Uncategorized « Painsmith Landlord and Tenant Blog

21 May, 2009 • 12:16 1

Proper Place for TDS Claims

The Court Service has published guidance setting out that the proper route for bringing claims under the Tenancy Deposit Provisions of the Housing Act 2004 is via Part 8 of the Civil Procedure Rules.

Key points to note are:

these claims are automatically allocated to the multi-track which means that legal costs are recoverable irrespective of the size of the claim;
the claim must be commenced on a form N208 and not the standard N1 claim form;
the claim cannot be commenced using the moneyclaim online service;
the Claimant is required to serve a witness statement with their claim form setting out their evidence;
the Defendant is required to serve a witness statement with its aknowledgment of service setting out its evidence;
failure to serve witness statements at the appropriate times will preclude reliance onm evidence save by permission of the Court

A great many claims are currently not being commenced correctly and are not having the appropriate procedure followed. While it is unlikely that a claim will be struck-out for following the improper procedure, a defendant may be precluded from giving evidence and there may be costs implications for both parties if the correct procedures are not followed.

Filed under: Uncategorized, deposits, Housing Act 2004, litigation

21 May, 2009 • 09:40 2

Changes to ASTs

The government has published a response to the Rugg Review.

One of the proposed changes is that the upper limit threshold on Assured and Assured Shorthold Tenancies (set at £25,000 by para 2(1)(b) of Schedule I of the Housing Act 1988) should be raised to £100,000.

Section 2A of the Act allows this amount to be easily varied by Stautory Instrument and we have heard on the grapevine that the government is minded to do this as soon as October this year.

This will have far reaching consequences, particularly in the South-East as the majority of higher value tenancies that were outside the Act will not be brought into it. This will mean a large increase in the number of tenancies requiring to have their deposits protected and changes in the way possession proceedings are brought for these tenancies.

There are some important uncertainties. Will it be the case that the raise will be retroactive such that all tenancies under a rent of £100,000 per annum will automatically fall inside the Act? If so, this will affect tenancies already in place and will mean that their deposits will need to be placed in protection.

It would be better if the change was made so that only new tenancies after the start date were caught. However, in that case it will be necessary to bear in mind that renewal tenancies will drop inside the Act.

Filed under: Uncategorized, deposits, Housing Act 1988, legislation

23 April, 2009 • 10:34 0

Premium Leases and the Budget

Although the 2009 Budget was fairly unexciting from a Landlord and Tenant point of view the Chancellor did make one very important, but quiet, change.

This was to remove a tax efficiency in premium leases which was used by a number of companies. Previously, the lease premium was not treated as part of the employees renumeration package and so the National Insurance and tax liability of both employer and employee was reduced. This loophole has been removed and the premium paid will now be treated as if it were rent for the purposes of taxation and NI contributons in respect of all premium leases of 10 years or less.

This is not retroactive but will apply to all new or extended leases from yesterday, 22 April 2009.

More information is available on the HMRC website.

Undoubtedly this will markedly reduce the number of premium leases in the market.

Filed under: Uncategorized, premium lease, taxation

22 April, 2009 • 11:20 10

TDP again!!

A recent judgement in Clerkenwell & Shoreditch County Court has clarified another issue relating to Tenancy Deposit Protection. HHJ Cryan has indicated that as far as he is concerned a deposit taken for a tenancy which began prior to the intorduction of TDP on 6 April 2007 does not have to be protected but that when the tenancy is renewed the deposit is, in effect, taken again and must therefore be protected from that point. This was a well accepted interpretation of the position but it is nice to see confirmation. It must of course be noted that this decision is not one of record and is not, therefore binding on other Courts.

Unfortunately, this opens up another possible problem. It is widely believed that a tenancy that becomes periodic under the aegis of s5 Housing Act 1988 does not need its deposit protecting. However, s5 states that the periodic tenancy is arises immediately the fixed term tenancy ends and it therefore seems to be thae case that this is a new tenancy just as much as any renewed tenancy. One wonders when this point will be raised and what the outcome will be. In the meantime the rule must be that if there is any doubt then the deposit should be protected.

With thanks to James Browne, Lamb Chambers

Filed under: Uncategorized

15 April, 2009 • 17:37 0

Tenancy Deposit Protection and ‘Rent in Advance’

A recent case in Grimsby County Court reported in Legal Action magazine has cast doubt on a method commonly used by private landlords to avoid the tenancy deposit protection regime.

Under section 213(8) of the Housing Act 2004 a deposit is defined as property intended to be held as security for the performance of any obligation of the tenant. Many landlords seek to avoid this by taking money described as ‘rent in advance’ and claiming not to hold a deposit at all.

This was precisely the position in the case of Piggot v Slaven in Grimsby. The Court held that the question of whether or not money has been taken as security must be judged objectively in each case. However in the case before the Court it was held that the money was intended to provide the landlord with security should the tenant fail to pay rent at some future date. The money held was therefore caught by the defintion in s213(8) and should have been prtected in a scheme. The landlord was accordingly ordered to pay the normal ’3 times the deposit’ penalty to the tenant.

