Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

Guildford Seminar 4th October 2016

Our next Seminar will take place on Tuesday 4th October 2016 at The Holiday Inn, Egerton Road, Guildford, Surrey, GU2 7XZ. The event will start with registration and lunch from 1pm and run from 2pm to 5:00pm.

 

Topics to be covered include the following:

 

  • Right to Rent and Immigration Act 2016;
  • Deregulation Act 2015 one year on;
  • Housing and Planning Act 2016: what the future holds;
  • New case law and legislation. PainSmith Helpline subscribers will be able to attend the Seminar at a cost of £50 plus VAT (£60 including VAT) per person. Non-helpline subscribers will be able to attend the Seminar at a cost of £75 plus VAT (£90 including VAT) per person. Places are limited to sixty-five delegates so book your place today in order to avoid disappointment.

 

Places can be booked by completing the attached form and emailing it to alexandrar@painsmith.co.uk

Filed under: England & Wales

Brentwood Seminar 14th September 2016

Our Next Seminar! Just a reminder that our next Seminar is coming up next week.  We still have a limited number of places available so if you are interested please contact Alexandrar@painsmith.co.uk

Filed under: England & Wales

The Homelessness Reduction Bill

The Homelessness Reduction Bill is a Private Member’s Bill introduced by Bob Blackman, backbench Conservative MP for Harrow East. The Bill, which is based upon recommendations contained in a report commissioned by numerous housing groups including the charity Crisis, aims to amend the Housing Act 1996.

The Bill will require local authorities to demonstrate that they are taking reasonable steps to prevent homelessness. The Bill details the types of housing advice and information local authorities must provide before people become homeless or are threatened with homelessness. The Bill will also include guidance for local authorities to intervene with landlords to prevent evictions. The duty placed on these authorities would apply to all eligible households irrespective of priority need and intentional homelessness.

Currently a person is threatened with homelessness if it is likely that he will become homeless within 28 days. The Bill proposes to extend that period to 56 days to enable local authorities to respond to the threat of homelessness at a much earlier point. It will further provide that local authorities will have to accept a valid notice to quit, such as a Section 21, as evidence that the tenant is threatened with homelessness.

Where a local authority is unable to prevent an applicant’s homelessness, they should help to secure alternative accommodation in the private rented sector. The Bill will also require authorities to provide emergency accommodation for those with nowhere safe to stay.

The second reading of the Bill is scheduled for Friday 28th October 2016.

Comment

The Bill has a huge amount of support from various housing charities and numerous MPs. Landlords have also welcomed the news because properties could be returned to them much sooner than at present. However, London local authorities have expressed concerns over their ability to cope with a sharp increase in homelessness cases which may have an impact on the Bill that is finally adopted.

Filed under: England & Wales

Our Next Seminar!

Our next Seminar will take place on Wednesday 14 September 2016 at The Holiday Inn, Brentwood M25, jct 28, Brook Street, Essex CM14 5NF. The event will start with registration and lunch from 1pm and run from 2pm to 5pm.

Topics to be covered include the following:

  • Right to Rent and Immigration Act 2016;
  • Deregulation Act 2015 one year on;
  • Housing and Planning Act 2016: what the future holds;
  • New case law and legislation.

 

PainSmith Helpline subscribers will be able to attend the Seminar at a cost of £50 plus VAT (£60 including VAT) per person. Non-helpline subscribers will be able to attend the Seminar at a cost of £75 plus VAT (£90 including VAT) per person. Places are limited to sixty-five delegates so book your place today in order to avoid disappointment.

For further information please email  alexandrar@painsmith.co.uk.

We look forward to seeing you in Brentwood.

Filed under: England & Wales

Electronic Signatures

The Law Society has released a new practice note Practice Note on electronic signatures with the aim of increasing confidence in the use of electronic signatures for commercial contracts. It should be noted that the note is only applicable in England.

Released on 25 July 2016 and approved by a senior barrister the note clearly sets out the relevant law around the use of electronic signatures on commercial contracts. It does not limit itself to one specific type of electronic signature and covers signatures by adding a picture of a signature, use of e-signing software and other methods.

Generally, contracts do not need to be in writing and as such electronic signatures should not pose a problem. Agent’s terms of business are therefore perfectly suitable for signing by electronic means.

 

Tenancy agreements are not considered ordinary contracts because they involve the transfer of land or property so they are subject to limits imposed by statute. However, current legal views are that a contract executed using an electronic signature satisfies the statutory requirement to be in writing and signed for several reasons including:

 

  1. “Writing: The Interpretation Act 1978 defines ‘writing’ to include ‘typing, printing, lithography, photography and other modes of representing or reproducing words in a visible form’. Where the contract is represented on a screen (including a desktop, laptop, tablet or smartphone) in a manner which enables a person to read its terms properly, it will be ‘in writing’ at that point.

 

  1. Signature: Provided that the signatory inserts an electronic signature into the appropriate place in a document with the intention of authenticating the document, a statutory requirement for that document to be signed will be satisfied.”

 

The note also addresses Deeds and electronic signatures. In a nutshell Deeds can be signed in electronic form by a suitable signatory in the presence of another individual who must genuinely observe the signing. When the witness signs the witness section, in electronic form or writing, then that Deed will have been validly executed.

