31 January, 2012 • 17:26 2
A short blog to highlight to readers that TDS and the Residential Landlords Association have created a fourth tenancy deposit scheme with price structures that are targeted at private landlords. The scheme is called Deposit Guard and the scheme will not charge an annual subscription fee or joining fee. For more information click here.
Filed under: England & Wales, FLW Article, comment, deposits, Housing Act 2004
18 January, 2012 • 21:30 9
Painsmith has recently encountered the Kafkaesque world of the tenancy deposit protection schemes, specifically the DPS and its new rules relating to the release of the deposit following a court hearing.
DPS is currently refusing to release deposits where the courts have not specifically ordered it and they have changed their rules to reflect the same. Under rule 29 (a) DPS will only release the Deposit if the Court Order specifically refers to the Deposit and how much to be paid out to the tenant.
Several of our landlord clients have obtained a possession order on the grounds of rental arrears and are finding it impossible (or very nearly impossible….or just very expensive) to get the deposit released, even where the contract specifically allows for the deposit to be applied against rental arrears.
Of course it is always open for the tenant to agree the release of the deposit to the landlord, but once possession is obtained many tenants lose interest in co-operating with their former landlord.
In the absence of an agreement from the former tenant the landlord is left to apply to the scheme to ask for the release of the deposit. We believe this should simply be a matter of drawing the scheme’s attention to the court order for possession and rent arrears and the clause in the contract, which allows the deposit to be used against rental arrears, where applicable.
However on more than one occasion recently a landlord’s application to the DPS for the release of the deposit has been refused and the applicant referred to clause 29 of the terms and condition ( see above) and informed that if they want DPS to release the deposit to them they must either arrange for the Court Order to be amended or a Third Party Debt Order to be obtained.
Concurrently, courts are refusing to make orders that would satisfy the DPS rules with many judges refusing to address the issue of the deposit on the grounds that it is a matter for the scheme and they do not want to usurp the jurisdiction of the Adjudicator.
You will recall that part of the point of these schemes was to take the matter of deposit handling away from the courts and instead use an alternative dispute resolution, that is the Adjudicator. However landlords find themselves facing courts that refuse to deal with the deposit because it is a matter for the scheme, and the scheme refusing to release the deposit without a court order so the whole thing becomes farcical.
Painsmith has historically been involved in deposit protection reform and we would suggest that between the schemes and the courts there needs to be some clarification.
Filed under: England & Wales, FLW Article, comment, consultations, deposits, Housing Act 2004, litigation, possession
6 January, 2012 • 10:00 0
Painsmith draws your attention to this news item published by Bristol City Council which has prosecuted some of its landlords for serious breaches of the Housing Act 2004. The landlords of one Bristol property have been fined more than £30,000 and ordered to pay over £5,000 in costs after being found guilty of serious breaches of the Housing Act 2004.
Interestingly the prosecutions were brought as a last resort only after attempts to work with the landlords to “turn the management of the property around” failed. Bristol City Council maintains that it is committed to working with private landlords to maintain and improve the quality of housing in the city.
If you are an HMO landlord the advice is – work with your local authority: respond to their letters within the specified time limits. If you believe that they are demanding measures not required by law, then raise this with them. If you are not sure of your rights then as always make sure you seek independent legal advice as soon as you can.
You can read the full article here.
Filed under: England & Wales, FLW Article, comment, HMOs, Housing Act 2004, legislation
20 October, 2011 • 10:01 0
This not really a heading that one would expect on a Landlord and Tenant blog but with the country up in arms in many cases about the sentencing of the rioters and the recent Court of Appeal decisions we thought it prudent to mention the case of Premier Places.
Brandon Weston and David Christopher Williams ran Premier Places, a lettings agency with offices in Worcester and nearby Redditch. They were sentenced this week for a long-running fraud but the sentences were suspended.
Weston who ran the business pleaded guilty to four charges of fraud between 1 April 2007 and 28 February 2008 and was sentenced to 12 months in jail. But the sentence was suspended for two years and so he will not go to jail unless he is convicted of another offence within that time. He was also ordered to serve 250 hours of community service which is an alternative to custody. Williams, the book keeper, was sentenced to serve eight months, suspended for two years plus 150 hours of community service. He pleaded guilty to three charges of forgery of an accountant’s signature.
In sentencing, the Judge at Worcester Crown Court took into consideration the fact that Weston exhibited genuine remorse and was bankrupt with the events having had a devastating effect on his family.
According to prosecutors, Weston had interests in a restaurant, “The Glasshouse” in Worcester, a family home, a house in France and seven other houses in Worcester he was also allegedly taking £8,500 out of the business every month.
Daniel White of Counsel for Weston confirmed that he had signed over to the prosecution or sold all his assets and that his life had been turned upside down following his bankruptcy.
Premier places were a member of TDS (the Dispute Service) which has made good the losses suffered by both tenants and landlords at a cost of some £63,000. As most of you know the deposit should be held in a designated client account which is treated as a trust account and is therefore ring fenced from the assets of any company. However the deposits were not ring fenced despite the reassurances given to the tenants and landlords.
Steve Harriott, the Chief Executive of TDS, says that the sentences are “a kick in the teeth” for the tenants and landlords who were the victims of the scheme and that it “undermined the excellent work of properly self-regulated agents.”
Whatever your opinions maybe on the sentencing of these agents we at PainSmith Solicitors do agree that the industry needs to be regulated and that just like lawyers agents should undergo a minimum amount of training every year.
