Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

More consultation over the Private Rental Sector

Due to the ever increasing demand for rental properties the Government have decided that a consultation on this area is needed. The discussion titled ‘Review of property conditions in the private rented sector’ is in its initial stages so no changes are imminent; but certain topics have been raised with a view to helping the system perform better and raise the standard of the housing industry to make sure tenants are protected and are able to live in a safe environment.

The intention of the consultation is to protect tenants from rogue landlords and agents but to try to balance this by not adversely affecting the good landlords/agents. The aim is to avoid imposing unnecessary legislation which could create more hassle, decrease much needed investment in private rented housing and result in further costs which will eventually be passed on to the tenant in the form of increased rent etc.

There are a number of topics that have been proposed as talking points for which they are inviting comments and suggestions. These include:

• Rights and responsibilities of landlords and tenants – How can it be made clearer to both sides what is required of them and what can be done if the other side has breached their obligations?
• Retaliatory evictions – How to prevent landlords from simply serving notice to evict a tenant that has notified them of necessary repairs to the property?
• Illegal evictions – Should the penalties against landlords convicted of illegal evictions be stricter?
• Safety conditions – Should smoke and carbon monoxide alarms be mandatory in all properties?
• Licensing of rented housing – Should there be mandatory licensing for all properties? Should there be voluntary accreditation schemes for Landlords so that the good landlords can be found more easily?
• Housing Health and Safety Rating System – Is more information required to make the system clearer for all parties?

This is a non-exhaustive list and so if you have any ideas of how to improve the housing market the details of where to send your proposals are detailed below and any suggestions made should be considered and discussed.

The closing date for responses is 28 March 2014 and they can be sent to PRSReview@communities.gsi.gov.uk

We will be looking to keep an eye on this and will update the blog when there are any further developments.

Filed under: England & Wales, , , , , , , ,

Office of Fair Trading to study Residential Property Management services

The OFT last week announced that it intends to launch a market study into the residential property management field for leasehold property in England and Wales.

Ahead of the study the OFT has invited interested persons to tell them about what areas they should be concerned about. Their Press Release sets out what areas the OFT is particularly interested in and so if you are involved in this sector you should be reviewing this and consider what if anything you want the OFT to look at.

Recently leasehold law does seem to have come on to the political agenda so it will be interesting to see what steps the OFT takes following on from its investigation into retirement home security services.

Filed under: England & Wales, , , , , , ,

Phillips v. Francis: Permisssion to Appeal granted

At the end of last year we were all faced with the Judgement in Phillips v. Francis [2012] EWHC 3650 (Ch). No doubt those of you with an interest in long leasehold matters and particularly property management will recall that Sir Andrew Morritt, The Chancellor, in what is believed to be one of his final judgments, determined that the test for qualifying works requiring consultation under the Landlord and Tenant Act 1985 required all qualifying works to be considered together. If the total cost would exceed £250 then consultation was required.

He determined that it was a case of looking at qualifying works as a whole in the relevant service charge period and if the cost would exceed the threshold for consultation then the landlord/managing agent should consult. So if the cost of repairs (no matter what was included) in any one service charge period would mean that any one leaseholder would have to contribute more than £250 (the current threshold) then consultation should take place. Prior to this the practice had been that elements could be broken down and it was a question of looking at the particular works and consulting on those for which the contract sum would result in a charge above the threshold.

The Supreme Court in Daejan v. Benson offered some relief in its decision earlier this year. Here the Supreme Court determined that generally dispensation for a failure to consult should be granted although conditions may be attached. However the Francis decision continued to cause much consternation.

It appears initially the Landlords did not appeal due to a lack of funds. It is understood that they have now gained support from interested parties including ARMA and RICS. An application for permission to appeal and an extension of time was made. This application was granted by the Court of Appeal yesterday, 18th November 2013, with Lord Justice Gloster giving Judgment.

