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What has the Law Commission achieved?

One of the key strengths of the Law Commission – set up by the Law Commissions Act 1965 for the purpose of promoting law reform – has been its independence. However, in its annual report published in December, the chief executive points to cuts in its budget of 53% since 2010-11 bringing it to an “irreducible minimum”.

Although the Commission’s function is to identify areas of law where there is a need for simplification and modernisation, its 13th Programme of Law Reform (see “Unlucky number 13?”, EG, 13 January 2018, p54) highlights the need to commence a greater number of income-generating projects quickly in order to meet its budgetary requirements, rather than choosing projects according to its own priority.

With an eye specifically on the property sector, it therefore seems a good time to review the Commission’s track record and consider its future.

Easements and covenants

Easements often cause uncertainty because they can be acquired without writing and it is possible in some cases for them to be enforceable without being registered at the Land Registry. There is currently no way to ask a court to modify an easement, such as re-routing a right of way.

The Commission reported on this area in 2011, proposing the creation of land obligations that would enable positive obligations to run with the land. Additionally, easements would be simplified and those created after the legislation would be capable of modification or cancellation.

On 18 May 2016, it was announced that the government would respond to the Commission’s proposals in a draft Law of Property Bill. We understand that this is awaiting Parliamentary time. If this makes it to the statute books it will be positive news for the property sector. In the meantime, the Ministry for Housing, Communities and Local Government has announced plans to ban new leasehold houses (with a few exceptions) – but these are sometimes necessary because of the fact that positive obligations (covenants) do not pass to successors-in-title and it is unclear how the government proposes to address this.

Rights to light

Rights to light are the “bug-bear” of many developments because the threat of injunctions can bring proposed developments to a halt. The case of Lawrence v Coventry (t/a RDC Promotions) [2014] UKSC 13; [2014] 1 EGLR 147 clarified the test that should be applied when exercising the court’s discretion in this area and gave some comfort to developers, but the risk that injunctions can still be granted continues to cause uncertainty.

The Commission reported on rights to light in 2014, but currently it says that it is awaiting a government response. It is a shame that this could not be dealt with within the Law of Property Bill.

Digital economy

An area of recent success is the Digital Economy Act 2016, which followed the Commission’s report in 2013. It is to continue its work in the digital arena in its 13th Programme by looking at electronic signatures and smart contracts. We could all soon be signing contracts on our mobiles over the digital network promoted by the 2016 Act.

Land registration

Over the years, there have been various reports on the subject of land registration resulting in legislation; the most recent was the Land Registration Act 2002, which repealed the Land Registration Act 1925. The Commission is continuing to review land registration as part of its 12th Programme of Reform. With the risk of fraud and developments in technology this work is essential to making land ownership transparent and easily transferable.

Landlord and tenant

The work of the Commission in 1985 resulted in the Landlord and Tenant Act 1988, which places obligations on landlords to consent to applications from tenants to assign, sublet, charge or part with possession of leased premises unless it is reasonable not to do so. This makes it easier for tenants to adjust their property holdings to the needs of their business.

More controversial is the impact of the Landlord and Tenant (Covenants) Act 1995 on the law of guarantees and assignments, which followed a Commission report in 1988.

Responding to the impact of a recession on the property market, the Commission proposed reform to enable tenants to be released from the financial obligations of a lease once they have assigned it. This prevents landlords from pursuing the original tenant for rent arrears where the lease has been assigned several times.

Unfortunately, the effect of the drafting and recent case law has meant that assignments of a lease from a tenant to its guarantor are void, making intra-group re-organisation more difficult. In its 13th Programme, the Commission indicated that it would have liked to look at this again, but it is not a priority.

Reports not accepted

In addition to its successes, there are several Commission reports that have not been accepted by government. These include reports on reforming the law of forfeiture, liability for chancel repairs, compensation for tenant’s improvements and, most ambitiously, the codification of the law of landlord and tenant.

The future for law reform

Some of the projects that are not being taken up by the Commission include reform of the business tenancies legislation, which, having been introduced in 1954 for the post-war economy, could perhaps use some review. It had also been hoped that the Commission would look at how we buy and sell houses to improve the process.

Budgetary constraints are common to many public services and some would see law reform as low on the priority list when compared with items such as welfare. However the law underpins our economy and, as we face an uncertain future as a nation, we need to stay competitive in the world economy.

There is a role for the Law Commission and, as the new Lord Chancellor David Gauke settles in, we hope that he finds room in his agenda for championing its cause.

This article was written by Emma Humphreys. For more information please contact Emma on +44 (0)20 7203 5326  or emma.humphreys@crsblaw.com.

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