While this case is only a decision of a District Judge in a County Court and is therefore not binding on other Courts it is undoubtedly a shot accross the bows of landlord who seek to avoid the tenancy deposit protection provisions by asserting that money they are holding is merely rent in advance and not a deposit.

Filed under: Uncategorized, deposits, Housing Act 2004

15 April, 2009 • 16:15 0

Digital Switchover

As most people will know the UK is in the throes of switching from analogue to digital telelvision signals. For many people this will simply involve a change in equipment, such as a new television set. However, some areas will require that a new aerial is fitted to the property to allow reception of the new signal.

For private landlords there will of course be the question of whether there is an obligation to upgrade the installations in their properties. In the case of O’Connor v Old Etonians Housing Association the Court of Appeal considered whether a landlord was required to upgrade a water installation to deal with a drop in supply pressure. It commented that while it would be unreasonable to expect a landlord to provide an installation which coped with any possible change in supply of services there would be times where a technical advance, which was well flagged in advance, would require a change in installations. In these cases the Court felt that it would be reasonable forr a landlord to be expected to upgrade installations to cope with the change. On this basis one would be forced to the conclusion that landlords will be expected to meet the cost of altering installations to make them compatible with the digital signal.

There are a number of sources of further information on the digital switchover although the majority are targetted at block landlords. There is a Chartered institiute of housing good practice guide as well as a range of resources for property managers.

Filed under: Uncategorized, guidance, Utilities and Services

7 April, 2009 • 09:26 2

Gas Safe Register

Boarding my train to London this morning I saw a poster campaign for the new Gas Safe Register. The successor to the old CORGI Landlords Gas Safety Certificate regime. While it is good to see promotion of gas safety, landlords and agents should make sure they are familiar with the new system and ensure that all their contractors are properly registered.

Filed under: Uncategorized, gas safety, regulations

17 March, 2009 • 18:11 15

New Generic Pre-action Protocol

From 1 April 2009 the 49^th update to the Civil Procedure Rules will come into force. One of its most important changes is the introduction of a generic pre-action protocol. A number of types of case already have pre-action protocols in place, the new general protocol will apply to most other case types.

As with other protocols failure to comply without good reason will lead to a request for an explanation for the non-compliance by the Court and could lead to costs being awarded against the defaulting party, even in the small claims track. It is therefore clear that an understanding of, and compliance with the new protocol is important.

There are genuine practical advantages to compliance too. The aim of the protocol is to assist parties in settling disputes at an early stage without embarking on litigation. Therefore compliance with the protocol could assist parties in settling their dispute more quickly and at a lower cost.

Pre-action Letter

The protocol requires a pre-action letter to be sent by the claimant. The letter should include:

The claimants name and address;
The basis of the claim;
A clear summary of the facts;
The remedy the claimant seeks;
An explanation of how any financial remedy sought has been calculated;
Provide details of any specific funding arrangement entered into by the Claimant;

The protocol also requires the claimant to:

List the main documents on which they rely (and presumably include copies);
State when the claimant expects a response;
Offer ADR if the claimant thinks it appropriate and invite agreement;
Ask for copies of specific documents that the claimant desires to see.

A number of points are worth noting from this list of requirements:

1. The claimant must show a basis for calculation of any financial demands. This is something that claimants frequently do imprecisely, if at all, and so it will be necessary to apply more rigour to such calculations;
2. While the protocol does not require the claimant to provide the documents he is relying on he is required to list them and so the implication appears to be that copies should be provided;
3. The claimant is encouraged to put forward a proposal for ADR. Interestingly the protocol list several different methods of ADR, including mediation, early neutral evaluation, arbitration, and plain old negotiation so the current bias in the Courts toward mediation as the only valid form of ADR may start to change;
4. The claimant is allowed to ask for copies of documents. However he is required to ‘identify’ them so the protocol is not a licence for ‘fishing expeditions’.

Additionally, where a defendant is believed to be unrepresented the claimant is expected to refer the defendant to the protocol and provide a warning that ignoring the letter could lead to the commencement of legal proceedings.

Defendant’s Response

The defendant is normally expected to respond within 14 days in full. Where that is not possible they should send an acknowledgment letter within 14 days stating:

If an insurer is involved;
If the defendant is seeking advice who they are seeking it from;
When the defendant, its insurer, or its advisors will provide a full response;

The letter should also request any further information the defendant requires to make its full response.

The full response should begin by accepting the whole or part of claim or denying the claim. If the defendant is not accepting the whole claim the letter should then state:

Why the claim is being denied by reference to the facts which are disputed and clearly identifying any parts which are accepted;
State whether any counter-claim is to be made and provide the same information as must be provided by the claimant’s pre-action letter;
State whether the defendant believes the claimant to have been to blame for any part of the claim and, if so, state why;
Agree to the proposals for ADR or state why they are not agreed and propose an alternative form of ADR or state why no ADR is relevant;
List the essential documents on which the defendant intends to rely;
Supply any documents requested by the claimant or, alternatively, state why they will not be supplied;
Identify and ask for any documents the defendant wishes to view.

Claimants Response

In response to the defendant’s letter the claimant should provide the documents sought or state why they will not be provided and, if the defendant has made a counterclaim, should respond in the form required for the defendant’s letter.

