Tag Archives: Property Legislation

21Dec 2010

Rental Issues: Utility problems

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By Steve Roulstone

It has long been my impression that Utility Companies really do not have a clue when it comes to understanding the relationship between Tenants and Landlords and the implications of a property used for the rental market and nothing has happened over the last couple of years to change my mind in this respect. Then take the confusion every time a tenant does not pay the final bill and the overbearing reaction of the provider to invoice the Landlord for the unpaid bill! Never mind the ongoing question of who is responsible when?

Just what it says on the tin!

How nice that would be! To have a Company who looked after the interests of all concerned and more than that – understood what happens when a property changes hands three times in sometimes as little as two weeks. It is a fact that some organisations in my opinion just see this as a chance to make money. In my own region, the amount Severn Trent WA would invoice a Landlord for the few days he became liable between Tenancies would suggest the actual annual invoice was up to three times the actual annual cost. But what can you expect from an organisation that in my knowledge takes at least £100 more than is needed by those of us who have decided that paying by Direct Debit removes the hassle of calculating and making monthly payments. (Just work that across the region and see how much they have in their account that does not legitimately belong to them)

Services catered for

Well actually not yet! Yes Companies do exist but they have not yet managed to deliver the services they promise. I am sure the intent is good and without a doubt, they do assist us as Letting Agents in removing some of the hassle we have to go through in dealing directly with the suppliers, but as yet, the co-operation that should exist between them does not seem to exist.

All round benefits

What is needed is not somebody acting as a middle man, resulting in services at good prices (Still amazed at how much prices vary in the utility market, especially if you do not keep on top!) but somebody who can be trusted to look after the interests of all parties, especially the Tenant in ensuring they buy competitively and the Landlord in ensuring they do not fall foul of DATA protection legislation (or indeed be threatened that they have, which can be just as upsetting) and that they no longer get silly little invoices for short periods when a property is empty. (Take note STWA!) The problem for us as Agents, is that we are only ever going to be able to pick the best system whilst not being able to do the work needed to improve the service supplied.

Future competitive market                                            

And the point is that it is very competitive now! The private rental market alone is calculated at being over 14% of housing stock in this Country and I would hope that Companies that are able to work at the way in which utility providers go about their business would take the time to look seriously at the option available by providing both a system and a service which is simple and time saving for all concerned.

17Dec 2010

Property Landlord advice: Tenant Deposit clarity?

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By Steve Roulstone

I was reading an article this week about the Court of Appeal rulings on two recent cases and whilst I believe there is some underlying common sense in the decision in the short term, it has also been confirmed in my opinion, that long term, Landlords, who will probably have costs awarded against them in such circumstances, continue to risk the full weight of the penalties as laid out in the Tenant Deposit legislation if they do not register deposits correctly. It has of course raised a question of whether the legislation is now toothless, but it is the more practical fallout that I would like to look at.

14 Day rules

What the review has done is confirm that the 14 day registration is just that, a rule and therefore whilst it is right and proper that all Agents should register within the rules of the approved scheme that they are using, failure to do so is not covered by legislation confirming the appropriate penalties referred to within the legislation. It has also confirmed that should the Deposit not be registered within the 14 ruling then allowance will be given providing it is registered and therefore protected before any court action commences. In fact, all approved agencies cannot refuse to protect the Deposit. But I feel it is right and proper that whichever scheme an Agent or Landlord belongs to should be allowed to take appropriate action in such cases, but at present this is not the case.

Grey area

I hear that the matters ruled upon are now a subject of further appeal to a higher court. Add to this the ability for judges up and down the Country to still make rulings which do not have a common theme and we have what can only be described as a ‘grey area’ and this is the main factor that should be taken from this ruling.

Conclusion

To continue to risk penalty by failing to register a Tenants Deposit within the Tenants Deposit Scheme, apart from flying in the face of the intent of the original legislation, is a poor decision and will probably, to quote a well known saying ‘ all end in tears’ It is the role of National Companies such as ours and the Government approved agencies that carry out the role of protection, to discuss lobby and suggest ways of making this and any legislation work within the intent of the original act. At Castle Estates we will continue to carry out this role and as the agencies go about their task in getting the clarity we all need, to act against the intent will only give purpose to those who would argue against practical changes to make the legislation work to the better for all concerned.

