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DEFECTIVE PREMISES (LANDLORD'S LIABILITY) BILL

EXPLANATORY AND FINANCIAL MEMORANDUM

INTRODUCTION

  1. This Explanatory and Financial Memorandum relates to Defective Premises (Landlord's Liability) Bill. It has been prepared by the Department of Finance and Personnel in order to assist the reader in understanding the Bill and to help inform debate on it. It does not form part of the Bill and has not been endorsed by the Assembly.
  2. The Memorandum needs to be read in conjunction with the Bill. It does not, and is not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require any explanation or comment, none is given.
BACKGROUND AND POLICY OBJECTIVES

Background to the proposals

  1. The Defective Premises (Landlord's Liability) Bill is intended as a development of the existing law and to implement the recommendations of the Law Reform Advisory Committee's report on the subject (Report no.7, 1998). In its report the Committee concluded that landlords enjoy a degree of immunity stemming from the House of Lords decision in Cavalier -v- Pope [1906] AC 428. It felt that whilst this "immunity" was limited by section 4(1) of the Occupiers' Liability Act (Northern Ireland) 1957, the law in Northern Ireland had not developed in the same manner as in England and Wales where the landlord's liability was extended to include those who might reasonably be expected to be affected by defects in the premises (section 4 of the Defective Premises Act 1972).
  2. Although the Defective Premises Act 1972 was mirrored in Northern Ireland by the Defective Premises (Northern Ireland) Order 1975, the provision regarding a landlord's liability for failure to repair defective premises was omitted. The premier reason given at the time for this omission was due to the high number of bomb damaged and derelict properties in Northern Ireland, the imposition of this further liability would be too onerous a burden for many landlords.
  3. The Law Reform Advisory Committee's consultations revealed that there has been a major improvement in the quality of housing stock in Northern Ireland and substantial redevelopment in poorer areas, principally undertaken by the Northern Ireland Housing Executive. This coupled with the greatly reduced threat of terrorist bombings and the continued availability of grants to improve housing led the Committee to recommend that legislation should be introduced along similar lines to that currently existing in England and Wales.

Purpose of the Bill and summary of its main provisions

  1. The Defective Premises (Landlord's Liability) Bill will give effect to the recommendations of the Law Reform Advisory Committee for Northern Ireland.
  2. The main feature of the Bill will be to impose a duty of care upon a landlord to all persons who might be reasonably expected to be affected by defects in the state of his premises. This provision will replace the existing limited statutory claim available against the landlord to the tenant's lawful visitors as expressed under section 4 of the Occupiers' Liability Act (Northern Ireland) 1957. It will thus cover lawful visitors, the tenant, passers-by, neighbouring occupiers and their families and guests.
  3. The duty of care owed by the landlord will apply if the landlord knows of the defect or if he ought to know of it in all the circumstances. A relevant defect is one which arises due to the actions of the landlord which amounts to a breach of his obligation to a tenant for the maintenance or repair of the premises. The duty is extended further by the removal of the requirement of an obligation to repair by providing that the landlord is under a duty either where he has undertaken to do repairs or where he has a right, express or implied, to carry out maintenance and repair.
  4. Several types of landlords will be exempt from the proposed reforms. The Law Reform Advisory Committee's consultations revealed that landlords holding restricted or regulated tenancies (within the meaning of the Rent (Northern Ireland) Order 1978) would face an onerous duty if the legislation was applied to them. The level of recoverable rents in relation to such tenancies led the Committee to recommend that they should be exempted from duty. In addition, it recommended that owners of ground rents or nominal rents be exempted, as they do not maintain the same degree of economic interest or control in the premises as in the usual landlord-tenant relationship.
CONSULTATION
  1. The Law Reform Advisory Committee for Northern Ireland conducted a consultation exercise prior to its report in 1998. The responses received indicated a general level of support for the changes as eventually recommended by the Committee. The Office of Law Reform carried out a short consultation exercise with interested bodies subsequent to the report being published.
OPTIONS CONSIDERED
  1. Three options were considered: no change to the present law, abolition and repeal of the law in Cavalier -v- Pope or adopting the limited measure of reform which extends the liability of a landlord.
  2. The first option was not recommended by the Committee or the majority of consultees who favoured reform; social conditions have evolved significantly in Northern Ireland since the decision was made in 1975 not to incorporate section 4 of the Defective Premises Act into our law. The second option was considered to be too radical a step and could have more serious cost implications. The third option was largely welcomed by consultees and was the preferred option of the Committee which considered it to represent a rational development of the existing law.
COMMENTARY ON CLAUSES

Clause 1: Landlord's duty of care by virtue of obligation to repair premises

Subsection (1) provides that a duty of care is owed where premises are let under a tenancy and that the landlord has a contractual obligation to maintain or repair the premises.