After this process the protocol anticipates that the parties will be in a position to review the relative merits of their respective cases, to eliminate unimportant issues, and consider how to proceed. The protocol encourages further careful thought before the issue of proceedings.

Debt Proceedings

Where the claim being contemplated is one by a company against an individual for unpaid debts there are further requirements to be followed. The initial claim letter is required:

To provide details of how the outstanding monies can be paid;
To state that the defendant can contact the claimant to discuss repayment options and provide details of a suitable contact; and
Give the defendant details of organisations that can provide free, independent advice and help.

Conclusions

Many will undoubtedly see this process as an unnecessary and unwieldy bar to swiftly progressing a claim into Court. However, the Courts are increasingly awash with relatively minor claims that could easily be resolved by sensible negotiation between the parties. By forcing both sides to declare their case earlier and also creating significant costs consequences for failure to comply with the protocol in all tracks the Courts presumably intend to reduce the quantity of cases being litigated. The introduction of the protocol makes it even more important for landlords and agents to consider whether their agreements should include clauses offering suitable forms of ADR to reduce their reliance on the protocol and to help expedite disputes.

Filed under: Uncategorized, litigation, procedure

25 February, 2009 • 23:52 2

New Gas Safety Regime

From 1 April 2009 CORGI will no longer be the official gas safety regulation body. The role will be taken over by the Gas Safe Register which is operated by Capita.

This has occurred because CORGI’s contract with the HSE came to an end and, while they tendered for a renewed contract, they were beaten by Capita who have promised a gradual reduction in the cost to gas engineers as well as an aggressive public awareness campaign.

From 1 April engineers must be registered with the Gas Safe Register to carry out work. Old CORGI registrations will not be valid. Engineers have had since January of this year to sign up with the new scheme so there will be no grace period.

From a landlord or agents point of view it is important to check that gas engineers that have previously been used are registered with the new scheme. All members will have ID cards and they can be checked either on the register website or by telephoning 0800 408 5500.

Current landlords gas safety certificates issued by CORGI engineers will remain valid, even if they expire after 1 April 2009 but on expiry they will have to be replaced by certificates conforming to the new scheme. After 1 April any certificate produced by an engineer not registered with the new scheme will not be valid.

A leaflet is available giving more information which also includes a picture of the new ID card.

The responsibilities and penalties as regards failing to have a valid certificate remain unchanged.

Filed under: Uncategorized, gas safety, regulations

17 February, 2009 • 23:07 0

Repossession Pre-Action Protocol

The current economic climate has seen many properties repossessed by lenders that are increasingly concerned about the downturn in property values and the risk of a drastic reduction in the equity (if any remains) of properties. The government has responded to the ‘credit crunch’ by introducing a pre-action protocol for both money and possession claims by lenders on residential properties. The protocol came into effect on the 19 November 2008 and applies to proceedings commenced after that date.
The protocol seeks to ensure that the lender makes every attempt to assist the borrower prior to possession proceedings being commenced. Such assistance should include pre-action contact with the borrower in an attempt to reach an agreement, which could lead to a change in the mortgage type or payment date or some form of payment holiday so that the borrower has a realistic chance of complying with his obligations.
However the protocol fails to close a loophole available to lenders intending to enforce their security on a residential property without obtaining a court order. In some cases lenders appoint a receiver under s109 of the Law of Property Act 1925 to sell the property, causing the borrower and even their tenants, who were originally occupying it to become trespassers. Mr. Justice Briggs ruled in October in Horsham Properties v Clark & Beech (2008) EWHC 2327 (Ch) that this did not breach the borrower’s rights under the European Convention on Human Rights.

No doubt lenders will find that the new protocol is an obstacle to them obtaining possession expeditiously. However, the protocol provides no protection for buy to let mortgages and thus mortgage companies may be more aggressive in this area by way of compensation. Whilst the courts have recognised that this is an area of concern they are powerless to do anything and as such the government will need to step in if landlords are to be afforded similar protection.
Agents that are contacted by Section 109 receivers should request that the receiver confirm instructions in writing. Upon receipt of the written instructions they may then comply with the same despite any objections raised by the landlords. Due to the Data Protection Act 1998, the receiver will not be in a position to discuss the details of the possession with the Agents unless the landlord’s specific consent is sought which is unlikely, and therefore obtaining the written instructions is paramount.

Filed under: Uncategorized

12 February, 2009 • 01:22 1

Mortgage Possession- Tenants Notice

The 49th update to the Civil Procedure Rules comes into force on 6 April 2009. Part of the update amends rule 55 which governs possession actions and, particularly, amends the rules on mortgagee possession claims.

Currently rule 55.10 requires that the mortgagee send a letter to the property addressed to ‘The Occupiers’ not less than 14 days before the hearing for possession. This requirement has been amended to force the mortgagee to send the notice not more than 5 days after receipt of the hearing details thus giving occupiers approximately 2-3 weeks more warning of a possession hearing.

