By Judith Loeffler

Eviction 2

Another aspect of the Deregulation Act 2015 coming into force on 1st Oct 2015 is to ensure let property is kept adequately repaired and maintained in compliance with Section 11 of the Landlord and Tenant Act 1985. Unless the correct procedure is followed a Section 21 notice cannot be served to avoid retaliatory evictions as outlined in Section 33 of the Deregulation Act.

Whenever a landlord receives a complaint in writing from a tenant regarding the condition of the property an ‘adequate’ response must be given in writing within 14 days. There is no further definition of ‘adequate’. Landlords need to show they are actively trying to resolve complaints – this requires sending a competent person to inspect any reported problem. The response must also set out the timescales in which remedial action will be undertaken.

If the tenant is unhappy with the 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.

A Section 21 notice cannot be served after an actual complaint either by the tenant or service of the notice by the local authority.

By Judith Loeffler

letter delivery

As part of the Deregulation Act 2015, a new form of the Section 21 notice will have to be used. The new prescribed format must be used as of 1st October 2015.

In order to enforce it, a landlord must have complied with tenancy deposit protection legislation and have issued the Tenant a valid Energy Performance Certificate (EPC), a valid Gas Safety Certificate and a How to rent guide at the start of the tenancy.

Another important change is that the Section 21 notice will now have time restrictions.

Furthermore, Landlords will be unable to issue a Section 21 Notice

  1. during the first four months of the tenancy
  2. where the landlord is not following the correct procedure upon receiving a written disrepair complaint from the tenant (Retaliatory Eviction)
  3. where the landlord has not provided the tenant with an EPC, a gas safety certificate or the ‘How to rent’ guide
  4. where the landlord has not complied with the tenancy deposit protection legislation
  5. where a property requires a licence but is unlicensed

By Judith Loeffler

Smoke alarm

As advised in our blog earlier this year, the Smoke and Carbon Monoxide Alarm (England) Regulations 2015 has become law as of today, 1st Oct 2015.  Under these new regulations, Landlords of all rental properties are required to have smoke alarms on every floor of a property on which there is a room used wholly or partly as living accommodation (this includes a hall or landing).

The regulations do not state what kind of smoke alarm system is required, though we would always recommend a hard wired alarm system – hard wired is compulsory for newly built properties since 1992 which require mains powered smoke alarms with battery backup. Each smoke alarm must be tested and be in full working order on the commencement date of every new tenancy.

Landlords are also required to fit carbon monoxide alarms in every room with a solid fuel appliance, which includes wood burners and open fires.  Currently gas appliances are not covered but we would always recommend to have carbon monoxide detectors installed in properties with gas appliances as well.

Landlords may face a penalty of up to £5000 for failure to meet the regulations.

 

By Judith Loeffler

Ram 2 ours

There’s no stopping Wandsworth claiming its place on the list of places to be in London!

Property wise, the demolition phase at The Ram Quarter has been completed with work on the foundation and the basement excavation now started. Slowly but certainly the redevelopment of the historic brewery site in Wandsworth is taking shape and the impressions of what it will look like when completed are certainly stunning – explore for yourself here.

As to entertainment, the West Hill Farmers’ Market has launched in Wandsworth – from 21 June 2015 a huge selection of seasonal produce from free range poultry & meat, eggs, dairy produce, veg and fruit, fresh bread and so much more is on offer every Sunday  from 10am-2pm at West Hill Primary School playground. Loads of space for children to play and free parking included.

Over in Putney, the Putney Pier Art Market has returned this year showcasing a mix of original and contemporary artworks, handcrafted by creatives across Putney, Wandsworth and the South. On the first Sunday of each month, between May to December (August excluded),  you’ll find a blue and white ‘pop-up’ tented arts village offering pottery, paintings, jewellery, sculptures, glass ware and much more. Opening Times: 11am – 5pm.

For evening entertainment, the Luna Cinema offers a pop up open air cinema experience in Wandsworth Park. Located on the south side of the Thames in between Wandsworth and Putney, you can enjoy classic films under the stars in a beautiful park, overlooking the Thames.

And finally for a sporty summer event that is a bit different from the norm … there’s the Sumo Run in Battersea Park. It’s an annual 5km charity fun run in inflatable Sumo Suits. The organisers advise ‘you can walk, jog, run or wobble your way around (…)! Expect lots of giggles, smiles and shocked by-standers!’