 

If the validity of an electronic signature is questioned, legal opinion is that an English court would accept the document bearing the electronic signature as prima facie evidence that the document was authentic and, unless the opponent adduced some evidence to the contrary, that would be sufficient to deal with the challenge. The burden of proof is thus on the party questioning the validity of the signature.

 

It should be noted, however that Tenancy Deposit Prescribed Information requires a signature by the landlord certifying that the information is true to the best of his knowledge and belief. It is not clear that an electronic signature would satisfy that requirement.

 

Comment

This practice note will encourage those agents who are, or are considering, using electronic signatures. There is a risk associated with tenancy deposit protection information but the Government is looking at confirming the status of electronic signatures in these cases as well.

Filed under: England & Wales

Increased Court Fees – Again……..

Court fees have been increased once again.

Fees for possession claims have not changed. However, the fees for enforcement orders have been increased. A warrant of possession to instruct the County Court Bailiff has increased from £110 to £121. Where landlords wish to enforce through the Sheriff the fee to transfer enforcement up to the High Court has increased to £66.

These fee increases are again above inflation. With the current funding issues faced by our courts such increases should continue to be expected with little or no notice.

 

 

Filed under: England & Wales

Break Clauses and Rent in Advance

The financial consequence of rent being paid in advance and then a break clause being triggered was recently considered by the Supreme Court in the case of Marks and Spencer plc v BNP Paribas Securities Services Trust Company.

 

The lease required the rent to be paid on the usual quarter days in advance. Accordingly, the rent was paid in full on 25 December 2011, and on 24 January 2012 the break clause was activated.

 

Having validly exercised the break clause, M&S then demanded repayment of the basic rent that related to the period after the break period. Their lease did not have any clause within it which entitled M&S to any such reimbursement.

 

The Supreme Court found that, other than in very exceptional circumstances, a reimbursement of rent in advance would require a very clear clause in the lease to entitle a tenant to a refund. These would even apply to rent paid in advance relating to the period after the exercise of a conditional break clause. In giving its judgment the Supreme Court took the opportunity to clarify the law on implied terms generally and to confirm that the Apportionment Act 1870 does not apply to rent payable in advance.

 

Comment

 

Those drafting leases with a break clause should consider an apportionment clause for rent paid in advance where tenants are permitted to exercise a break clause if they wish to allow for rent to be paid back in this way. Anyone acting for a tenant should ensure that such a clause is in their lease.

Filed under: England & Wales

Edwards v Kumarasamy – Supreme Court

In Edwards v Kumarasamy, the Supreme Court held that the landlord of a leashold flat was not liable for the injury of his tenant sustained outside the block of flats he was renting. The Court of Appeal decision which caused so much concern to landlords of flats has been overturned.

 

A summary of the case and the Court of Appeal decision can be read here.

 

The Supreme Court held that there were three questions to consider and answer and the tenant would need to succeed on every one of them in order to win the case. The three questions were:

 

  1. Was the path part of the exterior of the property?
  2. Was there an implied easement over the path? and
  3. Did the landlord need to be given notice of a want of repair of the path?

 

Question 1

The Court resolved this question in the landlord’s favour. The Court refused to agree that a path which was far removed from the property could form part of its exterior. It held that despite the fact that the path was a key approach to the property, there was a distinction between the actual outside surface of the property and a path which was removed from the property itself. The court preferred the plain English meaning of ‘exterior’ as opposed to the strained meaning adopted by the Court of Appeal.

 

Question 2

Once again the Supreme Court adopted a plain English meaning here and agreed that the there was an implied easement. However, in light of the answers to Question 1 and 3 the Supreme Court did not dwell on this question.

 

Question 3

The Supreme Court decided, by a majority, that the landlord should be given notice. The Court held that it is the tenant that had the easiest opportunity to view the state of repair of the common areas. Furthermore, that while the landlord retained a right of access as against the freeholder, he had no right to actually effect repair.

 

Comment

This decision will come as some relief to landlords of flats who were facing the need to inspect the common areas of these properties and were potentially liable for the failures of the freeholder. While the Supreme Court has simplified things a great deal the issue of notice is not closed and is likely to raise its head again.

Filed under: England & Wales

Lettings Agent Fined

Colvin Houston Ltd, a lettings agent in Scotland, was fined £750 (reduced to £500 for an early plea) after becoming the first to be prosecuted in connection with the Tenancy Deposit Schemes (Scotland) Regulations 2011 that required all landlords (including England and Wales) to register deposits. The legislation was set up to ensure deposits were ring-fenced in independent tenancy deposit schemes and protected by third parties until such time as the tenant vacated the rented property.

North Ayrshire Council said the landmark ruling at Kilmarnock Sheriff Court could now have a “massive impact” for people renting properties across the UK

The deposit legislation primarily places the responsibility for securing deposits on landlords. However, the Consumer Protection From Unfair Trading Regulations (CPRs) were used in this instance to hold Colvin Houston Ltd responsible for the deposit they took on behalf of their client, the landlord.

In this prosecution, North Ayrshire Council’s Trading Standards team argued that landlords were consumers rather than professionals. Consequently, in failing to secure the deposit, the letting agent had committed the offence of unfair trading by “failing to meet the standard of skill and care that would reasonably be expected” of a trader in its field of activity, and hence their practice was deemed “unfair as it failed to meet the standard of professional diligence”.

