FTT's new pilot scheme for unopposed lease renewals set to 'take-off'…

Although it was initially announced that the new scheme was set to commence on 1 December 2017, HM Courts & Tribunals Service have delayed the commencement of the new scheme which is now anticipated to launch in early 2018 with no official date set.

What is the new pilot scheme?

The purpose of the pilot scheme is to speed up the renewal process for unopposed claims, allowing cases to run more smoothly and to save the parties costs.

It is set to last for a year and, during this time, all unopposed lease renewals that are issued in the County Court at Central London (CCCL) will be transferred to the First Tier Tribunal (Property Chamber) (FTT) in London.

During the pilot scheme, all existing claims in the CCCL will also be transferred to the FTT. All other courts will remain unaffected for the time being and any case wrongly issued in the CCCL to try and take advantage of the scheme will be transferred to the correct court.

The FTT's standard directions will set out the steps to be taken by the parties in the proceedings.

What are the changes?

  • There will no longer be a Case Management Conference and once the proceedings are issued, the final hearing is expected to take place in just 20 weeks.
  • The parties will only be allowed one three-month stay at the outset of the proceedings for Professional Arbitration on Court Terms (PACT) referral or mediation. Unless there are exceptional circumstances, no further deferral will be granted.
  • The standard directions of the FTT do not provide the parties with the opportunity for disclosure or witness statements of fact.
  • The parties' valuers are required to provide their evidence even before the lease terms have been agreed.
  • At the hearing, the judge will always sit with a valuer/assessor.

What difference could it make?

With the court process at the CCCL often delayed, cases could now be resolved as quickly as 20 weeks from the date of issue. Cases which only concern rent may be dealt with by way of written submissions rather than an oral hearing. The parties cannot therefore rely on tactical advantages that were caused by the delays in listing matters at the CCCL and will now need to progress matters much quicker.

The claims will be heard by a judge who has a greater knowledge of property matters and there may be more consistency in the outcome of the cases.

Currently parties tend to avoid, where they are able, issuing unopposed lease renewal claims to save costs, but the new pilot scheme may encourage both landlords and tenants to issue if negotiations fail to progress. With a quicker turn around proposed by the new scheme, the costs of issuing a claim and progressing to a hearing may not be as costly as it currently is. However, it is possible that more claims will progress to the hearing stage, which is typically the most expensive part of the proceedings, and it may result in more costs than initially anticipated.

Although the aim of the scheme is to avoid delay, which is a problem with the existing process, it could prove problematic with potentially rushed negotiations and the urgency to meet the tight deadlines proposed by the standard directions. The standard directions require the valuers to exchange their comparables and to clarify the issues in dispute within 2 weeks from the date of the directions and for the valuers to exchange statements of agreed facts and disputed issues within a further 5 weeks. Is this timing going to be sufficient for the valuers to properly prepare their expert evidence?

With parties no longer able to produce witness statements of fact, there is a question mark over how evidence will be given in the event that the length of the term of the renewal lease for example is in dispute.

It remains to be seen whether the scheme proves to be a success and if it will be launched across the country following the end of the pilot.

For more information on the new scheme, contact Daniel SwimerDogus Cosgun or a member of the Real Estate Dispute Resolution team.