Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

Equality Act: what does this mean for Agents and Landlords?

2010 saw the enactment of the Equality Act which provided that Landlords must consider making reasonable adjustments for people with a disability looking to rent their property.

The purpose of the duty included within the Act was to ensure that disabled people do not face barriers to occupation and enjoyment of rental property. The duty applies to the tenant but also to others entitled to occupy such as spouses and children. In so far as this article we are referring to the actual premises themselves and to private rented accommodation. A failure to comply with this duty will of itself amount to a form of discrimination and it is believed that the duty will apply also to agents acting on behalf of landlords. Currently as a new Act there is little case law and no specific code of practice and consideration needs therefore to be given to previous codes, cases and provisions under the Disability Discrimination Act 1995.

Generally in respect of premises the duty only applies if there has been a specific request by a person. It is a question of looking at the circumstances and seeing if it is reasonable to assume that a request has been made. This could be as simple as a prospective tenant indicating to an agent that they find it difficult to read the print on a tenancy agreement. This is likely to be sufficient to trigger the duty to look at how you can make the tenancy more accessible to that person and the agent would then be required to take reasonable steps. What is reasonable is objective and will depend on the specific circumstances.

The duty to make adjustments has 2 requirements which apply currently. There will in due course be a third requirement in respect of physical features to common parts when further parts of the Act are brought into force.

Firstly where something puts a disabled person at a disadvantage compared with a non-disabled person reasonable steps must be taken to avoid this. Secondly to provide an auxiliary aid if this prevents the disabled person being at a substantial disadvantage. It is believed in considering this you must have regard to all policies, procedures, rules and requirements and it includes any terms of the letting. The threshold is lower than previously being “substantial disadvantage” and this is defined as being “more than minor or trivial”.

What this means in practice is a landlord must consider any request made. This is at any stage of the process and therefore may apply in the pre tenancy stage and also during the continuance of the tenancy. An example is given of a disabled tenant with mobility problems who asks the landlord to install a walk in shower and grab rail. If the landlord refused they must be able to give clear reasons as to why and to show this would not be unreasonable. The landlord may be able to impose conditions such as the color should match the existing suite or that the tenant must ensure removal at the end of the tenancy. Ultimately it is for the landlord to show the conditions are reasonable and interestingly there does not seem to be a requirement necessarily for the landlord to pay the cost although if an improvement is being made to the property in some way it may be reasonable for the landlord to contribute to the cost. Again it is a question of reviewing all the circumstances to determine what is reasonable.

Currently there is little case law to rely upon even under the 1995 Act. It is hoped that a code of practice will be issued to clarify what parliament contends but for the time being landlords and agents must take care. Generally if in doubt it is probably best to consider any request as potentially triggering these provisions and if any consent is not granted to have noted the reasons why. Both agents and landlords need to be able to step back from the decision they have made and look at the reasons and be satisfied that any reasonable person would support that decision. Currently the bulk of decisions under the 1995 Act have tended to refer to secure tenancies from social housing providers but it is believed that this Act could result in more claims being made. You are warned.

With regard to common parts the Act does provide that reasonable adjustments should be made to physical features. Currently the Home Office has said they are considering when to bring these provisions into force. It is likely that if and when brought into force these will make some fairly significant changes which are believed will offer disabled occupiers greater flexibility and independence. A case of watch this space!”

Filed under: England & Wales, FLW Article, ,

Mitigation

We have heard that agents have been advised recently that a landlord is required to mitigate his losses when seeking to recover rent arrears, where a tenant abandons the demised premises. This is not correct, the landlord is in fact under no such obligation.

In Reichman v Beveridge the Court of Appeal dismissed the appeal of two tenants who had abandoned the office premises. The landlord took no steps to terminate the lease and sued for the rent arrears for the period that the premises were abandoned. The tenants argued that the landlord should have mitigated its loss by marketing the property or accepting the offer of a prospective tenant.

However the court held that the tenant’s argument should fail because the landlord had not acted wholly unreasonably in refusing to take steps to find a new tenant. The court also held that damages would not be an adequate remedy for the landlord as, if current market rent had been lower than that reserved by the lease, terminating the lease and re-letting the premises would leave the landlord with a shortfall in rent which it would be unable to recover. If, however, market rent was the same or higher, then it would have been possible for the tenant to take steps itself to find an assignee.

The rationale behind the decision is that landlord will be prevented from enforcing his contractual rights to maintain the contract and sue for the contract price only where an election to keep a contract open is wholly unreasonable, or where damages would be an adequate remedy.

Therefore whilst there is no requirement in most cases of L&T to mitigate, the advice is that you consider it. If for example your tenant is from abroad and for whatever reason abandons the premises is makes no sense to sue for the rent if there is no possibility of recovering it. What should be considered is for the tenant to be put on notice that whilst the landlord is not required to mitigate he will do so by replacing the tenant at the tenant’s expense and confirming that the tenant is responsible for the rent until a new tenant has been secured.