Comment

It should be remembered that the CPRs apply equally in England as well as in Scotland and so a similar prosecution could be pursued South of the Border. Routine failure to protect deposits is something that agents should not be involved with and is likely to attract prosecution.

Filed under: England & Wales

McDonald v. McDonald revisted

In McDonald v McDonald, the Supreme Court held last week that a Court is not required to consider proportionality when evicting a tenant when a Landlord seeks possession under section 21 of the Housing Act 1988.

A summary of the case and the Court of Appeal decision can be read here.

The Supreme Court stated that any decision which required the Courts to consider proportionality “would involve the Convention effectively being directly enforceable as between private citizens so as to alter their contractual rights and obligations, whereas the purpose of the Convention is…to protect citizens from having their rights infringed by the state.”

The effect of this judgment in relation to private residential tenancies is that it is now not possible for a tenant who is being faced with Section 21 possession claim to invoke Article 8 of the Convention. As the Court said in relation to private residential possession proceedings:

“Once it [a court] concludes that the landlord is entitled to an order for possession, there is nothing further to investigate.”

Comment

This judgement largely puts to bed any ability to challenge a private landlord’s eviction of their tenant on human rights grounds. While the case is a sad one in which the tenant did and should attract sympathy it will be of considerable relief to landlords. The effect of human rights arguments entering the private rented sector were, as the Supreme Court held, too horrible to contemplate.

Filed under: England & Wales

The Referendum Results and Landlords

Having voted to leave the EU a great many pieces of legislation will need to be reviewed which will undoubtedly have an impact on the property sector.

 

The Bank of England has raised concerns about the economic uncertainly following this result. Certainly, the pound and UK stock market has seen a significant drop in value after the result was announced. This may lead to landlords being hard hit because lending for the buy to let market may become more difficult to obtain.

 

Furthermore, legislative change will need to be implemented. A number of regulations rely on the European Communities Act 1972 which presumably will need to be repealed. There is some uncertainty about how the Government will deal with this. The Government may choose to re-implement some of the regulations individually or collectively re-implement them all. Either option is possible in principle. However, some regulations are popular and some are certainly not. Consequently, what and if any regulations deriving from EU matters are implemented will be dependent on who is in power at the time the decisions need to be made. The regulations which may be subject to repeal or implementation will include the EPC Regulations, Heat Network Regulation and most particularly the Consumer Protection from Unfair Trading Regulations which are of great importance as they cover property misdescriptions.

 

That said, the current government has not yet served the Article 50 notice to leave the EU and it seems that it will not occur until at least October, once a new Conservative leader has been chosen. In any event, upon service of the Article 50 notice there is a 2-year notice period, which could be increased further by negotiation. Consequently, any changes are likely to be delayed for some time.

 

Finally, the EU result calls into question the proposed legislation in the Queen’s speech and the implementation timetable for legislation already passed. This is particularly so for the Housing and Planning Act 2016 and the Immigration Act 2016, due to government departments now having other priorities!

 

We will keep readers updated if and when changes are made to the property sector.

Filed under: England & Wales

Improvement or Disrepair?

In Sternbaum v Dhesi [2016], the Court of Appeal found that a landlord was not liable when one of its tenants fell down a staircase which lacked any form of handrail or bannister. The tenant sued the landlord in negligence and for breach of section 4 of the Defective Premises Act 1972.

 

At the date of commencement of the tenancy agreement there was no handrail or bannister fitted even though the stairs were steep. There were indications that a handrail had been removed at some point but this was prior to the commencement of this tenancy.

 

The tenancy agreement required the landlord ‘to keep in repair the structure and exterior of the premises’ and the tenant was under an obligation to permit the landlord to enter the premises for the purposes of inspection and repair.

 

The Court of Appeal recognised that whilst a staircase without a handrail was hazardous, it was not defective pursuant to the Defective Premises Act. A lack of a handrail, although potentially dangerous, did not amount to disrepair and to oblige the landlord to fit a handrail would amount to requiring him to improve the premises and/or make them safe which is beyond the scope of the Act.

 

This decision introduces more certainty on the interpretation of landlords’ duty to ‘repair’ even if it might be concerning to tenants. It also highlights the gap in current repair obligations which still focus more on fairly basic obligations rather than a more general requirement for a property to be reasonably safe.

Filed under: England & Wales

Liability for Disrepair

On 5 May 2016, the Supreme Court heard the appeal of a Landlord in Edwards v Kumarasamy (UKSC 2015/0095). The Court needs to consider whether a Landlord under an assured shorthold tenancy, was liable for his tenant’s injuries under the extended covenant implied into the tenancy by section 11(1A) of the Landlord and Tenant Act 1985.

The Supreme Court’s decision had not been released at the time of writing this blog.

The tenant, Mr Edwards tripped on an uneven paving slab between the front door of the building of flats and the communal bin area. The Landlord, Mr Kumarasamy claimed that he had no obligation to repair the path between the building and the bin area, since he did not own it. The Landlord was the leaseholder of the flat rented by Mr Edwards.

The Court of Appeal found that a landlord of a flat let under a tenancy was liable for disrepair of common parts of the building in which the flat was situated. This liability arose under section 11 even when Mr Edwards had not given notice of the disrepair.

The Court of Appeal found that the disrepair was not within the demised property, therefore the implied term that the tenant had to give notice of the disrepair was found not to apply. The disrepair was in a common area and knowledge of it would have been revealed had the landlord or his agents carried out inspections.