Unfortunately the rules do not require any more than this and many people assume post addressed to ‘The Occupiers’ to be junk mail – something the amendment could easily have addressed by requiring a notification on the outside of the envelope. However, where such a notice is not sent in time the tenants could appear in Court and seek an adjournment of the hearing due to the mortgagee’s failure to comply with the rules. The added cost of this might induce the mortgagee to negotiate with the tenants – allowing them to stay in the property on payment of rent direct to the mortgagee, for example.

In practical terms, those acting for tenants should remind them to open all post addressed to ‘The Occupiers’ and should keep in mind the possibility of forcing an adjournment where the rules have not been adhered to as a method of extracting concessions from the mortgagee.

With thanks to Francis Davey.

Filed under: Uncategorized, litigation, procedure

29 January, 2009 • 17:28 5

The End of the Tolerated Trespasser

Where a suspended possession order is granted by the court but suspended on terms there has been a problem in the past. The reason for this is that the Court order has the effect of ending the tenancy but prevents eviction of the tenant as long as they comply with the terms of the order. The result is that the tenant becomes a, so-called, ‘tolerated trespasser’ on the date of possession as stated on the order. A tolerated trespasser is a peculiar legal fiction which denotes that the former-tenant has lost ther tenancy rights thereby making them a trespasser but cannot be removed from the property hence the use of the word tolerated (admittedly a rather strained use!).

The loss of tenancy rights has some rather bizarre consequences such as an inability for the tenant to enforce repairing covenants against landlords and the landlord losing the right to rely on the relevant Housing Act provisions and the tenancy agreement itself. So the landlord’s ability to increase the rent, for example, is also affected.

However, the House of Lords has eliminated this problem by holding in the cases of Knowsley Housing Trust (Respondents) v White (FC) (Appellant) Porter (FC) (Appellant) v Shepherds Bush Housing Association (Respondents) [2008] UKHL 70 that the tolerated trespasser is indeed a fiction and does not exist.

In Knowsley they allowed White’s appeal against the decision of the Court of Appeal that her assured tenancy had come to an end when she failed to comply with the terms of a suspended possession order. The Lords held that assured tenancies only came to an end when the tenant either voluntarily gave up possession or when they are evicted pursuant to an order. Therefore an assured tenant cannot become a tolerated trespasser.

This could be a problem where a landlord with a previously assumed tolerated trespasser has taken advantage of their status by refusing to repair the property. As the status cannot now have ever arisen these reinstated tenants will have a claim for disrepair against their landlords.

The situation will become a lot clearer when the Housing and Regeneration Act 2008 comes into force. The Act received Royal Assent on 22 July 2008. Schedule 11 of the 2008 Act makes amendments to the Housing Act 1985, Housing Act 1988 and the Housing Act 1996 to prevent the tolerated trespasser arising by stating that a tenant’s assured or secure tenancy does not end until the landlord has obtained a Court Order for possession and the eviction has actually taken place. Existing tolerated trespassers still in occupation of their original properties as their only or principle home, have had their tenancy status reinstated by virtue of “replacement tenancies”, which reinstate the tenant’s rights and obligations of the tenancy they held prior to the Possession Order coming into effect. The possession order itself will remain enforceable against the new tenancy.

Filed under: Uncategorized, Housing Act 1988, legislation, litigation

22 January, 2009 • 14:10 0

Smoke Control in Wales

From 31 December 2008 the The Smoke Control Areas (Exempted Fireplaces) (Wales) Order 2008 has introduced certain exemptions to the Clean Air Act 1993 in Wales.

This allows that certain types of stove, mainly wood-burners are exempt from this legislation because they are particularly clean-burning.

From a landlord’s point of view it might be worth considering fitting one of the exempted stoves if refitting is being contemplated. In tandem with this it will be important to have a clause in the tenancy agreement to ensure that the tenant burns the appropriate fuel.

On a wider point where a property with a stove is being let it is important that a clause is inserted in the lease to specify the burning of the correct type of fuel. Many stoves are limited in what they can burn and will be damaged if the wrong fuel is used. It will be hard to make a claim for what is an expensive item if such a clause has not been inserted.

Filed under: Uncategorized, regulations, Wales

13 January, 2009 • 00:44 0

Spotting Drug Production

Tessa Shepperson’s blog has a very useful post on telltale signs of drug production in rental properties along with a link to a new booklet on the subject produced by Suffolk Police. More information here.

Filed under: Uncategorized, guidance

29 December, 2008 • 20:37 2

Shareholders and Leaseholders- Different Obligations

In Morehead Mansions Ltd v Di Marco the Court of Appeal has held that there is a difference between a tenants obligation to pay service charges and an arrangment made by a shareholder to pay into a company fund by seperate agreement.

The Defendant in the case was a shareholder in a company which owned the lease of a series of flats. Simultaneously, the Defendant held one of those leases. The shareholders had agreed to pay into a new ‘recovery fund’ in two tranches in a sum which varied according to their respective shareholdings.

The Court held that the payment was not related to the Defendants role as a tenant and so was not governed by the limitations imposed by the Landlord & Tenant Act 1985. Equally, failure to make such a payment, as it was not a lease-related matter, was enforceable as a normal breach of contract and did not give rise to the normal forms of enforcement and recovery used by a landlord against a tenant such as forfeiture of the lease.