Filed under: England & Wales, FLW Article, comment, deposits, Housing Act 2004, legislation
9 August, 2011 • 21:32 0
in court arguing over a deposit again!
Suurpere entered into an assured shorthold tenancy agreement with the landlords Nice and Anor for a period of 6 months on the 9th January 2009.
For a number of reasons the relationship between the parties began to deteriorate and the landlords served a Section 21 and issued possession proceedings on this notice which was in fact defective.
The landlords did not lodge the deposit with a scheme pursuant to Section 213 of the Housing Act 2004 until the 20 July 2009. On the 10 August 2009 the tenant issued for this breach, which included the landlords’ failure to provide the “prescribed information”.
On the 14 August 2009 the tenant left the premises allegedly due to the landlords unlawful harassment. The deposit was returned to her in full on the 1 September 2009. In their defence the landlord’s confirmed that the tenant had received her rent in full and that their failure to register the deposit was a “innocent technical breach”.
The county court judge applied the decision in Draycott and held that because the landlord had registered the deposit before the tenant issued proceedings, the sanctions in Section 214 (4) (3 times the penalty) did not apply. The tenant therefore appealed.
The landlords claimed that pursuant to the Hashemi case because the tenant “vacated” on the 14th August 2009 the court had no power to make an order under Section 214 (4).
However, the Appeal court held that in Hashemi the date on which the tenancy ended was clear but in this case the tenant did not accept that her tenancy had been determined because she brought a claim for wrongful eviction, claiming that she was forced to vacate as a result of the landlord’s harassment. Therefore Hashemi did not apply.
The tenant relied on Tiensia and argued that due to the landlord’s failure to register the deposit with a scheme and provide the requisite information in the prescribed form she was entitled to an award of a sum of money equal to 3 times the amount of the deposit. The Court of Appeal agreed with this and awarded 3 times the deposit because the tenancy had not been lawfully determined.
Filed under: England & Wales, FLW Article, deposits, Housing Act 2004, litigation
24 June, 2011 • 09:28 0
Some of you will note that we have blogged on the Localism Bill previously and the expected changes to the Housing Act 2004 specifically the sections on the registration of deposit. The amendments were not supported by the Commons and it was assumed that alternatives would be proposed. However, no such alternatives have been proposed and Lord Best has therefore introduced the original amendments into the Lords.
The Bill started its committee stage on 20 June and given that in the House of Lords committees are always ‘committees of the whole House’, i.e. every peer is able to contribute a huge number of amendments are expected.
Filed under: England & Wales, England only, comment, consultations, deposits, Housing Act 2004
25 May, 2011 • 23:56 6
Call me lazy but here’s the summary of the case.
The Court of Appeal in their judgement held that the case of Tiensia did not assist the landlord in this case because the landlord had never complied with the initial requirements or provided the prescribed information and given that the lease had now ceased they cannot do so.
The landlords arguments in defence of the application were:
In response to the above arguments the court held that the legislation does not make it a prerequisite of any application by a tenant that the lease must still subsist. The legislation also does not include a definition for ‘tenant’ although it is accepted that the word is used to refer to former tenants by the DPS. Finally that the word deposit had a clear meaning which was the deposit money paid at the commencement of the tenancy.
Taking all of this into account and the circumstances of this case the Court of Appeal has made the decision that the court cannot make an award for three times the deposit where the lease has expired. Whilst it was recognised that a landlords failure to register the deposit was unlawful it was not a criminal offence for which there were criminal sanctions imposed.
The obvious problem with this decision is that if no liability is going to be imposed then landlords will simply choose not to register the deposit and will only do so if the tenant makes a threat to go to court during the tenancy. When this was put to the court the response was that tenants could still rely on the Act to make an application for the award during the tenancy. In relation to the loss of the benefit of the deposit adjudication services that tenants would experience from this becoming a common strategy the Court noted that they would be able to make use of the small claims track in the county courts…..which was one of the things that tenancy deposit protection was introduced to get away from!
Filed under: England & Wales, FLW Article, comment, deposits, Housing Act 2004
18 May, 2011 • 22:27 3
Gladehurst granted Mr Hashemi and Mr Johnson (the tenants) an assured shorthold tenancy of a flat for a fixed term of one year from September 2007. The monthly rent was £2,080. A deposit of £6,240 was paid to Gladehurst. The terms of the agreement provided that the deposit was to be held by Gladehurst. The deposit was never registered in accordance with the Housing Act 2004.
The tenants vacated the property in October 2008. Following an inventory check out, Gladehurst paid back the deposit minus various deductions. Mr Hashemi then wrote to Gladehurst requesting receipts and a breakdown of the sums deducted from the deposit and he put them on notice that he would make a claim for three times the deposit under s214.
In February 2009, Mr Hashemi issued a claim against Gladehurst in both his own name and that of Mr Johnson. Gladehurst in its defence pleaded that it had not been fully aware of the impact of the 2004 Act, but accepted that it applied. The defence also asserted that the landlord had all the necessary receipts for the dilapidations and other expenses paid on behalf of the tenants.
In April 2009, District Judge Manners, of her own motion on the papers, struck out the claim on the basis that the tenancy ended before the application was made. Mr Hashemi applied to set that order aside. District Judge Stary dismissed that application in so far as it related to the s214 claim, but reinstated the claim for the deductions of £618. Mr Hashemi appealed.
HHJ Cryan allowed the appeal and found for Hashemi. He noted that the landlord:
… never dealt with the deposit in the correct way in accordance with Act and still retains part of it … There can be no question that in accordance with the scheme of the Act a landlord should not be holding any part of a qualifying deposit at this stage, or at least without the safeguards of the Act being in place.