The Court of Appeal accepted that there was a point of principle such as to satisfy Civil Procedure Rule 52.13. As a result time was extended and permission to appeal granted with the court taking account of the unprecedented industry interest and concern over the original decision.

It would appear the Respondents are concerned that the Appellants have assistance from various parties with the appeal yet supposedly no party has come forward to offer assistance to the Respondents. Various other arguments were raised which it is understood they will continue to pursue at any substantive hearing of the appeal.

It seems likely that the full hearing will come before the court at some point next year and so for the time being the position as to when to consult appears to be in a position of flux. As we learn more we will post updates.

We would like to thank Anneli Robins a pupil at Arden Chambers who attended the hearing and prepared a note and Justin Bates, also of Arden Chambers, for supplying us with a copy of the same.

Filed under: England & Wales, , , ,

Data Protection

We often get asked whether and in what circumstances landlords, tenants, agents and contractors can give out each other’s details of and those of other third parties. The main concern is not to breach the Data Protection Act 1998. Anyone who processes personal information must comply with eight principles of the Data Protection Act, which make sure that personal information is:
• Fairly and lawfully processed
• Processed for limited purposes
• Adequate, relevant and not excessive
• Accurate and up to date
• Not kept for longer than is necessary
• Processed in line with your rights
• Secure
• Not transferred to other countries without adequate protection

Unlawfully obtaining or accessing personal data is a criminal offence under s55 of the Date Protection Act 1998. Organisations processing personal information are required to register with the ICO. Failure to notify is a criminal offence. The ICO provides a checklist to organisations to check if they need to register. However lettings agents do generally process personal data ( e.g. tenants’ financial information) and if so should register.

There is a useful guide on the Information Commissioner’s website here.
Below is a list of the most common queries we get, and our answers
(with reasons).

1. Can an agent give out tenant referencing details to a landlord?
We say: Yes, the agent has collected the information as agent of the landlord, on behalf of the landlord. The Information Commission adds that the agent should make it clear to the tenants/guarantors that this will happen when the information is taken.

2. Can an agent give out landlord’s details to the tenant?
We say: It depends. If the tenant requests the landlord’s name and address in writing from the agent, section 1 of the Landlord and Tenant Act 1985 requires that the agent must supply the tenant with that information within 21 days of receipt. Criminal sanctions apply for failure to comply. There is a duty to disclose the name and address of all directors and company secretary to a corporate landlord. However where not required by statute, an agent should get the landlord’s permission before handing information to the tenant.

3. Can an agent/landlord give out tenant details to utility companies where there are unpaid bills?
We say: Yes the utility company may need the forwarding address of the former tenant to recover unpaid bills, or to return funds. The information commissioner adds that there should be a clause in the tenancy agreement setting out that this may happen.

4. Can landlords give former tenants details to enquiry agents/tracing agents in order to recover unpaid rent/ issue debt proceedings?
We say: yes – but again the ICO says it is good practice to notify the tenants in the tenancy agreement that this might happen.

5. Can landlords/agents give tenant’s details to guarantors?
We say: only to the extent that it relates to the guarantee. So you need to see whether the information you are passing on relates to the guarantee (e.g. it would probably be relevant to say there are rental arrears but not to notify the guarantor that the tenants have had a baby and the date of birth and name of that baby, for example).

6. Can landlords/agents give tenant’s information to the Local Authority/ Police?
We say: again, it depends. Local Authorities do have powers to request personal information, and so do the Police. However they should be able to provide authority – to demonstrate that they have authority to ask, and that a landlord/agent has the duty to disclose.

7. If the tenant requests to see the tenancy file, does the agent have to disclose the entire file?
We say: No. The tenant should make a subject access request. The file belongs to the landlord. You do not have to supply information about other people. The agent should send a redacted copy and even then only needs to provide personal information. This does not mean the agent’s management log for example.