It is important therefore where a company is set up to run a block and is, in effect, owned by the block residents whether payments into that company are being levied by way of service charges, in which case all the normal requirements of consultation and the like must be carried through, or whether they are to be levied by way of contractual agreement with shareholders, avoiding consultation but giving up the more powerful enforcement options.

Filed under: Uncategorized, Landlord & Tenant Act 1985, litigation, long lease

29 December, 2008 • 19:49 1

Corporate Manslaughter and Homicide Act 2007- Audit Your Procedures

The Corporate Manslaughter and Homicide Act 2007 came into force on 1 April 2008. This Act introduced a new offence of Corporate Manslaughter (Corporate Homicide in Scotland) which applies to organisations that cause the death of an individual by way of a gross breach of their Duty of Care.

The Duty of Care is the same as that set out by the common law of negligence but for lettings agents or corporate landlords would certainly include their basic requirements to ensure that a property is safe and that a landlord’s Gas Safety Certificate has been obtained.

The offence is triable in the High Court before a jury. The jury must consider whether the breach of the Duty of Care is one which falls “far below what can reasonably be expected of the organisation in the circumstances”. Factors to consider will include breaches of any legislation designed to protect health and safety and the seriousness and risk of death posed by such breaches and whether “there were attitudes, policies, systems or accepted practices within the organisation that were likely” to have encouraged or tolerated the breach of Duty that led to the death.

It is important to note that the offence is only committed if it can be shown that it was the manner of organisation and management of an organisations activities by its senior management that led to the death. In this case senior management is defined as those responsible for making or implementing decisions as to the management or organisation of the whole or a substantial part of the organisations activities.

For many organisations it will be the attitude and policy considerations that will cause the greatest concern. However, there is no requirement to spend excessive time dealing with individuals as long as the senior management is making the right decisions and promoting the right policies. However, the definition of ‘senior management’ could be very wide. It will certainly include board members, lettings directors, operations managers, and possibly branch managers. It should not be forgotten that the Act applies equally to partnerships and this form of operation provides no protection. Sole traders were, of course, already liable under the more common charge of manslaughter by gross negligence.

The key point to protection is the need for all organisations to ensure that they have clear, written policies in respect of all health and safety matters, whether these are in connection with their internal or external relations and further to ensure that staff are fully aware of and trained in these policies. Finally, it is important that no ‘culture’ of ignorance of the policies is promulgated by the senior management and that any breach of policy is dealt with swiftly and seriously.

Filed under: Uncategorized, legislation

23 December, 2008 • 15:27 0

Consent to Assign or Alter

It is common for commercial tenants to seek consent to assign their lease or to make alterations to the premises. Most landlords are happy to consent to this as long as certain conditions are observed and a proper licence to assign or alter is drawn up.

Any communication between the parties that implies that the landlord is minded to grant the consent but specifically states that the consent can only be seen as given once a licence is signed would normally be thought to do precisely what it says. Imply that the landlord is prepared to grant consent but on further conditions being imposed and that the consent will not therefore be granted until a full licence setting out all those conditions has been signed.

However, in the case of Alchemy Estates Ltd v Astor & Anor the High Court felt differently. It followed a decision in the Court of Appeal and held that a consent given in principle was sufficient to bind the landlord into the assignment sought by the tenants.

The practical upshot of this is simple. It was relevant in the Alchemycase that the lease did not provide for any conditions to be imposed on a consent to assignment. The first solution then is to ensure that any lease imposes conditions on assignment or alteration. Additionally, and most crucially it is vital that no suggestion is made that any consent will be given until the licence to assign with all relevant conditions is completed and a draft sent to the tenant. Only by giving no indication beyond the fact that a licence is being drawn up can a landlord avoid the principle of implied acceeptance put forward in Alchemy

Filed under: Uncategorized

21 December, 2008 • 14:36 0

Move to Monthly Rents in Commercial Leases

The British Retail Consortium has stepped up its campaign to force landlords to accept rent monthly in advance rather than on the usual quarter days as has previously been the practice. They have produced template letters for tenants to send to landlords to seek alterations in their leases to allow for monthly payment of rent.

It is, of course, one thing for large retailers who, irrespective of the financial situation retain enormous financial muscle, to demand changes to rent payment provisions and quite another for the average small retailer to do so. However, other than the slight inconvenience of collecting rent monthly there seems few sound reasons for landlords not to accept a move to monthly rent and most new commercial leases stipulate monthly rental payments. The fact that the government also backs such a change is also a powerful force.

More information including the various templates can be found at the rent monthly website.

Filed under: Uncategorized, commercial lease, rent

15 December, 2008 • 16:19 0

Ground 14 and Possession for Criminality

The Court of Appeal has recently had cause to consider Ground 14 of Schedule II to the Housing Act 1988 in some detail. This ground provides a discretionary right to possession where the tenant has committed a criminal offence in, or in the locality of, the dwelling-house.