Gladehurst then appealed to the Court of Appeal.
Filed under: England & Wales, FLW Article, comment, deposits, Housing Act 2004, legislation
17 May, 2011 • 14:00 0
We believe the decision will be handed down on Thursday.
Filed under: England & Wales, England only, comment, deposits, Housing Act 2004
6 May, 2011 • 15:17 19
The High Court has handed down its decision in the case of Potts v Densley today. Previous blogs can be viewed here.
We acted on behalf of the Claimant who in this instance was the Tenant with James Browne of counsel.
Facts
The landlord first let the property for a term of one year commencing on 12th May 2007. The property was managed by a lettings agent. A deposit was taken of £1,500, which was correctly registered with the TDS scheme. In 2009 an agreement was made between the parties that a new tenancy would be agreed at a lower rent, without the management of the agents. It was agreed that the deposit would be withdrawn from the TDS and paid direct to the Landlord who would be responsible for protecting it themselves.
In order to assist the Tenant the Landlords agreed not to insist on a further deposit upon this renewal. Instead they agreed to wait for the return of the deposit from the agent and then register it upon receipt. The Landlords received the deposit of £1,590 on 18th June 2009. In the meantime on the 15th June 2009, the Tenant exercised a break clause bringing the tenancy to an end on 15th August 2009.
On the 10th August the Landlord offered to pay the deposit back to the Tenant however, the Tenant refused the deposit and insisted that the Landlord register the deposit with a scheme pursuant to their obligations under the section 213 of the Housing Act 2004. The Landlords failed to do so and the Tenant issued proceedings on the 12th August 2009. The Landlords in response no doubt registered the deposit with the DPS custodial scheme on the 17th August 2009, 2 days after the Tenant vacated.
The Prescribed Information as required by s213 (3) and s213 (6) was never served.
Before Her Honour Judge Hallon, it was held that there had been a breach of the requirement to secure the deposit, because the initial requirements of the scheme can not be complied with after a tenancy has come to an end. This is despite the decision in Tiensia. However, the judge refused to award the penalty of three times the deposit because she held that there had been a technical breach of the requirement to secure the deposit and that given the:
“unusual circumstances of the case, it would not be in the interests of justice to do so”.
She did not deal with the prescribed information at all.
The Tenant appealed.
Two main issues were raised in the appeal. First that the judge had no discretion to refuse to impose a sanction once she had decided there had been such a breach and it thus follows that she was wrong to refuse to award the penalty. Second that the judge erred in failing to deal with the issue of the Prescribed Information.
The Judgment of Today
The Honorable Mrs Justice Sharp when referring to the County Court decision above states at paragraph 23 of her judgment:
“it is obvious that the judge had considerable sympathy with the position of the Landlords on the facts found by her and considered it would be unjust for them to be subject to the sanction provided for non compliance, under section 214 (4) of the Act”.
She then went on to say that to award the penalty for a breach of a technical nature when the deposit was not returned due to the insistence of the Tenant pursuant to section 214 would:
“do a very considerable injustice”.
With regards to the 2 points of appeal, Mrs Justice Sharp upheld the County Court decision and based her reasoning on the decision on Tiensia. That is that Landlords had until the date of the hearing of the Tenants application to comply with the provisions and having secured the deposit before the hearing they had a complete defence to the Tenants application.
On the matter of the prescribed information, Mrs Justice Sharp held that due to the failure to plead this in the particulars of claim submitted by the Tenant, the judge had not erred. The issue over the prescribed information was mentioned in court by the Tenant and also mentioned in the Tenants witness statement. However, it was held that this was not clearly pleaded but had it been the judge would no doubt have dealt with it.
Conclusion
Whilst we welcome the release of the decision the area of law is not concluded. It does appear that you can register the deposit after the tenancy but the judge did not deal with implied or the actual requirements of the scheme because they had not been pleaded. It may be the case that it is an implied “initial requirement” of all 3 deposit schemes that the deposit be registered before the tenancy ends. Even if it is not an implied requirement is it likely that it will become explicitly stated requirement!
There of course remains the decision of Hashemi v Gladehurst which has the potential of changing this decision.
Filed under: England & Wales, FLW Article, comment, deposits, Housing Act 2004, legislation
5 May, 2011 • 13:17 0
We have heard on the grapevine that the Potts decision will be handed down tomorrow…..All those that would like to read the history please read here.
Filed under: England & Wales, FLW Article, comment, Housing Act 2004
31 March, 2011 • 19:07 3
As many of our readers will be aware Oxford City Council has now launched it’s scheme to license every HMO within it’s jurisdiction. The primary rationale behind this was the need to deal with poor management of properties within Oxford.
In February, shortly after the new scheme was introduced, Oxford prosecuted Oxford Letting and Property Management Ltd for failing to manage a HMO property.
Oxford was alerted by a tenant of a property to a series of breaches of the HMO Management regulations, including:
The agent pleaded guilty to offences under the HMO Management regulations and was fined £2000 with an additional award for costs of some £910.
Whilst the agent recognised the various breaches of the Management of Houses in Multiple Occupation (England) Regulations 2006 and pleaded guilty accordingly the matter will not end there. Oxford will now be considering whether the agent is suitable to mange licensable HMOs. While we do not condone the agent’s failure to manage the property appropriately this is a very severe response which could destroy the agent’s business and is a hard lesson to learn.