16Dec 2010

Property Landlord advice: Unlawful Eviction supports Professional Agents

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By Steve Roulstone

I have constantly voiced the opinion that our Industry progressively gets more professional year upon year. I was totally behind the recommendation of the Rugg review that both Landlords and Agents should be licensed and or registered having qualified in some prescribed manner. I believe the benefits will be for all to see and enjoy and enforce the movement away from unlawful activities. I also understand the current Government saying they would not pursue this policy at the moment, with the current financial situation to deal with they have bigger fish to deal with!

Breaking the Law

This week, I have had two reminders that what was recommended by the review is still important and that the review was correct to recommend the introduction of legislation in the first place. I have reported in these pages that as an industry we are moving away from horror stories and that renting has become embedded in our way of life as an acceptable and in many cases preferable way of life, but what I have heard this week has reminded me that some people still believe they can act outside of the law!

Landlord jailed

The first case concerning unlawful eviction was reported back in November and was referred to this week in a conversation with a colleague. A Landlord looking to remove a Tenant who had become a Housing Benefit applicant attempted to do so without proper recourse to legal methods and then physically removed the Tenant when they refused to move out. Oxford City Council took the appropriate action and the Landlord was charged and convicted being jailed for three months. Whilst it is always sad to hear about Landlords trying to act outside of the law, at least the Law caught up with him and justice was seen to have been done. Although of course the Tenant still had to go through the indignity of being dealt with unlawfully in the first place!

Unlawful Agent recommendations

The second case was I admit hearsay, but I have no reason to doubt the source or the motivation for telling me what had been heard, as it was bought out in normal conversation and not raised intentionally. In concerned a Local (to me) Agent, who advised a Landlord when discussing the methods of dealing with Tenants who fail to pay due rent and when discussing notices served within the Housing Act in such cases, with a sideways tap of the nose saying; ‘Of course there are always other ways of dealing with Tenants who do not pay’

Legal Methods

Well there are not! Any method of eviction which is not within the Housing Acts is of course unlawful and what amazes me is that agents should still recommend some midnight knock on the door method openly to a Landlord! Perhaps I should not be surprised that the agent concerned was not a specialist Letting Agent being involved in other aspects of the Housing Industry! So bring on the legislation and I shall report such matters that come to my attention wherever possible to further legitimate professional Landlords being recognised as just that!

25Nov 2010

Property Landlord Advice: Private Rental sector gets Government boost.

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By Samantha Knight

The Prime Minister said the Government may introduce “fixed period” tenancies to ensure new social housing tenants can be evicted if their circumstances improve. People who are given council houses are currently awarded an indefinite “secure tenancy” if they successfully complete a 12-month trial tenancy. This means they can only be evicted through the courts if they fail to pay rent, cause serious problems for their neighbours or in other exceptional circumstances. If they die, their secure tenancy can be passed on to a partner or child. Mr Cameron said the current rules meant that people in more severe need of housing were being kept on council waiting lists while some tenants’ situations got better.

Controversial statement:

“At the moment we have a system very much where, if you get a council house or an affordable house, it is yours forever … And actually it ought to be about need,” Mr Cameron told a public forum in Birmingham. His comments came in response to a mother of two teenagers, who told him she slept on a blow-up bed for two years because her council could not find her a bigger house. Your need has got greater,” Mr Cameron told her, “and yet there isn’t really the opportunity to move.

“There is a question mark about whether, in future, should we be asking, actually, when you are given a council home, is it for fixed period, because maybe in five or 10 years you will be doing a different job and be better paid and you won’t need that home, you will be able to go into the private sector.” A total of 1.8 million families are currently on waiting lists for council housing. The Government advises local authorities on how they should ration properties but councils also use their own criteria,

Changes will be difficult.

