McDonald v. McDonald revisted

In McDonald v McDonald, the Supreme Court held last week that a Court is not required to consider proportionality when evicting a tenant when a Landlord seeks possession under section 21 of the Housing Act 1988.

A summary of the case and the Court of Appeal decision can be read here.

The Supreme Court stated that any decision which required the Courts to consider proportionality “would involve the Convention effectively being directly enforceable as between private citizens so as to alter their contractual rights and obligations, whereas the purpose of the Convention is…to protect citizens from having their rights infringed by the state.”

The effect of this judgment in relation to private residential tenancies is that it is now not possible for a tenant who is being faced with Section 21 possession claim to invoke Article 8 of the Convention. As the Court said in relation to private residential possession proceedings:

“Once it [a court] concludes that the landlord is entitled to an order for possession, there is nothing further to investigate.”

Comment

This judgement largely puts to bed any ability to challenge a private landlord’s eviction of their tenant on human rights grounds. While the case is a sad one in which the tenant did and should attract sympathy it will be of considerable relief to landlords. The effect of human rights arguments entering the private rented sector were, as the Supreme Court held, too horrible to contemplate.

Filed under: England & Wales

The Referendum Results and Landlords

Having voted to leave the EU a great many pieces of legislation will need to be reviewed which will undoubtedly have an impact on the property sector.

 

The Bank of England has raised concerns about the economic uncertainly following this result. Certainly, the pound and UK stock market has seen a significant drop in value after the result was announced. This may lead to landlords being hard hit because lending for the buy to let market may become more difficult to obtain.

 

Furthermore, legislative change will need to be implemented. A number of regulations rely on the European Communities Act 1972 which presumably will need to be repealed. There is some uncertainty about how the Government will deal with this. The Government may choose to re-implement some of the regulations individually or collectively re-implement them all. Either option is possible in principle. However, some regulations are popular and some are certainly not. Consequently, what and if any regulations deriving from EU matters are implemented will be dependent on who is in power at the time the decisions need to be made. The regulations which may be subject to repeal or implementation will include the EPC Regulations, Heat Network Regulation and most particularly the Consumer Protection from Unfair Trading Regulations which are of great importance as they cover property misdescriptions.

 

That said, the current government has not yet served the Article 50 notice to leave the EU and it seems that it will not occur until at least October, once a new Conservative leader has been chosen. In any event, upon service of the Article 50 notice there is a 2-year notice period, which could be increased further by negotiation. Consequently, any changes are likely to be delayed for some time.

 

Finally, the EU result calls into question the proposed legislation in the Queen’s speech and the implementation timetable for legislation already passed. This is particularly so for the Housing and Planning Act 2016 and the Immigration Act 2016, due to government departments now having other priorities!

 

We will keep readers updated if and when changes are made to the property sector.

Filed under: England & Wales

Improvement or Disrepair?

In Sternbaum v Dhesi [2016], the Court of Appeal found that a landlord was not liable when one of its tenants fell down a staircase which lacked any form of handrail or bannister. The tenant sued the landlord in negligence and for breach of section 4 of the Defective Premises Act 1972.

 

At the date of commencement of the tenancy agreement there was no handrail or bannister fitted even though the stairs were steep. There were indications that a handrail had been removed at some point but this was prior to the commencement of this tenancy.

 

The tenancy agreement required the landlord ‘to keep in repair the structure and exterior of the premises’ and the tenant was under an obligation to permit the landlord to enter the premises for the purposes of inspection and repair.

 

The Court of Appeal recognised that whilst a staircase without a handrail was hazardous, it was not defective pursuant to the Defective Premises Act. A lack of a handrail, although potentially dangerous, did not amount to disrepair and to oblige the landlord to fit a handrail would amount to requiring him to improve the premises and/or make them safe which is beyond the scope of the Act.

 

This decision introduces more certainty on the interpretation of landlords’ duty to ‘repair’ even if it might be concerning to tenants. It also highlights the gap in current repair obligations which still focus more on fairly basic obligations rather than a more general requirement for a property to be reasonably safe.