 

Many Landlords will be hoping that this decision is reversed by the Supreme Court. Until it is, Landlords are advised to carry out inspections or ensure that management companies are doing so and that they report any necessary repairs in common areas promptly in writing to the freeholder. Landlords of flats should also ensure that the freeholder’s insurance includes public liability cover.

Filed under: England & Wales

The Private Housing (Tenancies) (Scotland) Act 2016

The Private Housing (Tenancies) (Scotland) Act was recently passed by the Scottish Parliament and will have a profound impact on the private lettings market in Scotland. Whether London MPs or Welsh AMs follow suit remains to be seen – but if so, you read it here first!

 

The Act is expected to come into force in late 2017 however, the key aims of the Act include a simpler tenancy system, predictability regarding rent increases, and an enhanced security for tenants.

 

Simpler Tenancy System

The Act abolishes the short assured and assured tenancies. In its place will be the single type of private tenancy, the Private Rented Tenancy (PRT). There are exceptions to the PRT such as Student accommodation and Holiday lets.

 

Rent Increases

Landlords are only permitted to increase the rent once per year upon providing 3 months’ notice. Tenants may challenge such rent increases by referring the matter to a Rent Officer who can determine a ‘fair’ rent. The newly created Private Rented Sector Housing Tribunal will hear any appeal of the Rent Officer’s decision.

 

The Act also gives local authorities powers to create ‘rent pressure zones’. This enables authorities to apply rent caps in areas they determine have been subject to excessive rent increases.

 

Security for Tenants

The Act abolishes the short assured tenancy and consequently the ‘no-fault’ ground for possession will also disappear. The ‘no-fault’ ground permits Landlords to vacate a property on the the expiry of a lease upon the expiry of two months’ notice. In short, Scotland will no longer have the equivalent of a section 21 notice in England.

 

Under the new Act, Landlords seeking possession will need to give at least one ground to bring the tenancy to an end. The grounds include that the Landlord is looking to use the property for non-residential purposes, to sell/refurbish/move into the property, or rent arrears for three or more consecutive months. The Landlord’s notice will be either 28 days or 84 days depending on the circumstances and the Tenant will have the right to refer the matter to the newly created Tribunal. If the Tribunal finds for the Tenant, a wrongful termination order could require the Landlord to pay the Tenant a sum of not more than six months’ rent.

 

Comment

The response to the Act has been mixed amongst those in the Property Sector. The security of tenure and restrictions on rent increases will no doubt be welcomed by many Tenants across the board. However, Landlords and Landlord associations have warned that these restrictions may result in Landlords disposing of their investment properties or looking outside of Scotland for such properties. Time, will no doubt tell.

Filed under: England & Wales

Housing and Planning Act 2016 Continued

We have now blogged about the Bill/Act on two separate occasions. This should be the final post, unless something else changes!

 

Banning Orders

Part 2 of the Act is about rogue landlords and property agents. Under the Act, agents and rogue landlords can be banned from engaging in letting agency or property management work or letting houses. The Act does not state what offences could lead to a ban however, the Government has promised an autumn consultation on this, with draft regulations published in early 2017 and the measures coming in to force in October 2017.

 

Banning orders will be made by the First-Tier Tribunal (formerly known as the LVT) on the application of a local authority. The order will state the length of the ban but will last at least 12 months. A person in breach of the ban will be liable on summary conviction to imprisonment for a period of less than 51 weeks and or a fine. Any such fine will not exceed £30,000 and the banned person will not be permitted to hold a HMO license.

 

Further measures designed to tackle rogue landlords and property agents are the ‘database of rogue landlords and property agents’ and rent repayment orders.

 

Database

The database will be established and operated by the Secretary of State and updated by local authorities.  The information held on the database will include:

 

(a)        the person’s address or other contact details,

(b)        the period for which the entry is to be maintained;

(c)        details of properties owned, let or managed by the person;

(d)        details of any banning order offences of which the person has been convicted;

(e)        details of any banning orders made against the person, whether or not still in force;

(f)        details of financial penalties that the person has received.

 

The Secretary of State may use the information on the database for statistical and research purposes and may disclose the information to a person, on application, in redacted form. The local authorities will also have access to the database.

 

Rent Repayment

 

The First Tier Tribunal can also make a rent repayment order which will require a Landlord to repay an amount of rent he has received from a tenant or local authority by way of universal credit. Instances where the First Tier Tribunal is likely to make such an order include where a Landlord has:

 

– failed to comply with an improvement or prohibition order;

– evicted or harassed a tenant;

– control or management of an unlicensed HMO or house; and

– breached a banning order.

 

Applications for rent repayment orders can be made by Tenants or local authorities and the Tribunal will make such an order if it is beyond reasonable doubt (high criminal standard) that the Landlord has committed the offence. The amount of the rent repayment order will not exceed the rent paid by the Tenant over a 12-month period during which the Landlord was committing the offence.

 

Comment

This will significantly widen the range of powers available to local authorities to combat bad Landlords and Property Agents. Whether this is effective will depend on how well it is used.

Filed under: England & Wales

Housing and Planning Act 2016

We wrote about the Housing and Planning Bill last month but it has subsequently received Royal assent and is now officially the Housing and Planning Act 2016. All kinds of secondary legislation will need to be passed before it is in force, which incidentally is expected to be April 2017. So no need to fret just yet!

