Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

Legionnaire’s disease and the HSE

We are aware that certain companies have been contacting landlords and agents in an effort to sell their services to carry out risk assessments for legionella bacteria in rental properties. These tests are often expensive and in most situations are completely unnecessary as is recognised by the Health and Safety Executive in its mythbusters section of the website.

The above mirrors the advice that we have always given in our past blogs here : yes there must be a written risk assessment, and that risk assessment must be done by a competent person BUT “competent” does not mean having any specific qualifications – all that is required is for the person carrying out the risk assessment to understand the circumstances in which legionella bacteria grows and becomes a risk; and what steps can be taken to reduce the risk of disease. That could be the landlord or agent.

Filed under: England & Wales

Consumer Rights Act 2015 and lettings agent fees. More duties for lettings agents?

From 27 May 2015 there will be a statutory duty on lettings agents in England  to publicise the fees they charge.

What needs doing?

  1. Agents need to display prominently in each office and on the agent’s website ( if there is one):
    1. A list of fees. The list must give enough information so that a person can work out what exactly they are paying for, and why, and how much it will cost. The list must set out whether the fees are per property or per individual. Where there is a joint tenancy is it one fee for all, or for each individual to pay? The fees must be set out inclusive of VAT ( and any other applicable tax), and where that fee is not determinable in advance, a description of how the fee is calculated, for example Landlord’s commission fees.
    2. If the agent holds client monies, a statement as to whether the agent is a member of a client money protection scheme.
    3. A statement to say that they are member of a redress scheme and giving the name of that scheme.

Who needs to do it?

Lettings agents in the Private Rental sector. Local authorities are excluded. The duty (and therefore any penalty) falls upon the agent and not salaried employees of the agent.

What does “fees” mean in this context?

For the purposes of this legislation “fees” means “ the fees, charges or penalties which a landlord or tenant pays to the agent in relation to letting agency work, property management work or otherwise in connection with an assured tenancy or a dwelling-house let under an assured tenancy”. Some exclusions are set out. Rent and Deposits are excluded ( but not “holding deposits”) and some third party fees e.g. agent paying a contractor on behalf of a landlord.

Penalties for non compliance

Trading Standards can fine an agent up to £5000.00. The first step is that they would serve a “notice of intent” upon the agent setting out the proposed penalty and reasons for it. The agent has 28 days to respond. Trading Standards then decides whether to impose the penalty and if it does, will send a “final notice” requiring payment within 28 days. If the penalty is imposed an agent has a right to appeal through the FTT .

More detail can be found in the explanatory notes to the act.

When does it need doing?

Agents will need to be in compliance by 27th May 2015

In fact, most agents who are already adhering to the requirements of membership of a particular professional body and complying with the rules of their redress scheme, are likely to already be doing the above.   Of course all agents should check that they are compliant with the new legislation, but those who are not already doing the above need to put measures in place to ensure that they are doing so by 27 May 2015.

Filed under: England only, , , , ,

Smoke and Carbon Monoxide Alarms

Smoke and Carbon Monoxide Alarms

We have had a number of helpline calls over the last few days regarding the new regulations relating to smoke and carbon monoxide alarms so we thought it was about time that we put out a blog to answer some of the frequently asked questions.

The government has announced that landlords will soon be required by law to install working smoke and carbon monoxide alarms in their rented properties and that section 150 of the Energy Act 2013 would come into force from 11 March 2015.

Section 150 (1) of the Act states that the government can make regulations which impose the duty on landlords that ‘during any period when the premises are occupied under a tenancy –

  •  the premises are equipped with a required alarm (or required alarms), and
  • checks are made by or on behalf of the landlord in accordance with the regulations to ensure that any such alarm remains in proper working order.’

Section 150 (2) of the Act defines ‘required alarm’ only as a smoke alarm or carbon monoxide alarm.

The regulations which are referred to in the Act, the proposed Smoke and Carbon Monoxide Alarm (England) Regulations 2015, are currently only available as a draft. It is expected that the Regulations will take effect from October 2015. We have outlined a number of key points from the Regulations below, but please note that these will not be confirmed until the Regulations are approved later in the year.

What is the requirement on landlords?

Regulation 3(1) defines the ‘relevant landlord’ upon whom the duty is imposed as the immediate landlord in respect of a specified tenancy and excludes registered providers of social housing.

Regulation 4 sets out what the specific duties of the landlord will be during any period beginning on or after 1 October 2015 where the premises are occupied under a tenancy. A smoke alarm will need to be fitted on each storey of the property where there is a room used wholly or partly as living accommodation. A carbon monoxide alarm will need to be fitted in any room which is used wholly or partly as living accommodation and contains a solid fuel burning combustion appliance. For the purposes of the above, bathrooms and lavatories are included in the definition of a room that is used as living accommodation and a ‘room’ includes a hall or landing.

Checks will also need to be made by or on behalf of the landlord to ensure that each alarm is in proper working order on the day the tenancy begins if it is a new tenancy.

Regulation 4(4) defines the term ‘new tenancy’ and confirms that this duty only applies to tenancies granted on or after 1 October 2015 and does not include:

  •  tenancies granted by an agreement entered into prior to 1 October 2015;
  • statutory periodic tenancies which arise at the end of a fixed term assured shorthold tenancy; or
  • any extensions entered into a the end of an earlier tenancy where the landlord and the tenant have not changed and the premises being let are the same or substantially the same as those let under the earlier agreement.

Enforcement

Under Regulation 5, if the local housing authority has reason to believe that the landlord has not complied with their duties set out in the Regulations, they must serve a remedial notice on the landlord setting out which duties it believes the landlord has failed to comply with and what action should be taken. The notice will require the landlord to take action within 28 days of the date on which the notice was served. If the landlord does not agree with the contents of the notice, they can submit a written appeal within that 28 day period.

Regulation 6(1) states that if a landlord is served with a remedial notice, they must take the action specified within the notice within the 28 days. Under Regulation 7(1) if the landlord fails to comply with the terms of the notice, the local housing authority will arrange for an authorised person to take the action specified in the notice, but only with the consent of the occupier of the premises (Regulation 7(1) and (4)).

A landlord will not be in breach if they can show that they have taken all reasonable steps, other than legal proceedings, to comply with the terms of the notice (Regulation 6(2)).

Penalties

Under Regulation 8, if the local housing authority is satisfied that the landlord has failed to comply with the terms of the remedial notice, they can impose a penalty charge which cannot exceed £5,000. The landlord does have a write to request a review of the penalty charge and can appeal it on various grounds (Regulation 11(2)) to the First-tier Tribunal if they do not agree with the local authority’s decision.

As we have said above, these Regulations will not be in force until October 2015, and we will be sending out another blog closer to the time to confirm what the provisions and remind you of the imminent changes. Until then, it is always best practice to ensure that any rented properties have adequate working smoke alarms and carbon monoxide detectors to ensure the safety of the tenant.

Filed under: England only

NEW Section 8 Notices, New Section 13 Notices

Just a short reminder that from 6 April 2015 any section 8 or section 13 notices must be served on the new form and we have put them in a word template on our shop and, for our helpline subscribers they are free in the vault.  To ease your pain we have added a rental arrears only section 8 template for serving when there are, well rent arrears only.

Filed under: England & Wales

Deregulation Act 2015

The long awaited Deregulation Act received Royal Assent on Thursday 26 March 2015 and provides an immediate amendment of the law in relation to tenancy deposits. These changes are very welcome for landlords following the flurry of cases following Superstrike v Rodrigues.

The Superstrike amendments:

  • If the deposit was received before 06 April 2007 and went period before 06 April 2007

The position set out in Charalambous v Ng  continues to apply.

  • If the deposit was received before 06 April 2007 but was renewed or went periodic after 06 April 2007

If the deposit has not been protected, the landlord now has a period of 90 days from 26 March 2015 (or before the Court hearing to determine a tenant claim for compensation or to determine the landlord’s claim for possession under s.21, whichever is the earlier) to protect the deposit and serve the prescribed information.

  • If the deposit was received after 06 April 2007

If the deposit has been protected and the prescribed information served at the outset, provided the deposit remains the same with the same scheme, the landlord will be treated as if he/she has complied. There is no need to re-protect the deposit and/or re-serve the prescribed information on renewal or roll over into a period tenancy.

If the deposit has not been protected at all, the Act doesn’t change the landlord’s liability.

Other Tenancy Amendments

The Act also provides many other amendments not only relating to landlord and tenant law. For our readership, the following are important:

  • Section 30 clarifies PainSmith’s view (see our blog here) that an agent can sign and serve the prescribed information on behalf of the landlord. The section amends The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 to make this explicit without the need to refer to the primary legislation. All references to “the landlord” within the Order have been amended to read “either the landlord or a person who acts on the landlord’s behalf in relation to the tenancy”.

 

  • Section 35 of the Act removes the requirement from s.21(4)(a) for the date of expiry of such a notice to be the last day of a period of the tenancy.

 

  • Section 36(2) provides that a s.21 notice cannot be given during the first 4 months of a tenant’s occupation under a tenancy agreement. This gives the tenant the same 6 month security of tenure but makes timing of the notice trickier where possession is required at the end of a 6 month term.

 

  • Section 36 also provides that a s.21 notice will only have a shelf life of 6 months after which possession proceedings cannot be issued on the notice. This is contrary to the previous approach that the Courts were taking that a s.21 notice could be relied on until it was waived.