Local families living in cramped conditions and people who are homeless or have medical conditions being made worse by their houses are usually prioritised. Only some local authorities consider the income of applicants. It is thought councils and housing associations would be left to decide how long local fixed-term tenancies would last. Mr Cameron conceded that an attempt to reform the system would cause “a big argument” but was necessary. “Looking at a more flexible system I think makes sense,” he said.

The Prime Minister said that any changes would not, however, apply to people already in social housing. The Conservatives pledged in their general election manifesto to protect the rights of existing tenants. All good news for private landlords, making investing in rental property with affordable rents a safe bet.  If the Prime Ministers plans go ahead, we will have a queue of tenants now in need of private rental properties.

24Nov 2010

Rental Issues: Tenants Protected against defaulting Borrowers

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By Mike Edwards

Tenants will no longer be at the same risk of losing their home with little warning if their landlord defaults on their mortgage, because new rules have come into force giving judges the power to delay repossessions in order to give tenants time to find a new home.

Prior to the change           

People could previously be evicted from rental properties relatively quickly if their landlord defaulted on the mortgage and had failed to inform their lender that they were renting out the property. In most cases tenants were totally unaware of the situation until a Court Summons was received or bailiffs arrived to enforce the Court

New Legislation

Under new rules tenants with a valid tenancy will be able to attend Court possession hearings for the first time. Judges will be able to take their situation into account and delay repossession by up to two months though but even now if a lender is seeking possession under Ground 2 it is 2 months notice and only then can proceedings commence. However the tenant may be unaware that proceedings have commenced.       

Lenders must also ensure tenants know that their home is going to be repossessed by sending a letter to the property giving them notice of a court hearing date. Again however having said that lenders have been under such an obligation since the Civil Procedure Rules were changed many years ago requiring lenders to write to the property addressing the letter to The Occupier.

This letter should be sent at the earliest possible opportunity when it becomes apparent that a lender is likely to institute proceedings against a borrower but most lenders have consistently failed to do so only advising of the proceedings very shortly before they were listed or even after the event thus adding to the problems.

The end Result

Once a repossession order has been granted, the lender must without fail send a second letter to the property telling tenants they have a warrant for its possession.
The tenant can then request a delay of up to two months if they have not previously had the opportunity to do so and this is the big change introduced by the new rules.

19Oct 2010

Property Landlords advice: Resident Landlord agreements (Part 1)

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By Mike Edwards

Deciding if a Resident Landlord agreement is the correct solution to any situation can be a nightmare for Landlords to determine. What can on the face of it look straight forward may not be and vice versa. What happens if there is completely separate access for the tenant? Or what if their accommodation is like a granny annexe or a garage converted into a studio, or a building in the garden? The list goes on!

Popular practice

These situations are becoming more common as the credit crunch inspires some innovative use of spare accommodation by Landlords, but do we treat these scenarios as tenancies or licences? And above all if they are tenancies then should they be ASTs which means registering the deposit – or a fine if you don’t!

Some definitions

If the building as originally constructed is a purpose built block of flats no matter how small and the Landlord occupies a unit as their main residence it can never be a Resident Landlord case. But if you have a conversion to self contained flats and the landlord lives downstairs it is a Resident Landlord case but the tenant cannot have an AST because it is a Resident Landlord situation. In the conversion if the occupier has their own bedroom but shares facilities with the Landlord then only a license can be granted. This is because under the 1988 Act the tenant only needs exclusive possession of “any part of the dwelling” to have a tenancy so the exclusivity of the bedroom is enough to make them a tenant and an AST can be created if there is no Resident Landlord.

And more definitions

Rules on exclusive possession are different outside the 1988 Act as to be a tenant the occupier must have exclusive possession of all essential living accommodation. Therefore if the tenant cannot have an AST as the landlord is in the building, he must have exclusive possession of all essential living accommodation before he can be a tenant and therefore be granted a Common Law tenancy (as in the example above of the two self contained flats above).