Agent’s must not forget that they are directly liable for HMO property under the HMO Management regulations. If a landlord refuses to make necessary repairs to a property the agent will not be able to hide behind their status as the landlord’s proxy in order to avoid prosecution.
Filed under: England & Wales, FLW Article, HMOs, Housing Act 2004
14 March, 2011 • 10:41 2
As some of you will recall we mentioned some possible changes to the Tenancy Deposit Protection legislation. These TDP changes do not however, appear to have survived the committee stage of the bill. This is not to say that they will not get back in later but it is of some concern that what we considered to be improvements has been overlooked.
Filed under: England & Wales, FLW Article, comment, consultations, deposits, Housing Act 2004, review
24 February, 2011 • 23:47 0
We have been provided with a copy of a letter that Oxford City Council is distributing to relevant parties in the lettings industry.
As regular readers will know, the Labour government amended the planning use classes in April 2010 to limit the C3 use class and created a C4 use class for HMOs’. We reported on this here.
After the election the new coalition government amended the General Permitted Development Order to allow movement between the C3 and C4 classes. This was reported here.
Local Authorities can opt out of the GPDO by making an Article 4 Direction and requiring planning permission to switch from C3 to C4 use. Oxford is stating that they have a shortage of housing and a high demand for HMO accommodation. This might appear to be inconsistent with a policy of increased planning control but Oxford justify the policy by stating that there is a shortage in all types of accommodation and that wholesale conversion to HMOs in all areas means that other areas are not satisfied. However, Planning Policy Statement 3 requires local authorities to adopt planning policies that provide sufficient living accommodation for all types of use. It will be for Oxford to show that their new restrictions on HMO accommodation do not violate this policy statement.
Finally, there is some doubt as to whether Oxford’s article 4 Direction will actually matter. As we explained in this post the fact that a property use moves from one use class to another does not automatically mean it is a material change of use, which requires planning permission.
It should also be noted that Oxford is not permitted to charge a planning application fee for applications made as a result of an Article 4 Direction and one possible way of frustrating the proposals is simply for a large number of landlords to make applications thereby tying up resources.
Thank you to Mark at College and County
Filed under: England & Wales, FLW Article, consultations, HMOs, Housing Act 2004, legislation, licensing, planning, procedure
18 February, 2011 • 10:09 11
While we await the outcome of Potts v Densley & Pays in the High Court, followers of deposit protection litigation might be interested in a case with similar facts to Potts, but a different outcome in the county court.
Gemma Shepley v Majid Yassen, Tameside County Court, Thursday 13th January 2011 (Unreported), has been spotted and commented on by Nearly Legal.
To recap, in Potts v Densley & Pays the main issue is, can the tenant sue for the usual penalties where the landlord has protected the deposit after the end of the tenancy but before the court hearing and failed to provide the prescribed information?
The Shepley v Yassen facts mirror Potts: the deposit was not protected during the tenancy, and after the end of the tenancy the tenants issued proceedings (in May 2010) for the usual remedies. The deposit was protected in August 2010 with DPS. But the prescribed information was never served on the tenants.
The (County) court held that protection after the end of the tenancy was not acceptable. The cases of Draycott and Tiensia were distinguished on the basis that in those cases the deposits had been protected late but had still been placed into schemes before the tenancy ended.
NL comments that this “seems to be absolutely correct. If a landlord can put the deposit into protection after the tenancy has ended then it makes a total nonsense of the legislation and almost encourages a “wait and see” attitude.”
Painsmith agrees. Currently no-one is sure of their position when a deposit is protected after the end of the tenancy and this is disconcerting for both landlords and tenants. With the Potts v Densley & Pays judgment still not handed down, landlords, tenants and lawyers are indeed having to wait and see, whether we want to or not. A High Court decision that deposits cannot be protected after the end of the tenancy would be welcomed.
Filed under: England & Wales, FLW Article, deposits, Housing Act 2004, legislation, litigation
4 February, 2011 • 10:54 10
On Wednesday 9th February 2011 PainSmith has a case appearing in the High Court which should provide a further binding decision on Tenancy Deposit Protection under the Housing Act 2004.
In Potts –v- Densley & Pays there are two issues for the Court to consider:
1. Whether the trial judge had made the wrong decision in refusing to award the penalty pursuant to s214 of the Housing Act 2004 for three times the value of the deposit despite having found that the Landlord had breached s213 by failing to lodge the deposit with a deposit scheme.
2. Whether the prescribed information required to be given to the tenant pursuant to s213 (5) and s213 (6) of the Act had been complied with in these particular circumstances.
This case relates to the registration of the deposit post the expiration of the tenancy and PainSmith is acting for the Claimant. Although it is unlikely that we will receive a decision on the 9th February it will no doubt be reported on this blog as soon as we receive it.
Filed under: England & Wales, FLW Article, deposits, Housing Act 2004, legislation
22 November, 2010 • 08:08 1
Hanley v Tameside Metropolitan Borough Council concerned an appeal from the Residential Property Tribunal (RPT) against the service of a Prohibition Order. Bolton Metropolitan Borough Council v Patel concerned an appeal from the RPT on Emergency Remedial Action.
The Housing Health and Safety Rating System (HHSRS) was introduced by the Housing Act 2004 and represents one of the more far reaching and significant parts of the act. Under its provisions Environmental Health Officers (EHOs) have powers to inspect properties, identify hazards and after scoring the hazards placing them in either one of two categories, category 1 hazards being the most serious hazards and usually attracting more severe enforcement methods. The EHO can then issue the landlord with orders for remedial action. Enforcement actions range from Hazard Awareness Notices which are not enforced to Prohibition Orders, ordering the Premises to be vacated until the identified hazards have been rectified.