 

  • Section 37 allows the Secretary of State to require landlords to use prescribed forms for s.21 notices. There is currently no prescribed form but Section 37 leaves it open that this might change.

 

  • Section 40 requires a daily apportionment of rent to be paid back to the tenant in the event that the tenant has paid rent in advance but a s.21 notice is subsequently served requiring the tenant to give up possession of the property during the period that the rent payment covers.

 

The Act also contains provisions to prevent the retaliatory eviction of tenants following orders being made by the local authority relating to disrepair at rental properties. The provisions are set out in Section 33 of the Deregulation Act but they are not yet in force. Watch this space for further details on the enactment of these amendments, which is expected to be towards the end of this year.

Filed under: England & Wales, , , , ,

Buying your freehold: Section 5 Landlord and Tenant 1987, Right to Buy

We have talked previously about long leaseholders purchasing their freehold.

PainSmith has recently assisted a substantial development of about 100 flats and various commercial units to purchase their freehold.  The Freeholder of this development entered into liquidation. The Liquidators served notices under Section 5 of the Landlord and Tenant Act 1987 giving the residential leaseholders a right of first refusal.  The development consisted of about 100 long residential leaseholders and various separately let commercial units.

Certain of the leaseholders approached PainSmith for advice and we were able to advise on their rights that provided not less than 50% of the residential leaseholders wanted to purchase they could do so at the price included in the notice.  PainSmith assisted in the co-ordination of the leaseholders to bring on board more than the numbers required.  This meant explaining the process and assisting in drafting documents for the leaseholders and then obtaining valuation advice to assist the participants in making the decision to proceed.   Acceptance Notices were served within two months of the service of the notice and the form of contract was agreed with the Vendors.  PainSmith assisted in dealing with an investor who was found to fund the premium payable in respect of the non-participant minority leaseholders so that those taking part did not have to fund this part of the premium.

The transaction completed allowing the residents who participated to have control of their destiny moving forward at a price they were advised was advantageous.

If therefore you or any of your clients in respect of leasehold property they own receive a Section 5 Notice from a freeholder indicating they are looking to sell their freehold interest we at PainSmith are experienced in:

  1. Advising on the Notice, its validity and steps to be taken,
  2. Assisting finding suitable valuation advice and if necessary finding investors to help fund the purchase.
  3. Co-ordinating all the various steps including payment of completion monies.
  4. Dealing with all of the formalities both prior to and post completion  of the freehold.

If you have any queries or questions do not hesitate to contact a member of the long residential leasehold team who will be happy to discuss and assist

Filed under: England & Wales,

The Assured Tenancies and Agricultural Occupancies (Forms) (England) Regulations 2015

Some of you may have seen that as at 6th April 2015 new forms have been prescribed for certain notices and applications with the most relevant to our readership being those in respect of Section 8 and Section 13 of the housing Act 1988 (as amended).  We will be updating the Notices for sale on our Shop and also those contained in our Document Vault (for our Helpline subscribers) and will put up a post once done.

In the meantime you should be aware that if from the 6th April 2015 you are looking to serve one of these notices it must be in the new form or it will be invalid.

So what are the changes?

In the main they are minor changes to the guidance notes.  With regards to the Section 8 Notice it is to take account of the fact that two new grounds (Grounds 7A and 14A) have been enacted. For the section 13 notices it is to update them to provide that the forum for referring any rent not agreed is the First Tier Tribunal (Property Chamber) which now undertakes the functions of the Rent Assessment Committee.

So the changes are minor and probably practically make very little difference for most of what you do, but be warned the new notices must be used or you do run the risk of any reliance you place on such a notice being challenged!

Filed under: England & Wales, , , ,

Time to get your house in order

Landlords are facing the prospect of wider and more severe sanctions for failing to keep rental properties in a safe and habitable condition.

From yesterday landlords who fail to comply with an Improvement Notice or Prohibition Order to ensure properties are safe and habitable face unlimited maximum fines in the magistrate’s courts. Previously there was a £5000.00 cap. That cap has been removed.

Further, Improvement Notices and Hazard Awareness notices in relation to category 1 and category 2 hazards are a “relevant notice” for the purposes of the proposed new section 21A of the Housing Act 1988, which is set to come in imminently with the Deregulation Bill. If the Bill is passed in its current form the new section 21A will provide that if a tenant complains in writing to the landlord regarding the condition of a dwelling house, and the landlord serves a section 21 notice, and after the landlord has served the section 21 notice the local authority serves an Improvement Notice or Hazard Awareness Notice, that section 21 notice will be invalid.

For those readers in need of a refresher, Hazard Awareness Notices, Improvement Notices and Prohibition Orders are part of the inspection and enforcement mechanism contained in the Housing Health and Safety Rating System introduced by the Housing Act 2004. A local authority has the right to inspect residential premises for hazards.

There are 29 hazards, in 6 main areas:

  • Damp and mould, excess cold, excess heat
  • Pollutants including asbestos, CO, Lead, Radiation
  • Space and security, light (is there enough?) and noise (is there too much?)
  • Hygiene, sanitation, water supply including adequacy of food preparation areas.
  • Accidents – protection from falls, slips, trips on stairs, electric shocks, burns, scalds
  • Collisions – structural hazards, poor design, explosions, collapse.

An environmental health officer, usually, but not always, following a request from a tenant, can attend a property and inspect for hazards. Each hazard identified is given a score based on the likelihood of an accident happening combined with the probable harm if it does happen. Depending on the score a hazard will be either a “category 1” hazard or a “category 2” hazard.

Category 1 hazards are the more serious.   A local authority must take enforcement action. Depending on the seriousness of the hazard the first step might be to attempt to deal with the matter informally by sending the landlord a “minded-to” letter, giving the landlord a time-limited chance to remove the hazard before taking enforcement measures. If the landlord does not comply, the local authority is likely to serve

an Improvement Notice ( this requires works to be undertaken to remove or minimise a hazard); or

a Prohibition Order ( this closes whole or part of the dwelling, or restricts the number of occupants); or

an Emergency Prohibition Order (If the hazard is thought to pose an “imminent risk of serious harm to the health and safety of any occupiers” in the property, the local authority might make an emergency prohibition order).

An Improvement Notice must set out in detail what the hazard is and set out clearly what work needs doing and a date by which the works must be started and completed. A Prohibition Order must set out what works must be done  for the order to be revoked. Failure to comply with an Improvement Notice or Prohibition Order constitutes an offence.  On conviction the fine until 12 March 2015 was capped at £5000.00. It is now unlimited. The local authority is entitled to recover the costs of enforcement, including the cost of an improvement notice.

Category 2 hazards are the less serious. The local authority has a power to take action, but not a duty. It can issue a Hazard Awareness Notice but there is no power to enforce. However if the Deregulation Bill is passed into law, a Hazard Awareness Notice served on a Landlord may be sufficient to invalidate a section 21 notice if the other conditions of the proposed section 21A are satisfied.

You can read more about the fines here.

You can follow the progress of the Deregulation Bill here.

 

Filed under: England & Wales, , , ,

Possession claims – court fees rise again

It has been announced by HM Courts and Tribunals Service that many Court fees will be significantly increased from 9 March 2015.

The fees for possession proceedings have been further increased by £75 with the fees for claims issued via the Court’s Possession Claims Online (PCOL) system now rising from £250 to £325 and the fee for paper based claims to rise from £280 to £355.

Most will be aware that this will be a very unwelcome increase, particularly considering that the issue fees for possession claims were already increased by over 60% just last April.

The area that has seen the biggest change are money claims, as detailed below:

  • The fee for claims from £1 – £9,999 will remain unchanged;
  • The fee for claims from £10,000 – £199,999 will now be five per cent of the claim; and
  • The fee for claims £200,000 and above will be fixed at £10,000.

The new fee increases are part of wider efforts to modernise and improve the efficiency of the courts and move towards a system which is self-funded. Understandably there has been much criticism of the increases, which will continue to add to the cost of accessing justice for litigants.

Filed under: England & Wales

Agents, bribes and secret profits

 

FHR European Ventures LLP and others (Respondents) v Cedar Capital Partners LLC (Appellant) [2014] UKSC 45

It is a well-known principle that an agent must account to his principal, and that an agent who holds or receives money on behalf of his prinicipal is bound to pay over or account for that money. If a third party then sues the agent for that money, the agent has the right to bring in the principal (“interplead”).

It is also a general principle that an agent owes a fiduciary duty to his principal because he is someone who has undertaken to act for or on behalf of the principal in circumstances that give rise to a relationship of trust and confidence; and as a result the agent must not make a profit out of his trust; and an agent who acts for two principals with potentially conflicting interests without the informed consent of both is in breach of his obligation.

This summer the Supreme Court examined the application of that principal when moneys have been received by an agent as a bribe or a secret profit.

In the case of FHR v Cedars  an agent negotiated the purchase of share capital on behalf of its principal ( the buyer).  Unbeknownst to the principal the agent had made a deal with the seller that they would receive a commission of 10 million euros following the successful sale and purchase.  The buyer, when it became aware of the deal, sued its agent for the 10 million euros.

The Supreme Court held that a bribe or secret commission accepted by an agent is held on trust for his principal;  not only did the principal have a right to sue for the sum equal to the benefit the agent had received, but that the principal has a proprietory interest in that benefit.