In Raglan Housing Association Ltd v Fairclough the tenant was convicted of downloading and possessiing indecent images of children. However, the offences were committed prioir to the current tenancy while he was residing in a property under a tenancy from the same landlord a few doors away. The Court of Appeal upheld the order for possession deciding that the relevant date was that of conviction and that the objective of Ground 14 was to ensure that individuals who might be disruptive or offensive did not remain in the locality.

In North Devon Homes Ltd v Nova Batchelor the tenant was convicted of possession of cannabis, possession of cocaine with intent to supply, and money laundering. The Court declined to award possession on the basis that the crimes were of a minor nature and it did not consider it necessary. The Court of Appeal upheld this decision.

The upshot of these decisions is that the position on Ground 14 possession for criminality remains uncertain with the higher Courts unwilling to interfere in the exercise of discretion by lower Courts. A more detailed discussion of these cases can be found at http://www.painsmith.co.uk/downloadnow/ground14.pdf.

Filed under: Uncategorized, Housing Act 1988, litigation

12 December, 2008 • 16:14 0

Cancellation of Consumer Contracts

Under the Cancellation of Contracts Made in a Consumer’s Home or Place of Work Etc Regulations 2008 new restrictions were imposed on certain types of contract from 1 October 2008.

The regulations do not apply to tenancy agreements but they do apply to agent’s terms of business with landlords. The regulations only apply where the contract is concluded (ie. signed) in the consumer’s home or workplace with the agent present. If they are mailed out and back or signed in some other place then the regulations will not apply.

Contracts that are made in the consumer’s home or workplace are able to be cancelled within 7 days of being made. Agent’s can seek reimbursement of any costs they have incurred provided that the consumer has agreed in writing but there is no right to claim any form of fees.

Contracts that fall under the regulations must include a notice setting out the consumer’s right of cancellation and failure to provide this is a criminal offence punishable by a fine of up to £5,000. In addition, clauses in the agreement will not be enforceable until such notice is given.

PainSmith Solicitors are able to supply copies of such notice on request.

Filed under: Uncategorized, regulations

12 December, 2008 • 15:55 0

Agents Fees

In the recent case of Foxtons v Pelkey-Bicknell the Court if Appeal considered the fee provisions in Foxtons terms of business. These were based on the Estate Agents (Provision of Information) Regulations 1991 but are similar to those used across much of the estate and lettings field.

There was extensive discussion regarding the nature of effective cause terms and whether these should be implied into the agency contract but the Court declined to make such an implication. The Court focused instead on the phrase “a purchaser introduced by us” and looked closely at its meaning.

Ultimately, Lord Neuberger, who gave the leading decision, took the view that the proper reading of this phrase was “a person who becomes a purchaser as a result of our introduction” and not “a person who at some time in the future becomes a purchaser” as was put forward by Foxtons.

This is an interesting decision. The Court was keen to point out that users of residential agents should be afforded more protection than those using commercial agents and wherever possible the position should be that a vendor or landlord should not have to pay fees to two agents in respect of work done. However, it is clear that the Court was unwilling to imply terms into the agreement that were not there and so, if a fee clause is correctly expressed it would seem to be the case that an agent can still seek a fee where an individual comes to a property through the seperate efforts of two sole agents.

PainSmith Solicitors have produced a clause which they believe will survive the decision in Pelkey and can supply this on request.

Filed under: Uncategorized, fees, litigation

4 December, 2008 • 20:46 0

Interest Rate Cuts and Tenancy Deposits

Today the Bank of England cut its base rate to 2%. While this will hopefully help the economy there is an unintended consequence that will affect many tenants. Tenancy Deposit Protection was introduced by the Housing Act 2004. One of the three approved tenancy deposit protection schemes was the government-backed Deposit Protection Scheme (DPS). The Housing (Tenancy Deposits) (Specified Interest Rate) Order 2007specified that this scheme would pay interest at 2.32% below the Bank of England base rate. With the rate cut this means that the DPS is now paying interest at -0.32%. Effectively, tenants will find themselves paying interest to the scheme at 0.32%. While it is unlikely that this will occur and the government will hopefully act to resolve the problem it is nonetheless embarassing.

Meanwhile the primary advantage to tenants of using the DPS, the payment of interest, has now gone. Agents who wish to attract tenants and use one of the other schemes may choose to offer to pay interest to tenants, albeit at a low rate.

Filed under: Uncategorized, deposits, Housing Act 2004

24 November, 2008 • 16:35 0

Chancellor’s Pre-Budget Report

Today saw the Government make their Pre-Budget Report (PBR). A number of measures were introduced with the aim of stimulating the UK economy which is now predicted by the treasury to show growth of less than 1% this year and negative growth of 0.75 to 1.25% next year.

The following measures may have a particular impact on the landlord and tenant sector:

Stamp Duty Land Tax has had no changes made to it which will disappoint much of the sector.
Value Added Tax (VAT) has been lowered to 15% until the end of 2009. This change will take effect from Monday 1 December 2008. This will have an impact on some commercial landlords who have elected to waive their VAT exemption and on their tenants. Commercial agents will need to amend their rental demands to reflect the new VAT rate. All agents will need to amend their fees to allow for the new VAT rate.
Government borrowing will rise to £118bn next year. This may affect the ability of larger borrowers to gain attractive terms for borrowing.
It appears that the government is to abandon plans to end Empty Property Relief.
All businesses will suffer slightly from a rise in the National Insurance threshold although this will not occur for some time. This may accelerate job losses across the sector as less productive staff are made redundant.
A further sum of £100m has been provided to improve home insulation. It is not yet known whether this money will be available to assist landlords.
The mortgage rescue scheme has been extended to include second mortgages. Depending on the terms this may assist some small buy-to-let landlords.

