If you are involved in a property dispute – whether you are a developer, an investor, a landowner, a property manager, or landlord – this comprehensive legal guide is designed to help you navigate the intricacies of the situation, and reach a satisfactory resolution.
Key property dispute statistics
Whether it’s a dilapidation dispute between a residential landlord and tenant, a commercial tenant facing rent arrears, a disagreement regarding lease renewal, or a conflict over a boundary or right of way, property disputes have the potential to be both costly and time-consuming.
- More than half of landlords have had disputes with their tenants. (Statistica)
- In 2021-22 the three tenancy deposit schemes in England and Wales issued 31,276 adjudications representing an increase of 1,579 from the previous year. (TDS)
- Over two thirds (67%) of landlords who evicted tenants or asked them to leave in 2021 used a section 21 notice. (Gov.UK)
- The most common reason landlords ended a tenancy was that the tenant was in arrears (46%). (Gov.UK)
- 39% of landlords chose to end a tenancy because the property was not cared for and 32% because the tenant engaged in anti-social behaviour. (Gov.UK)
- Over half of commercial property is let to tenants. (British Property Foundation)
- 19% of residential landlords are considering commercial property, with more than a third citing diversifying from residential investment as the key reason for doing so (Shawbrook)
- In 2021, the UK saw the average construction dispute value increase to £27.7 million, an increase of 117% from 2019. (Arcadis)
A breach of contract is not a criminal offence. But there are legal steps you can take to resolve the matter by liaising with experienced breach of contract solicitors.
Types of commercial property disputes
Several factors can cause commercial property disputes, and these conflicts can quickly evolve into costly and complex litigation. As such, whether your property portfolio consists of a few units, a large commercial building, or even whole business/retail parks, it is vital to do everything you can to resolve any issues early and mitigate the impact on your operations. Understanding the common pitfalls can help you to avoid such disputes.
- Service charge disputes
Tenants often pay service charges to cover the costs of maintaining and providing services to a property. Set out in a lease or tenancy agreement, these charges are one of the main areas of dispute between leaseholders and landlords – especially as the fees can be variable and unpredictable.
Typical service charge disputes initiated by tenants encompass issues such as the calculation of service charges, the reasonableness of associated costs, and the quality of services provided.
Service charge disputes also occur when tenants do not pay the fee on time. Where a leaseholder falls into arrears, the landlord will seek recovery of any monies due to ensure standards are maintained. However, recovering such arrears is not always a straightforward process.
- Leasehold disputes
If you own a leasehold property, you have an agreement from the freeholder to use the home/unit for a set number of years. However, leases are complicated documents to understand, and a lack of understanding over the rights and responsibilities of both parties can lead to disputes.
Common disputes between leaseholders and freeholders include:
- Service charge disputes
- Lease extensions
- Breaches of lease
- Lease forfeiture and possession
- Ground rent arrears
- Nuisance actions
- Repairs and maintenance
- Leasehold enfranchisement
The UK government is planning to ban leasehold houses, with the housing secretary promising to stop the “feudal” system of freeholders maintaining control over properties. At present (December 2023), the proposed ban does not extend to flats, which currently make up about 70% of all leasehold properties. Nevertheless, under the new legislation, all statutory lease extensions will be for an additional 990 years, rather than the current 90 years for flats and 50 years for houses.
A landlord might make a dilapidation claim at the end of a lease, where the tenant has not addressed any disrepair or damage to a property that they are legally obligated to put right. A claim may also arise mid-tenancy for breach of repair covenants.
Common dilapidation disputes include over the extent of the repairs required or the cost of addressing dilapidations. In most cases, resolving the dispute will require looking at the lease terms and providing evidence of the initial and current condition of the property.
The Dilapidations Protocol sets out the process for making claims for damages against tenants at the termination of a tenancy. The Protocol aims to help landlords and tenants resolve their dilapidation disputes and avoid litigation by agreeing to a settlement before legal proceedings begin.
- Development disputes
Development disputes may arise between developers, contractors, planners, or other parties involved in the development process. In a dynamic and often challenging environment, development disputes are an all-too-common occurrence.
Common development disputes may relate to:
- Delays (leading to associated loss and expense)
- Outstanding payment/non-payment
- Boundary disputes
- Poor quality work or defective workmanship
- Property damage
- Changes in project scope
- Planning permission issues
- Building control issues
- Post construction issues.
With different parties and complex contractual terms in the mix, even a simple matter can escalate to disrupt projects, strain budgets, and sour relationships. Often, the quickest and best way to settle a development dispute is through open communication between the parties. Where that is not enough, legal advice is recommended.
- Landlord insolvency
When a residential landlord becomes insolvent and cannot pay their debts, this can have a profound impact on their tenants. Disputes may arise over the handling of the property, security deposits, and ongoing tenancy arrangements. In some cases, the property may be put up for sale at the liquidator’s request.
- If the tenancy is binding. The new owner becomes the landlord and will need to go through a separate eviction process under the terms of the tenancy agreement if they want to get rid of the tenant.