“where an agent acquires a benefit which came to his notice as a result of his fiduciary position, or pursuant to an opportunity which results from his fiduciary position, the general equitable rule ( “the Rule” ) is that he is to be treated as having acquired the benefit on behalf of his principal, so it is beneficially owned by the principal……a bribe or secret commission accepted by an agent is held on trust for his principal”.

In the sphere of lettings, if a landlord’s agent makes a secret profit, that profit is considered to be the property of the Landlord. Clearly an agent holding or receiving rent must hand it over to the landlord:  it is the landlord’s money. An agent holding overpaid rent should also hand it over to the landlord, and let the tenant pursue the landlord for the refund (although that principal is under challenge from consumer protection regulations and codes of conduct).  But what would constitute a bribe or secret profit, the benefit of which would belong to the landlord?

Consider the following examples.

  • An agent arranges for a contractor it has on its books to do work for its managed properties.   The contractor, in exchange for the work, agrees to pay the agent 10% of its profits from the work done. If the agent does not disclose the arrangement and get the agreement of both parties, the agent will be in breach of his duty and that profit will belong to the landlord. Where it is set out in the agent’s terms of business with the landlord that he takes a cut from the contractor, the agent can rely on that clause to show he is not in breach and that the landlord was fully aware and could give informed consent. Again the ability to accept such payments is under challenge from consumer protection regulations.
  • An agent facilitates an early surrender of a tenancy. The Landlord agrees unconditionally.   The agent asks for and takes a lump sum payment from the tenant as consideration for the early surrender but does not tell the landlord of the deal, nor does he pass the money on. That payment belongs to the Landlord. If you are seeking a payment from the Landlords tenant, even if to cover your administration charges, this should be disclosed to the Landlord and agreed by them.
  • The terms of business between agent and landlord provide that the cost of an inventory clerk will be £200.00 plus £50.00 admin fee for arranging the same. The inventory clerk gives a discount of £50.00 and charges only £150.00. The agent does not tell the landlord and charges the landlord £250.00. £50.00 of that money belongs to and must be handed over to the landlord.

Where agents are acting as estate agents any breach of such fiduciary duty could lead them to be struck off. Lettings agents are now at risk of being ejected from the compulsory redress schemes and unable to practice, as well as of being sued for negligence etc.  However agents can protect themselves by agreeing fees with their clients at the outset, and declaring and passing over any monies that come to them during their instruction. Transparency as to all arrangements for receiving payments from any third party connected with the tenancy is key.

 

 

 

Filed under: England & Wales, ,

I predict a riot – Anti-social behaviour Crime and Policing Act 2014

The Anti-Social Behaviour Crime and Policing Act 2014 (the Act) was given royal assent in March 2014. It amends the Housing Act 1988 to include a new mandatory grounds for possession based on anti-social behaviour. Sections 97 to 100 ( in Part 5) of the Act deal with the new grounds for possession relating to Assured Tenancies ( of which Assured Shorthold Tenancy is a subset). These provisions are not yet in force, and will come in via a Commencement Order sometime in the future.

New ground 7A

In summary ground 7A of schedule 2 of the Housing Act 1988 will provide that the court must give possession if any one of 5 conditions are met:

1. the tenant and/or another occupier or visitor has been convicted of a serious offence and that offence took place in or near the property; or elsewhere but against a tenant/occupier of the property; or against the landlord or agent
2. the tenant/occupier or visitor has breached an injunction to prevent nuisance and annoyance( which is a new injunction to be introduced under this act)
3. the tenant/occupier or visitor has breached a criminal behaviour order ( also new order under this act) and that breach was in or near the property, or caused or was likely to cause harassment to a tenant/occupier or landlord/agent, wherever it took place.
4. the property has been closed down under s73 of the Act. The court has a power to prohibit entry to a property where the use of the premises has resulted in or likely to result in serious nuisance to members of the public.
5. the tenant is in breach of an abatement notice relating to statutory nuisance ( breach of Environmental Protection Act 1990 or noise nuisance

The grounds will not be made out if the conviction is in the process of appeal, or has been overturned.

There are time limits: for example for 1,3 and 5 the notice must be served within 12 months of the conviction; for 2 within 12 months of the court making its finding; and for 4 within 3 months of the closure order. The date that the notice expires and after which the landlord could bring proceedings will be one month from the date of service during a fixed term tenancy, or for periodic tenancies, the earliest date that the tenancy could be brought to an end by a notice to quit. Interestingly the reference to the common law principal of notice to quit suggests that in a periodic tenancy, where a landlord can give only two months’ notice at any time, a notice given under 7a will need to expire at the end of a period of the tenancy.

Why ground 7A? Because the mandatory grounds for possession go from 1-8 so this ground has been shoe-horned in at no 7A and is not related to ground 7.

Will it ever be used? In a fixed term then possibly, especially if the fixed term is for a relatively long period with no break clause. In a periodic tenancy arising after the end of a fixed term, unless and until the use of section 21 is limited, why use ground 7a, which would require a hearing and expire at the end of a period, when you could simply serve two months’ notice under the ruling in Spencer v Taylor and the accelerated procedure.

The discretionary ground 14 is also to be amended to make it a ground if the tenant or occupier “has been guilty of conduct causing or likely to cause a nuisance or annoyance to the landlord of the dwelling-house, or a person employed (whether or not by the landlord) in connection with the exercise of the landlord’s housing management functions, and that is directly or indirectly related to or affects those functions”. There is no need for the conduct to take place at the rented property.

Controversially, ground 14ZA is added to include that the tenant/occupier has been
convicted of an offence which took place during, and at the scene of,
a riot in the United Kingdom.

Filed under: England only, , , , , ,

Redress Schemes for Letting Agents – countdown to deadline

Sadly the gremlins got into the Painsmith blog again and the address for one of the three authorised schemes was incorrect.  Here they are in full.

The Property Redress Scheme:  www.theprs.co.uk.

The Property Ombudsman:    http://www.tpos.co.uk

Ombudsman Services:  http://www.ombudsman-services.org/property

Filed under: England & Wales

Redress Schemes for Letting Agents – deadline to sign up 1 October 2014

From 1 October 2014 anyone carrying out “lettings agency work” operating in England must belong to a government authorised redress scheme or face a fine of up to £5000.00.

Who does it apply to?

The Enterprise and Regulatory Reform Act 2013 s83 provides:

S83…….

(7)In this section, “lettings agency work” means things done by any person in the course of a business in response to instructions received from—

(a)a person seeking to find another person wishing to rent a dwelling-house in England under a domestic tenancy and, having found such a person, to grant such a tenancy (“a prospective landlord”);

(b)a person seeking to find a dwelling-house in England to rent under a domestic tenancy and, having found such a dwelling-house, to obtain such a tenancy of it (“a prospective tenant”).

(8)However, “lettings agency work” does not include any of the following things when done by a person who does no other things falling within subsection (7)—

(a)publishing advertisements or disseminating information;

(b)providing a means by which—

(i)a prospective landlord or a prospective tenant can, in response to an advertisement or dissemination of information, make direct contact with a prospective tenant or (as the case may be) prospective landlord;

(ii)a prospective landlord and a prospective tenant can continue to communicate directly with each other.

With regards to property management work:

S84……

(6)In this section, “property management work” means things done by any person (“A”) in the course of a business in response to instructions received from another person (“C”) where—

(a)C wishes A to arrange services, repairs, maintenance, improvements or insurance or to deal with any other aspect of the management of premises in England on C’s behalf, and

(b)the premises consist of or include a dwelling-house let under a relevant tenancy.

(7)However, “property management work” does not include—

The section goes on to define “relevant tenancy” as an Assured Tenancy ( of which Assured Shorthold Tenancy is a subset); a Rent Act tenancy, and residential long leases. Commercial leases are not relevant tenancies.

In short, if you are a lettings agent, a relocation agent, or a property management agent then the rules apply to you and if you are not already a member of a scheme you have a fortnight from today to do so.

Newspapers that carry advertisements, web portals which facilitate landlords and tenants finding each other directly are not considered to be carrying out “lettings agency work”, nor does the definition apply to things done by a local authority.

Currently there are three schemes:

The Property Ombudsman   http://www.tpos.co.uk/

Ombudsman Services – Property    http://www.ombudsman-services.org/property.html

Property Redress Scheme   www.theprs.co.uk.

Agents should also be aware that in order to comply with the  Consumer Contracts (Information Cancellation and Additional Charges  Regulations 2013  the name and details of any redress scheme be given to consumers before any contract is entered into. The information should be given either in the terms of business or separately but before the contract is concluded.

Filed under: England & Wales

Erratum : Spencer v Taylor and Superstrike v Rodrigues revisited, revisited

Our blog dated 7 August 2014 contained a rather important typo which was drawn to our attention and corrected within one hour of the original blog going up.

It has now come to light that subscribers to the blog were not alerted to the correction. The corrected version is repeated below. We hope that it was obvious from the tone of the article that it was a typo and we are very grateful to our original subscriber who queried the point. We apologise for any confusion caused.

So here is the correct version:

Spencer v Taylor [ 2013] EWCA Civ 1600

The Court of Appeal ruled that when serving notice on a tenant in a statutory periodic tenancy, provided there was once an initial fixed term, Landlords may serve valid notice by giving not less than two months’ written notice i.e according to the provisions of section 21 (1)(b) of the Housing Act 1988. There is no need for the notice to expire at the end of a period of the tenancy; even if the period is six months, the Landlord need only serve two months’ notice in writing.