Filed under: Uncategorized

31 October, 2008 • 14:41 1

Housing and Regeneration Act

The Housing and Regeneration Act has introduced important changes in the Housing Act 1988 and particularly in the way that tenancies are ended by the Court.

This has been done to end the problems caused by so-called tolerated trespassers. This bizarre status came about due to the decision in Harlow DC v Hall where the Court ruled that a suspended possession order actually had the effect of terminating the tenancy but prevented the landlord from executing the order by seeking possession as long as the occupier kept to the conditions imposed on the order. This had the effect of creating a new class of occupier, the tolerated trespasser, who were people whose tenancies had been brought to an end but who could not actually be removed from the property.

This unsatisfactory state of affairs was resolved in part by changes to the Civil Procedure Rules and the creation of a new type of possession order, the postponed order. However, the position has been further resolved by the Housing and Regenration Act. This has amended section 5 of the Housing Act 1988 along with other relevant legislation to make clear that tebnancies do not come to an end merely by Court order but actually by the execution of that order by the Bailiff. This means that tolerated trespassers will no longer be created as their tenancy will remain active even on the making of a suspended order and will only bve brought to an end by the execution of that order if the tenant fails to keep to the conditions for its continued suspension.

While this resolves the tolerated trespasser issue it does create a new problems, albeit a fairly small one. This is that when an order has been made and there is uncertainty about whether the tenant has vacated the preference will now have to be to instruct the Bailiff. Whether this will mean that the Bailiff service will become busier remains to be seen.

Filed under: Uncategorized

27 October, 2008 • 16:56 0

Rugg Review of the Private Rented Sector

The government-sponsored review of the Private Rented Sector carried out by Julie Rugg and David Rhodes (the “Rugg Review”) has recently been unveiled.

A large part of the review is simply a look at the current state of the sector and principally makers clear just how little understanding of the sector there is within local and national government and in Parliament. In particular, the myth that the majority of landlords are out to steal from their tenants came in for some criticism. It is also apparent from the review that the quality of information on which decisions are based is very poor.

The review makes six key recommendations:

A sound base of evidence should be developed to inform future policy and decision-making.
Improvement of the quality of lettings and management agents should be encouraged, primarily through the compulsory licensing of all agents. This would be overseen by a new, independent body. Continuing Professional Development should a be a key requirement for all agents as a part of any accreditation system.
Government policy should be modified to view landlords less as investors and more as active small-businesses. This will mean changes in taxation schemes to recognise the business status of landlords and incentives for good landlords to grow their portfolios. The mortgage market will also need to be reformed to encourage buy-to-let landlords to present a business plan as a part oif their mortgage application and also to ensure that tenants do not find themselves evicted if those businesses fail.
Tenants who rely on benefits to meet obligations in the private sector should be better supported with assistance over deposits and rent arrears. Local authorities should be encouraged to set up social sector lettings agents offering attractive rates to landlords in return for placement of their properties in the social sector.
All landlords should be licensed although fees and red-tape to obtain the licence should be kept to a minimum. Where a landlord proves unwilling to aknowledge his responsibilities he should be excluded from the sector by withdrawal of the licence. Licence fee income could be used to help fund a new tribunal service for resolution of landlord and tenant disputes without recourse to the Courts.
There seems to be no immediate need to reform the actual legal framework of letting by reforming or amending the Assured Shorthold Tenancy system although landlords should be encouraged to offer longer-term lets. All parties should be encouraged to view letting as a lower risk activity to reflect the large percentage of tenancies that occur without any problems.

On the whole the review is a balanced and sensible document. It does a good job of taking the best parts of prevcious considerations of the sector and promoting them while leaving behind the more complex and unworkable ideas. It does much to imporve understanding of the sector by providing sober review of the issues and should be applauded for this. In general, while some tenant organisations have been unhappy that the review does not go far enough it has received a warm welcome from landlords and agents. Whether government takes up the recommendations remains to be seen.

Filed under: Uncategorized, review

26 October, 2008 • 15:57 0

Costs and the Disrepair Pre-Action Protocol

In a recent case the Court of Appeal considered the issue of legal costs on a claim using the Disrepair Pre-Action Protocol.
In Birmingham City Council v Lee the Council was initially given notice of disrepair in Mrs Lee’s property by solicitors in a letter which made mention of the protocol. The Council repaired the property during the course of the following month and negotiations then took place with regard to payment for damages and Mrs Lee’s legal costs. These apparently broke down and a claim was issued in the for damages of between £1000-5000. As the repairs were complete there was no claim for specific performance and as the amount claimed fell below £5000 the matter was properly allocated to the small claims track. However, Mrs Lee sought damages on the fast track scale for, at the minimum, the time between notification and completion of the repairs. It seems fairly likely from thr papers that the action was largely begun in an effort to obtain legal costs.

