Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

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

New How to Rent: the Checklist

Just a reminder to all our readers that as of today the How to Rent: checklist for renting in England has again been updated.  Make sure you are giving the most up to date version!

Filed under: England & Wales

Right to Rent Checks

The 1st February 2016 is nearly upon us.  The requirement to undertake “right to rent” checks becomes mandatory throughout England for all tenancies starting on or after this date.

For those in the West Midlands pilot zone apologies, you will all be very familiar with the processes and what is required. For everyone else this is yet more legislation you need to understand and ensure compliance with if involved in letting property.

Essentially the principle legislation is the Immigration Act 2014. There is currently a further Immigration Bill before parliament which may change certain aspects, including making a failure to comply a criminal offence.  The Home Office is continuing to issue Guidance and it is expected that over the coming months further Guidance and tweaks to the existing Guidance will be issued.

The basic principle is that a landlord may not allow an adult to occupy a property under a residential tenancy agreement unless they satisfy one of three criteria:

  • The adult is a British Citizen; or
  • They are an EEA or Swiss National; or
  • They have a right to rent in the UK.

Of particular note is that this does not just apply to the named tenants but any known occupiers of the Property. You must therefore ask if there is intended to be any additional occupiers.

If the tenant should sub-let, whether lawfully or unlawfully, they will become the responsible person for undertaking these checks. Also if the tenancy is a company let for the company’s employees the onus will be on the company to check however their remains uncertainty about other occupiers such as family members and many agents will wish to satisfy themselves that they have a right to rent, at least initially, until further clarity.

This means for all tenancies you need to think who actually will be occupying. You are required to check the right to rent in the 28 days prior to the start of the tenancy.

To check whether someone has the appropriate right to rent you need to see the appropriate documents. The types of documents you can accept are set out in two lists.  Group 1 (sometimes referred to as the Safe List) and Group 2 (Semi-safe list).  Essentially Group 1 are passports and Visas which will be the norm although it is believed over one million British Citizens do not have a valid passport.

You must physically see the original of these documents with the person in front of you (there is a provision for you to have the originals with the person on video link but this is unlikely to be widely used). You must check the document to be satisfied that it is not an obvious forgery, you are not expected to be a document expert but should be satisfied as to the authenticity of the documents presented.  You should then take and keep copies.  These copies should be kept for one year after the end of the tenancy.   You should ensure you record how and when the copies were taken and by whom.

If the person has a time limited right to be in the UK (e.g. a time limited visa) provided they have even one day beyond the start of the tenancy left on that document they will have a right to rent for 12 months. However you must then do a follow up check either within 12 months or if the right to remain is later (i.e. longer than 12 months) at the end of this right. Given therefore such checks must be done within 28 days before hand this means in month 11 or the month before the right expires and you should ensure you have systems in place for recording when follow up checks are required.

Whilst prior to the start of the tenancy if someone cannot establish the right to rent you have no obligation to report them to the Home Office on a follow up check if the documents are not provided (again face to face) or the right is established you will have to report this to the Home Office.

There is a provision within the Immigration Bill that in the case of a follow up check failure the Home Office may be able to issue an Order allowing you to evict the tenant. We need to wait and see exactly what the provisions are when passed and any accompanying regulations to see how this will work in practice.

For those who have not got documents, possibly because of an application or appeal which is pending, you can contact the Home Office Landlord Checking Service either online or via the telephone enquiry line. You will then receive within 2 working days a response confirming whether or not this person has a right to rent. This response will have its own unique reference number and will contain details as to when follow up checks are required and should again be kept.  The Home Office makes clear this is not however an advice service.

It is important to note that you must not apply the checks in a discriminatory way. This means that you must not offer someone less favourable terms (e.g. as to length of term) simply based upon the right to rent check.

In terms of enforcement it will be the Home Office who will enforce probably following on from intelligence they have gained. You will then have 28 days to object and if appropriate provide evidence of compliance.  Thereafter the Home Office can issue a civil penalty which must be paid within 28 days (if paid within 21 days the penalty will be 30% lower) or may be appealed to the county court. For a first offence the penalty is £1,000 per occupier and for subsequent penalties £3,000 per occupier.

This article is only intended to be a brief overview of the new rules. It is important that you familiarise yourself with the Home Office Guidance if you are doing these checks and keep an eye out for updates.

Filed under: England & Wales

Telephones

We are today experiencing some issues with our telephone lines where if people call in we cannot hear them.  If you experience this please do email instructions@painsmith.co.uk and we will come back to you.

Apologies, our engineers are working hard to correct the problem.

