Cold Weather and Tenant’s Obligations

Given the current weather conditions it seemed appropriate to do a post on what happens if a property is left by the tenant and the pipes freeze and burst.

The short answer to the question is to consider how unreasonable the tenant’s conduct has been. If the tenant has only been away for a short period and during that time there has been an unexpected cold snap then the tenant will not be liable for burst pipes (Wycombe Health Authority v Barnett). If however, the weather is well-forecast or the tenant goes away fro an excessive period with no reasonable precautions taken then the Scottish case of Mickel v McCoard would be relevant. In this case it was held that the tenant was liable for burst pipes.

So, in each case, the tenants behaviour and its reasonableness in relation to the foreseeable danger is the key factor. Given that the current spell of cold weather has been well advertised any tenant who fails to take proper precautions is likely to be liable for any damage caused.

It should be noted that, separately to this, there is a responsibility for landlords under the HHSRS to make sure that homes do not suffer from excess cold. Local authorities will be keen to ensure that properties are properly insulated, have sufficient heating, and do not suffer form drafts and have the right to serve enforcement notices to ensure that this is the case.

Filed under: England & Wales, FLW Article, Scotland, disrepair

Consultation on Planning Application Fees

A consultation on changing the fees for planning applications has been published by the DCLG. This consultation only applies to planning application fees in England.

The proposal is to decentralise the fee structure for planning applications and allow local authorities to set their own fees. There will also be the option for local authorities to charge for items which are currently free. The objective is that the planning system is more directly funded by application fees and less by taxation which, in the current environment, is not surprising.

This consultation is potentially very important to landlord’s of HMOs. As we have previously reported, a number of local authorities have made, or suggested that they will make, article 4 directions to opt-out of the general permitted development rights for a change in use from a private dwelling to an HMO (ie from the C3 to the C4 use class). The changes fee structure is intended to come into force in October 2011, at exactly the same time as the article 4 directions made by Manchester and Portsmouth Councils will also come into force.

Obviously there remains an argument as to whether planning consent is needed for a change to use as an HMO at all, as we have discussed here. However, for those who seek to apply for that permission the costs of doing so are likely to increase.

The consultation is open for responses until 7 January 2011.

Filed under: England only, FLW Article

HHSRS Before the Land Tribunal

Hanley v Tameside Metropolitan Borough Council concerned an appeal from the Residential Property Tribunal (RPT) against the service of a Prohibition Order. Bolton Metropolitan Borough Council v Patel concerned an appeal from the RPT on Emergency Remedial Action.

The Housing Health and Safety Rating System (HHSRS) was introduced by the Housing Act 2004 and represents one of the more far reaching and significant parts of the act. Under its provisions Environmental Health Officers (EHOs) have powers to inspect properties, identify hazards and after scoring the hazards placing them in either one of two categories, category 1 hazards being the most serious hazards and usually attracting more severe enforcement methods. The EHO can then issue the landlord with orders for remedial action. Enforcement actions range from Hazard Awareness Notices which are not enforced to Prohibition Orders, ordering the Premises to be vacated until the identified hazards have been rectified.

The Prohibition Order in Hanley was made by the council as a result of a water ingress into the house he was letting to four people. An appeal to the RPT was refused but it allowed a further appeal to the Lands Tribunal on the basis that there was an arguable point of law. The landlord argued that as the building conformed to the Building Regulations or could be easily made to comply they could not be hazards for the purposes of the HHSRS.

There were two issues the Lands Tribunal had to deal with. Firstly whether the HHSRS would take precedence over the Building Regulations. The RPT held that if the hazard was identified under the provisions of the Housing Act, compliance with the building regulations was not a material consideration.

The Lands Tribunal found that this interpretation was an error of law. It must be a material consideration if an alleged hazard conforms with the building regulations. Furthermore the tribunal found that there was no conflict between the two legislative provisions.

However the Prohibition Order was not set aside as the erroneous reasoning did not form part of the reasoning of the RPT.

Bolton considered Emergency Remedial action, another of the enforcement actions available to EHO’s. The hazards identified were failure of the boiler and consequential lack of heating, hot water and exposed electrical wiring. The RPT found that it was correct that emergency remedial action was ordered on the basis of the exposed electrical wiring but not for the repair of the boiler. The argument raised before the LT was whether the RPT had properly concluded there was not a ‘serious risk’ of ‘imminent harm’ as required by the Act. The landlord argued that the interpretation of ‘imminent’ should be that of 28 days as opposed to 5 days which the RPT had interpreted after which the next possible action could be taken, namely an improvement notice. The LT did not accept this as an improvement notice has an additional period in which an appeal could be lodged and furthermore the act was not drafted to link emergency remedial action with improvement notices. The appeal was therefore dismissed by the LT.