At first instance the Deputy District Judge refused costs. On the tenant’s appeal the Circuit Judge made a costs order allowing costs prior to allocation to be reserved for consideration by the trial judge at the conclusion of the matter. The Council appealed this decision to the Court of Appeal.

In a unanimous verdict the Court (led by Hughes LJ) declined the appeal in its main points, largely because it left too much to be decided later. They substituted an order awarding Mrs Lee costs up until completion of the repairs.

While both sides made much in argument about the nature of litigation funding the Court set this aside and took the view that it should decide whether an award of pre-allocation costs was necessary in order to make the protocol operate as intended.

Ultimately the Court decided that this was necessary otherwise landlords would have the option of refusing to repair until a pre-action letter was issued then completing all repairs pre-allocation, having the matter allocated to the small claims track, and thereby having no liability for the tenant’s reasonably incurred legal costs in forcing the landlord to carry out works in the first place.

This decision will prove a boon to a number of public assistance firms as it will increase their ability to recover legal costs where they have assisted tenants under the protocol, even where the landlord immediatley does the works required. From a landlord’s point of view it reinforces the need to get works done early as once a pre-action protocol letter arrives the legal costs meter will start ticking.

Filed under: Uncategorized, costs, disrepair, litigation

24 October, 2008 • 17:10 0

New Tenancies Under Section 34

InTruro Diocesan Board of Finance Ltd v Foley [2008] EWCA Civ 1162 the Court of Appeal considered the effect of section 34(1)(b) of the Housing Act 1988.

In this case Mr Foley had compromised a prior dispute with the Diocesan Board by a consent order under which he surrendered his tenancy under the Rent Act 1977 and gave up possession for approximately 24 hours before being granted a new assured shorthold tenancy for 5 years under the Housing Act 1988. In due course he was served with a section 21 notice and contested this on the basis that he could not have the protection of the Rent Act removed in the manner in which the consent order sought to do.

Section 34 sought to prevent the granting of any further protected tenancies under the Rent Act 1977 but intentionally kept open the possibility that certain tenants would be able to gain such tenancies primarily in order to prevent unscrupulous landlords inducing protected tenants to sign new assured shorthold tenancies thereby losing their protection. Section 34(1)(b) requires that a tenancy “granted to a person … who … was a prtoected or statutory tenant and is so granted by the person who at that time was the landlord” will remain a protected tenancy. In section 45(1) it is stated that “except where the context otherwise requires [a] tenancy includes … an agreement for a tenancy”.

Mr Foley’s argument was simple. The consent order was an agreement for a tenancy between a landlord and tenant who had previously been related by a protected tenancy. Therefore any tenancy flowing from the agreement should also be a protected tenancy.

The Diocesan Board’s argument was equally simple. They suggested that section 34(1)(b) was clearly one of those areas where “the context otherwise requires”.

Perhaps unsurprisingly, the Court of Appeal was not entirely keen to allow an agreed consent order to be set aside in this manner and unanimously followed the argument advanced by the Diocesan Board.

However, that was not quite the end of the matter as Mr Foley advanced a second argument. This was the, rather clever, postion that the consent order was a signed agreement which set out all the termns of a tenancy and should therefore take effect as the grant of a tenancy under the principle established in Walsh v Lonsdale. This would have the effect of making s45(1) irrelevant and allow s34(1)(b) to be engaged directly. This argument was leant weight by the fact that the consent order was executed as a deed in order to comply with the provisions of s52(1) of the Law of Property Act 1925 and that no further tenancy agreement between the parties was in fact ever entered into.

Perhaps surprisingly, the Court of Appeal divided itself over this issue. The majority (Sir John Chadwick dissenting) distinguished Walsh on the basis that the intention of the parties in that case was clearly different from the intention here.

TYhe upshot of this decision is that practitioners can feel confident when drawing up consent orders, and potentially any agrement, by which a prtoected tenant surrenders their tenancy for the grant of a new Housing Act 1988 tenancy.

Filed under: Uncategorized, Housing Act 1988, litigation, Rent Act 1977

20 October, 2008 • 20:30 0

New Fire Safety Guidance

LACORS has created new guidance on appropriate standards of fire safety in residential rented accommodation.

Previously there was a requirement for properties to be fire safe under the HHSRS or when applying for an HMO licence but there was little information on what fire safe meant which led to a wide disparity of standards between different local authorities. LACORS has taken best practice and ideas from around the country and combined it into one document.

The standard required depends on the size of the property and its anticipated occupancy. HMOs and larger properties will need to meet a higher standard. For most landlords the main issue that will cause concern is the requirement that all properties should have a mains-powered, battery-backed, smoke detection system.

It should be remembered that the guidance is just that, guidance. Therefore there is no legal requirement for a property to fulfil the standard before it is rented. However, if the property is inspected by the local authority for the purposes of the HHSRS or HMO licensing these are the type of standards they will expect.

More information on the guidance can be found here.

Filed under: Uncategorized, guidance, Housing Act 2004

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