Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

Housing and Regeneration Act

The Housing and Regeneration Act has introduced important changes in the Housing Act 1988 and particularly in the way that tenancies are ended by the Court.

This has been done to end the problems caused by so-called tolerated trespassers. This bizarre status came about due to the decision in Harlow DC v Hall where the Court ruled that a suspended possession order actually had the effect of terminating the tenancy but prevented the landlord from executing the order by seeking possession as long as the occupier kept to the conditions imposed on the order. This had the effect of creating a new class of occupier, the tolerated trespasser, who were people whose tenancies had been brought to an end but who could not actually be removed from the property.

This unsatisfactory state of affairs was resolved in part by changes to the Civil Procedure Rules and the creation of a new type of possession order, the postponed order. However, the position has been further resolved by the Housing and Regenration Act. This has amended section 5 of the Housing Act 1988 along with other relevant legislation to make clear that tebnancies do not come to an end merely by Court order but actually by the execution of that order by the Bailiff. This means that tolerated trespassers will no longer be created as their tenancy will remain active even on the making of a suspended order and will only bve brought to an end by the execution of that order if the tenant fails to keep to the conditions for its continued suspension.

While this resolves the tolerated trespasser issue it does create a new problems, albeit a fairly small one. This is that when an order has been made and there is uncertainty about whether the tenant has vacated the preference will now have to be to instruct the Bailiff. Whether this will mean that the Bailiff service will become busier remains to be seen.

Filed under: Uncategorized

Rugg Review of the Private Rented Sector

The government-sponsored review of the Private Rented Sector carried out by Julie Rugg and David Rhodes (the “Rugg Review”) has recently been unveiled.

A large part of the review is simply a look at the current state of the sector and principally makers clear just how little understanding of the sector there is within local and national government and in Parliament. In particular, the myth that the majority of landlords are out to steal from their tenants came in for some criticism. It is also apparent from the review that the quality of information on which decisions are based is very poor.

The review makes six key recommendations:

  1. A sound base of evidence should be developed to inform future policy and decision-making.
  2. Improvement of the quality of lettings and management agents should be encouraged, primarily through the compulsory licensing of all agents.  This would be overseen by a new, independent body.  Continuing Professional Development should a be a key requirement for all agents as a part of any accreditation system.
  3. Government policy should be modified to view landlords less as investors and more as active small-businesses.  This will mean changes in taxation schemes to recognise the business status of landlords and incentives for good landlords to grow their portfolios.  The mortgage market will also need to be reformed to encourage buy-to-let landlords to present a business plan as a part oif their mortgage application and also to ensure that tenants do not find themselves evicted if those businesses fail.
  4. Tenants who rely on benefits to meet obligations in the private sector should be better supported with assistance over deposits and rent arrears.  Local authorities should be encouraged to set up social sector lettings agents offering attractive rates to landlords in return for placement of their properties in the social sector.
  5. All landlords should be licensed although fees and red-tape to obtain the licence should be kept to a minimum.  Where a landlord proves unwilling to aknowledge his responsibilities he should be excluded from the sector by withdrawal of the licence.  Licence fee income could be used to help fund a new tribunal service for resolution of landlord and tenant disputes without recourse to the Courts.
  6. There seems to be no immediate need to reform the actual legal framework of letting by reforming or amending the Assured Shorthold Tenancy system although landlords should be encouraged to offer longer-term lets.  All parties should be encouraged to view letting as a lower risk activity to reflect the large percentage of tenancies that occur without any problems.

On the whole the review is a balanced and sensible document.  It does a good job of taking the best parts of prevcious considerations of the sector and promoting them while leaving behind the more complex and unworkable ideas.  It does much to imporve understanding of the sector by providing sober review of the issues and should be applauded for this.  In general, while some tenant organisations have been unhappy that the review does not go far enough it has received a warm welcome from landlords and agents.  Whether government takes up the recommendations remains to be seen.

Filed under: Uncategorized,

Costs and the Disrepair Pre-Action Protocol

In a recent case the Court of Appeal considered the issue of legal costs on a claim using the Disrepair Pre-Action Protocol.
In Birmingham City Council v Lee the Council was initially given notice of disrepair in Mrs Lee’s property by solicitors in a letter which made mention of the protocol. The Council repaired the property during the course of the following month and negotiations then took place with regard to payment for damages and Mrs Lee’s legal costs.  These apparently broke down and a claim was issued in the for damages of between £1000-5000.  As the repairs were complete there was no claim for specific performance and as the amount claimed fell below £5000 the matter was properly allocated to the small claims track.  However, Mrs Lee sought damages on the fast track scale for, at the minimum, the time between notification and completion of the repairs.  It seems fairly likely from thr papers that the action was largely begun in an effort to obtain legal costs.