 

A warning however, the delay in the enforcement of the Act, could lead to further legislative changes. The Act has been very slow in publication but is now available.

 

Electrical Safety Standards

 

The Secretary of State will have the power to pass regulations placing a positive obligation on Landlords to ensure that electrical safety standards are met during any tenancy term. These ‘electrical safety standards’ relate to the installation of the electrical supply and the electrical fixtures and fittings or appliances that the Landlord may have supplied.

 

In order to satisfy this obligation a Landlord will be required to instruct an expert (we assume an electrician) to ensure that the ‘electrical safety standards’ are met. These tests may be required annually and may obligate the Landlord to provide a copy of the expert’s certificate to the Tenant. However, until the Secretary of State has passed the regulation, we will not know the extent of the obligations.

 

Landlords who fail to comply with the ‘electrical safety standards’ could face a financial penalty and with the Tenant’s consent, the local authority may enter the rented property and remedy any electrical safety failure.

 

In essence, the provisions appear to be making fixed wiring and PAT tests a legal requirement for Landlords.

 

Client money protection schemes for property agents

 

The Secretary of State will also have the power to pass regulations placing a positive obligation on property agents to become members of a private or government client money protection scheme. The reference to client money would include deposits and rent held by lettings agents on behalf of Tenants and Landlords.

 

Property agents who fail to comply with this provision could face a financial penalty determined by the Secretary of State and enforced by local authorities.

 

Comment

It remains to be seen to what extent the electrical changes will impact Landlords. They could be arranged in such a way that significant upgrades to electrical installations are required but are more likely to be targeted at specifically dangerous items.

 

Client money protection schemes have been called for, for a long time and will be a welcome addition for most Landlords and Tenants who generally already believe that it is a requirement.

Filed under: England & Wales

New Code of Management for Residential Properties

In quick succession two codes of practice in respect of service charges for residential leasehold property have been granted approval by the Secretary of State.

Readers may recall that under the Commonhold and Leasehold Reform Act 2002 the Secretary of State had powers to approve certain codes of practice.  He had previously approved codes produced by Association of Retirement Housing Managers (ARHM) and the Royal Institution of Chartered Surveyors (RICS).  Both of these codes have now been updated and as from the 1st June 2016 there is a new code.

The RICS code is the best known and is now in its third edition and here is a link to the statutory instrument granting approval of the code.

If you are involved in the management of long residential leasehold property then you ought to be familiarising yourself with the Codes. Both Codes are considered best practice and any court or tribunal adjudicating on long residential leasehold will have regard to the Code in determining the issues.

As with previous editions the Codes are written in clear easily understood terms.  The ARHM is aimed at those managing properties in the retirement sector and for all other long leasehold property the RICS code would be relevant.

Filed under: England & Wales

Immigration Act 2016

The Act came into force on 12 May 2016 and is intended to clamp down on people in the country illegally. Below is a summary of some of the provisions.

 

Offences by Landlords and Agents

 

Under section 33A of the Act a Landlord is committing an offence if he knows or has reasonable cause to believe that his tenant is in the country illegally. It is a defence to the offence if the Landlord can prove that he has taken reasonable steps to terminate the tenancy promptly on knowing or having reasonable cause to believe that his tenant is illegally in the country.

 

Under section 33B, letting agents will also be committing an offence if they know or have reasonable cause to believe that the tenant is illegally in the country and did not notify the Landlord prior to the Landlord entering into the tenancy. The defence available to Landlords above is unfortunately not available for agents.

 

The maximum penalty for a breach of section 33A and B, is a prison term of 5 years and/or a fine.

 

Eviction

 

Where the Secretary of State notifies a Landlord that all of his tenant/s are illegally in the country the Landlord will be expected to terminate the tenancy under Section 40. The Landlord will need to give the tenant/s 28 days’ notice in prescribed form. If the tenant/s do not vacate on the expiry of the notice the Landlord may use reasonable force to evict himself of instruct a High Court sheriff to evict the tenant/s. This section applies to Rent Act 1977 and assured shorthold tenancies under the Housing Act 1988.

 

Where the tenancy is a Common Law tenancy, Landlords will need to serve a section 146 notice on tenants illegally in the country.

 

New Ground 7B, Section 8

 

Where the property is let to a mix of tenants lawfully and unlawfully in the country, a Landlord may seek possession under Section 8, Ground 7B. This new ground permits Landlords to commence possession proceedings where they have received a notice from the Secretary of State advising that one or more of the tenants is unlawfully in the country. However, tenants that are lawfully in occupation of the property may apply to have the tenancy transferred into their names provided there have been no other breaches of the tenancy.

 

Comment

 

The Act is an unwelcome addition to the Landlord’s obligations to check the immigration status of their tenants. The Act fails to address some important issues such as the Deposit position where lawful tenants apply to have tenancies transferred to them. It remains to be seen how the new prosecution powers will be used and whether the courts will be prepared to sentence Landlords on the bases of these offences.

Filed under: England & Wales

Address for Service

In Levett-Dunn and others v NHS Property Services Ltd, the High Court in Birmingham found that a tenant’s notice to exercise a break clause had been validly served on a their landlord at the address set out in the lease, even though the landlords no longer used those addresses.