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

Collective enfranchisement: what is it?

Collective enfranchisement is the term given to Leaseholders acquiring the Freehold of the property they live in. For the purposes of this article we will be referring to the Leasehold Reform Housing and Urban Development Act 1993 (“the Act”) as amended and the collective enfranchisement of flats. There is other legislation such as the Leasehold Reform Act 1967 which mainly relates to houses.

For many people owning a share of the freehold of the block of flats they occupy is seen as being vital as people often do not like the idea of simply being a tenant. In practice there are many different considerations which need to be weighed up before any application is made.

Firstly the Leaseholders need to act together (at least in part) since in simple terms 50% of the long leaseholders have to all come together to be able to purchase the freehold and if the building has any commercial parts these must not exceed 25% of the building. Assuming that these basic conditions are met the Leaseholders can then at least in principle consider whether they wish to pursue this route. Often there will be a vocal group who wish to “get on ” with the application. At this stage it is usual that people will then look to appoint a surveyor experienced in these matters to provide some guidance on the price payable. The methodology is set out in the Act and has been subject to numerous decisions of which the most famous is probably the decision in the case known simply as Sportelli. It is vital that a proper valuation is undertaken at an early stage to give all of the potential participants some idea as to what price may be paid.

Assuming that the numbers then match the Leaseholders pockets a detailed consideration should be given as to the right to qualify. Often a valuer experienced in this field will already have flagged if he foresees any particular issues. At this point it would always be advisable to instruct someone experienced in this field as the law, despite various amendments being made under the Commonhold and Leasehold Reform Act 2002, remains hugely technical with various pitfalls for the unwary. The adviser can then draw up the appropriate documentation and advise whether the Leaseholders will hold the freehold subject to any trust or company structure. It is worth pausing at this point to highlight that it is always open to Leaseholders to enter into informal negotiations with the Freeholder.

A Notice will then be served upon the Freeholder specifying a date by which they must reply. If there is no response then an application can be made to the County Court but usually (assuming a valid Notice has been served) the Freeholder will respond agreeing the right but disputing the price. There can however still be many technical reasons why a Notice may not be accepted by a Landlord and the Court of Appeal and the Supreme Court continue to hear a large number of appeals on very technical aspects although the bulk of these do relate to high value properties in what is known as Prime Central London however the outcomes tend to be binding on all.

The Act then allows for a period of negotiation after which if no agreement is reached an application can be made to the Leasehold Valuation Tribunal for a determination of the terms of the purchase. After this determination or agreement there will then be a transfer of the freehold and the Leaseholders will have acquired the freehold.

It is at this point that the hard work starts. Often Leaseholders will be advised to grant to themselves extended leases (typically 999 year terms) and possibly review any other perceived or actual failings in the lease. Certainly this should be looked at at this stage as there can be various issues if the Leaseholders only look to do this some way down the line, not least certain tax consequences which can arise.

It is important that all parties to the Collective Enfranchisement understand that there will still be a Leaseholder and Freeholder and whilst not impossible to own a freehold flat this is highly undesirable for reasons outside the scope of this article. The previous leasehold structure will then remain. For this reason before going down the route the Leaseholders must consider what Collective Enfranchisement will mean in practice.

The Freeholder will still be required to comply with both the terms of any leases (whether participants in the acquisition or not) and also the various statutory rules particularly governing recovery of service charges. The LVT in various recent decisions has made clear it has no jurisdiction to deal more leniently with Resident Owned freeholds than those owned by commercial investors. Given how complicated some of these rules are Leaseholders will always be well advised to consider appointing external managing agents to make sure these obligations are complied with. Owning the freehold brings both rights and obligations and this should not be forgotten. In particular awkward situations can arise where you have non paying tenants as the Freeholder and the Leaseholders who comprise the same will need to pursue action against these people.

As a result careful consideration needs to be given not just as to the acquisition but what this means for the future. It is also worth noting that simply because a building has undergone Collective Enfranchisement on one occasion does not mean this will not happen again and the writer has seen instances where one group have enfranchised but there has been a parting of the ways with some members of the freehold and so a second collective enfranchisement has taken place!

For some Leaseholders the costs of Collectively Enfranchisement mean that this is more economic than bulk lease extension applications but Leaseholders should proceed with their eyes fully open as to what is involved once you have been successful. Advice at an early stage of the process is vital so all are aware of the full implications of going down the route but if you decide this is the route for you it really can be a satisfying journey to have greater control of your destiny for what for many is their largest single asset

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

Change in Tenants

Sam asked “change of occupancies can be a legal minefield so some clarification on the best procedure would be helpful.”

The document you need is the Deed of Assignment.