What are the sanctions for breaching the Data Protection Act? The Information Commission can order the offender to stop the breach. For serious breaches monetary penalties can be given and criminal prosecutions brought. See here: http://www.ico.org.uk/enforcement/prosecutions

In general the best place to go for those concerned about Data Protection is the ICO website. They have useful guides and checklists, as well as news and updates.

Filed under: England & Wales, , ,

Yes you are your brother’s keeper. Immigration Bill 2013

Last week the Immigration Bill was given its first reading in Parliament. As was mooted in the Queen’s Speech, it contains requirements on landlords and agents to check the immigration status of tenants, with penalties for failure to comply.

If the Bill becomes law, people living in the UK without the “right to rent” are to be prohibited from renting premises in the UK. Section 17 of the Bill provides that persons “disqualified by immigration status” are not to be granted tenancies. Tenants who become disqualified during a tenancy are to lose their right to rent.

And the landlord/agent is responsible for checking.

If a landlord and/or agent lets a property to, renews a tenancy agreement with, or possibly allows continued occupation once a statutory periodic tenancy arises of a disqualified person, that landlord/agent will face a penalty of up to £3000.00.

There is a list of excuses that landlords can look to rely on, including that it was the agent’s fault (!), or that the “prescribed requirements” ( yet to be prescribed, but probably something along the lines of taking copies of passports/visas etc) were complied with before the tenancy was granted. If a person becomes disqualified during the tenancy the Landlord can try to wriggle out of paying a penalty if he tells on the tenant. Agents will have similar excuses set out in section 21.

The penalty system looks like this: 1. Landlord/agent receives penalty 2. Landlord/agent objects 3. Penalty is cancelled, reduced, increased, or no action to be taken. The prospect of an increase might put some people off lodging an objection.

The Bill anticipates that landlords might try to get around the responsibility to check immigration status by inserting a clause into the tenancy agreement prohibiting occupation by a disqualified person; section 17(6) provides that any such clause will be ignored for the purposes of determining whether there has been a contravention.

In anticipation of the fact that asking landlords and agents to do the job of the UKBA could give rise to racial profiling and discrimination ( hmmm, that name looks a bit foreign, let’s be on the safe side and not let our property to them),
Section 28 provides that a code of practice is to be issued to ensure compliance with the Equality Act 2010 and Race Relations ( Northern Ireland) Order 1997. Interestingly though a breach of the code will not incur civil or criminal proceedings. This looks like a dangerous balance: breach of the Immigration Act will incur a penalty, whereas breach of the so-called safe-guard will not.

Points to note:
• The Bill is currently in draft form. If and when it becomes law the current draft provisions may have been amended considerably.
• It does not apply to British Citizens, EEA nationals or Swiss nationals.
• Currently the referencing checks that reputable agents carry out would probably provide the necessary information ( sight of passports, evidence of bank accounts etc).
• The Bill covers tenancy agreements whether written or oral.

The above may seem unusually political for a Painsmith blog. This is not the intention. However Painsmith is committed to helping to eliminate discrimination in the private rental sector and in its current form this bill is set to cause problems.

Filed under: England & Wales, , , , ,

Property Owners Beware of Fraudulent Transfers

If you own a property that is registered and do not live in it yourself, you could be an easy target for fraudsters.

One type of fraud that is not new but seems to be becoming more common involves fraudsters transferring a property into their own name with HM Land Registry and then securing a mortgage against it. Having converted the equity in the owner’s property into cash, the fraudster disappears, defaults on the mortgage and leaves the true owner to deal with the consequences.

This is what happened in the case of Barclays Bank plc v Guy 2008. When Mr Guy found out about the fraud on his property, he applied to the Court to rectify the register to show that he was the owner and not the fraudster. The Court found that Mr Guy was entitled to this but he was not entitled to have the mortgage charge removed. The Court found that the mortgage remained valid and so the mortgage company was entitled to seek an order for sale to recover the sum it had lent to the fraudster if they were not paid.