The LT however made an important observation about the HHSRS system stating, in relation to the method of hazard assessment

The great danger of a numerical score produced in this way is that it creates the impression of methodological accuracy, whereas the truth may be that it is the product of no more than a series of value judgements based on little understood statistics of questionable validity

The statistics that the hazard calculation tables are based on have also been criticised. The statistics embody a ‘notional occupier’ test, as opposed to testing the hazard against the actual occupants. The test for Excess Cold is based on a ‘bare statistic’ of total winter deaths for over 65s.

A further concern lies in the ability of EHO’s to decide whether the likelihood of a hazard occurring should be increased. It is this subjective element that can result in extra-ordinary results as the EHO’s decision acts as a multiplier. For example in the present case the the EHO had radically increased the risk of harm by excess cold assessing that there was a “1 in 31.6 that an occupier of the house would within the next 12 months die or suffer some other form of extreme harm…” The court noted that this was a surprising conclusion.

From these decisions Landlords and their agents should be mindful that although properties may be compliant with the Building Regulations, and compliance may be a positive sign that they are HHSRS compliant, there may be divergence. Furthermore as the HHSRS system currently stands EHO’s have a wider discretion than may initially be thought. Therefore to ensure compliance hazards should be interpreted conservatively.

Filed under: England & Wales, FLW Article, HHSRS, Housing Act 2004, Lands Tribunal

Private Landlords Attitudes to Housing Benefits

The DWP has recently published a research report titled RR 689 Private landlords and the Local Housing Allowance system of Housing Benefit.

The study is based on interviews with 60 private landlords and letting agents and is not intended to have statistical signifance. The interviews were based in six different locations (Bradford, Cornwall, Coventry, Edinburgh, Newham, Sunderland) and interviewed parties who had experience in letting to Housing Benefit claimants under the LHA rules

The interviewees were asked about their letting preferences, their experience with housing benefit claimants, how they dealt with rent collection and rent arrears, the safeguards built into the LHA provisions, and their plans for the future.

Some answers come as no surprise: e.g. why do most landlords prefer tenants who work? Because they can pay the rent. Why do some landlords target the Housing benefit market? Because of good rental returns, healthy rental rates, and the general idea that housing benefit tenants stay longer in properties.

But some answers make interesting reading, especially in the light of recent media coverage. For example in the areas subject to the LHA, most agents still set rent by finding out the market rent and then undercutting by a small amount, the reason being that this will allow the agent to widen the pool of applicants. Such a process flies in the face of accusations that landlords inflate rents for Housing Benefit because they know that the Local Authority will pay, and that the proposed cap will lower rents throughout the private rental sector.

If a significant number of landlords are already renting to Housing Benefit claimants at below the market rent (albeit by only a small bit), the proposed cap on housing benefit will not lower market rents in the manner suggested by the Government.

The interviewees’ main complaint about the LHA process was that rent had to go to the claimants, and that the claimants had to be eight weeks in arrears before the Landlord can apply to have the rent paid directly. Serial non payers were cited (mainly young single people who could “hop” from tenancy to tenancy every eight weeks and never pay anything). Once the Local Authority has arranged to pay the landlords directly, often the landlords have gone without three months’ rent, and the general feeling was that this was never going to be recovered fully.

There are safety nets in the LHA provisions. Landlords taking on a tenant whom they believe will have difficulty paying their rent or be unlikely to pay their rent can apply for rent to be paid directly. However the report noted that many landlords were not aware of these safeguards.

Most respondents said that they planned to maintain their property portfolio for the future. Since the LHA has been introduced there has actually been a drop in the preference for non housing benefit tenants. The overall impression was that landlords in the private rental sector have good economic reasons to let to housing benefit claimants.

Finally we note that the housing benefit reforms will see more people taking HMO accommodation : there are plans to extend the single room rate to individual renters under the age of 35 ( from the current age limit of 25). This could leave landlords in the paradoxical situation of having to cut down housing benefit portfolios on the one hand, while jumping through local authority hoops to get an HMO licence.

So at a moment when the recession is causing more people to enter the rental sector and claim housing benefit, landlords are being squeezed between increased regulation in the shape of HMO licensing, and decreased assistance in the shape of a sudden cap ( and ensuing fall in revenue) on Housing Benefit claims.