- If the tenancy is not binding. The tenant can delay the eviction by two months to provide time to find somewhere to live. If the lender does not agree to the extra time, the tenant should apply to the court to order the lender to delay possession.
A commercial tenant will likely hear about their landlord’s insolvency from the appointed insolvency practitioner. Eviction is by no mean the norm following landlord insolvency, but legal advice should be sought by commercial tenants in such circumstances to ensure their rights are protected.
- Rent arrears
Rent arrears disputes occur when tenants fail to pay rent as stipulated in their lease agreements. When a residential tenant can no longer afford to pay and refuses to vacate the property, landlords may take legal action to recover the unpaid rent. However, we advise landlords to first talk to their tenants to attempt to resolve the matter amicably. Where eviction proceedings are necessary, the landlord should contact a lawyer to serve a Section 8 Notice for rent arrears.
When a commercial tenant falls into rent arrears, a number of remedies are available to the landlord. These include forfeiture, possession proceedings, arrears recovery, eviction, statutory demand, and winding-up proceedings. However, early communication is recommended as some of these options can have devastating consequences for the tenants and their ability to continue to trade.
While legal action can help persuade the tenant to settle the arrears, if pursued the wrong way, it can irreparably damage the relationship between the parties. Therefore, any proceedings against commercial and residential tenants must be handled correctly.
Common types of residential property disputes
Residential property disputes can be challenging and stressful. But a word of warning! While taking matters into your own hands can be tempting, you must ensure any resolution complies with the latest regulations, or you could find yourself on the wrong side of the law.
- Boundary disputes
Boundary disputes arise when there is disagreement or uncertainty about the exact location of the lines between neighbouring properties. With the ability to negatively impact the value of all the properties involved, these disputes can quickly become emotionally charged.
While you can sometimes avoid conflict with clear communication, determining property boundaries often requires expert legal support to correctly interpret deeds, historical records, local laws, potential shared rights, and title issues.
Where the disputing parties cannot reach an agreement and the documentation is questionable, early mediation and legal assistance can stop a bad situation from escalating.
- Landlord and tenant disputes
Landlord and tenant disputes can occur over a range of issues, including rental agreements, property maintenance, and other lease terms. Common issues that can lead to landlord and tenant disputes include:
- Rent arrears
- Property damage
- Lease violations
- Security deposits.
Mediation can often help resolve landlord/tenant disputes before eviction is necessary.
The Renters’ (Reform) Bill forms part of the government’s wider levelling-up strategy (and was mentioned in the 2023 King’s Speech). It aims to provide “safer, fairer, and higher-quality homes” for tenants. Landlords and tenants should ensure they understand how the Bill will impact them.
- Construction disputes
Tensions between clients, project owners, contractors, subcontractors, and suppliers can lead to construction disputes. As well as holding up progress and costing a lot of money, such disagreements can damage property projects, business relationships, and reputations. Common construction disputes include:
- Contract issues (usually due to poorly drafted contracts)
- Poor quality work
- Change of finish date
- Mistakes in design
- Regulatory disputes.
With various stakeholders in the mix, the consequences of a construction dispute can have knock-on repercussions. Practical legal support can help you to resolve any disputes quickly, without compromising on the outcome you need.
- Restrictive covenants
Restrictive covenants are legal obligations written into property deeds that limit the way land and buildings can be used. Often, restrictive covenants are introduced when somebody is selling land and wants to restrict what the buyer can do with it.
The obligation to comply with a property-related restrictive covenant remains, no matter how often the land changes hands or how long ago the covenant was introduced. This can lead to frustration when someone buys the land and wants to change how it is used. Disputes often arise when a property owner violates or seeks to challenge the terms of a restrictive covenant.
It may be possible to remove a disputed restrictive covenant, particularly if it is deemed obsolete due to ‘changes in the character of the property or the neighbourhood or other circumstances’ or if the restriction impedes the reasonable use of the land.
- Party wall disputes
Party wall disputes occur when neighbouring property owners disagree over shared walls, structures, or other boundaries. In 2022, over six million Britons were involved in boundary disputes, with the most common property boundary issues involving a fence, wall, or hedge (31%), a plant or tree (14 %), access issues (13%) (Churchill Home Insurance 2022).
In England & Wales, the Party Wall Act outlines procedures for resolving such disputes. The Act does not apply to Scotland or Northern Ireland.
Whether you’re a property owner, a real estate professional, or someone involved in a land-related conflict, we have created a helpful guide to help you understand the intricacies of boundary disputes.
- Right of way disputes
An ‘easement’ gives one party specific rights to use or access a portion of a property owned by someone else (e.g. a shared driveway or pathway). You don’t have to have permitted the use of your land, if a neighbour has used your land for 20 years or more, they could have acquired a legal right of way.Right of way disputes occur where there is a disagreement between property owners regarding the right to use a pathway, road, or access route over another’s land.
Such disputes can arise where one or both neighbours are unclear about the nature of the right of way and the benefit or burden that applies to them. Resolution may involve negotiation, mediation, or legal action to clarify and enforce.
The benefits of resolving property disputes early
When property disputes become drawn out, they can become acrimonious. In such situations, the emotional toll can be detrimental to everyone involved. In addition, where a dispute is protracted, costs can quickly mount up.