The Prohibition Order in Hanley was made by the council as a result of a water ingress into the house he was letting to four people. An appeal to the RPT was refused but it allowed a further appeal to the Lands Tribunal on the basis that there was an arguable point of law. The landlord argued that as the building conformed to the Building Regulations or could be easily made to comply they could not be hazards for the purposes of the HHSRS.
There were two issues the Lands Tribunal had to deal with. Firstly whether the HHSRS would take precedence over the Building Regulations. The RPT held that if the hazard was identified under the provisions of the Housing Act, compliance with the building regulations was not a material consideration.
The Lands Tribunal found that this interpretation was an error of law. It must be a material consideration if an alleged hazard conforms with the building regulations. Furthermore the tribunal found that there was no conflict between the two legislative provisions.
However the Prohibition Order was not set aside as the erroneous reasoning did not form part of the reasoning of the RPT.
Bolton considered Emergency Remedial action, another of the enforcement actions available to EHO’s. The hazards identified were failure of the boiler and consequential lack of heating, hot water and exposed electrical wiring. The RPT found that it was correct that emergency remedial action was ordered on the basis of the exposed electrical wiring but not for the repair of the boiler. The argument raised before the LT was whether the RPT had properly concluded there was not a ‘serious risk’ of ‘imminent harm’ as required by the Act. The landlord argued that the interpretation of ‘imminent’ should be that of 28 days as opposed to 5 days which the RPT had interpreted after which the next possible action could be taken, namely an improvement notice. The LT did not accept this as an improvement notice has an additional period in which an appeal could be lodged and furthermore the act was not drafted to link emergency remedial action with improvement notices. The appeal was therefore dismissed by the LT.
The LT however made an important observation about the HHSRS system stating, in relation to the method of hazard assessment
The great danger of a numerical score produced in this way is that it creates the impression of methodological accuracy, whereas the truth may be that it is the product of no more than a series of value judgements based on little understood statistics of questionable validity
The statistics that the hazard calculation tables are based on have also been criticised. The statistics embody a ‘notional occupier’ test, as opposed to testing the hazard against the actual occupants. The test for Excess Cold is based on a ‘bare statistic’ of total winter deaths for over 65s.
A further concern lies in the ability of EHO’s to decide whether the likelihood of a hazard occurring should be increased. It is this subjective element that can result in extra-ordinary results as the EHO’s decision acts as a multiplier. For example in the present case the the EHO had radically increased the risk of harm by excess cold assessing that there was a “1 in 31.6 that an occupier of the house would within the next 12 months die or suffer some other form of extreme harm…” The court noted that this was a surprising conclusion.
From these decisions Landlords and their agents should be mindful that although properties may be compliant with the Building Regulations, and compliance may be a positive sign that they are HHSRS compliant, there may be divergence. Furthermore as the HHSRS system currently stands EHO’s have a wider discretion than may initially be thought. Therefore to ensure compliance hazards should be interpreted conservatively.
Filed under: England & Wales, FLW Article, HHSRS, Housing Act 2004, Lands Tribunal
11 November, 2010 • 10:58 37
At 0945 this morning, 11 November 2010, the Court of Appeal handed down its judgement in the two conjoined cases of Universal Estates v Tiensia and Honeysuckle Properties v Fletcher. The decision was a majority decision of Lord Justices Rimer and Thorpe, with Lord Justice Sedley dissenting.
Facts
The facts in the two cases were as follows. In Universal Estates the tenant was taken to Court for possession for arrears of rent. The possession claim was adjourned after she indicated her intention to counterclaim, although that counterclaim was not for an unprotected deposit. The deposit was then registered with MyDeposits but it was, of course, late, more than 14 days from the date of receipt. The High Court has held, in the case of Draycott v Hannells Lettings, that registration more than 14 days after receipt of the deposit cannot be penalised. However a breach of the initial requirements of the relevant deposit scheme can incur the penalties and it was argued in Universal Estates that the MyDeposits scheme had such an initial requirement. In Honeysuckle a claim for possession for rent arrears was also commenced. The tenant’s counterclaimed on the basis that the deposit was not registered. The deposit was protected before the hearing of the matter by the Court, again with MyDeposits.
Therefore the issues before the Court of Appeal were whether it was permissible to protect the deposit more than 14 days after its receipt and at what date there should be a consideration of the protection status of the deposit, at the date of issue of proceedings or at the date of the Court considering the situation at a hearing.
Decision
In short, the Court considered that the High Court had decided correctly in Draycott v Hannells and that late protection is acceptable. Where the Court of Appeal has gone further is that it has ruled that provided protection has been done, and the correct information provided, before the Court comes to consider the matter at a hearing then that is acceptable, even after proceedings have been issued for non-protection. Therefore the landlord’s deadline for compliance is the Court hearing itself and not the date by which proceedings have been issued. The Court did hold that if a tenant is compelled to issue proceedings to force the protection of a deposit then they are probably entitled to their legal costs in so doing. It should be noted here that the Court emphasised the importance of pre-action conduct and discouraged any attempt to ‘ambush’ landlords by issuing proceedings for an unprotected deposit without writing to them first.