Filed under: England & Wales, FLW Article, Benefits

Damp- The Legal Position

At this time of year we are often asked about damp and mould growth in properties and who is liable for it. This can be a difficult question to answer and it often depends on precisely what is causing the damp.

Under Section 11(1)(a) Landlord and Tenant Act 1985 (LTA), Landlords have an obligation to “keep in repair the structure and exterior of the dwelling-house”. Due to the duty they owe to Tenants, they must repair the defect to the structure/exterior of the property which is resulting in damp. “To keep” means that there must have been some form of deterioration before the Landlord is liable to repair, therefore the mere existence of damp does not automatically mean that disrepair has occurred. Section 11 is a legally enforceable obligation under which Tenants are entitled to compensation.
The courts have ruled that the Landlord’s obligation is to repair only the structure and exterior of the “dwelling-house”. This means that if the property is part of a larger building, the obligation is only in respect of the dwelling in question and not that of whole building (Campden Hill Towers Ltd v Gardner). However, anything reasonably considered to form part of that dwelling will fall within the obligation e.g. the roof of an entire block where the dwelling is the top floor flat (Douglas-Scott v Scorgie).
The issue of whether the Landlord owes a duty becomes complex when the question of “what is structure and exterior” is raised. In Quick v Taff Ely BC severe damp was caused by large metal framed windows and some rooms in the property were rendered uninhabitable due to the damage caused to furniture, clothing, decorations and bedding; the courts described the living conditions as “appalling”. Nevertheless the Landlord was under no obligation to remedy the damp because his duty was to repair only the structure and exterior (which includes the walls and windows to the property), neither of which was damaged. Likewise, in Post Office v Aquarius Properties Ltd where the water table in the area had risen. Due to a defective joint between the walls and the floor the basement became ankle deep in water, however because the joint was still in the same condition as when the property was constructed there was no evidence of that the water had caused damage to the structure or exterior.

The position was clarified in Southwark LBC v McIntosh where it was stated:

the tenant must establish either that the damp arises from a breach of the covenant [i.e. that the structure or exterior has deteriorated and the Landlord has not provided a remedy] OR that the damp has itself caused damage to the structure or exterior and that this damage, in turn, has caused the damp of which complaint is made.

In Staves v Leeds City Council, damp had caused damage to parts of the plaster on the walls. Therefore, the Landlord was under an obligation to repair. However, this judgment has been subject to some discussion and there are judgments which rule to the contrary i.e. that plaster is decoration and not part of the wall, so the matter is not clear cut. It depends upon whether the plaster is considered to constitute part of the structure or exterior.

Finally, it should be noted that even if the Tenancy Agreement does not expressly burden the Landlord with the obligation to repair, it is an implied term of any agreement under seven years in duration due to Section 11 LTA.

Alternatively, the dampness may be due to the Tenant(s)’ actions e.g. incorrect use or the heating system of drying clothes indoors. This is known as condensation damp which is caused by water vapour in the air condensing when it contacts a cold surface. The Landlord does not have an obligation to remedy this type of damp. This obligation falls upon the Tenant due to their duty to act in a “tenant like manner”.

It should be remembered that under the HHSRS, a part of the Housing Act 2004 a higher burden can be placed upon Landlords to rectify dampness and mould in properties; they can be made to do more than put a house in repair as would be required under Section 11 (LTA). Under HHSRS ratings many properties have been found to score highly in this category of environmental hazards due to issues such as lack of damp proofing or poor ventilation. As a result of such defects, local authority EHOs can serve an improvement notice on Landlords to remedy the problem. Therefore, if a similar scenario arose today as in the case of Quick, the tenant could approach the Council and the landlord would then probably be served notice to remedy the problem. However, this is not disrepair in the strict sense and Tenants are not able to recover compensation from Landlords if such a notice is served. Additionally, Tenants can only seek a remedy under HHSRS by reporting the damp to their local authority.

In general terms, most damp issues are a result of:

1. penetrating damp,
2. rising damp, or
3. condensation damp.

It is necessary to assess the source of damp or mould before any further advice can be given as to who the burden falls upon to correct the defect. If the damp or mould is as a result of something that has been broken or is no longer functioning as it should then it will probably be the landlord’s responsibility. If it is simply as a result of the property being old or not constructed to modern standards then the landlord is probably not liable but the local authority could force him to do the work under the HHSRS.