The 3 main points to note:

Deposit
We do not know how many of you have been affected by this but DPS in their rules (16c) state that they will only allow registrations to be changed where you have the written consent of the outgoing tenant. So the Deed should include a clause which states that the outgoing tenant permits the landlord to change the registration of the deposit into the name of the new tenant and that the new tenant and outgoing tenant agree to settle the issue of any deposit monies to be passed between them themselves.

Inventory
The Deed also needs to include clauses relating to the inventory. When a tenancy is being assigned the new tenant must be given a copy of the inventory and given the opportunity to go through it before the Deed is signed. This may mean an additional visit to the property. However when the inventory is agreed this should be noted in the Deed and the inventory should be attached to the Deed. If the new tenant takes issue with the condition of the property then have the outgoing tenant and the new tenant deal with that between themselves even if that means the outgoing tenant compensates the new tenant and then have them contact you to finalise the Deed. The new tenant must agree that the condition of the property when they move in is as per the inventory compiled at the beginning of the tenancy. Agents and landlords should not finalise the Deed until the inventory is agreed to as this will affect the landlord’s ability to make any claim on the deposit at the end of the tenancy if the need arises.

It is recommended that you consider both the issues above no matter what scheme the deposit is registered with.

Signature
As you are no doubt aware when tenants enter into a tenancy they do so on a joint and several basis. This means that when one gives notice you can accept it on behalf of all of them and when one defaults in his rent payment you can seek the default amount from those that have already paid. It is due to this joint and several principle that many argue that when there is going to be a change in tenants that the remaining tenants consent should be sought and they should also sign the Deed.

It is therefore advisable that all the tenants that remain also sign the Deed along with the outgoing and new tenant and of course the landlord. However obtaining everyone’s signature is sometimes easier said than done. Whilst you can choose not to release the outgoing tenant unless they obtain the consent of the others, if for example, they are leaving the country they are unlikely to be too concerned about the procedure that they need to follow. Therefore if you obtain the signature of only the outgoing and new tenant along with the landlord the new tenant has at best an equitable right to remain in the property where rent is paid and accepted. This means that possession proceedings can be pursued against all those in the property following the assignment but the assignment needs to be fully explained in the court papers.

The problem with this issue is that there is no legislation or case law that supports the view that everyone should sign or not as the case may be. There is also the concern that in the case of an assured shorthold tenancy the new tenant could argue that he has 6 months security of tenure because he has a new tenancy. At PainSmith, 2 solicitors a barrister and 2 paralegals argued over this issue for some time and still there is no consensus. Therefore whilst the easy option is to sign a whole new tenancy this may not be what the landlord wants because of the security of tenure issue and as such the Deed with only the outgoing and new tenant signing maybe the only option available with the landlord warned of the above risks. To minimise the signature being a problem agents could consider handing tenants a letter at the outset explaining that if there is to be a change that everyone will have to sign a Deed and if they do not that not change will be considered. We can draft a template of this letter for readers to purchase if needed.

Sam thank you for the feedback and sorry for the delay!

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

Homelessness and what this means to Landlords…..

We are often faced with questions from Landlords and Agents about information they have received from Tenants about homelessness and the advice given by local authorities.

Often a Landlord/Agent will have had a good relationship with a tenant but for whatever reason the Landlord requires back the property. Assuming therefore that the Tenant occupies under an assured short hold tenancy generally (subject to the appropriate rules) the Landlord can obtain back possession by serving a valid Section 21 Notice upon the Tenant. This is a non fault ground and the Tenant should vacate at the expiry of the Notice.

Many tenants, particularly those in receipt of state benefits, will approach the Local Authority to see if they can access any form of social housing. Generally local authorities owe duties to people such as those with children or who suffer from some form of disability or illness. All too often these people will receive advice that they should simply remain in the property until such time as the Landlord has applied to the Court, obtained a Possession Order and then looked to enforce the same. The Tenant then finds themselves in the invidious position of having to explain this to the Landlord/Agent and explaining that if they do not comply with this advise then the Local Authority is likely to owe them no (or at best a limited ) duty to rehouse.

This of itself can lead to what previously was a good relationship breaking down but the Tenant often has little choice. Whilst arguably Local Authorities do not have to wait until an Order is made or a bailiffs appointment fixed for most this is the policy they have adopted. The duty potentially arises to rehouse if they believe that the Landlord does have a genuine intention to obtain back possession but most in our experience will not enter into dialogue with the Tenant or the Landlord/Agent until the Court progress is underway. Sadly this policy is difficult for a Tenant to challenge.

With the changes to Housing Benefit it is likely that Agents and Landlords will come across this far more frequently. It is perhaps worth trying to understand the position Tenants find themselves in. If they remain in the property the Local Authority may rehouse them (although some do not even properly assess the Tenants rights and claim until the proceedings are underway) but if they simply leave then the Tenant will receive no support. For Landlords and Agents the way forward is perhaps to engage with local authorities and Councilors to get them to look again at the policy although sadly given the shortage of accommodation most Local Authorities are unlikely to change their policies.