Filed under: England & Wales

PainSmith Seminar

Our next Seminar will take place on Thursday 21st January 2016 at The Holiday Inn, Peartree Roundabout, Woodstock Road, Oxford OX2 8JD. The Seminar is slanted specifically towards relocation companies. The event will start with registration and lunch from 1pm and run from 2pm to 5pm with networking drinks until 7pm.

Topics to be covered include the following:

 Immigration and the right to let;

 Legal updates on cases, legislation and regulation, including the Deregulation Act 2015;

 High value damage and deposit disputes.

PainSmith Helpline subscribers will be able to attend the Seminar at a cost of £30 plus VAT (£36 including VAT) per person. Non-helpline subscribers will be able to attend the Seminar at a cost of £60 plus VAT (£72 including VAT) per person. Places are limited to forty delegates so book your place today in order to avoid disappointment. Places can be booked by completing the attached form and emailing it to emmab@painsmith.co.uk.

 

Filed under: England & Wales

Appointment of a manager to leasehold blocks

Over the past couple of years we have acted and advised on a number of occasions with regards to appointment of a manager.

For owners of leasehold properties, particularly Buy to Let investors, one of the biggest bugbears can be poor or none existent management. Some freeholders or their supposed managers seem to take little or no interest in the building which can have a significant effect on leaseholders.  In some situations little can be gained by looking to enfranchise for various reasons and in our experience Right to Manage under the Commonhold and Leasehold Reform Act 2002 does not work for all.  This can be particularly true when you have an investor with perhaps one or two flats in a development who does not want to become involved in the complexities of an RTM application and involving themselves with the other residents.  For them they wish to see value for money repairs and maintenance.

In the above the appointment of a manager under Section 24 of the Landlord and tenant Act 1987 can be the route to adopt.

This is a fault based ground. This means you have to be able to show the Landlord and or their agent are breaching the terms of the lease and the RICS service charge code. In practice when there is dissatisfaction this is often not that high a hurdle.

The first step is to serve notice under Section 22. This is where the leaseholder sets out their complaints.  The landlord is then given a reasonable period of time to respond and explain how they are going to remedy these breaches.

If no response is received, or an unsatisfactory one then an application can be made to the First Tier Tribunal (Property Chamber). The only real requirement is to propose a suitable manager.  Typically they will need to have some form of professional qualification and be prepared to act as a tribunal appointment which is a personal appointment although a managers firm may undertake the day to day tasks.

At any hearing the first step will be to prove that a section 22 notice has been served and the landlord did not provide an adequate response. You must then prove the inadequacies of the landlord and the tribunal will interview the proposed manager.  The tribunal will want him to understand that his appointment is by the tribunal and he reports to them.  Typically the Order, if made, will fix the fees payable and the length of appointment which will often be for three years initially.

The process is one which can be very useful in a mismanaged block which does not want to enfranchise or exercise a right to manage or has done so and this is the cause of the problems! If you are involved in any such blocks we are experienced in dealing with such matters and would be happy to have a preliminary discussion to see if we could assist. For further advice please contact David Whitney on 01420 565310 or email davidw@painsmith.co.uk

Filed under: England & Wales

Christmas Seminar 17th December 2015

PainSmith are holding a Christmas Seminar on Thursday 17th December 2015 at the Slone Club, 52 Lower Slone Street SW1W 8BS. There will be a morning and evening seminar with topics being covered including Immigration Act and the right to rent, the Deregulation Act and legal updates. Some places are still available and there is a small charge for Helpline Subscribers of £30 inclusive of VAT and £60 inclusive of VAT for non-members. If you are interested in a place please call the office on 01420 565310 or email emmab@painsmith.co.uk for details. Places are limited so get in touch quickly!

Filed under: England & Wales

Mediation in Property Disputes

We have previously blogged on mediation back in 2011. Its significance in disputes is now greater than ever. Pretty much every court and tribunal will encourage parties to disputes to have actively considered mediation and many run their own mediation schemes. Those of you in business will typically need to have reference to alternative dispute resolution (ADR) within any complaints/regulator process which will often be mediation.

To us at PainSmith knowledge of mediation is an important feature of litigating disputes. Particularly landlord and tenant disputes and those involving longer term leases whether residential or commercial. The reason being that whatever the outcome of a particular dispute you will have an ongoing relationship. Commercially parties are often sensitive to the issue of costs. Court proceedings today can become hugely expensive with the reality being that the costs outweigh the sums in dispute. Believe it or not that many lawyers, and certainly PainSmith Solicitors, are alive to this and do not want clients to find themselves litigating about costs. We have also blogged in the past as to some of the delays we are experiencing in the civil courts. Civil claims can typically often take 18 months to come to trial and whilst the process is ongoing every party is in limbo and there is never a guaranteed outcome. All claims have litigation risks which can be many and varied.