 

The tenant served notice under a break clause in a 10 year lease. The notices were sent by recorded delivery on each of the individual landlords named in the lease at the business addresses provided in the document. However, the landlords no longer used those addresses. In fact, only one of the four named landlords had retained any connection with the address given for him in the lease but he had transferred his interest in the property in 2011. The tenant followed up the notices by email to the Landlords’ property manager.

 

Prior to the expiry of the notice the tenant contacted the property manager to arrange for the return of the keys. The manager sent a careful reply accepting the keys without prejudice to the landlords’ contention that the notices were invalid. So the landlords were aware of the tenant’s intention to leave even though they were taking the view that the break clause notices were ineffective because they had not been served on them properly. On 13 October 2014 the landlords leased the property to another tenant while disputing the validity of the notices and claiming that the original leases continued.

 

The court held that where a contractual relationship existed they would take note of the agreed details for service. The leases specifically provided that the landlords were to be served at their last known place of abode or business, and also set out that address. The tenant had complied with the contractual provisions.

 

The landlords could have taken steps to inform the tenant of a change of address and, having failed to do so, they bore the risk of any notices not reaching them. Thus the tenant was entitled to a declaration that the leases had been terminated.

 

In the event that the above decision was wrong, the court also held that the landlords had accepted the tenant’s surrender of the lease when they had retaken possession and re-let the property.

 

Comment

This case demonstrates the crucial importance of keeping contact details updated, especially where the tenancy agreement makes clear that those details should be used for service. Landlords and tenants who fail to do this may find themselves being held to have received notices or being served with legal proceedings of which they were entirely unaware.

Filed under: England & Wales

Welsh Compulsory Landlord Registration and Licensing

Landlords have a deadline of 23 November 2016 to be registered and licensed under the Housing (Wales) Act 2014. The Act requires all landlords with property in Wales to register with Rent Smart Wales and to either be licensed themselves if they’re managing the let or use a licensed agent.

 

Registration

Landlords may register online for a fee (currently £33.50). Paper applications will cost more (currently £80.50). The registration has to be renewed every 5 years and the fee is again payable at that point. Some registration details are publicly available.

 

Licensing

Landlords who manage their rental properties will need to apply for a license online for a fee (currently £144.00). Paper applications will cost more (currently £186.00). Landlords will only need 1 license irrespective of the number of properties they manage. The license must be renewed every 5 years and a fee is again payable on renewal. Landlords will also need to undertake relevant training and comply with a Welsh Minister approved Code of Practice.

 

Training

The training is provided by Rent Smart Wales and other authorised providers. The training provides, at a minimum the following:

 

  1. the statutory obligations of a landlord and tenant;
  2. the contractual relationship between a landlord and tenant;
  3. the role of an agent who carries out lettings work or property management work;
  4. best practice in letting and managing dwellings subject to, or marketed or offered for let under, a domestic tenancy;
  1. the role of a landlord who carries out lettings activities or property management activities.

 

Landlords are advised to attend the one-day training in person however, Rent Smart Wales provides online courses too.

 

Code of Practice

The Rent Smart Wales code of practice comprises 2 elements. First, what landlords and agents managing rental property in Wales must do and second, what they can do to raise standards above the legal minimum. A landlord or agent who fails to comply with the requirements of the code could lose their licence and thus their right to let or manage their rental properties.

 

Penalties

The penalties are substantial and involve criminal prosecution, the inability to serve a section 21 notice and orders preventing the collection of and requiring the repayment of rent.

 

Comment

This part of the Act was brought into force in November 2015 and 12 months was intentionally allowed for compliance. Therefore, it is very likely that an aggressive approach will be taken to prosecution and other penalties from November 2016.

Filed under: England & Wales

Fees and the CAP Code

The Consumer Rights Act 2015 requires letting agents to publish a full list of their fees and charges on their website and in their offices. However, there is also a separate code of practice produced by the Committee on Advertising Practice (CAP) relating to how agents advertise non-optional fees alongside rent. These are the additional agency fees and other items (such as a deposit) that a tenant must pay as well as the rent before they will be permitted to rent a property.

 

There is CAP guidance for a range of advertising matters which must be followed by advertisers, agencies, and the media. It is enforced by the Advertising Standards Authority (ASA). A breach of CAP guidance can lead to criminal penalties and a civil claim by the tenant for the return of fees. In a recent ruling, the ASA has been critical of some large agency advertising because they had not been sufficiently clear in indicating that administration charges were excluded from the quoted prices and did not provide enough information to allow the consumer to establish easily how further charges would be calculated.

 

When tenants look at a property advert, they should be in a position to determine the total cost of renting the property. This means the total cost not only including the rent, but also the deposit, referencing fees and the cost of drawing up the tenancy agreement.

 

Letting agents advertising rental prices should include 2 types of fee information, pursuant to the CAP guidance:

 

  1. Rule 3.18 – Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers.  However, VAT-exclusive prices may be given if all those to whom the price claim is addressed pay no VAT or can recover VAT. Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable.

 

Letting agents who charge potential tenants non-optional fees which can be calculated in advance need to include the fee beside the monthly rent. Fees applicable to all or most tenants should be clearly stated and in a prominent position of the advertisement. This of course means that fees in the ‘small print’ fall foul of this Rule. This Rule applies to all advertisements on websites, brochures and leaflets but not property portals which are outside the Agent’s direct control such as Rightmove, Zoopla, On the Market or others (see below).