How can this be right? The Court referred to Section 58 of the Land Registration Act 2002 which provides that, if a person is listed as the proprietor of a legal estate with HM Land Registry, that is conclusive evidence of ownership. The Court accordingly found that, the transfer into the fraudster’s name was a mistake and so rectifiable but the mortgage charge was not a mistake as the mortgage company was entitled to rely on the information on the Land Register as conclusive evidence of ownership. The Charge was therefore not rectifiable. This means too that if the fraudster sells the property to an innocent third party, that transaction would be binding.

So, how do you minimise the risk of this happening to you? If you do not live at your property personally you must make sure that you amend the Register to show that (by using a Unilateral Notice) and provide your current address for correspondence. Updating your address with HM Land Registry is free – all you need to do is complete a form and send it to a freepost address with evidence of your identity.

Filed under: England & Wales, , ,

Agents signing prescribed information

We are running out of titles for deposit blogs. We have had some queries regarding a court case in which possession proceedings were thrown out because the Prescribed Information had been signed by the agent, not the Landlord. This is unreported and we do not know exactly what went on although it has been reported here:

Painsmith has also experienced a claim for possession defended on this same point: the tenant argued (i) that the certificate on the deposit protection certificate must, pursuant to paragraph 2(g)(vii) of the The Housing (Tenancy Deposits) (Prescribed Information) Order 2007, ( the Housing Order ), be signed personally by the landlord, (ii) that under paragraph 2(g) (iii) the landlord’s address etc must be provided and not the agent’s and that accordingly the s.21 notice is invalid.
In our case the matter settled so we can only speculate on the outcome of that hearing, which would have only been a county court decision and thus not precedent.

However we disagree with the above view. Section 2 of the Housing Order provides that prescribed information for the purposes of section 213(5) of the Housing Act 2004 (“the Act”) includes: at 2g (iii) “the name, address, telephone number, and any e-mail address or fax number of the landlord”; and at 2g(vii) confirmation (in the form of a certificate signed by the landlord) that—
(aa)the information he provides under this sub-paragraph is accurate to the best of his knowledge and belief; and
(bb)he has given the tenant the opportunity to sign any document containing the information provided by the landlord under this article by way of confirmation that the information is accurate to the best of his knowledge and belief.

The Housing Order sets out what information is needed for the purposes of the Housing Act 2004. Chapter 4 of the The Housing Act 2004 deals with tenancy deposit schemes. Section 212 part 9 of the Housing Act provides that “In this Chapter [ i.e. Chapter 4] – (a) references to a landlord or landlords in relation to any shorthold tenancy include references to a person or persons acting on his or their behalf in relation to the tenancy or tenancies……”.

So, for the purposes of s213, the obligations on the landlord are also onto a person or persons acting on his or their behalf i.e. his agent. The Housing Order prescribes what information must be given for the purposes of compliance with s213.

In our view “landlord” for the purposes of the Housing Order 2007 should share the definition with the primary legislation i.e. the Housing Act 2004. It is not logical to interpret the Housing Order 2007 in a way that is incompatible with its parent legislation.
It follows that in our view the deposit schemes are correct to allow the agent to sign.

However as we know, the courts can make some odd decisions so we might have to concede if a precedent is set in a higher court. Watch this space.

Filed under: England & Wales, , , , ,

Lettings Fees in the news

Shelter has stepped up its campaign to make it unlawful for lettings agents to charge any fees at all to tenants. You can read their report here. The average compulsory lettings fee that renters pay to a landlord’s agent in setting up a tenancy is £355.00. The charity would like to see tenants’ costs limited to the protected deposit and rent in advance as it is in Scotland.

Painsmith receives frequent queries about agents’ fees, and what can and cannnot be charged. The position currently is that agencies must be transparent about their fees, which should be an accurate reflection of their actual reasonable costs rather than an unsubstantiated sum. We have blogged on this before .

The Advertising Standards Authority recently ruled that agents must publicise their fees and charges in their quoted prices, or at least provided enough information for potential renters to calculate what they will be charged.