We blogged on this here.

So why are we bringing it up again? Our original blog advised caution in moving over to the practice of serving notices on statutory periodic tenants under s21 (1)(b) on the basis that the tenant might appeal, and that the decision might take time to trickle down to the lower courts. Indeed the tenant did apply to appeal the matter to the Supreme Court but has been refused leave to appeal, which means that the Court of Appeal decision continues to be good law unless and until a new case on the same issue reaches the Supreme Court.

Helpline subscribers can access a notice that follows the ruling in Spencer v Taylor from our document vault to use in statutory periodic tenancies.

Where there was never an initial fixed term, or where a fixed term is expressed to continue on a contractual periodic basis, the provisions of section 21 (4)(a) should be followed.

Superstrike Ltd v Rodrigues [2013] EWCA Civ 669 (14 June 2013)

When a fixed term assured shorthold tenancy ends, a statutory periodic tenancy arises. That tenancy is a new tenancy for the purposes of the deposit protection legislation ( ss212 to 215 Housing Act 2004 as amended by the Localism Act 2011). At the end of the fixed term the Landlord/Agent is deemed notionally to have returned the deposit and then re-received it. This means that the requirements to comply with the deposit protection rules kick in once more – you need to protect the deposit in a government authorised scheme and serve the appropriate prescribed information.

We blogged on this here

So why are we bringing this up again? Because although our advice has always been to re-serve the prescribed information, we did not know how the courts were going to apply Superstrike. We have had brought to our attention the case of Gardner v McCusker. In this county court case the Landlord had failed to (re)serve the prescribed information when the tenant’s fixed term ended and a statutory periodic tenancy arose and then served a section 21 notice. The court found that the landlord had not complied with the deposit protection requirements and that the section 21 notice was invalid. This is one county court decision. It is not binding on other courts. However, why risk the point being raised and exposing yourself to a penalty and failed possession proceedings? There are plans afoot to amend the deposit protection legislation with amendments to the Deregulation Bill which is currently going through Parliament. A court decision might come along which says that the prescribed information served in the fixed term satisfies the requirement to serve when a statutory periodic tenancy arises. Until then, just get into the habit of serving new prescribed information whenever an SPT arises and save yourself some trouble later.

Filed under: England & Wales

Spencer v Taylor and Superstrike v Rodrigues revisited.

Spencer v Taylor [ 2013] EWCA Civ 1600

The Court of Appeal ruled that when serving notice on a tenant in a statutory periodic tenancy, provided there was once an initial fixed term, Landlords may serve valid notice by giving not less than two months’ written notice i.e according to the provisions of section 21 (1)(b) of the Housing Act 1988. There is no need for the notice to expire at the end of a period of the tenancy; even if the period is six months, the Landlord need only serve two months’ notice in writing.

We blogged on this here.

So why are we bringing it up again? Our original blog advised caution in moving over to the practice of serving notices on statutory periodic tenants under s21 (1)(b) on the basis that the tenant might appeal, and that the decision might take time to trickle down to the lower courts. Indeed the tenant did apply to appeal the matter to the Supreme Court but has been refused leave to appeal, which means that the Court of Appeal decision continues to be good law unless and until a new case on the same issue reaches the Supreme Court.

Helpline subscribers can access a notice that follows the ruling in Spencer v Taylor from our document vault to use in statutory periodic tenancies.

Where there was never an initial fixed term, or where a fixed term is expressed to continue on a contractual periodic basis, the provisions of section 21 (4)(a) should be followed.

Superstrike Ltd v Rodrigues [2013] EWCA Civ 669 (14 June 2013)

When a fixed term assured shorthold tenancy ends, a statutory periodic tenancy arises. That tenancy is a new tenancy for the purposes of the deposit protection legislation ( ss212 to 215 Housing Act 2004 as amended by the Localism Act 2011). At the end of the fixed term the Landlord/Agent is deemed notionally to have returned the deposit and then re-received it. This means that the requirements to comply with the deposit protection rules kick in once more – you need to protect the deposit in a government authorised scheme and serve the appropriate prescribed information.

We blogged on this here

So why are we bringing this up again? Because although our advice has always been to re-serve the prescribed information, we did not know how the courts were going to apply Superstrike. We have had brought to our attention the case of Gardner v McCusker. In this county court case the Landlord had failed to (re)serve the prescribed information when the tenant’s fixed term ended and a statutory periodic tenancy arose and then served a section 21 notice. The court found that the landlord had not complied with the deposit protection requirements and that the section 21 notice was invalid. One swallow does not make a summer. This is one county court decision. It is not binding on other courts. However, why risk the point being raised and exposing yourself to a penalty and failed possession proceedings? There are plans afoot to amend the deposit protection legislation with amendments to the Deregulation Bill which is currently going through Parliament. A court decision might come along which says that the prescribed information served in the fixed term satisfies the requirement to serve when a statutory periodic tenancy arises. Until then, just get into the habit of serving new prescribed information whenever an SPT arises and save yourself some trouble later.

Filed under: England & Wales, , , , ,

European Standards for Safety of Internal Window Blinds

The British Standards Institution published new standards in February 2014 based upon the European Standards on safety requirements to address certain risks posed to children by internal blinds, corded window coverings and safety devices. These Regulations apply to all businesses but not to a consumer therefore any installer will be subject to the Regulations as will any business entity. The Regulations run to forty pages but a short summary is shown below.

1 Businesses must sell a safe product.

2. The Standards affect any device used for internal blinds or curtain tracks including but not limited to, vertical blinds, roller blinds, Roman blinds and plantation shutters.

3. The Standards apply to blinds which have cords or chains fitted with a hazardous loop that could create a hazard in premises where there are children aged between 0 and 42 months who are likely to have access
or be present.

4. All new blinds or curtain tracks which are fitted by a professional must pass the new standard that specifies safety requirements and test methods for safety devices to improve safety and help prevent accidents. These safety devices can be fitted during manufacture or where blinds or curtain tracks have already been installed be retro-fitted to window blinds and tracks.

Practical Issues

If a blind or curtain track is purchased new then it should contain a label regarding safety and compliance with the Standard together with a safety device installed to prevent strangulation of a young child by a dangerous loop made of cord material or ball bearings. When choosing new window blinds in houses or public buildings such as offices it is strongly recommended that the chosen blind is safe by design which means it does not use cords or chains to operate it; or if they are fitted then the cords or chains are either concealed or tension cords and chains. However Agents should check existing properties where blinds or tracks with cords are already fitted and if there is a long or loose loop arrange the fitting of a cleat or snap connector retrospectively to these items as a matter of urgency.

If an accident did occur the Trading Standards could take action for failure by an Agent to have such devices fitted.

Filed under: England & Wales,

New CMA Guidance for Lettings Professionals

The Competition and Markets Authority (CMA) which replaced the OFT earlier this year issued on the 13th June 2014 “Guidance for lettings professionals on consumer protection law”. Plainly for anyone involved in the Lettings Industry a must read document!

Much of what is included within the guidance is not new. It helpfully pulls together various guidance which has been issued and incorporates it in one document. The underlying principle throughout is that letting professionals must act fairly with all they come into contact with. This is a positive obligation which you must actively set out to achieve. This objective mirrors the Consumer Protection Rules and also the CAP Guidance on advertising issued last year.

We will be studying the guidance carefully and watching how over the ensuing months this is applied by both CMA and Trading Standards officers in their dealings with agents.

Filed under: England & Wales, , , , , , ,

Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013

As many of you are aware the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 came into force on 13 June 2014 (the Regulations).

Rental agreements are specifically excluded so the Regulations do not apply to tenancy agreements but all other contracts are potentially caught. Particularly, the Regulations do apply to lettings and sales terms of business with landlords/sellers that are individuals acting outside their business.

To comply with the Regulations, you are required to give certain information to the consumer. What is required depends on where the contract is concluded. A notice of right to cancel may also have to be given.

If you are required to give notice of the right to cancel, you are advised not to undergo any work during the cancellation period (14 days) unless and until the client requests you to do so in writing otherwise you will not be entitled to charge for the work undertaken.

In light of the Regulations, we have updated our template lettings and sales terms and these are available for purchase from our online shop. Alternatively, if you want to keep your standard form, we have produced a stand-alone template of clauses to be inserted to help you when you are amending it (please note though that this is a template and may need to be adapted to fit your own documents). All versions come with guidance as to when and how the Regulations apply.

If you would like assistance in tailoring to your terms please contact us and ask for a quote.

Prices at going to press:
£150.00+VAT Sales Terms
£150.00+VAT Lettings Terms
£75.00 Guidance and clauses

Filed under: England & Wales, , , ,

Legionnaires’ Disease update : what do you need to know?

We first blogged on Legionnaires’ Disease here, but as this seems to be a popular topic amongst our helpline calls it seemed time to revisit.

What is Legionnaires’ Disease?

Legionnaires’ Disease is an illness contracted by inhaling droplets of water which are contaminated by Legionella bacteria. The bacteria are found in most water systems, but the risk is in places where the bacteria can multiply and increase to dangerous levels. The bacteria can survive low temperatures and thrive in stagnant waters with temperatures between 20 and 45 degrees celcius. The bacteria are killed in temperatures above 60 degrees celcius.