Further legal implications

However all this throws up another key issue. In managing the situation, you must make sure it should not have been an AST for if it is then the deposit must be protected. So if you wrongly designate an occupier as a licensee and do not give them an AST when you should have done so then you will be open to a claim for mishandling their deposit.

Link to Res LL Part 2

14Oct 2010

Property Landlord Advice: Rent limit for AST Agreements increased to £100,000

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By Mike Edwards

From 1st October 2010 all tenancies where there is no legally stated reason why they cannot be ASTs  will be so deemed unless the annualised aggregate rent is in excess of £100,000 or basically £8,333 a month no matter how short the initial term might be.

The Change in Law

So if a tenant rents at £10K a month for 6 months it still cannot be an AST because annualised the rent would be £120K. The term stated in the agreement makes no difference just multiply the rent by 12 and if the result exceeds £100K then from the 1st of October it can no longer be an AST. Do not make the mistake of thinking the tenant actually has to pay £100,000 or more in a year, they do not. The same rules that applied when the limit was £25,000 now simply apply at £100,000 instead. In effect the figure for a tenancy to fall within the EXCLUDED CATEGORY and be incapable of being an AST has now been increased to £100,000

The Affect

This will mainly affect the London market (over £1924.00per week) or very high rental value properties elsewhere but it applies to all new tenancies granted from 1st October onwards and also to all tenancies granted on 6th April 2007 or later as and when they are formally renewed.

The problem

The issue here for Landlords and agents is because these previous non ASTs now become ASTs do existing deposits now need to be registered and protected for these higher value tenancies. However the provision that applied when deposit protection first came in that periodic tenancies were unaffected is thought not to apply. Unfortunately the Government Department responsible for the TDP provisions (Communities and Local Government) omitted the word “new” at a critical point when drafting these revised Regulations.

The result

In doing so they condemned all existing cases to potential uncertainty which can only be clarified by a test Court case. So the advice from CLG, ARLA and the TDP schemes is to register ALL deposits where, under the revised limit if an existing tenancy was actually a new one being granted now it would be covered by the new rules. A Prescribed Information Form must also be issued and interestingly so must any clauses that would be in any such new tenancy but were not of course in the original agreement.

08Oct 2010

Property Landlord advice: Property Scams and problems

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By Mike Edwards

There is once again an upsurge in scams within the Private Rented Sector. These come in various changing guises, some more serious than others.

Common problems:

Properties being turned into cannabis farms or to house multiple foreign workers are still on the increase, though such more common abuse of a property should soon be spotted by regular inspection visits – especially if unannounced.

Problems to be aware of:

More recent developments include people communicating with agents claiming to be the Landlord and giving a change of bank details so payments are siphoned into the wrong bank account. Any change of details should only be registered if they are in writing, the signature compared with the Landlord contract on the file and are known to have come from a confirmed source. Acknowledgement can be sent to the Landlord’s known address or by calling the landlord on a telephone number you know to be theirs. Agents without a contract on their file are short of a significant document and if they do not have a signed Landlord contract on file how can they check the landlord’s signature?   

Summer problem:

There have also been instances over the summer of people posing as agents and turning up at a joint agent’s office, requesting keys for a property supposedly on the instruction of the landlord. Or posing as contractors the Landlord has instructed to undertake work to their property. Again a vigilant and well organised agent should obtain confirmation prior to releasing the keys.

Registration of ownership scam:

Two variations on actual property ‘theft’ are also being reported. Firstly Agents are being contacted by potential tenants only interested in viewing or enquiring about empty property. This can be a sign of a potential fraud intended to transfer the ownership of the property away from the Landlord. Secondly there has been an increase in cases where the Land Registry has confirmed a property has been ‘stolen’ by tenants who identify there is no mortgage and transfer the title deeds into their name. If in response to the ‘lender’s consent’ enquiries at initial interview the landlord confirms there is no mortgage then the Landlords should be advised to ensure that their home address is the one used by the Land Registry for service of any relevant notice so they can be aware of any such attempt of transfer.