As such, it’s not only essential to get the proper resolution to a property disagreement, but also to get it as quickly as possible to minimise the long-term adverse effects.
We always recommend seeking an early resolution to keep matters out of court, prevent unnecessary disruption, and save money. And there are a few ways to do this – including via alternative dispute resolution (ADR).
Consider ADR to resolve your property dispute
Whatever type of property dispute you are involved in, whether residential or commercial, there are several options available to you when making a property dispute claim. Legal action is not always the best solution, and depending on the nature and complexity of the matter, ADR may be more suitable.
Helping disputing parties reach a legally binding decision, ADR allows greater flexibility when it comes to the overall resolution (courts are bound by specific regulations and outcomes). ADR can also be less costly than going to court, and resolution can be achieved much quicker.
The most common methods of ADR include:
With mediation, the disputing parties try to settle their property dispute with the help of an impartial mediator. Both sides will usually be in the room as the mediation occurs. Should an agreement be reached via mediation, this is not mandatory. However, if everyone agrees, the decision can be made into a legally binding order.
More formal than mediation, arbitration provides a final and binding decision to a property dispute. As such, it is often the preferred choice to resolve commercial property clashes. With arbitration, a qualified arbitrator will consider the dispute before making their ruling. The arbitration process will likely occur without both parties having to be in the same room.
When is litigation necessary in property disputes?
- The chances of a settlement/agreement via ADR are very unlikely
- Attempts at negotiation or mediation have failed to produce a resolution acceptable to both parties
- There are highly complex legal issues that cannot be easily resolved through alternative dispute resolution methods
- The parties have opted for litigation to have the matter adjudicated by a court
- Immediate action is needed, such as preventing construction on a property, addressing urgent maintenance issues, stopping a party from violating property rights, or another form of injunction is needed
- Disputes arise over the interpretation of legal documents, such as leases, restrictive covenants, or easements, and parties cannot reach an agreement through negotiation or mediation
- The court is required to enforce a judgment that has already been issued, especially if the other party fails to comply voluntarily.
How does the court deal with property disputes?
In England and Wales, there is a process to follow if you want your property dispute to be handled through the court system.
Before initiating court proceedings, the disputing parties are encouraged to follow pre-action protocols. These are guidelines that promote early communication and negotiation to resolve disputes without going to court.
Issuing a Claim
The party wishing to start court proceedings (the claimant) typically issues a claim form outlining the details of the dispute. The claim is then served on the other party (the defendant). Proper legal representation will ensure all the required documents are in order, whether you are issuing or responding to a claim.
While you await a court date, you should establish your legal position. While each case is different, typically, this would involve carefully reviewing any contracts to establish the agreed obligations and assessing any damages suffered. It may also be in your best interests to continue to attempt to resolve the dispute amicably through negotiations.
The court will schedule a hearing where both parties present their cases, aided by their property dispute solicitors. Witnesses and evidence will be used to support each party’s case and assertions. As such, you must keep a record of all relevant communications, including formal meetings and face-to-face conversations (that might be relevant to your case). The judge will consider the evidence and legal arguments presented by each side and make a decision based on the evidence presented.
Do you need legal advice from property dispute solicitors?
Whether you need legal advice from property dispute solicitors depends on the nature and complexity of the dispute, but legal advice is almost always recommended. Here are some reasons why you should consider appointing a property dispute solicitor:
- To understand your rights and obligations. Property law can be complex, and individuals may not fully understand their rights and obligations without legal guidance. Solicitors can provide clarity on your legal position and help you make informed decisions.
- To deal with complex disputes. If the property dispute involves complex legal issues, intricate contractual matters, or questions of property rights, seeking legal advice is advisable.
- To help with legal procedures and documentation. Property disputes often involve legal procedures, court filings, and the interpretation of legal documents such as leases, contracts, or deeds. Legal professionals can provide guidance on the proper steps to take and help with document review.
- To reach an early settlement. Solicitors are skilled negotiators and can assist in settlement negotiations. They can advocate on your behalf, ensuring that any settlement reached is fair and protects your interests.
- To help with ADR. If you are considering alternative dispute resolution methods like mediation or arbitration, legal advice is valuable. Solicitors can assist in preparing for ADR processes, ensuring your rights are protected.
- To represent you in court. If the dispute reaches the court stage, having legal representation is highly recommended. Solicitors can present your case, navigate court procedures, and ensure that your interests are effectively represented.
- To prevent future disputes. Legal advice can also be beneficial in preventing future disputes. Solicitors can help draft clear and enforceable contracts, review lease agreements, and provide guidance to minimise the risk of disputes arising.
Unsure whether you need legal advice? Book an initial consultation with our property dispute solicitors today. During this session, you can discuss the details of your case, and our highly experienced team will provide guidance on the best course of action to achieve the desired result.
Whatever property dispute you are involved in, seek advice as soon as possible to increase the chance of a quick resolution. Call us today on 020 7467 3980 or complete our website enquiry form, and one of our property litigation lawyers will contact you to discuss how we can help you.