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

Squatters

On the 2 September 2011 Judge Fiona Henderson ordered Camden City Council to comply with a freedom of information request made by a member of the Advisory Service for Squatters. Judge Henderson when making the order stated that it was in the public interest to release the information, adding that there was a strong public interest in bringing empty properties into use, that squatting not was itself a crime and there was not a direct link between squatting and crime.

The council has 28 days (29 September) to comply with the Information Tribunal.

In response Mr Grant Shapps the Housing Minister, said rather than trying to prevent the anti-social and unfair practice of squatting, this judge is instead insisting that Camden City Council publish a ‘squatter’s road map’ – which in other areas has led to the numbers of squats doubling. I think this is madness, really. It’s clearly opposite to the expressed direction of [Government] policy.”

The Government has a £100 million fund to help councils bring empty homes back into use. About 80,000 homes are vacant across the capital, many of them under local authority control. Mr Shapps said: “I also want to shut the door on so-called ‘squatter’s rights’ once and for all, and end the misery, expense and hassle that far too many people have had to endure for too long, which is why we are consulting on making squatting a criminal offence.”

We have at PainSmith noted that squatting appears to be on the increase where landlords and even tenants have gone away on holiday. Obtaining a possession order can take a few weeks and as such precautions should be taken which could include hiring a house sitter or even having a friend visit your home every so often. If however squatters do get in and they refuse to leave upon a reasonable request then proceedings should be initiated.

Reasonable force is only an option for a Protected Intending Occupier, that is a tenant under the Rent Act 1977 or Housing Act 1988 and Displaced Residential Occupiers that is homeowners who are being prevented from occupying the property by squatters. For anyone else, including landlords, force is simply not an option despite what you might read elsewhere!

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

Simply…

Thank you, on behalf of all at PainSmith for the positive feedback.

Filed under: England & Wales, FLW Article,

Residential Property Tribunal Service: what is it?

The Residential Property Tribunal Service or RPTS as it is often known currently incorporates Rent Assessment Committees, Leasehold Valuation tribunals (LVTs) and Residential Property Tribunals. These are all quasi judicial bodies who have been given powers to determine various disputes relating to property under various legislation.

RPTS is the umbrella organization covering the 5 regional panels each of which has a President and a number of Vice Presidents who determine which members will hear disputes. Generally for each Tribunal or Committee a panel of 2 or 3 members are appointed to deal with each case. The panel will consist of a Chair (usually a lawyer or valuer) and 1 or 2 other members who may be lawyers, valuers or lay members. All members are specifically trained to deal with the range of disputes which RPTS deal with as in all functions RPTS is a specialist tribunal.

Rent Assessment Committees: generally these deal with disputes and issues arising from rent levels. They were set up under the Rent Act 1977 and now cover Rent Act tenancies, assured shorthold tenancies, assured tenancies and tenancies arising upon the end of a long residential lease. They have specific roles in relation to each of the different types of tenancy for becoming involved in the determination of rent payable.

Leasehold Valuation Tribunals: These deal with a variety of matters relating to long residential leases. Over the past decade the powers granted to them have increased although part of their jurisdiction runs in tandem with the Courts. Where this happens often today the Courts will refer matters to the LVT rather than adjudicating themselves.

In brief LVTs deal with all matters relating to the terms of an acquisition of a freehold or lease extension under the various statutes (e.g. Leasehold Reform and Urban Development Act 1993) including the price payable. They also deal with long residential leasehold disputes including in respect of service charges. This includes determining the reasonableness of service charges and whether appropriate statutory requirements have been complied with such as consultation and matters relating to appointment of managers and Right to Manage applications.

Residential Property Tribunals: these deal with matters relating to park homes and also various appeals and applications in relation to various actions which a local authority can take such as Empty Dwelling Management Orders, Improvement Notices etc.

The above gives only a brief introduction into the jurisdiction of RPTS which has been on the rise over the past 2 decades. This applies to England although Wales has a similar system. From July 2011 RPTS became part of HM Courts and Tribunals Service which is part of the Ministry of Justice. From Autumn 2012 RPTS and the various jurisdictions will then become part of the Property Land and Housing Chamber as a new part of the First Tier Tribunal which will incorporate RPTS, Agricultural Land Tribunals, The Adjudicator of the Land Registry and the Valuation Tribunal for England all within one body.

Many commentators believe that it is likely that greater jurisdiction will eventually be given to this Tribunal to cover more extensively matters relating to residential property.

A dry area but something everyone involved in residential property should know exists and have some knowledge as to what it does given the wide powers it now possesses.

Filed under: England & Wales, FLW Article, ,

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