What do I have to do as landlord/agent?

Landlords are responsible for ensuring that the risk of exposure to Legionella in their property is properly controlled. A landlord has the duty to assess the risk from exposure to the tenant and, where a risk is identified, take appropriate steps to remove or minimise the risk. This risk assessment can be carried out by a third party, but the ultimate responsibility is the landlord’s.

The Health and Safety Executive (HSE) can impose fines or imprisonment if you do not comply with these requirements. This can happen even if there is an exposure to risk without someone actually being affected.

How do I carry out a Legionella risk assessment?

When carrying out the risk assessment you should be asking the following questions in relation to each water system and associated equipment:

1. Is the water stored or re-circulated?
2. Is the water temperature in some or all parts of the system between 20-45 degrees?
3. Is there rust, sludge, scale or organic matter in the system?
4. Are there any conditions present which would encourage the bacteria to multiply, e.g stagnant water in any areas of the water system? This could include redundant pipework, or any outlets that are not frequently used.
5. Is it possible for water droplets to be produced and, if so, can they be dispersed over a wide area?

Individuals with weaker immune systems are most at risk of contracting Legionnaire’s Disease so you will need to think about the age and any pre-existing illnesses of the person that will be living in the property when you carry out the assessment.

Even if there is no storage of hot or cold water in the system you still need to carry out a risk assessment. There may be other factors in the system which increase the risk, including shower heads and long runs of pipework.

You should keep a written record of the risk assessment which should include:

1. The name of the person carrying out the risk assessment;
2. The review date;
3. A list of the systems you are assessing;
4. Any potential sources of risk;
5. Any controls in place to control risks;
6. Your monitoring, inspection and maintenance procedures; and
7. Records of the monitoring results, inspections and checks you have carried out.

Who can undertake the risk assessment for Legionella?

The risk assessment needs to be carried out by a competent person. The HSE defines a competent person as ‘someone with the necessary skills, knowledge and experience’. This does not need to be a contractor. An agent can carry out the risk assessment, but they need to have an understanding of how to inspect the premises for any risks as set out above. This can be provided through proper training and by ensuring that each agent is following the guidelines that have been set out by the HSE.

What do I do when a risk is identified?

Where you have identified a risk you should take steps to deal with it, such as flushing out the system, avoiding debris getting into the system, or maintaining the correct water temperature. You should also advise the tenant of any risks and provide them with instructions on how to avoid them (e.g. flushing out the system after periods where the system has not been used). Humidifiers, pools and spas are potentially high risk so if any of these are present in the property you should ensure that the tenant is provided with the manufacturer’s instructions and that the items are serviced regularly.

You should ensure that the risk assessment is reviewed regularly and carry out a new assessment whenever any element of it changes, e.g. vulnerable tenants move in or a system is updated/altered.

There are a few things that you can do to prevent or control any risks, including:

1. Keeping water in the boiler at a minimum of 60 degrees;
2. Dismantling, descaling and cleaning any shower heads regularly and between lets;
3. Regularly flush through any water units that are not regularly used; and
4. Inspect the cold water tank regularly and ensure that it is insulated with a closed lid.

Filed under: England & Wales,

Can squatters acquire title to land post s144 LASPOA?

R (Best) v Chief Land Registrar [2014] EWHC 1370 (Admin)

The facts

In 2002 Mr Best took possession of a property that he knew to be empty. He spent the next 10 years working on the property: making it watertight, putting down floorboards, painting, plastering etc. He then took up occupation of the property in 2012.

Soon after taking up residence, Mr Best made an application to the Land Registry to have the property register amended to show him as legal owner. His application was made in accordance with the Land Registration Act 2002, which allows a person who has been in adverse possession of registered land for 10 years or more to make such an application.

The usual process on receipt of a valid application involves the land registry sending out details of the application to the registered owner and giving him the chance to object. However, Mr Best did not even get this far as the Chief Land Registrar refused to accept Mr Best’s application as valid on the basis that Mr Best was not entitled to rely on his 10 years occupation as during this time he was committing a criminal offence and should not be allowed to rely on this period (following Section 144 Legal Aid, Sentencing and Punishment of Offenders Act which came into effect on 01 September 2012.

On receiving notice of the Land Registry’s rejection of him application, Mr Best sought judicial review of the decision arguing the decision was wrong on three grounds:
1. It was not parliament’s intention that Section 144 of the LASPOA should alter the position set out in the LRA 2002 or, if it was, the intention was that it should only alter the position if the legal owner would also have been committing a criminal offence if he had carried out the same act. Here clearly not.
2. He was not committing a criminal offence under Section 144 as this only criminalises “living in” residential premises and not other physical acts which are sufficient to rely on in making a claim for adverse possession. Mr Best asserted that he had begun living in the property until 2012, which was after the 10 year period. During the 10 years though he had undertaken acts such as securing doors and windows, which is a sufficient basis for an application for registration.
3. The Land Registry’s interpretation of Section 144 was in breach of Mr Best’s rights under Article 8 of the European Convention of Human Rights and/or Article 1 of Protocol I to the ECHR (the right to respect for one’s private and family life and the right to peaceful enjoyment of property).

The Court Decision

On considering the points raised by Mr Best, the court ruled that, although as a matter of public policy a person should not be allowed to derive benefit from criminal acts, that principle must be weighed up against other public policy interests. In this case, the question of whether a trespasser should be allowed to rely on his wrongdoing needed to considered against the conflicting interest that title should not be left uncertain when there had been a long period of possession to which no dispute had been raised. The Court decided that parliament would not have enacted Section 144 in the way that it did with the intention that the Act should amend the rules already in place regarding adverse possession. If this had been the intention then parliament would have made express provisions in LASPOA dealing with this.

The Court agreed that Mr Best had performed acts of adverse possession that would suffice for an application, such as possession through acts of repair, maintenance and exclusion.

The Court, however, found that the Land Registry’s decision was not incompatible with the ECHR.

The court granted permission to appeal so watch this space. Meanwhile read the whole case here.

Filed under: England & Wales

Section 8 case – ( but don’t try this at home)

Readers might be interested in another example of the Court of Appeal upholding a notice despite the tenants attempts to claim it was defective – this time a section 8 notice.

The Queen on the Application of Masih v Yousaf [ 2014] EWCA Civ 234

The facts.
Mr Yousaf let a property out to Miss Masih on an AST. When Miss Masih fell into rent arrears Mr Yousaf served a section 8 notice, followed by proceedings for possession. At the hearing possession was granted on the mandatory ground 8. So far so normal. The tenant applied to the court to set aside the possession order on the grounds that the section 8 notice was not in proper form. This matter then ended up in the Court of Appeal.

The appeal
The tenant argued that the notice seeking possession had not complied with section 8.2 of the Housing Act 1988 in that it did not properly specify the ground that was being relied on.

The notice served on Miss Masih :
“Your landlord intends to seek possession on ground(s) 8 in schedule 2 to the Housing Act 1988 as amended by the Housing Act 1996, which read(s): that the tenant owed at least two months’ rent both when the landlord served notice that he wanted possession and still owes two months’ rent at the date of the court hearing”

Ground 8 in schedule 2 of the Housing Act 1988 in fact reads:
“Both at the date of the service of the notice under section 8 of this Act relating to the proceedings for possession and at the date of the hearing:
a) if rent is payable weekly, or fortnightly, at least eight weeks’ rent is unpaid;
b) if rent is payable monthly, at least two month’s rent is unpaid;
c) if rent is payable quarterly, at least one quarter’s rent is more than three months in arrears; and
d) if rent is payable yearly, at least three months’ rent is more than three months in arrears;
And for the purpose of this ground “rent” means rent lawfully due from the tenant”.

The Court of Appeal, in the earlier case of Mountain v Hastings 35 HLR 7 had already held that the grounds in schedule 2 may be validly specified in the notice in words that differ from the statutory language provided that the words are “adequate to achieve the legislative purpose of giving the tenant the information which the provision requires to be given in the notice to enable the tenant to consider what he should do and do that which is in her power to put things right and best protect her against the loss of her home”.

However in Mountain, the notice was defective as it had not included the requirement that the rent was unpaid at both the date of service and the date of the hearing and that “rent” meant rent lawfully due.
The tenant in this case tried to rely on Mountain on the basis that the notice was absent the phrase that “rent means rent lawfully due”.

Did it matter that the notice did not mention “rent lawfully due”? Lord Justice Floyd said [para 25]:
“In contrast to a statement that rent is unpaid, a statement in a section 8 notice that the rent was owed in my judgment is sufficient notice to enable a recipient to appreciate that it would be an answer to the claim to show that the rent was not lawfully due, thus the recipient of a notice using the word “owe” is aware that he or she must find some basis for showing that the rent is not owed”.

Floyd LJ was unable to find a case where rent might be owed but not lawfully due. He ended his judgment ( with which the other two C of A judges agreed) by quoting from the judgment in Mountain v Hastings:
“ ‘It is difficult to think of any good reason why a person given the task of settling a form of notice should choose to use words differently from those in which the Crown has stated in the schedule.’
That is and remains sound advice”

Comment

A section 8 notice which does not replicate the statutory wording is not necessarily defective, if the tenant can ascertain from it what the notice requires, and what s/he needs to do to maximise chance of keeping her home. In this case it was that rent was owed, and that the tenant needed to pay the arrears ( or counterclaim) in order for the rent not to be owing.