Filed under: England & Wales, FLW Article, disrepair

Manchester Makes Article 4 Direction

We have been informed that Manchester City Council has made an Article 4 direction in relation to HMO properties. This direction will come into force on 8 October 2011. More details can be found here.

This means that from the date the direction comes into force (8 October 2011) the amendments introduced in October (which we wrote about here) will no longer apply and landlords may need to seek planning permission to let their properties as an HMO.

Full details of the new planning categories and their effects can be found in this post.

However, there is some doubt as to whether the making of the direction actually matters. Even if an article 4 direction is made that does not mean that use as an HMO requires planning permission. This is because, contrary to popular belief, movement between planning classes does not require planning permission. What does require planing permission is a material change in use and it is by no means clear that a change of use to an HMO represents such a change. We have written more about this issue in this post.

At this stage any Manchester landlord who either is now or is considering renting a property in such a way that it will fall into the C4 planning category should consider applying for a certificate of lawful use as it will be hard for the Council to refuse it.

After October next year any Manchester landlord who is starting to use a property as an HMO or who proposes to do so will need to consider whether they should seek planning consent. If consent is sought and refused for the three months after the making of the direction (ie before 8 January 2012) the landlord may be able to seek compensation from the Council.

Naturally, if such consent is refused the landlord may also wish to appeal the decision of the Council.

Filed under: England & Wales, England only, FLW Article, HMOs, planning

Court of Appeal Rules on Tenancy Deposit Protection

At 0945 this morning, 11 November 2010, the Court of Appeal handed down its judgement in the two conjoined cases of Universal Estates v Tiensia and Honeysuckle Properties v Fletcher. The decision was a majority decision of Lord Justices Rimer and Thorpe, with Lord Justice Sedley dissenting.

Facts
The facts in the two cases were as follows. In Universal Estates the tenant was taken to Court for possession for arrears of rent. The possession claim was adjourned after she indicated her intention to counterclaim, although that counterclaim was not for an unprotected deposit. The deposit was then registered with MyDeposits but it was, of course, late, more than 14 days from the date of receipt. The High Court has held, in the case of Draycott v Hannells Lettings, that registration more than 14 days after receipt of the deposit cannot be penalised. However a breach of the initial requirements of the relevant deposit scheme can incur the penalties and it was argued in Universal Estates that the MyDeposits scheme had such an initial requirement. In Honeysuckle a claim for possession for rent arrears was also commenced. The tenant’s counterclaimed on the basis that the deposit was not registered. The deposit was protected before the hearing of the matter by the Court, again with MyDeposits.

Therefore the issues before the Court of Appeal were whether it was permissible to protect the deposit more than 14 days after its receipt and at what date there should be a consideration of the protection status of the deposit, at the date of issue of proceedings or at the date of the Court considering the situation at a hearing.

Decision
In short, the Court considered that the High Court had decided correctly in Draycott v Hannells and that late protection is acceptable. Where the Court of Appeal has gone further is that it has ruled that provided protection has been done, and the correct information provided, before the Court comes to consider the matter at a hearing then that is acceptable, even after proceedings have been issued for non-protection. Therefore the landlord’s deadline for compliance is the Court hearing itself and not the date by which proceedings have been issued. The Court did hold that if a tenant is compelled to issue proceedings to force the protection of a deposit then they are probably entitled to their legal costs in so doing. It should be noted here that the Court emphasised the importance of pre-action conduct and discouraged any attempt to ‘ambush’ landlords by issuing proceedings for an unprotected deposit without writing to them first.

The Court further held that no scheme can impose an initial requirement that a deposit must be protected within 14 days, a failure to adhere to which will allow a tenant to claim against the landlord. Therefore the current imposition by The Dispute Service scheme of a requirement to register within 14 days is no more than an administrative requirement for that scheme and registrations with that scheme made after 14 days are not invalid for the purposes of tenancy deposit protection legislation although the scheme may consider them violations of its rules and may therefore adjudicate on the deposit in a manner that is against the landlord’s interests.

The Court made no comment on what the correct position should be if the deposit is not protected until after the tenancy has ended. This remains a live issue and one which must be considered.

All three judges commented that the interpretation which they have been forced into is totally unsatisfactory and they found it hard to believe that this is what Parliament intended when it made the legislation. The consensus certainly appeared to be that the legislation is now toothless and largely without value. The onus now seems to be on Parliament to consider reform of the legislation as a matter of urgency to restore a proper balance.