The Court further held that no scheme can impose an initial requirement that a deposit must be protected within 14 days, a failure to adhere to which will allow a tenant to claim against the landlord. Therefore the current imposition by The Dispute Service scheme of a requirement to register within 14 days is no more than an administrative requirement for that scheme and registrations with that scheme made after 14 days are not invalid for the purposes of tenancy deposit protection legislation although the scheme may consider them violations of its rules and may therefore adjudicate on the deposit in a manner that is against the landlord’s interests.
The Court made no comment on what the correct position should be if the deposit is not protected until after the tenancy has ended. This remains a live issue and one which must be considered.
All three judges commented that the interpretation which they have been forced into is totally unsatisfactory and they found it hard to believe that this is what Parliament intended when it made the legislation. The consensus certainly appeared to be that the legislation is now toothless and largely without value. The onus now seems to be on Parliament to consider reform of the legislation as a matter of urgency to restore a proper balance.
Filed under: England & Wales, FLW Article, deposits, Housing Act 2004
9 November, 2010 • 00:22 2
The judgement in the two conjoined Court of Appeal cases of Universal Estates v Tiensia and Honeysuckle Properties v Fletcher will be handed down on Thursday 11 November 2010 at 0945.
As regular readers of this blog will know these cases deal with tenancy deposit protection matters and relate to late protection in the MyDeposits scheme and protection after Court proceedings for non-protection have already begun.
There is a rumour that the landlords in both cases have won but we do not know this for certain. The precise position is likely to be much more complex than this.
We intend to be at Court for the decision and will be posting the results as soon as possible on the 11th.
Filed under: England & Wales, FLW Article, deposits, Housing Act 2004
30 September, 2010 • 17:31 2
We have received a letter from Oxford City Council.
It appears that they are considering the licensing scheme further. New recommendations will be put to the Executive Board and from them to the full Council in meetings on 18 October. It may be that these recommendations will include the withdrawal of the current licensing designation (due to come into force on 22 October) and the making of some alternative designations to introduce HMO licensing over time.
PainSmith Solicitors welcome any reconsideration by the Council of its HMO licensing scheme.
Filed under: England & Wales, England only, FLW Article, HMOs, Housing Act 2004, licensing
16 August, 2010 • 10:03 1
The two conjoined appeals of Universal Estates v Tiensia and Honeysuckle Properties v Fletcher were heard by the Court of Appeal on 7 May 2010. These are both appeals relating to the tenancy deposit protection provisions introduced by the Housing Act 2004.
The judgement has been reserved and we are informed that further questions were asked of the various parties involved fairly recently. As the Court of Appeal is now in recess until 1 October there is now unlikely to be a any decision in these key cases until after that date.
UPDATE- The Court of Appeal has now handed down its decision. A full report is available here.
Filed under: England & Wales, deposits, Housing Act 2004
13 May, 2010 • 11:03 7
Following on from our previous post on the plan to give a blanket consent to all local housing authorities in England to operate Additional and Selective licensing schemes. It seemed that this had been put to one side in the consultation response from the DCLG and no further announcement has been made.
However, this firm has been told by contacts within some local authorities that the blanket consent has actually been granted and that they are free to carry through discretionary HMO and landlord licensing schemes provided that they are satisfied that the legal requirements for such a scheme have been met. We are informed that several local authorities will now be carrying such schemes forward.
This is very surprising as there has been no announcement from the DCLG. Hopefully they will now clarify the position.
UPDATE- With thanks to Mark we have now obtained a copy of the blanket consent authorisation signed by the Housing Minister an a copy can be downloaded here.
Filed under: England only, HMOs, Housing Act 2004, licensing
30 April, 2010 • 16:32 14
Next week is a big week for political parties but it is also a big week for tenancy deposit protection.
Two key cases, Universal Estates v Tiensia and Honeysuckle Properties v Fletcher, are both being heard together before the Court of Appeal on 7 May.
Universal Estates concerns late registration of a tenancy deposit with the MyDeposits scheme. At first instance, the County Court held that the MyDeposits scheme had an initial requirement that the deposit be paid within 14 days on the basis of a statement made on a leaflet supplied to the tenant by the scheme. This is in direct contrast to the ruling of the High Court in the case of Draycott v Hannells Lettings which we have discussed on this blog at length.
The facts in Honeysuckle Properties are unknown but it is a case on which the Government are intervening and was originally intended to be the one that set the marker for all tenancy deposit protection cases.
The Court of Appeal ruling will be important and could overturn the High Court decision in Draycott so it will no doubt be awaited with baited breath by a number of different groups.
Filed under: England & Wales, deposits, Housing Act 2004
23 April, 2010 • 10:52 3
As we have previously reported the maximum rent threshold for Housing Act 1988 tenancies is to be altered on 1 October from £25,000 to £100,000.
One of the key questions has been what the position will be for tenancy deposits taken in respect of tenancies which start prior to 1 October and are not ASTs but which will become ASTs on 1 October. There has been some uncertainty as to whether these tenancy deposits will need registration with an authorised scheme or not. If they do need registration then there is some doubt as to when that will need to occur.
It seems that DCLG thinks they will need registration. They have been advising stakeholders that:
Our intention is that these new assured shorthold tenants should have the same protection as existing tenants, so if the tenancy started after 6 April 2007, the landlord will have to protect the deposit.
It is debatable whether they can, in fact, achieve this as the trigger for the protection of a deposit is receipt in connection with an AST. These deposits were received prior to the change and were not received in accordance with an AST and so did not require protection as at the time they were received. Clearly, however, the DCLG thinks different and will seek to encourage the Courts to rule on this basis.
The DCLG recognises that landlords will not have been able to register deposits within 14 days of receipt but states that
we would expect them to protect the deposit as soon as possible.