Hence why mediation is something all parties should think about at the outset. Looking to reach an agreement should not be seen as a weakness. It is a prudent and sensible step to be taken. Courts, tribunals and ombudsman’s schemes all encourage this approach and many will penalise those who do not consider properly this option. Most mediators will tell you there is no such thing as a dispute that cannot be mediated. The important thing with this process is that it is the parties’ process. You the parties’ contract with each other and the mediator as to the process you wish to follow. A lawyer versed in meditation will be able to help you through this and advise as to what steps or process should be followed, the skilled mediator will help to guide and facilitate this process. The route and procedure to follow is never set in stone.

So why show my hand at an early stage? Essentially this is a two way street. All litigation in England and Wales, whilst being adversarial, requires disclosure of the party’s case and all relevant evidence. When referring to documents this is everything, whether supportive of your case or not. So what is there to lose? We would suggest little. The mediation itself will be a confidential and without prejudice forum. Both parties should approach it in the spirit of being open. It is a real opportunity to lay out your case and for the other side to do likewise. Even where there are substantial differences as to fact and evidence the process can be used to narrow the issues. This of itself may be beneficial to all in that narrowing the issues may of itself help save substantial costs of litigation if the court is left with clear and defined areas to be determined.

Mediation is not limited to what the court or tribunal can award or order. The mediation essentially does not have a limit on what it can determine. That is a matter simply for the parties to agree. We have seen a commercial dispute over service charges which was subject to High Court proceedings where costs estimates for all parties totalled nearly half a million pounds where the parties mediated. The final agreement had no relation to what the court could order but agreed processes and procedures resolving the current dispute and to prevent further disputes in the future. It was clear thinking on the parties being aware that they did not want to find themselves in this position again and using mediation as an opportunity to agree a framework to prevent this.

ADR and mediation are very much buzz words for those dealing with consumers and the way you deal with complaints. All the various studies undertaken have shown that mediation works in increasing the chance of reaching an agreement and maintaining relationships. All of this can be vital to your work. Mediation, when successful, results in an agreement. This is a two way process.

We are always very happy to discuss the benefits of mediation with clients. David Whitney is an accredited Civil Mediation Council mediator with a particular emphasis on property mediations and is available to act as a mediator.

Filed under: England & Wales

Section 21 Prescribed Form 6A

Dear All,

Just to remind all Helpline Subcribers that we have uploaded today the most up to date version of the Prescribed Form. If you have downloaded a version prior to todays date, 7th October 2015, please discard and download the most up to date version to make sure it is the current prescribed form.

Any queries for our Helpline subscribers please do call 01420 656310, option 1.

Filed under: England & Wales

Deregulation Act and Retaliatory Evictions

No doubt everyone who reads this blog is getting sick of the whole sea change of regulations due to come into force on 1st October. It seems no time at all since March and the passing of the Deregulation Act 2015 when we all breathed a sigh of relief over deposits.

One part seems to be missed a little and may turn out to be one of the most important aspects for Landlords. That is Section 33, titled within the Act as “Preventing retaliatory evictions.” Whether we agree the concept exists or not this section will come into force on 1st October 2015.

So what does it involve and mean for landlords and agents?