Filed under: England & Wales

Liability for Disrepair

On 5 May 2016, the Supreme Court heard the appeal of a Landlord in Edwards v Kumarasamy (UKSC 2015/0095). The Court needs to consider whether a Landlord under an assured shorthold tenancy, was liable for his tenant’s injuries under the extended covenant implied into the tenancy by section 11(1A) of the Landlord and Tenant Act 1985.

The Supreme Court’s decision had not been released at the time of writing this blog.

The tenant, Mr Edwards tripped on an uneven paving slab between the front door of the building of flats and the communal bin area. The Landlord, Mr Kumarasamy claimed that he had no obligation to repair the path between the building and the bin area, since he did not own it. The Landlord was the leaseholder of the flat rented by Mr Edwards.

The Court of Appeal found that a landlord of a flat let under a tenancy was liable for disrepair of common parts of the building in which the flat was situated. This liability arose under section 11 even when Mr Edwards had not given notice of the disrepair.

The Court of Appeal found that the disrepair was not within the demised property, therefore the implied term that the tenant had to give notice of the disrepair was found not to apply. The disrepair was in a common area and knowledge of it would have been revealed had the landlord or his agents carried out inspections.

 

Many Landlords will be hoping that this decision is reversed by the Supreme Court. Until it is, Landlords are advised to carry out inspections or ensure that management companies are doing so and that they report any necessary repairs in common areas promptly in writing to the freeholder. Landlords of flats should also ensure that the freeholder’s insurance includes public liability cover.

Filed under: England & Wales

The Private Housing (Tenancies) (Scotland) Act 2016

The Private Housing (Tenancies) (Scotland) Act was recently passed by the Scottish Parliament and will have a profound impact on the private lettings market in Scotland. Whether London MPs or Welsh AMs follow suit remains to be seen – but if so, you read it here first!

 

The Act is expected to come into force in late 2017 however, the key aims of the Act include a simpler tenancy system, predictability regarding rent increases, and an enhanced security for tenants.

 

Simpler Tenancy System

The Act abolishes the short assured and assured tenancies. In its place will be the single type of private tenancy, the Private Rented Tenancy (PRT). There are exceptions to the PRT such as Student accommodation and Holiday lets.

 

Rent Increases

Landlords are only permitted to increase the rent once per year upon providing 3 months’ notice. Tenants may challenge such rent increases by referring the matter to a Rent Officer who can determine a ‘fair’ rent. The newly created Private Rented Sector Housing Tribunal will hear any appeal of the Rent Officer’s decision.

 

The Act also gives local authorities powers to create ‘rent pressure zones’. This enables authorities to apply rent caps in areas they determine have been subject to excessive rent increases.

 

Security for Tenants

The Act abolishes the short assured tenancy and consequently the ‘no-fault’ ground for possession will also disappear. The ‘no-fault’ ground permits Landlords to vacate a property on the the expiry of a lease upon the expiry of two months’ notice. In short, Scotland will no longer have the equivalent of a section 21 notice in England.

 

Under the new Act, Landlords seeking possession will need to give at least one ground to bring the tenancy to an end. The grounds include that the Landlord is looking to use the property for non-residential purposes, to sell/refurbish/move into the property, or rent arrears for three or more consecutive months. The Landlord’s notice will be either 28 days or 84 days depending on the circumstances and the Tenant will have the right to refer the matter to the newly created Tribunal. If the Tribunal finds for the Tenant, a wrongful termination order could require the Landlord to pay the Tenant a sum of not more than six months’ rent.

 

Comment

The response to the Act has been mixed amongst those in the Property Sector. The security of tenure and restrictions on rent increases will no doubt be welcomed by many Tenants across the board. However, Landlords and Landlord associations have warned that these restrictions may result in Landlords disposing of their investment properties or looking outside of Scotland for such properties. Time, will no doubt tell.

Filed under: England & Wales

Housing and Planning Act 2016 Continued

We have now blogged about the Bill/Act on two separate occasions. This should be the final post, unless something else changes!

 

Banning Orders

Part 2 of the Act is about rogue landlords and property agents. Under the Act, agents and rogue landlords can be banned from engaging in letting agency or property management work or letting houses. The Act does not state what offences could lead to a ban however, the Government has promised an autumn consultation on this, with draft regulations published in early 2017 and the measures coming in to force in October 2017.