This decision seems to be very much from the Spencer v Taylor stable of Court of Appeal decisions and arguably represents a growing reluctance to find notices invalid on technicalities or hair splitting meanings of words.
That said, we would still recommend using the statutory wording. Why make things complicated when they need not be. Use the statutory wording and keep your possession proceedings to a five minute first instance hearing. Or better still hope that the tenant clears the arrears.

*How did it end in the Court of Appeal ?
After the original possession order was granted the tenant had made an application to set aside the possession order and stay the bailiff’s warrant. At the application hearing the judge concluded that he did not have the power to set aside a possession order, but granted possession to appeal.
The Court of Appeal also considered the point as to whether the judge hearing the set-aside application had been right not to set aside a possession order made in the presence of both parties. Floyd LJ cited a stream of authorities on the subject. Where the defendant did not attend the hearing at which possession was made, then possibly ( see London Borough of Hackney v Findlay [2011]EWCA ), but otherwise if “all that is sought is a reconsideration of the order on the basis of the same material, then that can only be done in the context of an appeal”. See Collier v Williams [2006] EWCA Civ 20.

Filed under: England & Wales

Council Tax

We have been getting a number of queries regarding council tax liability on our helpline recently so we thought it was about time that we revisit some past cases and the relevant legislation and answer a few of our frequently asked questions.

Who is liable to pay council tax?

As a starting point, Section 6(2) of the Local Government Finance Act 1992 sets this out thus:

Persons liable to pay council tax.

(1)The person who is liable to pay council tax in respect of any chargeable dwelling and any day is the person who falls within the first paragraph of subsection (2) below to apply, taking paragraph (a) of that subsection first, paragraph (b) next, and so on.

(2)A person falls within this subsection in relation to any chargeable dwelling and any day if, on that day—
(a)he is a resident of the dwelling and has a freehold interest in the whole or any part of it;
(b)he is such a resident and has a leasehold interest in the whole or any part of the dwelling which is not inferior to another such interest held by another such resident;
(c)he is both such a resident and a statutory , secure or introductory tenant of the whole or any part of the dwelling;
(d)he is such a resident and has a contractual licence to occupy the whole or any part of the dwelling;
(e)he is such a resident; or
(f)he is the owner of the dwelling.

Local authorities will therefore first see if there is someone who falls into para (a), and if not will move onto para (b) and so on.

Following this list, it is clear that where the owner of the freehold interest (the Landlord) is no longer a resident of the property and has entered into a tenancy or created a licence with another party who is resident of the property i.e. there is someone who falls into one of categories a-e above, he will no longer be responsible for the payment of council tax. However if there is no-one liable under a-e, council tax liability falls on the owner.

Who is the “owner” for the purposes of section 2(e)?

In Section 6(5) ‘owner’ is defined as a person having a material interest in the whole or any part of the premises. Section 6(6) further defines ‘material interest’ as being either a freehold interest or a leasehold interest which is granted for six months or more.

Therefore the “owner” for the purpose of this section can mean not only the owner of the freehold interest ( i.e. Landlord), but also in some cases the tenant ( owner of leasehold interest).

What happens if the tenant is no longer resident?

Where the tenant leaves the property before the end of a fixed term of six months or more (without giving notice in line with a break clause or agreeing a surrender with the landlord), the tenant would be the “owner” for the purposes of Council Tax liability and therefore the tenant would continue to be liable for council tax. This liability would only continue until either the tenant’s valid notice has expired or the landlord accepts to implied surrender and takes back possession.

However, what about when fixed term has ended and a statutory periodic tenancy has arisen. This situation was considered in the case of MacAttram v London Borough of Camden [2012] EWHC 1033. This case concerned a three year fixed term contract with Camden who used the property to house homeless applicants. After an initial fixed term the tenancy became a statutory periodic tenancy and Camden continued to pay the monthly rent although there were no longer any occupiers residing in the property. Camden had then stopped paying rent and tried to surrender the tenancy. To add insult to injury, they then presented the landlord with a council tax bill for the time that the tenancy was a periodic tenancy.

As neither the landlord nor tenant was a resident during this time, the court explored the definition of ‘owner’.

The Landlord, Mrs MacAttram tried to argue that as the original tenancy had been granted for three years, Camden continued to have a material interest in the property when the tenancy went periodic. However, it was held that the periodic tenancy was a new tenancy and not a continuation of the original fixed term. As the tenancy ran from month to month, Camden was not considered to have a material interest as it had not been granted for six months or more.

It is worth noting that whilst this would mean that the local authority can require a landlord to pay the council tax from the date that the tenant vacates, this does not affect the contractual relationship between the landlord and tenant. As such, you should ensure that your tenancy agreement contains a clause that states that the tenant is responsible for council tax until the end of the tenancy (and most well drafted agreements will define the tenancy to include any holdings over or statutory periodic tenancies etc) so that the landlord in turn can recover this money from the tenant.

Who is responsible for council tax where the property is an HMO?

It is important to note that the definition of an HMO for the purposes of council tax liability is different to the definition provided in the Housing Act 2004. We have already posted a blog on this case, Goremsandu R (on the application of) v London Borough of Harrow [2010] EWHC 1873 (Admin), but for those of you that missed it the case can be summarised as follows:
A group of tenants occupying the property on a single AST, each paying a ‘share’ of the rent direct to the landlord. The conservatory at the property was unusable because the tenants had placed all of the landlord’s furniture in it (by agreement) as they had no use for it. As the tenants were jointly and severally liable and the tenants did have access to the conservatory should they have wished, liability fell to the tenants.
However where a property is an HMO for Council Tax purposes then the landlord has the primary liability for Council Tax. If part of the demise is excluded from the tenancy ( e.g. a locked room) so that there is no liability to pay rent on the dwelling “as a whole”, or the tenants have a licence to occupy only part of the dwelling, then the landlord will remain liable for Council Tax.
The tenants left owing in excess of £11,000 in Council Tax. Harrow tried to make the landlord pay it.
The full post can be found here.

What if the landlord is storing items or restricting access to parts of the premises?

Landlords should be careful where they are storing possessions at the property or restricting the tenant’s access to parts of the premises. A common example is where the tenancy agreement specifically excludes the loft from the tenancy. In these situations the owner can be pursued by the local authority for the council tax. Again, the landlord would be able to pursue the tenant for any council tax he has paid if the tenancy agreement states that the tenant is liable to pay it.

Who is entitled to any council tax discounts when the property is vacant?

Local authorities now have the discretion to charge full council tax on empty properties, but can choose to offer a discount. You will need to contact your local authority to find out if they have an exemption period of offer any discounts.

We receive a lot of calls from the agents and landlords whose tenants have vacated the property a month early and later find the council tax exemption period has already been used by their former tenants. Unfortunately for landlords hoping to use any discount themselves to bridge the gap between tenants, tenants are able to make use of any empty house exemptions. Of course this is only if they are no
longer living in the property and have taken all their belongings with them.

Filed under: England only, ,

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013

These Regulations are due to come into force on 13 June 2014 and will apply to all contracts that traders enter into with consumers after that date. The Regulations replace the provisions that are currently in place under the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contracts Made in a Consumer’s Home or Place of Work etc Regulations 2008.

A consumer for the purposes of the Regulations is an individual acting outside of their trade, business craft or profession.

How do the new Regulations apply to lettings agents?

The Regulations do not apply to tenancy agreements as Regulation 6(1) (d) specifically excludes contracts for rental of accommodation for residential purposes from their scope. However, terms of business with landlords are potentially caught.

What is required?

The Regulations distinguish between three types of contracts and require different initial information to be given or made available to the consumer:

1. On Premises Contracts – Regulation 9

These are defined as contracts that are concluded otherwise than at a distance or by way of an off premises contract.

So, all contracts concluded at a lettings agent’s premises. The Regulations require the trader to give or make available the information set out in Schedule 1 of the Regulations.

The information does not necessarily have to form part of the terms of business document but the agent will need to be able to prove that the information was given and it must be in a clear a comprehensible form.

2. Off Premises Contracts – Regulation 10

These are defined as contracts that are either negotiated and concluded in the physical presence of both the trader and the consumer off of business premises; or concluded at a distance following the consumer making an offer in the physical presence of the trader.

The Regulations require the trader to give or make available to the consumer the information set out in Schedule 2 of the Regulations.

Again, the information does not have to be in the contract so long as proof that the information has been given in a clear and comprehensible form is kept.

The trader must in addition give the consumer the cancellation form contained at Part B of Schedule 3 of the Regulations on paper.

3. Distance Contracts – Regulation 13

These are defined as contracts concluded under an organised distance selling/service provision scheme without the physical presence of the consumer and the trader at any time.

So, none of the negotiations or offers have been conducted face to face.

The Regulations require the trader to give or make available to the consumer the information set out in Schedule 2 of the Regulations.

The requirements are the same as off premises contracts (as above) in terms of the provision of the information and the cancellation form. In addition, the trader will need to send confirmation of the contract in a “durable medium” and keep proof that the confirmation of instruction was sent out.

There are additional specific requirements for contracts concluded by electronic means or on the telephone.

What are the consumer’s cancellation rights?