 

By Judith Loeffler

have your say

Following the announcement to remove the 10% wear and tear allowance for furnished properties as of the tax year 2016/2017, the consultation on the reform has now started. The declared purpose is ‘to improve the consistency and fairness in the taxation of residential property businesses’.

HMRC is now inviting  feedback on the proposed scope of the measure as well as on the amount of relief suggested: ‘We would like to hear from businesses, individuals, tax advisers, professional bodies and any other interested parties involved in the letting of residential property’. The Consultation will run for 12 weeks from 17/07/2015 to 09/10/2015 and the full consultation document is available here.

The summary of the proposal:

  • Remove the 10% wear and tear allowance for furnished property – this is currently available, independent of whether any money has actually been spent on the property.
  • Introduce a new replacement furniture relief which will apply to all residential rental properties, furnished or unfurnished – the initial cost of furnishing a property would however not be included.
  • Landlords will be able to claim a deduction for the capital cost of replacing furniture, furnishings, appliances and kitchenware provided for the tenant’s use including furniture, televisions, fridges and freezers, carpets / flooring, curtains etc.
  • Fixtures integral to the building would not be included because the replacement cost of these would, as now, be a deductible expense as a repair to the property itself. This includes baths, basins, toilets, boilers and fitted kitchen units.

Under the new proposal, tax relief can only be claimed for expenses that are actually incurred by landlords which HMRC believes will provide a better incentive for landlords to actually maintain the furnishings in their property. No relief can be claimed without actual expenditure. The new replacement furniture relief will give relief for the cost of the replacement asset, less any proceeds received from the old asset that is being replaced.

By Judith Loeffler

Landlord licensing

‘We’ll (…) crack down on the unscrupulous landlords (…) by introducing a new mandatory licensing regime.’ This intent was stated by David Cameron during his speech on immigration end of May.

Whilst the Department for Communities and Local Government has since clarified that this will apply  to Houses in Multiple Occupation (HMOs) only, it also became clear that there will be a new definition of HMOs requiring to be licensed. Currently mandatory licensing is only required for properties with 3 or more stories and 5 or more tenants. The Government will consult on the amendment of the definition of a mandatory HMO which requires a license – with the outcome predicted to be that more properties will need to be licensed.

Councils in the meantime have created new realities by making use of their ability to introduce additional licensing:

  • Ealing, Hounslow, Kingston, Islington and Croydon already operate selective HMO licensing requiring landlords of any rental property with 3 or more unrelated tenants to obtain a license from the council – a license is required for each property which of course needs to be paid for and usually requires additional works to be implemented
  • Croydon has announced that an additional licensing scheme will be put into place from 1 October 2015 requiring ALL landlords to obtain a license, no matter the size of the property to be let

Whenever councils aim to introduce widespread landlord licensing, this tends to be challenged:

Enfield’s proposed scheme was claimed to reduce anti-social behaviour and increase the quality of properties to let, though following challenges these plans have now been abandoned. However, a judicial review over a selective licensing scheme for private sector landlords in Rotherham Council has upheld the decision, now requiring landlords to have a five year license costing up to £625.

By Judith Loeffler

Budget-summer-2015

The Summer Budget 2015 announced by Chancellor George Osborne last week held some unpleasant surprises for buy to let landlords:

As of April 2016 landlords of furnished rental properties will no longer be able to claim a blanket 10% of rental income as fair wear and tear allowance per year. The Summer Budget outlines: ‘Currently, landlords of furnished properties can deduct 10% of their rent from their profit to account for wear and tear, irrespective of their expenditure. This means landlords can reduce their tax liability even when they have not improved the property. From April 2016, the government will replace this allowance with a new system that enables all landlords of residential property to only deduct costs they actually incur.’

An even bigger blow was the announcement that mortgage interest relief would be restricted: Currently landlords of buy to let properties can claim tax relief on mortgage interest payments and this can be claimed at the higher rate of tax that is paid ie up to 45%. This is being reduced so only a 20% relief can be claimed on the mortgage interest expense, independent of a landlord’s marginal tax rate.