Apparently they will ask the Courts to give landlords leeway on this issue although after the ruling in Draycott v Hannells the Courts should not be acting on late registration anyway so it is hard to see what useful guidance can be provided.
While we have some doubts about the validity of the DCLG position the message is clear. Protect all tenancy deposits as soon as possible and definitely promptly after 1 October. We hope the deposit protection schemes are prepared for the rush.
Filed under: England & Wales, deposits, guidance, Housing Act 2004, rent threshold change
13 April, 2010 • 09:30 2
We have previously posted on proposed changes to the consent process for local authorities wishing to introduce selective or additional licensing of HMOs or other properties in their areas of responsibility.
The government has now published a summary of the responses to the consultation it carried out on this topic. The response break down much as expected. Local Authorities supported a move to give a general unfettered consent and opposed anything which would limit this. Landlords were opposed to the whole idea.
The plan going forward is not clear. The summary report states that the responses will now be considered. With the election in the offing it now seems unlikely that anything will happen before any new government takes power and therefore what happens will depend entirely on the outcome of the election as the Conservatives are unlikely to give a blanket consent.
Filed under: England only, Housing Act 2004, licensing
12 March, 2010 • 16:22 48
We have previously reported that the Government was planning to amend the Town and Country Planning (Use Classes) Order 1987 to create a separate planning class for HMOs. The changes will come into force on 6 April 2010. The changes will only apply to England as Wales has its own devolved powers to deal with these matters.
The statutory instrument to carry out this change has just been published on the OPSI website as the The Town and Country Planning (Use Classes) (Amendment) (England) Order 2010.
The new planning classes will be as follows:
Class C3 has been amended to cover single households of up to six occupiers.
A new class C4 has been created which will cover HMOs of up to six people.
Properties with more than six occupiers will continue to be outside any planning category.
These changes will bring the definition of HMO for the purposes of planning in line with those used in the Housing Act 2004. The upshot of this issue is that any property which is an HMO (irrespective of whether it requires a licence) will now need to have a separate planning approval. The government has previously stated that they do not consider that this applies to tenancies which are currently in place as at 6 April but will presumably an application will need to be made on renewal. However, it is not clear how local authorities will view this area.
This will undoubtedly cause a massive increase in the number of planning applications and therefore the number of appeals. This will therefore mean yet another increase in cost to landlords and the amount of paperwork. Inevitably, many landlords will simply decline to let to sharers to avoid the hassle.
Filed under: England & Wales, England only, HMOs, Housing Act 2004, planning
12 February, 2010 • 10:45 12
We are pleased to report that the High Court has handed down its decision in the case on Tenancy Deposit Protection that we have previously mentioned on this blog.
In Draycott v Hannells Lettings Ltd, PainSmith Solicitors have been acting for the Defendant lettings agency and have used Mr James Browne of Lamb Chambers as counsel. The facts of the case were undisputed and the essential issue is that Hannells registered the deposit with the custodial scheme operated by DPS more than 14 days after receipt.
The tenants claimed for the usual penalty of three times the value of the deposit and after decisions in their favour at lower courts the matter came before Mr Justice Tugendhat in the High Court.
There were three issues before the Court:
If point 1 was found in favour of Hannells they could not be liable under any circumstances but if they failed on this point then both points 2 and 3 would also have ot be found in their favour for them to escape liability.
On point 1 the Court decided that the wording of section 212(9)(a) was clear in stating that in the section of the Act relating to deposit protection:
references to a landlord or landlords in relation to any shorthold tenancy or tenancies include references to a person or persons acting on his or their behalf in relation to the tenancy or tenancies…
Accordingly, the Court found against Hannells on this point.
In relation to point 2 the Court looked at the wording of section 213(6) which reads:
(6) The information required by subsection (5) must be given to the tenant and any relevant person—
(a) in the prescribed form or in a form substantially to the same effect, and
(b) within the period of 14 days beginning with the date on which the deposit is received by the landlord.
and the wording of section 214(1)(a) which provides that an application can be made to the Court where a person believes:
(a) that the initial requirements of an authorised scheme (see section 213(4)) have not, or section 213(6)(a) has not, been complied with in relation to the deposit;
The Court noted that the Circuit Judge whose decision was being appealed had taken the view that to suggest that the 14 day requirement set out in s213(6)(b) did not attract the penalties set out is section 214 was to “drive a coach and horses” through the intent of the Act as it would permit a landlord to not protect a deposit until such time as they were challenged in Court. However, it also heard submission that this view was overly draconian as it penalised innocent error and that a failure to protect the deposit properly would always be penalised by section 215, which prevents the service of a section 21 notice while the deposit remains unprotected. Ultimately the latter position prevailed and the Court agreed that the Act itself does not impose a requirement that the deposit be protected within 14 days as long as it is protected prior to the matter coming before a Court.
The third point was more complex. Initially, none of the schemes had formally set out any initial requirements. In December 2008 the TDS scheme altered its rules to make clear that it had an initial requirement that any deposit registered with it be protected within 14 days of receipt. It was common ground that section 214(1)(a) allowed for a penalty to be imposed where an initial requirement had been breached. What was at issue was whether the DPS scheme imposed such a requirement. On looking at the DPS rules it could be seen that they had a clause stating that the deposit should be lodged with them within 14 days of receipt. However, there was no mention of this being an initial requirement. The Court took the view that a simple restatement of the Act did not amount to an expression of an initial requirement and that while it could be seen that an initial requirement of the DPS scheme was that a deposit be lodged with it it could not be taken that it was required that the deposit be lodged within 14 days. Therefore, this point was found in favour of Hannells.