For off premises and distance contracts, the consumer has the right to cancel the contract at any time during 14 days without giving a reason unless the consumer requests early supply of service in accordance with Regulation 36(4).

There are a number of exceptions to the right to cancel but none of these will apply to most terms of business – Regulation 27 and 28.

The trader should not begin service until after the cancellation period unless the consumer expressly requests this. If this has not been requested and the consumer cancels within the 14 days, the trader is required to reimburse the consumer for all costs paid by the consumer already under the contract without imposing any fees.

If the consumer does requests that the supply of service begins during the cancellation period, the consumer may still cancel within the 14 day period but will be required to pay for the service on a pro rata basis. If the service has been fully performed before cancellation, the consumer will cease to have the right to cancel.

What are the implications of failing to give the required information?

1. If the required information about fees is not given to the consumer, he or she will not be liable for them;
2. The 14 day cancellation period is extended until either 14 days after the information is given or at 12 months, whichever is the earlier;
3. The trader will be guilty of an offence under Regulation 19 if it fails to give notice of the right to cancel and will be liable to a fine.

Conclusion

Agents would be advised to update their terms of business from June to make sure all of the information required and the notice of cancellation is included. The complete Regulations and schedules can be found here

Filed under: England & Wales

Court Fees to Increase on 22 April 2014

In a move that has been described by the Civil Justice Council as “a tax on litigation”, HM Courts and Tribunals Service have announced that many Court fees will be significantly increased from 22 April 2014.

The fees for possession proceedings are subject to some of the highest increases with the fees for claims issued via the Court’s Possession Claims Online (PCOL) system to suffer a staggering rise from £100 to £250 and the fee for paper based claims to see a rise of in excess of 60% from £175 to £280.

There is a catalogue of other significant increases, which can be viewed on the court website. It has been approximated that all of the increases will boost Court revenue by approximately £200m.

Understandably there has been much criticism of the increases, which will undoubtedly considerably add to the cost of accessing justice for litigants.

Landlords may feel particularly hit in light of the need for a court order to recover possession, and especially since many local authorities will not re-house tenants until they have been formally evicted.

Filed under: England & Wales,

More consultation over the Private Rental Sector

Due to the ever increasing demand for rental properties the Government have decided that a consultation on this area is needed. The discussion titled ‘Review of property conditions in the private rented sector’ is in its initial stages so no changes are imminent; but certain topics have been raised with a view to helping the system perform better and raise the standard of the housing industry to make sure tenants are protected and are able to live in a safe environment.

The intention of the consultation is to protect tenants from rogue landlords and agents but to try to balance this by not adversely affecting the good landlords/agents. The aim is to avoid imposing unnecessary legislation which could create more hassle, decrease much needed investment in private rented housing and result in further costs which will eventually be passed on to the tenant in the form of increased rent etc.

There are a number of topics that have been proposed as talking points for which they are inviting comments and suggestions. These include:

• Rights and responsibilities of landlords and tenants – How can it be made clearer to both sides what is required of them and what can be done if the other side has breached their obligations?
• Retaliatory evictions – How to prevent landlords from simply serving notice to evict a tenant that has notified them of necessary repairs to the property?
• Illegal evictions – Should the penalties against landlords convicted of illegal evictions be stricter?
• Safety conditions – Should smoke and carbon monoxide alarms be mandatory in all properties?
• Licensing of rented housing – Should there be mandatory licensing for all properties? Should there be voluntary accreditation schemes for Landlords so that the good landlords can be found more easily?
• Housing Health and Safety Rating System – Is more information required to make the system clearer for all parties?

This is a non-exhaustive list and so if you have any ideas of how to improve the housing market the details of where to send your proposals are detailed below and any suggestions made should be considered and discussed.

The closing date for responses is 28 March 2014 and they can be sent to PRSReview@communities.gsi.gov.uk

We will be looking to keep an eye on this and will update the blog when there are any further developments.

Filed under: England & Wales, , , , , , , ,

Section 21 news ( and comment)

Spencer v Taylor [ 2013] EWCA Civ 1600.

The Court of Appeal has recently revisited the requirements of section 21 of the Housing Act 1988 and its application to statutory periodic tenancies, which in due course is likely to significantly alter and simplify the way notice is served on statutory periodic tenants of an Assured Shorthold Tenancy (AST).

The facts

The Landlord, Mr Spencer, served notice on his tenant, Miss Taylor who was on a weekly statutory periodic tenancy following on from a fixed term agreement. From the transcript of the judgment it would seem that the notice was sent in the usual format that most agents use, and was a “standard” section 21(4)(a) notice. (There is no statutory required standard form but a customary standard form has developed).

The expiry date was in the format approved in the case of Elias v Spencer, i.e. it required possession “after 1/1/2012 or (b) at the end of your period of tenancy which will end next after the expiration of two months from the service upon you of this notice” (i.e. the “saving provision” as approved in Lower Street Properties v Jones.

Possession proceedings were brought once the notice expired. The tenant defended the proceedings arguing that the given date of expiry of the section 21 notice was not the last day of a period of her tenancy and that the saving provision gave a second date, which invalidated the first. In other words a continuation of the interpretation of the requirements of section 21 (4)(a) Housing Act 1988.

The tenant defended successfully in the first instance. The Landlord appealed successfully in the High Court. The Tenant appealed to the Court of Appeal.

The Court of Appeal

The appeal judge hearing the tenant’s appeal in the Court of Appeal, Lewison LJ, concentrated on the requirements of section 21 as a whole, starting with section 21(1) finding:

1. The fixed term tenancy came to an end on its expiry date for the purposes of section 21(1)(a).
2. No other tenancy had come into existence save for a statutory periodic tenancy (which we now all know is a new tenancy following Superstrike!).
3. The landlord gave the tenant two months’ notice.
All three conditions of s21(1) were satisfied and therefore the court could give possession

The significance

To go back (briefly) to basics: section 21 of the Housing Act 1988 provides the mechanism by which a landlord can recover possession of his property that has been let on an AST. A court can grant a possession order under section 21 (1), or under section 21 (4) if certain conditions are satisfied.

Prior to the judgment in this case, the courts have been finding that section 21(1)(b) applied only to serving notice during the fixed term of an AST. This line of thinking is supported by section 21(2), which provides that notice may be given under section 21(1) before or on the day the fixed term comes to an end, even if a statutory periodic tenancy arises part way through the notice period.

Once a statutory periodic tenancy had arisen, it was understood that section 21(4)(a) applied: “without prejudice to any such right as is referred to in [s21(1)], a court shall make an order for possession of a [property] let on an AST which is a periodic tenancy.

The requirements of section 21(4)(a) are that: “…the landlord…has given to the tenant a notice in writing stating that, after a date specified in the notice, being the last day of a period of the tenancy and not earlier than two months after the date the notice was given, possession…is required by virtue of this section”; and “…that the date specified…is not earlier that the earliest day….the tenancy could be brought to and end by a notice to quit…”

It is well known in the industry that adhering to the requirements of section 21(4)(a) have been tricky to the point of ridiculousness. Possession claims have historically been thrown out of court simply because the landlord required possession on the wrong date, or asked for possession “on” a date, rather than “after” (see Fernandez v McDonald [2003] EWCA Civ 1219). There has been much case law interpreting section 21 (4)(a), some of it to alleviate the harsher requirements of the section, ( see for example Lower Street Properties v Jones in which the court approved the use of the “saving provision” to avoid the risk of putting an incorrect date on the notice).

The law therefore is now that a landlord wishing to gain possession of his property let on an AST which was a fixed term and has become periodic needs to give only two months’ notice in writing, pursuant to section 21 (1)(b) and need not concern himself with rental periods.

So what about section 21 (4)(a) and the case law surrounding it? Fernandez v McDonald [2003] EWCA Civ 1219, the leading case that requires notices under s21(4)(a) to demand possession “after” rather than “on” a date? Lord Justice Lewison considered that that case fell “squarely within section 21(1) rather than section 21(4)”. However he emphasised that his comments on Fernandez v McDonald were not part of the “ratio decidendi” of the case ( i.e. not part of his judgment). Therefore the case law surrounding section 21 (4) ( a) remains good law, but it is section 21 (1)(b) that governed Spencer and Taylor, and by extension any notice served on a periodic tenancy ( statutory or otherwise) that was once a fixed term.

Comment

This judgment is surprising perhaps in that it has come apparently out of the blue, when agents and solicitors up and down the country have accepted ( if reluctantly) the difficulties and specific requirements of serving valid notice on statutory periodic tenancies. However it is well known that there has been significant ( and many would say understandable) criticism of the section 21 (4)(a) requirements and so the idea that the Court of Appeal has moved to simplify things is not so surprising. Further, Lewison LJ’s interpretation is of section 21 is not new – it is just new to the courts.

On the face of it then, Spencer and Taylor has removed the onerous requirements of section 21 (4)(a) from fixed term ASTs that have become periodic. Gone is the need for the saving provision lest the date of expiry be wrong. Gone too is the need to work out what is the “period” of the tenancy when the rent day does not match the beginning and end dates of the fixed term. Instead the landlord/agent simply needs to ensure proper service of the notice according to the terms of the tenancy agreement, and to ensure that he gives at least two months notice in writing as if serving the notice during the fixed term of the tenancy in accordance with section 21(1)(b).