It is being phased in over a 4 year period starting April 2017. The declared intention of this measure is to shift the balance in between landlords and homeowners: ‘Mortgage Interest Relief was withdrawn from homeowners 15 years ago. However, landlords still receive the relief. The ability to deduct these costs puts investing in a rental property at an advantage.’

In his speech, Chancellor George Osborne summarised the rationale for this decision:
‘Buy-to-let landlords have a huge advantage in the market as they can offset their mortgage interest payments against their income, whereas homebuyers cannot.
And the better-off the landlord, the more tax relief they get.
For the wealthiest, every pound of mortgage interest costs they incur, they get 45p back from the taxpayer.
All this has contributed to the rapid growth in buy-to-let properties, which now account for over 15% of new mortgages, something the Bank of England warned us last week could pose a risk to our financial stability.’

By Judith Loeffler

Update

 

The Deregulation Act was passed by Parliament early March 2015 clarifying requirements to comply with tenancy deposit protection rules and preventing retaliatory evictions. The key points to note are on tenancy deposit protection:

  1. Deposits received before 6 April 2007 for a fixed term shorthold tenancy and tenancy went statutory periodic on or after this date must be protected within 90 days of the Deregulation Act 2015 being passed.
  2. Deposits received on or after 6 April 2007 for a fixed term shorthold tenancy and deposit protection requirements have been complied with (ie deposit protected & prescribed information given) will be treated as complied with when it goes statutory periodic with no need for new protection and serving of prescribed information.
  3. Deposits received on or after 6 April 2007 and deposit protection requirements have been complied with (ie deposit protected & prescribed information given). If a renewal tenancy or a replacement tenancy (contractual periodic tenancy) comes into place the prescribed information is treated as having being given; this requires landlord and tenants to be the same as in the original tenancy. Whether a new deposit protection is needed, depends on the respective scheme rules.

On preventing retaliatory evictions the Deregulation Act states that a Section 21 notice will be invalid if, before the section 21 notice was given, the tenant made a complaint in writing to the landlord regarding the condition of the property which the landlord did not adequately respond to within 14 days and the local housing authority served a relevant notice in relation to the property as a result of the complaint.

And finally as of 6th April 2015 changes to Section 8 Possession Notice and Section 13 Rent Increase Notice have come into effect so as of this date the new  forms will need to be used.

By Judith Loeffler

Smoke alarm

 

To date having smoke alarms in rental properties has not been a legal requirements – this will change as of October this year. In a recent press release the Department for Communities and Local Government announced: ‘New regulations requiring landlords to install smoke and carbon monoxide alarms in their properties have been laid in Parliament and are expected to come into force, subject to Parliamentary approval, on 10 October 2015.’

Landlords would be required to have working smoke alarms installed on every floor of their property and test them at the start of every tenancy; landlords not having working smoke and carbon monoxide alarms will face a civil penalty up to £5000.

According to Housing Minister Brandon Lewis the number of smoke alarms installed in homes has already dramatically increased from just 8% in 1988 to over 90% today. Landlords would also be required to install carbon monoxide alarms in high risk rooms eg rooms where a solid fuel heating system is installed.

By Judith Loeffler

Budget 2015

 

The Budget Red Book released after the Chancellor makes his Budget speech includes the government’s commitment to ‘make it easier for individuals to sub-let a room through its intention to legislate to prevent the use of clauses in private fixed-term residential tenancy agreements that expressly rule out sub-letting or otherwise sharing space on a short-term basis, and consider extending this prohibition to statutory periodic tenancies’.

There is widespread confusion about the implications this would have – many of the relevant points summarised in a letter the RLA Chairman, Alan Ward sent to the Director General of the Department for Communities and Local Government following the publication. Alan Ward commented: ‘The measures on sub-letting are a nightmare in the making and smack of ‘back of the fag packet’ policy making.’

Amongst others, the key questions to be considered are

  • who will be responsible if a sub-tenant is in breach of general landlord tenant legislation
  • would the tenant who sublets a property have landlord like responsibilities towards the sub-tenant eg Gas Safety notices, immigration checks etc
  • what if an additional sub-tenant turns the property into a House of Multiple Occupation when more than 3 unrelated (sub-)tenants reside there
  • how would a landlord regain possession with no tenancy agreement in place