23Sep 2010

Property Landlord advice: Property Letting Agents

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By Steve Roulstone

 

As against Property Estate Agents, and this is the subject of my blog for today. Why do people still visit Estate Agents to carry out a role covered by a different trade? and we are different, in all the training I have gone through, I have never been taught how to manage a property sale and I can guarantee you that at no stage has any Estate Agent under the guise of training for selling houses, ever been taught how to be a Letting Agent.

So do you just not like us?

But people still knock on the door of Estate Agents to place their property on the Rental market. Of course, one of the reasons is the image that has historically hounded our trade, but I firmly believe that is changing. With the proliferation of Franchised offices throughout the Country over the last ten years, we are finally getting the professional image across and it is with great pride that I count Castle Estates as one of the Companies creating the change, but I believe this goes deeper than image and is tied to tradition.

Habits die hard.                      

I believe that it is habit that causes most people to look to the traditional office to look after our property interests. This is of course where Estate Agents score, because the Letting Industry is still new compared to the traditional route of property ownership, but this situation is changing, as the % of UK rental property continues to rise, currently sitting at 14%.

Property Letting Agents, a developing Industry.

This is where we must now concentrate as an Industry and look to educate the public, that our Industry is not one that can be turned to in a time of need (most Estate Agents started to offer rental services because they could not sell enough houses) but rather to be able to provide the correct Management that ALL of our Landlords need, the agent should be trained and specialise in its own field. After all, you rarely see a Letting agent who sells as well!!

10Sep 2010

Rental Issues: Local Councils promote breaking the Law?

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By Steve Roulstone

I believe that Local Councils, in delaying the time frame of having to find a home for Tenants that have failed to pay their rent and face eviction, by advising that they do not leave the property until they receive an eviction notice, are encouraging people to break the law and I do not believe this is the role they should be playing. 

Landlord and Tenant Rights.

Ok, let’s look at the reasons behind the scenario. If a Tenant is either unable or simply fails to pay the rent, the Landlord is of course entitled to take action and as Agent of the Landlord  it is our responsibility to take the best action on his behalf, which must include giving notice to quit the property. We use the notices within the Housing Act 1988 and by issuing such notice we are operating within the law.

Tenant reaction.

 Now if the Tenant has nowhere to move too, they need the support of the local Council to find somewhere to live. I have always believed that the service exists for exactly these circumstances. But this is where the problem lies. More and more there reaction is too advice the Tenant to stay exactly where they are until they receive an eviction notice and this is where ‘Breaking the Law’ enters in to the equation.

The implications of such advice.

So what happens if they stay in the property, don’t forget, failing to pay the rent! We are forced to take the Tenant to court and get the very eviction notice that the Council demand. Then and only then will they assist the Tenant in being re-housed. The Courts of course will not issue the notice unless we can prove that the Tenant has broken the agreement and should indeed leave. In fact, under some circumstances, the Courts do not even have an option and must issue an eviction notice, as it is mandatory within the Housing Act.

On the Record!

So now we have the rub, Councils by this lack of action, or rather delay of fulfilling their duty, cause the Tenant to be taken to court and in most cases have a court action issued against them. I see this as breaking the law and I do not feel it is right to place Tenants in this position in the first place, when the only thing that is achieved is a delay in the Council fulfilling its obligation and everybody else,  suffering the consequences:

Landlord, because they do not receive rent for a property for which they will more than likely have a mortgage to pay.

Tenant, because in my experience, they just want the Council to give them somewhere to live, but are forced to accept the route through lack of choice.

Agent, because they are unable to provide the service they are charged with, take on extra work which they have no control over and are the only sounding board for both parties.

And finally the Council? Well they still have to find property for the Tenant at the end of the day, but perhaps they feel they have done their job, because many Tenants do find an alternative rather than by forced to court. But hold on? Is it not the role of Councils to provide accommodation in these circumstances?

I think it is clear that the Tenant is the neediest and in these circumstances and in my opinion, it is they who suffer as the Council try to cut costs!