At first instance the Deputy District Judge refused costs.  On the tenant’s appeal the Circuit Judge made a costs order allowing costs prior to allocation to be reserved for consideration by the trial judge at the conclusion of the matter.  The Council appealed this decision to the Court of Appeal.

In a unanimous verdict the Court (led by Hughes LJ) declined the appeal in its main points, largely because it left too much to be decided later.  They substituted an order awarding Mrs Lee costs up until completion of the repairs.

While both sides made much in argument about the nature of litigation funding the Court set this aside and took the view that it should decide whether an award of pre-allocation costs was necessary in order to make the protocol operate as intended.

Ultimately the Court decided that this was necessary otherwise landlords would have the option of refusing to repair until a pre-action letter was issued then completing all repairs pre-allocation, having the matter allocated to the small claims track, and thereby having no liability for the tenant’s reasonably incurred legal costs in forcing the landlord to carry out works in the first place.

This decision will prove a boon to a number of public assistance firms as it will increase their ability to recover legal costs where they have assisted tenants under the protocol, even where the landlord immediatley does the works required.  From a landlord’s point of view it reinforces the need to get works done early as once a pre-action protocol letter arrives the legal costs meter will start ticking.

Filed under: Uncategorized, , ,

New Tenancies Under Section 34

InTruro Diocesan Board of Finance Ltd v Foley [2008] EWCA Civ 1162 the Court of Appeal considered the effect of section 34(1)(b) of the Housing Act 1988.

In this case Mr Foley had compromised a prior dispute with the Diocesan Board by a consent order under which he surrendered his tenancy under the Rent Act 1977 and gave up possession for approximately 24 hours before being granted a new assured shorthold tenancy for 5 years under the Housing Act 1988.  In due course he was served with a section 21 notice and contested this on the basis that he could not have the protection of the Rent Act removed in the manner in which the consent order sought to do.

Section 34 sought to prevent the granting of any further protected tenancies under the Rent Act 1977 but intentionally kept open the possibility that certain tenants would be able to gain such tenancies primarily in order to prevent unscrupulous landlords inducing protected tenants to sign new assured shorthold tenancies thereby losing their protection.  Section 34(1)(b) requires that a tenancy “granted to a person … who … was a prtoected or statutory tenant and is so granted by the person who at that time was the landlord” will remain a protected tenancy.  In section 45(1) it is stated that  “except where the context otherwise requires [a] tenancy includes … an agreement for a tenancy”.

Mr Foley’s argument was simple.  The consent order was an agreement for a tenancy between a landlord and tenant who had previously been related by a protected tenancy.  Therefore any tenancy flowing from the agreement should also be a protected tenancy.

The Diocesan Board’s argument was equally simple.  They suggested that section 34(1)(b) was clearly one of those areas where “the context otherwise requires”.

Perhaps unsurprisingly, the Court of Appeal was not entirely keen to allow an agreed consent order to be set aside in this manner and unanimously followed the argument advanced by the Diocesan Board.

However, that was not quite the end of the matter as Mr Foley advanced a second argument.  This was the, rather clever, postion that the consent order was a signed agreement which set out all the termns of a tenancy and should therefore take effect as the grant of a tenancy under the principle established in Walsh v Lonsdale.  This would have the effect of making s45(1) irrelevant and allow s34(1)(b) to be engaged directly.  This argument was leant weight by the fact that the consent order was executed as a deed in order to comply with the provisions of s52(1) of the Law of Property Act 1925 and that no further tenancy agreement between the parties was in fact ever entered into.

Perhaps surprisingly, the Court of Appeal divided itself over this issue.  The majority (Sir John Chadwick dissenting) distinguished Walsh on the basis that the intention of the parties in that case was clearly different from the intention here.

TYhe upshot of this decision is that practitioners can feel confident when drawing up consent orders, and potentially any agrement, by which a prtoected tenant surrenders their tenancy for the grant of a new Housing Act 1988 tenancy.

Filed under: Uncategorized, , ,

New Fire Safety Guidance

LACORS has created new guidance on appropriate standards of fire safety in residential rented accommodation.

Previously there was a requirement for properties to be fire safe under the HHSRS or when applying for an HMO licence but there was little information on what fire safe meant which led to a wide disparity of standards between different local authorities.  LACORS has taken best practice and ideas from around the country and combined it into one document.

The standard required depends on the size of the property and its anticipated occupancy. HMOs and larger properties will need to meet a higher standard. For most landlords the main issue that will cause concern is the requirement that all properties should have a mains-powered, battery-backed, smoke detection system.

It should be remembered that the guidance is just that, guidance. Therefore there is no legal requirement for a property to fulfil the standard before it is rented. However, if the property is inspected by the local authority for the purposes of the HHSRS or HMO licensing these are the type of standards they will expect.

More information on the guidance can be found here.

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