact us if you would like more information.
Firms must guard against flimsy discrimination claims
The case of a middle-aged man who's thought to have made thousands of pounds from numerous discrimination claims highlights the problems faced by small firms struggling to cope with employment law.
The man used the Ministry of Justice website to lodge claims against employers who used words like "school leaver" and "recent graduate" in their recruitment advertising. He then contacted the firms concerned telling them they could avoid the trouble of going to a tribunal if they settled with him quickly. This was in spite of the fact that he hadn't even applied for many of the jobs.
Unfortunately, many firms will cave in and settle when faced with claims because, according to a recent CBI survey, they believe the tribunal system is ineffective and skewed against them.
They prefer to settle cases even though they have a strong chance of winning because they fear the cost of going to tribunals.
It's easy to see a firm's dilemma, but if everyone simply gives in then it encourages more people to proceed with weak cases and the problem snowballs.
It can be cheaper in the long run for firms to stand their ground.
That would certainly be true in the case of this claimant because in reality he had very little chance of success. It is wrong, of course, for firms to put age related conditions in recruitment ads, but that alone is not enough to bring a claim.
The claimant would have to show that he had actually been discriminated against. He would be unlikely to do so in these cases which is why most of them were struck out by the Tribunal Service for being misconceived and vexatious.
Contrary to what many firms believe, tribunals don't always find in favour of the claimant and award enormous sums in compensation.
Firms will have to consider each claim on its individual merits, of course, but they should not feel pressurised into settling because they fear it is too expensive to mount a defence or because they fear the tribunal service will automatically find against them.
Please contact us if you would like more information.
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