 

Banning orders will be made by the First-Tier Tribunal (formerly known as the LVT) on the application of a local authority. The order will state the length of the ban but will last at least 12 months. A person in breach of the ban will be liable on summary conviction to imprisonment for a period of less than 51 weeks and or a fine. Any such fine will not exceed £30,000 and the banned person will not be permitted to hold a HMO license.

 

Further measures designed to tackle rogue landlords and property agents are the ‘database of rogue landlords and property agents’ and rent repayment orders.

 

Database

The database will be established and operated by the Secretary of State and updated by local authorities.  The information held on the database will include:

 

(a)        the person’s address or other contact details,

(b)        the period for which the entry is to be maintained;

(c)        details of properties owned, let or managed by the person;

(d)        details of any banning order offences of which the person has been convicted;

(e)        details of any banning orders made against the person, whether or not still in force;

(f)        details of financial penalties that the person has received.

 

The Secretary of State may use the information on the database for statistical and research purposes and may disclose the information to a person, on application, in redacted form. The local authorities will also have access to the database.

 

Rent Repayment

 

The First Tier Tribunal can also make a rent repayment order which will require a Landlord to repay an amount of rent he has received from a tenant or local authority by way of universal credit. Instances where the First Tier Tribunal is likely to make such an order include where a Landlord has:

 

– failed to comply with an improvement or prohibition order;

– evicted or harassed a tenant;

– control or management of an unlicensed HMO or house; and

– breached a banning order.

 

Applications for rent repayment orders can be made by Tenants or local authorities and the Tribunal will make such an order if it is beyond reasonable doubt (high criminal standard) that the Landlord has committed the offence. The amount of the rent repayment order will not exceed the rent paid by the Tenant over a 12-month period during which the Landlord was committing the offence.

 

Comment

This will significantly widen the range of powers available to local authorities to combat bad Landlords and Property Agents. Whether this is effective will depend on how well it is used.

Filed under: England & Wales

Housing and Planning Act 2016

We wrote about the Housing and Planning Bill last month but it has subsequently received Royal assent and is now officially the Housing and Planning Act 2016. All kinds of secondary legislation will need to be passed before it is in force, which incidentally is expected to be April 2017. So no need to fret just yet!

 

A warning however, the delay in the enforcement of the Act, could lead to further legislative changes. The Act has been very slow in publication but is now available.

 

Electrical Safety Standards

 

The Secretary of State will have the power to pass regulations placing a positive obligation on Landlords to ensure that electrical safety standards are met during any tenancy term. These ‘electrical safety standards’ relate to the installation of the electrical supply and the electrical fixtures and fittings or appliances that the Landlord may have supplied.

 

In order to satisfy this obligation a Landlord will be required to instruct an expert (we assume an electrician) to ensure that the ‘electrical safety standards’ are met. These tests may be required annually and may obligate the Landlord to provide a copy of the expert’s certificate to the Tenant. However, until the Secretary of State has passed the regulation, we will not know the extent of the obligations.

 

Landlords who fail to comply with the ‘electrical safety standards’ could face a financial penalty and with the Tenant’s consent, the local authority may enter the rented property and remedy any electrical safety failure.

 

In essence, the provisions appear to be making fixed wiring and PAT tests a legal requirement for Landlords.

 

Client money protection schemes for property agents

 

The Secretary of State will also have the power to pass regulations placing a positive obligation on property agents to become members of a private or government client money protection scheme. The reference to client money would include deposits and rent held by lettings agents on behalf of Tenants and Landlords.

 

Property agents who fail to comply with this provision could face a financial penalty determined by the Secretary of State and enforced by local authorities.

 

Comment

It remains to be seen to what extent the electrical changes will impact Landlords. They could be arranged in such a way that significant upgrades to electrical installations are required but are more likely to be targeted at specifically dangerous items.

 

Client money protection schemes have been called for, for a long time and will be a welcome addition for most Landlords and Tenants who generally already believe that it is a requirement.

Filed under: England & Wales