Full text of decision.

Filed under: England & Wales, FLW Article, deposits, Housing Act 2004

New Report on the PRS as Affordable Accomodation

The Joseph Rowntree Foundation has recently published a report on the role of the Private Rented Sector in the provision of affordable accommodation.

The report does not seem very optimistic. It does not believe that the PRS will grow further as a percentage of the housing market although it may grow as a consequence of the growth of the market as a whole. It also takes the view that renting in the PRS is a lifestyle choice for a period of time and does not provide lifetime homes.

From an economic point of view the report concludes that institutional investment in the sector is and is likely to remain low. This is concerning given the slowdown in the ‘buy to let’ market and the reluctance of new investors to enter it.

The report also concludes that there is little value in legislative change to increase security of tenure or to introduce rent control as the effects of this will simply be to reduce supply for another part of the PRS. Equally, subsidising one type of tenure will crowd out those who do not fall into that category. This point seems to ignore the fact that the state has, in effect, been subsidising a large part of the PRS for many years by the provision of Housing Benefit and is actually the biggest buyer in the market as a result.

However, the report will be pleasing to some landlords who oppose further regulation of the sector and will certainly bolster the determination of the Coalition not to get involved in the PRS. For those who feel that the sector badly needs an increased level of regulation the report will be less welcome. It also holds out little hope for those (which certainly includes the government) who had intended that the PRS would be a key part in resolving the current and projected housing shortages.

Filed under: England & Wales, FLW Article, report

Universal Estates v Tiensia- The Wait is Over

The judgement in the two conjoined Court of Appeal cases of Universal Estates v Tiensia and Honeysuckle Properties v Fletcher will be handed down on Thursday 11 November 2010 at 0945.

As regular readers of this blog will know these cases deal with tenancy deposit protection matters and relate to late protection in the MyDeposits scheme and protection after Court proceedings for non-protection have already begun.

There is a rumour that the landlords in both cases have won but we do not know this for certain. The precise position is likely to be much more complex than this.

We intend to be at Court for the decision and will be posting the results as soon as possible on the 11th.

Filed under: England & Wales, FLW Article, deposits, Housing Act 2004

Oxford Landlord Jailed

The Oxford City Council website has a news story stating that an Oxford landlord has been jailed for three months for unlawful eviction. We have very limited details as the story is sketchy (comments with more information welcome) but it seems that his case was not assisted by being arrested at an airport while on bail.

This is a little surprising as penalties for unlawful eviction have historically been almost laughable in their lack of severity. The average fine is normally in the order of £1000-2000 and custodial sentences are almost unheard of. Therefore this sentence either represents a case which is truly appalling, and this does not seem to be the case from the report on Oxford’s website, or courts are getting far tougher in their sentencing.

Filed under: England & Wales, FLW Article

Possession Proceedings and Human Rights

The Supreme Court has recently handed down its decision in Manchester City Council v Pinnock.

This case concerns whether it is appropriate for a Court to consider Article 8 of the European Convention on Human Rights when making a possession order.

Article 8 guarantees respect for private and family life (including respect for the home) and prevents interference with this by the state except in accordance with the law and only as “necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.”

While Article 8 cannot apply to private landlords as they are not organs of the state the Courts most certainly are and they are therefore bound by it. Accordingly the decision in Pinnock may be relevant to the private sector even though the Supreme Court took care to state that nothing in their decision “is intended to bear on cases where the person seeking the order for possession is a private landowner”.

So the decision of the Supreme Court is that Article 8 should be taken into account by Courts when dealing with possession actions by local authorities although they stress that it is only in the most exceptional cases where Article 8 would actually have the effect of preventing possession where the domestic law allowed for it. They have not ruled in relation to private landlords and are conscious of the impact of Article 1 of the First Protocol (which prevents deprivation of a person’s possessions except in accordance with law designed to protect the general interest) but this does not mean that they would not rule that Article 8 applied to private landlords if the matter came before them.

This is a worrying development for private landlords. It is undoubtedly the case that consideration will be given by some tenants to advancing an article 8 defence. More particularly it opens up questions about the use of the Accelerated Possession process for section 21 notices and their equivalents in Scotland and Northern Ireland and particularly about the use of section 21 notices in a ‘retaliatory’ manner where the tenant has complained about disrepair etc.

The battleground for 2011 may just have been set out.

Filed under: England & Wales, FLW Article, Northern Ireland, Scotland, human rights, possession