 

  1. Rule 3.19 states – If a tax, duty, fee or charge cannot be calculated in advance, for example, because it depends on the consumer’s circumstances, the marketing communication must make clear that it is excluded from the advertised price and state how it is calculated.

 

Some fees can’t reasonably be calculated in advance, because they will depend on the consumer’s circumstances, but the fact that these fees apply or might apply needs to be made immediately clear.  The full fee information and how they are calculated should be included via a hyperlink or in the small print, this should be inclusive of VAT. This applies to all websites, brochures, and leaflets- including property portals. There is also a need to be careful of using the phrase “fees may apply” if the “may” is in fact inaccurate because everyone will pay a fee of some sort.

 

At present, property portals, only need to include a “fees apply” pop-up, identifying all applicable fees, beside the monthly rental price. However, there should be a link to the agent’s website which allows for all fees to be displayed clearly and this should be a single click from the portal to the fees.

 

Comment

 

Rent and agency fees should be advertised together where possible in a simplified format. Agents may consider the benefits of a single fixed fee per applicant per property, including VAT.

Filed under: England & Wales

Deposits and Company Landlords

 

In Bali v Manaquel Company Limited, the tenant succeeded in his appeal against a possession order made by Lambeth County Court.

 

Mr Bali was an assured shorthold tenant. A deposit was taken and protected by his landlord Manaquel Company Limited. Manaquel served a section 21 and sought possession of the property from Mr Bali. The issue raised at first instance and at appeal was whether Manaquel had complied with the requirements on serving the Prescribed Information pursuant to the terms and conditions of the deposit scheme.

 

Mr Bali argued that the Prescribed Information served on him by Manaquel was defective for two reasons:

 

  1. The landlord had not included the Deposit Protection Service leaflet for tenants. The landlord had included a print out of the DPS ‘terms and conditions’ but not the leaflet.

 

The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 includes a requirement at 2(1)(b) to give the tenant:

 

(b) any information contained in a leaflet supplied by the scheme administrator to the landlord which explains the operation of the provisions contained in sections 212 to 215 of, and Schedule 10 to, the Act….

 

The appeal judge held that the requirement was to provide ‘any information contained in a leaflet’, not necessarily the leaflet itself. As it was common ground that the DPS ‘terms and conditions’ provided included all the information that was contained in the DPS leaflet, the landlord has satisfied this requirement and ground one of the appeal, failed.

 

The landlord had not properly provided a certificate as required by s.2(1)(g)(vii) of the 2007 Order. Section.2(1)(g) requires:

 

(vii) confirmation (in the form of a certificate signed by the landlord) that—

(aa) the information he provides under this sub-paragraph is accurate to the best of his knowledge and belief; and

  1. (bb) he has given the tenant the opportunity to sign any document containing the information provided by the landlord under this article by way of confirmation that the information is accurate to the best of his knowledge and belief.

 

The second issue raised by Mr Bali was that the certificate provided was ‘signed’ with Manaquel’s name written in manuscript as Manaquel Co. Ltd, and signed PP with illegible initials. Mr B argued that this did not comply with the requirements of s.44 Companies Act 2006 which provides:

 

(2) A document is validly executed by a company if it is signed on behalf of the company–(a) by two authorised signatories, or

(b) by a director of the company in the presence of a witness who attests the signature

 

The appeal judge held that that the Prescribed Information certificate was a document that required ‘execution’ as the accuracy of it needed to be certified for a ‘formal legal purpose’.

Accordingly, the requirement of s.2(1)(g)(vii) of the 2007 Order had not been met, because the prescribed information had not been given in full making the section 21 notice served, invalid.

 

The Judge acknowledged that this might well be a trap for the unwary, but the requirement for the company landlord, was for a signed certificate, and that must be in a manner compliant with the Companies Act 2006.

 

The Order has been stayed for 7 days to allow Manaquel time to appeal.

 

With thanks to Nearly Legal.

 

Comment

 

It is important for company landlords and their agents to ensure that they sign the Prescribed Information certificate and ensure that they comply with the Companies Act 2006. Technical points such as these are important and companies are advised to check the requirements to ensure compliance. There is no need for two directors to sign everything but it must be clear that the person signing is authorised to do so and it would be advisable to ensure that there are two such signatures.

Filed under: England & Wales

Section 21 and Article 8 of the ECHR

Section 21 and Article 8 of the ECHR

The Supreme Court’s judgement in McDonald v McDonald & Anor is expected in the next month or two.

The issue:
Whether the possession order made in the county court infringed the tenant’s rights under Article 8 of the European Convention on Human Rights (“ECHR”).

The History:
The tenant, Miss McDonald held an assured shorthold tenancy of a property in Oxfordshire. The Landlords of the property were in fact Miss McDonald’s parents who granted the tenancy in breach of the terms and conditions of their mortgage. When the Landlords fell behind with the mortgage payments, receivers were appointed to manage the property. The receivers, on behalf of the Landlords and the mortgage provider, sought possession of the property under the terms of the mortgage.

The Court Decisions:
Oxford County Court made the possession order in April 2013.

Miss McDonald appealed on the grounds that the receivers were not able to bring possession proceedings in the way they had and, that possession would be an interference with her rights under Article 8. The Court of Appeal dismissed the appeal on the following grounds (Arden LJ gave the leading judgment):

– Receivers under a charge had the power to serve section 21 notices.