In simple terms it is about ensuring let property is kept adequately repaired and maintained in compliance with section 11 of the Landlord and Tenant Act 1985. Nothing to worry about here you all shout, we are good responsible agents and landlords. However all is perhaps not as straight forward as you may think.
Whenever you receive a complaint in writing from a tenant regarding the condition of the property you must within 14 days give an “adequate” response in writing and in default a section 21 notice cannot be served. Whilst it refers to the complaint being in writing given there will inevitably be judicial consideration of these regulations we suggest that you ensure all complaints, no matter how minor, are clearly logged on your system and responded to. This means even when you have a telephone conversation with a tenant and resolve an issue in that conversation we would recommend that you confirm that conversation and what was agreed was your adequate response in writing or email so you have evidence of compliance. This may be overkill but better that than having a section 21 notice dismissed for lack of evidence of compliance on your part.
The next question is what is “adequate”. The Act provides limited explanation. It should provide an explanation as to what action the landlord is taking and the proposed timescales, clearly this will be subject to judicial interpretation. We think it means practically you need to show you are being pro-active in trying to resolve complaints and so if any doubt you must either go yourselves or send a competent person to inspect any reported problem on each and every occasion no matter how trivial they may appear. The response must set out the timescales in which you intend to undertake any remedial action. In effect it will be a report as to what was found, what you are going to do and when. Hence many firms are likely to develop a standard pro forma.
The section also provides that if the tenant is unhappy with your response he can complain to the local authority who may then serve a notice requiring works to be undertaken. If such notice is served then no valid section 21 notice may be served for 6 months from the date of that notice.
All the provisions provide that section 21 notices cannot be served after the actual complaint either by the tenant or service of the notice by the local authority. Arguably this does not effect earlier section 21 notices or situations where the tenant has complained to the local authority but they have not inspected either by the time of the service of the notice or the court proceedings. However practically we suggest that it is likely that where issues are raised this will inevitably either lead to accelerated claims being listed for hearings or adjournments being granted to ascertain if the local authority is taking action. Whilst there may be arguments to say that courts should not do this in our experience we think this will be District Judges response, at least until an upper court directs otherwise!
For private landlords there are limited safeguards and exceptions. These include if you can show the tenant has been the cause of the poor condition either from positively damaging the property or omission. Again the landlord will need to prove this. The other exception is if it can be genuinely shown the property is on the market for sale. Again we suspect very good evidence will be required by courts to prove this is the case and not just an attempt to get around the regulations.
It is vital therefore that those of you actively involved in property management look at your processes. Ensure it is 100% clear as how and to whom complaints of disrepair should be addressed and that your processes for dealing are clear. You may also want to remind landlords that just because a tenant complains is not a reason to serve a notice and in fact may no longer be possible. And finally as with, any of the other regulations sadly it will come down to judicial interpretation of the regulations and so for the time being there are many unanswered questions.

Filed under: England & Wales

Section 21 Prescribed Form amended already!

As many of you will have read there was concern as to errors in the first draft version of the prescribed Section 21 Notice issued by Government. As a result amendments have been rushed through for a New Section 21

The changes are modest but this is now the prescribed form which you should be using. We will be updating our document vault with this new version later today for our Helpline subscribers.

Filed under: England & Wales

New Prescribed Section 21 Notice is published

Hot on the heels of the smoke alarm debacle new regulations have been published prescribing the form for a section 21 Notice which must be used from 1st October 2015. (The Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015. 

As the name suggests these only apply to England. We think the idea of a prescribed form is a good one as it will help avoid arguments over the wording of the section 21 Notice. Obviously it is concerning that there is such a short lead in time although we have been expecting the same for some months now. For most agents completing the form should cause little difficulty, particularly for those used to giving old style Section 21 notice.

The regulations do however refer to three, in effect, new requirements for service of a valid section 21 Notice. The Landlord or Agent will need to show that the EPC and Gas Safe Certificate was given to the Tenant. Practically we would suggest that additional copies probably should be served with the Section 21 Notice, thereby saving arguments. Agents will no doubt wish to draw this to Landlords attention and make clear without these documents they will not be able to use the non-fault Section 21 Notice.

Also there is an entirely new requirement. At the start of each tenancy (including renewals) you will need to serve “How to rent: the checklist for renting in England”. This will only be available in electronic form on the Gov.uk website and Landlords and Agents will be expected to download and print off this 8 page document for each tenancy.   As with prescribed information it is important agents can prove this was given although again you may wish to serve a further copy with any notice to avoid issues being raised. Plenty to look at and certainly going forward we expect the issuing of accelerated possession proceedings will be more difficult given the extra hoops required to prove which will inevitably lead to further changes to the relevant court forms.

The Regulations apply in their entirety only to ASTs that are granted on or after the 1 October 2015, but subject to section 4, which provides that the  new form must be used. Therefore we advise that the new form be used for all notices served as soon as the Regulations come into force, i.e. 1 October 2015.

Finally, we comment on the note 1 on the form itself, which seems to be intended to help people give the correct date for expiry. First the note advises the landlord to allow two extra days for service, without advising them to check the terms of their tenancy agreement, or to allow for weekends and public holidays.

Secondly the note refers to serving notice on a statutory periodic tenancy under s21(4). Following the rule in Spencer v Taylor   notice on  a statutory periodic tenancy may be given under section 21 ( 1) following the expiry of the fixed term. Section 21(4) applies where there has never been a fixed term, e.g. a contractual periodic tenancy from the outset, or where the term is expressed at the outset to continue on a contractual periodic basis, but neither of these are statutory periodic tenancies. The note does not make it clear that although a notice served under s21 (4) may not expire earlier than a notice to quit could,   a statutory quarterly  periodic tenancy ( under the current interpretation of the Housing Act 1988) may, in our view,  be brought to an end by giving  two months’ notice under Section 21 ( 1).