Subsection (2) outlines the nature of the landlord's duty making it clear that it is to all persons who might be affected by defects. This may include the tenant himself, visitors, passers-by or neighbours.

Subsection (3) provides that the landlord's duty is owed if he knows of the defect or ought to have known of it in all the circumstances.

Subsection (4) provides that the duty is in addition to any other duty which may be owed.

Clause 2: Application of this Act where landlord has right of entry to carry out repairs

Subsection (1) provides that the legislation will apply where the landlord has a right of entry to carry out maintenance or repairs which is either express or implicit in the tenancy agreement.

Subsection (2) provides that subsection (1) applies as soon as the landlord is in a position to carry out the relevant maintenance or repair.

Subsection (3) provides that the landlord does not owe a duty of care where the defect arises or continues because of a failure of the tenant to carry out his or her express tenancy obligations.

Clause 3: Tenancies to which this Act applies

Subsection (1) provides that the Act applies to all tenancies apart from regulated or restricted tenancies (within the meaning of the Rent (Northern Ireland) Order), tenancies under a lease granted for more than 50 years (in effect, a type of ground rent), and tenancies under a lease under which the rent payable is less that £1 per annum or a peppercorn or other rent having no money value (in effect, a nominal rent).

Subsection (2) provides that section 4 of the Occupier's Liability Act (Northern Ireland) 1957 no longer applies except in relation to the above mentioned tenancies at subsection(1).

Subsection (3) prohibits the exclusion or restriction of liability under this Act.

Clause 4: Interpretation

This clause provides definitions of key words and phrases used throughout the Bill. These include the definitions of a tenancy, relevant defect and material time for the purposes of establishing liability under the Act, together with certain necessary technical provisions.

Clause 5: Application to the Crown

This clause describes the application to the Act to the Crown.

Clause 6: Short title and commencement

The short title of the Act will be the Defective Premises (Landlord's Liability) Act 2000. In order to give landlords a reasonable period of notice of the change to their liability and a reasonable time to effect any necessary work to their premises it will come into operation at the end of a period of 12 months from the day the Act receives Royal Assent.

FINANCIAL EFFECTS OF THE BILL
  1. The financial effects of this Bill should be minimal. Most consultees, and particularly those associated with the insurance industry, predicted only minimal changes as regards increase in rents flowing from an increase in premiums. Landlords already owe a duty of care which requires them to keep their premises in good repair and this additional liability should not prove to be too onerous in terms of having to effect further work. There may be some increase in terms of slightly higher fees for agents to ensure that premises are maintained but the majority of consultees felt again that such a duty would not be significantly costly.
IMPACT ON EMPLOYMENT AND COSTS TO BUSINESS
  1. No adverse impact on employment has been identified within the Bill. No significant costs to business are anticipated.
IMPACT ON RELATIONS, CO-OPERATION OR COMMON
ACTION ON A NORTH/SOUTH OR EAST/WEST BASIS
  1. No adverse impact is indicated. The effect of the Bill is confined to Northern Ireland only.
IMPACT ON TARGETING SOCIAL NEED
  1. No adverse impact.
EFFECTS ON EQUAL OPPORTUNITY
  1. The impact of the Bill on equality of opportunity as between those groups listed in section 75 of the Northern Ireland Act 1998 has been considered. No adverse impact was identified.
HUMAN RIGHTS ISSUES
  1. The Bill does touch on human rights issues. The Bill interferes with possession and peaceful enjoyment of property as guaranteed by Article 1 of the First Protocol to the European Convention on Human Rights. However, it is thought that the Bill nevertheless complies with Convention Rights on the grounds that it is considered that the extension of a landlord's liability is a legitimate aim and would be for the general benefit of the community at large.
LEGISLATIVE COMPETENCE

The Minister of Finance and Personnel has made the following statement under section 9 of the Northern Ireland Act 1998:

"In my view the Defective Premises (Landlord's Liability) Bill would be within the legislative competence of the Northern Ireland Assembly."