However, some words of caution:

Although this Court of Appeal judgment is good law today this point may be appealed to the Supreme Court and may be overturned in the next year or two. A notice which satisfies section 21 (4)(a) will also satisfy the looser requirements of section 21 (1)(b). Most tenants give back possession and do not quibble over the validity of notices, but if they do, possession claims are usually done on the paper (accelerated) procedure or a 5 minute possession hearing with a District Judge. Court of Appeal judgments take time to trickle down to the lower courts and do you really want to have to set yourself up for an argument or risk an adjournment when you could just serve notice to expire at the end of a rental period?

Tenants wishing to serve notice are still bound by the common law rules which would mean that if they are on for example, a quarterly periodic tenancy, their notice period must still run for a clear quarter and expire at the end of a rental period ( or on the day rent is due). Spencer v Taylor gives landlords a much easier way of serving notice while leaving the tenants with much more onerous requirements.

So after breathing a sigh of relief that we can all forget about section 21 (4)(a) in practice we would suggest that, in light of the above, agents might like to keep the practice of serving notices that comply with section 21 (4)(a), at least for the near future.
Section 21(4) a will continue to apply to contractual periodic tenancies which never had an initial fixed term, and to tenancy agreements which provide for an initial term to continue on a contractual periodic basis . The latter may become more prevalent following the Superstrike ruling as a way of avoiding the need to serve prescribed information, and it should be noted that for the purposes of section 21 (1)(a ) the tenancy will not have come to an end at the end of the fixed term and therefore section 21 (1) (b) will not apply.

In conclusion, the ruling in Spencer v Taylor is good law and should in the long run make serving notice on tenants much simpler. However for the moment our advice is that if you do change your systems to serve section 21 (1)(b) for all but contractual periodic ASTs, you should do so knowing that the courts might take some persuading that the notice is validly served. You will also have to keep an eye out for any Supreme Court reversals. If you are prepared for this then fine, otherwise it might be easier to let others beat the path first.

Filed under: England & Wales, , , , , ,

APPOINTMENT OF A MANAGER

We have recently seen a rise in the number of enquiries from long leaseholders dissatisfied with the management of their building. Often after the leaseholders have themselves taken over the management.

Many of our readers will be aware that the Commonhold and Leasehold Reform Act 2002 introduced Right to Manage (RTM). This was a non-fault ground that if the majority of leaseholders in a building wished to take over management then in effect they could do so. The process was thought to be straight forward but the rise in cases before the First Tier Tribunal Property Chamber and subsequent appeals to the Upper Tribunal are a clear indication that many freeholders will not give up management without a fight. Even when the process has been followed dissatisfaction can still exist with some leaseholders unhappy with the conduct of others.

So what other options are there? The Landlord and Tenant Act 1987 provides an alternative route. To follow this it is first necessary to show that in some way the body managing the development is not complying with its statutory duties and requirements under the lease. Any one leaseholder is entitled to follow this procedure.

Initially a Notice must be give to the freeholder and the person managing under section 22 of the 1987 Act. This notice needs to give details of what the perceived difficulties are and suggest how the manager can remedy the same. If the landlord and manager do not then remedy the breaches within a reasonable period of time an application can be made to the First Tier Tribunal Property Chamber inviting them to appoint a manager.

At the hearing the Applicant has to justify to the Tribunal that it is “just and convenient” to appoint a manager. Generally the Tribunal will want to be satisfied that the current appointee has not been complying with the lease and statute. The Tribunal will also take account the views of other leaseholders and the freeholder. The Tribunal will consider all points to try and determine if the imposition of a manager will improve the lot of the leaseholders to ensure good management of the building.

It is for the Applicant to source a person to be a manager. Generally the Tribunal will want to appoint a professional who can demonstrate that they fully understand what is required of them, will follow one of the approved statutory codes of management (such as the RICS Residential Service Charge Code), have sufficient professional expertise and hold insurance. The proposed manager will normally be required to attend any hearing and in effect be interviewed by the Tribunal to satisfy them as to the suitability. The reason for this is that the Manager (who may also be given powers as a Receiver) is an appointee of the Tribunal and answerable to them in the first instance rather than the parties to the leases. The management order will set out comprehensively the terms of appointment including prescribing the fees the manager can charge, the length of the appointment and other rights give to them. If anything is not covered or difficulties arise any party (including the manager) can then apply to the Tribunal for further directions. Typically an appointment will initially be for two or three years and before the Order lapses it is possible for the parties to apply for an extension of the same.

The benefit is that an entirely independent manager is appointed who is personally answerable (as the Order always names a specific individual) to the Tribunal. We have seen a rise in situations where the leaseholders have taken over management (either as a result of an RTM or collective enfranchisement) but issues have arisen. All too often we come across situations where factions arise who do not wish to strictly comply with the lease or statute. When such agreements are unanimous this can work but there are risks. In these circumstances the imposition of a manager may be better for all parties to resolve disputes. It is also worth noting that the leaseholder(s) who apply will themselves have no liability for the management. In forming and setting up an RTM their will be costs which the participating leaseholders are joint and severally liable for and those leaseholders whop become Directors of an RTM also have responsibilities under the rules and regulations governing companies.

These situations typically are complicated but appointment of a manager can be an effective method of resolving long residential leasehold management problems. We at PainSmith are happy to advise on any such matters, including assisting in finding managers prepared to accept such appointments.

Filed under: England & Wales, , ,

Office of Fair Trading to study Residential Property Management services

The OFT last week announced that it intends to launch a market study into the residential property management field for leasehold property in England and Wales.

Ahead of the study the OFT has invited interested persons to tell them about what areas they should be concerned about. Their Press Release sets out what areas the OFT is particularly interested in and so if you are involved in this sector you should be reviewing this and consider what if anything you want the OFT to look at.

Recently leasehold law does seem to have come on to the political agenda so it will be interesting to see what steps the OFT takes following on from its investigation into retirement home security services.

Filed under: England & Wales, , , , , , ,

More Long Leasehold News

For those of you who are involved in people looking to extend their leases or undertaking freehold purchase by way of collective enfranchisement under the Leasehold Reform Housing and Urban Development Act 1993 you will no doubt be aware of the issues with regards to signing the Initial Notices required under this Act.

Due to a case called St Ermin’s Property Co. Ltd v. Tingay [2002]EWHC 1673 (Ch) it was determined that all such Notices must be personally signed by the relevant leaseholder. The case determined that the Notice could not be signed by a solicitor or even under a Power of Attorney but required an actual signature. This practically caused many issues particularly once the residence requirement was removed and leaseholders were often “Buy to Let” landlords spread all over the globe.

As a result a Private Members Bill, Leasehold Reform (Amendment) Bill, is due to get its second reading on 22nd November 2013. The Bill sets out to amend paragraph 99 of the 1993 Act to remove the requirement that Notices must be personally signed. If the Bill should become law it will mean that Notices may be signed “by or on behalf of the tenant” and should remove this practical difficulty.

Whilst this may seems minor many notices have been rejected by freeholders on the grounds they have not been properly executed and leaseholders have had to start the process all over again incurring not only their own costs but having to pay costs to freeholders.

Filed under: England & Wales, , ,

Phillips v. Francis: Permisssion to Appeal granted

At the end of last year we were all faced with the Judgement in Phillips v. Francis [2012] EWHC 3650 (Ch). No doubt those of you with an interest in long leasehold matters and particularly property management will recall that Sir Andrew Morritt, The Chancellor, in what is believed to be one of his final judgments, determined that the test for qualifying works requiring consultation under the Landlord and Tenant Act 1985 required all qualifying works to be considered together. If the total cost would exceed £250 then consultation was required.

He determined that it was a case of looking at qualifying works as a whole in the relevant service charge period and if the cost would exceed the threshold for consultation then the landlord/managing agent should consult. So if the cost of repairs (no matter what was included) in any one service charge period would mean that any one leaseholder would have to contribute more than £250 (the current threshold) then consultation should take place. Prior to this the practice had been that elements could be broken down and it was a question of looking at the particular works and consulting on those for which the contract sum would result in a charge above the threshold.

The Supreme Court in Daejan v. Benson offered some relief in its decision earlier this year. Here the Supreme Court determined that generally dispensation for a failure to consult should be granted although conditions may be attached. However the Francis decision continued to cause much consternation.

It appears initially the Landlords did not appeal due to a lack of funds. It is understood that they have now gained support from interested parties including ARMA and RICS. An application for permission to appeal and an extension of time was made. This application was granted by the Court of Appeal yesterday, 18th November 2013, with Lord Justice Gloster giving Judgment.

The Court of Appeal accepted that there was a point of principle such as to satisfy Civil Procedure Rule 52.13. As a result time was extended and permission to appeal granted with the court taking account of the unprecedented industry interest and concern over the original decision.

It would appear the Respondents are concerned that the Appellants have assistance from various parties with the appeal yet supposedly no party has come forward to offer assistance to the Respondents. Various other arguments were raised which it is understood they will continue to pursue at any substantive hearing of the appeal.

It seems likely that the full hearing will come before the court at some point next year and so for the time being the position as to when to consult appears to be in a position of flux. As we learn more we will post updates.

We would like to thank Anneli Robins a pupil at Arden Chambers who attended the hearing and prepared a note and Justin Bates, also of Arden Chambers, for supplying us with a copy of the same.

Filed under: England & Wales, , , ,

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