– There was no sufficient body of case law in the ECHR that amounted to “clear and constant” jurisprudence establishing an Article 8 defence in private proceedings.

– The Landlords’ financial detriment in this case outweighed the Miss McDonald’s health considerations. Thus the Appellant had not met the threshold for a proportionality defence.

– The Court of Appeal was bound by the decision in Poplar Housing and Regeneration Community Association Limited v Donoghue [2002] Q.B. 48. The Court of Appeal had already found that section 21 was compatible with the European Convention.

Comment:

It remains to be seen how the Supreme Court will view the situation. They may follow the same line as the Court of Appeal and hold that Article 8 has no application to private landlords and tenants. If they do decide that Article 8 applies then that right will need to be balanced with a landlord’s right not to be deprived of their property under Article 1 of Protocol 1 of the European Convention. The balance is very tricky and in reality is likely to mean that only in the most exceptional cases could Article 8 not apply. It may be that even in this case Miss MacDonald’s personal situation is not sufficiently severe to prevent possession being granted.

Filed under: England & Wales

Abandoned properties under the Housing and Planning Bill

The Housing and Planning Bill is currently passing through the House of Lords. The Conservative government is hoping to tackle the housing crisis with this Bill by “kick-starting a national crusade to get 1 million homes built by 2020”. The Bill is not without its critics, including Jeremy Corbyn who led a mass demonstration against it in London last month. Criticisms of the Bill include:

– an introduction of market rents and a possible end to subsidised rents for low income tenants;
– the obligation on landlords to check the immigration status of tenants may lead to risk averse landlords refusing to rent to migrant workers; and
– new tenants will no longer be entitled to lifetime tenancies in council homes.
This post is focused on Part 3 of the Bill. Clauses 49-59 provide for an entirely new process for the recovery of abandoned properties by landlords without the need for a court order.

In summary a private landlord may give a tenant notice which brings the tenancy to an end on that day, if the tenancy relates to premises in England and certain pre-conditions are met. These are:
• a certain amount of rent is unpaid (two consecutive months where rent is payable monthly);
• that the landlord has given 3 warning notices at different times in accordance with clause 57; and
• and that neither the tenant or a named occupier has responded in writing to any of the warning notices prior to their expiry dates.

Comment

This process has caused concern in some quarters that unscrupulous landlords will take the opportunity to carry our unlawful evictions and attempt to disguise them as abandonment.

Filed under: England & Wales

New Section 8 and Section 13 Notices

We are pleased to confirm the new notices have now been uploaded to our document vault for our Helpline subscribers to download and use.  Remember these are the Notices you must be using now!  If you use the previous notice this will be invalid.

Filed under: England & Wales

Richard Pulford

We are pleased to announce that Richard Pulford qualified as a solicitor on 1st April 2016.

Richard is the latest person trained by PainSmith Solicitors to qualify. Richard joined the firm as a paralegal in 2011 and was offered a training contract in 2014.  Richard has a vast amount of experience in dealing with all aspects of residential repossessions and contentious landlord and tenant.

Richard will be attending the ARLA Conference at ExCel on Tuesday 12th April 2016 although this year PainSmith Solicitors are not exhibiting.

To contact Richard his email is Richardp@painsmith.co.uk or call 01420 565310.

Photo (2)

Filed under: England & Wales

New Section 8 Notice

With thanks to our friends at Nearly Legal for alerting us to new regulations made on the 23rd March 2016.

As from 6th April 2016 a new prescribed form will be required when you serve a Section 8 of the Housing Act 1988 Notice.  As a prescribed form for any such notices on or after that date you must use the prescribed form.  Remember this is the notice you serve when ending the tenancy typically for rent arrears or other breaches of tenancy.

The Section 13 notice has also been changed.

The amendments are made by Regulation . Essentially the amendments are minor and to correct formatting and drafting errors and in respect of the Section 8 Notice to refer to the new form 6A prescribed form for giving notice under Section 21 of the Housing Act 1988.  They should not however be ignored.

We are looking at updating the notices within our document vault and we will blog again once the new notices are included.

 

Filed under: England & Wales

Solicitor Required

PainSmith Solicitors are currently recruiting for a solicitor to join the practice.  All levels of PQE would be considered with salary commensurate with experience.  PainSmith offers a competitive benefits package to all employees.  The ideal candidate will have residential landlord and tenant experience and will be experienced in civil litigation.  The role will  require supervision of various other members of staff as well as answering calls on the PainSmith Helpline.  This is an opportunity to join this niche firm and develop a genuine specialism in the field of landlord and tenant law within this well regarded practice.  To apply please email Marveen Smith marveens@painsmith.co.uk with a cv and covering letter setting out your salary expectations.

Filed under: England & Wales

Painsmith phones back!

We are pleased to announce that our phones are working again.  Please call the usual number 01420 565310 and press 1 for helpline, or 2 to speak to reception as usual.

Apologies for any inconvenience.

 

Filed under: England & Wales

PainSmith Phones down

Unfortunately our phones are down this morning ( 11 March 2016). Helpline subscribers are asked to phone the following numbers:
07989 597936
07833 488701

or alternatively email us at:

Alexandra@painsmith.co.uk

Richard@painsmith.co.uk

We apologise for the inconvenience. We are working hard to get this fixed.

Filed under: England & Wales

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