Therefore, although it was found that Hannells were potentially liable for a failure to lodge a deposit it was found that their late lodging of that deposit with the DPS was not a breach of the Act or of the initial requirements of the DPS scheme and accordingly the appeal was allowed and the judgement against Hannells of the lower Court was set aside.
Therefore as things currently stand agents are liable for a failure to register the deposit, late registration does not automatically attract the penalties set out in section 214, and the DPS scheme has no initial requirement that the deposit be registered with it within 14 days of being received.
This is by no means the end of the matter though. This case is still capable of being taken to the Court of Appeal and there are at least two more cases which will see judgements handed down from that Court within the next few months and they could have the effect of altering the position again.
Although, there are other decisions from more senior Courts in the pipeline, this is the first binding decision on the issue of Tenancy Deposit Protection and, as such, is very important. We are pleased and proud to have been involved in this case.
A copy of he handed down judgement is available in Word format.
Filed under: England & Wales, deposits, Housing Act 2004
11 February, 2010 • 11:45 3
We have been informed that a decision in relation to the High Court case of Draycott v Hannells Lettings is to be handed down tomorrow (Friday 11 February 2010).
This is a case relating to Tenancy Deposit Protection in which PainSmith has been acting for Hannells. It represents the first binding decision in relation to this area.
Filed under: England & Wales, deposits, Housing Act 2004
29 January, 2010 • 11:30 7
The Department for Communities and Local Government has today published its response to comments made on a previous consultation on the planning status of HMOs and has also launched a new consultation in relation to additional and selective licensing powers.
In July 2009, the CLG launched a consultation on possible ways to deal with the creation of ‘HMO ghettoes’, where large numbers of HMO properties cluster together in a small area. We reported on this here. This issue is particularly prevalent in areas with high student populations. There were several proposals to deal with this but the most highly advocated, and the one most supported by the consultation was to create a new planning use class specifically for HMOs. Currently, dwelling-houses make up the C3 use class and are defined as properties comprising one household with up to 6 occupants. The definition of household is unclear but is not the same as that used by the Housing Act 2004. HMOs falling outside this class were uncategorised and required planning permission to be sought but a large number of smaller HMOs fell within the class and had no involvement from planning officers. The proposed changes will mean that a new use class is created which will be for HMOs specifically and will replicate the definition in s254 of the Housing Act 2004. That is properties rented to three or more occupiers where those occupiers do not form one household. The change will be implemented by an amendment to the Town and Country Planning (Use Classes) Order 1987 which will come into effect on 6 April 2010. In short, properties to be rented to three or more sharers after that date will require planning consent. This change has enormous potential effects. A large number of properties are let to small groups of sharers and are therefore HMOs without ever becoming licensable. Properties that are to be let in this manner after 6 April will require planning permission to be sought in advance. As the government accepts, this will lead to a significant rise in planning applications. What it appears not to have realised is just how large that rise could be and, in addition, that there will be a concomitant rise in planning appeals. It is not yet clear whether an application for the new use class will be met by an addition of that class to the current one or whether the use class will be changed. If it is the latter then landlords will, of course, need to make another application to change the use back again if they wish to let to a family. Landlords will therefore need to choose between letting to families or as an HMO or resign themselves to making regular applications for a change of use.
In addition the the response the CLG has published a ‘short’ consultation for a change in the process by which local authorities gain permission for additional and selective licensing schemes under the Housing Act 2004. Additional licensing allows for a local authority to license HMOs that fall outside the mandatory licensing set by Government. Selective licensing allows for the licensing on non-HMO landlords in areas of low-housing demand where there is a problem with anti-social behaviour. Currently in order to be permitted to carry through such licensing a local authority must carry out a consultation exercise and then seek the permission of the Secretary of State to go forward. The intent is to give a blanket permission to all local authorities so that they need merely carry out the consultation exercise. On the face of it this seems perfectly reasonable. However, when we consider that a number of authorities have been refused permission for additional or selective licensing or have been asked to provide more information then there must be doubt as to whether it is appropriate for this control to be removed. There is certainly a danger of a number of costly and time-consuming judicial review applications in order to challenge the local authority consultation process. For a landlord facing a prosecution such action, while unattractive, may be preferable to a substantial fine.
Although the Government, in announcing these measures reiterated their commitment to a landlord registration scheme this is something that will require primary legislation and, unsurprisingly, will not make it into this Parliament and, unless Labour wins the election, presumably not into any Parliament. One is therefore left to wonder if the latter measure is an effort to introduce partial landlord registration by the back door.
We do not usually comment on political matters, but it is disturbing to see these measures, along with others, being introduced in very short order in April. It immediately gives rise to concerns as to the level of consideration that has been given to the measures and their likely effects. It also gives the appearance of measures being forced through prior to an election in order to score points with the electorate or simply on the basis that the Conservative party, should they win an election, will be too busy to reverse them. One hopes that is not what is going on but if it is then it is sad to see cheap political point-scoring at the expense of the private rented sector which houses a significant percentage of the population and makes a substantial contribution to, an already weakened, economy.
Filed under: England & Wales, consultations, Housing Act 2004, planning
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17 February, 2012 • 18:21 2
TDS
We have blogged on the issues surrounding the release of Deposits following possession proceedings here. Many of you will be interested to note that the TDS have replied to this blog here.
Filed under: England & Wales, FLW Article, comment, deposits, Housing Act 2004