Filed under: England & Wales

Smoke Alarms and Carbon Monoxide Detectors and Recent Developments

We recently blogged on the proposed changes to a landlord’s safety requirements to provide smoke alarms and carbon monoxide detectors (see here ).

On Friday, the Department for Communities and Local Government (DCLG) published some guidance as to the implications for landlords. A full copy of the DCLG guidance can be found here

However last night the House of Lords refused to pass the Regulations saying there had been no consultation and agents and landlords did not have enough time to comply. The Regulations may therefore be modified regarding the date all properties must comply. However PainSmith Solicitors advise that agents and landlords ensure all properties comply by 01 October 2015.

In summary, in preparation for 01 October 2015 or the designated date, landlords of all rental properties (subject to a small number of exemptions – such as licenced HMO properties and properties where there is a resident landlord) will be required to do the following:

  1. Install at least one smoke alarm on each storey of a rental property that is used as living accommodation. These alarms may be battery powered or hardwired. However check with the local authority as some may have local regulations which require more stringent conditions. The above requirement is for all rental properties not just those with tenancies beginning after 01 October 2015.
  2. Install a carbon monoxide detector in any room that contains a solid fuel appliance which includes coal or wood burning fires and wood burning stoves. For information wood burning stoves installed since 2011 must already have a carbon monoxide detector and a certificate proving they have been safely installed. The certificate must be kept as it will be required upon sale of the property.
  3. Currently gas appliances are not covered by the above Regulations but we strongly advise that carbon monoxide detectors are installed in properties powered by gas appliances or oil fired appliances. We anticipate the gas safe regulations may be amended at some stage to require this in the future. Again, to emphasise installation of carbon monoxide alarms is a requirement for all rental properties with solid fuel appliances not just those with tenancies beginning after 01 October 2015.
  4. Carry out testing to ensure that all smoke and carbon monoxide alarms are in working order at the start of each new tenancy commencing on October 1 2015 or thereafter. There is no requirement to check existing alarms in tenancies that are continuing or renewed. Landlords should keep evidence of the testing for example as an entry on the check in report or inventory preferably signed by the tenant or their representative.
  5. Include a term in tenancy agreements requiring tenants to check the alarms at least once a month to ensure all smoke alarms and carbon monoxide detectors remain working, to replace batteries where necessary and to report any other faults to the landlord.
  6. Include a clause requiring landlords to install smoke alarms and carbon monoxide detectors in the Terms of Business and imposing a liability on the landlord to ensure the smoke alarms and the detector are in working order at the start of a tenancy and throughout the tenancy if the property is not managed by the agent.

There will be no grace period for compliance with the Regulations after 01 October 2015 if the Regulations are passed by Parliament.

Filed under: England & Wales

Another successful enfranchisement

Today we completed yet another successful freehold acquisition!

David Whitney and his team acted throughout in putting together with, a steering group of residents, a claim for enfranchisement of a development of two blocks of flats, various freehold houses and associated grounds comprising over 70 units. PainSmith worked with the steering group to ensure more than the minimum number of leaseholders were interested. After this they prepared the necessary participation agreements and served the required notices.

PainSmith worked with the resident’s valuer to deal with various issues over the premium necessary and settled all the necessary legal documentation. The acquisition opens the way for those taking part to grant themselves valuable lease extensions and help in ensuring the ongoing good management of their estate.

If you are thinking about possible acquisition of your freehold or lease extensions please contact David Whitney for a without obligation discussion of your options.

PainSmith Solicitors are proud members of the Association of Leasehold Enfranchisement Practitioners

Filed under: England & Wales

New Terms of Business

PainSmith Solicitors has updated its lettings terms of business to incorporate recent changes in legislation. The new version is available to purchase now from our online shop  for £200 plus VAT.

Filed under: England & Wales

Deregulation Act – Grace Period Expires on 23 June 2015

Just a quick reminder that, as explained in our blog on the Deregulation Act (here), if landlords or agents have any “Superstrike deposits” (i.e. those that were received before 06 April 2007 where the tenancy has been renewed or fell into a statutory period tenancy after that date) that have not already been protected in a government deposit protection scheme this must be done (along with serving the prescribed information) by no later than 23 June 2015 in order to avoid the penalties for non-compliance as set out in Section 214 of the Housing Act 2004.

Filed under: England & Wales

Legionnaire’s disease and the HSE

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

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

Filed under: England & Wales

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