There is already a great deal of consumer protection legislation, e.g CPR Consumer Protection from Unfair Trading Regulations 2008, UTCCR, as well as regulatory bodies such as the Property Ombudsman. Regulation 6 of the Consumer Protection Regulations prohibits misleading omissions, which includes the providing of material information in a manner that is unclear, unintelligible, ambiguous or untimely. To charge extortionate fees is already either unlawful or unenforceable.

If it becomes unlawful to charge tenants any fees at all it has been argued that the cost will have to be picked up by tenants later on down the line through higher rents ( although in its report Shelter says that since Scottish law was clarified there has been no significant rise in rents). That said, if Shelter succeeds in effecting a ban on lettings fees, agencies will no doubt adapt. It may even cause a demise in the number of rogue agencies that are currently operating.

Filed under: England & Wales, England only, , , , , ,

Rent Review: RPI, CPI and RPIJ

Commonly over the past few years longer term agreements or those with rent review clauses have tended to review the rent in line with the Retail Prices Index (RPI).
RPI was previously a National Statistic prepared by the Office of National Statistics (ONS) and used by Government as a measure of price changes. However earlier this year it was downgraded so that it was no longer a national statistic. ONS has confirmed that they will continue to produce RPI figures for the time being. This means that for agreements which refer to this as the measure to be used for calculating any rent review there is no need to worry. The statistic is still produced and ascertainable so the clause can still be operated. Remember all parties are bound by the terms of the lease and the court will give all words a common-sense interpretation. This means that simply because RPI is no longer a national statistic there is no reason why it cannot still be used.

So what about the future? You can still use RPI. It still exists and can be readily determined (even if a little harder to find on the ONS website than previously). The issue is that some parties are uneasy about using a statistic which is not a nationally excepted measure of price increases. RPI does however include housing and mortgage costs. For this reason alone it may be said to be a more accurate prediction on how inflation has affected rents although some economists suggest such figures alone help to perpetuate inflation.
Certain other figures are referred to. In particular the Consumer Prices Index (CPI) which is also calculated having regard to a specified “basket” of items save it does not include housing and mortgage payments. Hence this has tended to be considerably lower. If you are acting for Landlords CPI is less likely to appeal as the percentages have historically been substantially lower than RPI.

We are due to get two new indices produced by ONS. Both are meant to give a “truer” reduced level of inflation which again a landlord may disagree with although both supposedly will include some reference to housing costs. The two are RPIJ and CPIH. The ‘J’ in RPIJ stands for Jevons, which is the formula that replaces the one that was found to not meet international standards. It is likely to be lower than RPI. CPIH is similar to CPI but includes owner-occupier housing costs. It seems clear one of these will become the preferred option for including in rent review clauses but time will tell. There will always be a pull between landlord and tenant to adopt whichever either side sees as the most advantageous to them.
It should be remembered that a rent review clause can contain whatever mechanism the parties agree. This could include agreed increases by fixed amounts or determination by an external party. The later whilst common in commercial leases has tended not to find favour with residential tenancies given the short time nature means parties want a formula which will not put them to expense.

The bottom line is as ever to remember whatever terms are placed in the tenancy are binding upon both parties unless they mutually agree to the contrary.

Filed under: England & Wales, , , , , ,

Arla annual conference 2013

A big thank you to all those who came to chat to us at the Painsmith stand on Tuesday. It was great to see the old faces and put names to new ones. Please keep following our blog – we have some interesting ones coming up, including more on deposits ( oh yes), an HMO ruling to name just two. You can leave comments as well. Don’t forget to look at our website too for info.

Filed under: England & Wales,

Read the Lease!

A recent decision of the Upper Tribunal (Lands Chamber) in Sadd v. Brown [2012] UKUT 438 (LC) stands to remind us that it is always important that you read and understand the terms of the lease.

The case was about the recoverability of an insurance premium. In the past all parties to the lease had assumed that it allowed the recoverability of the costs incurred by the landlord in insuring the building. At first instance the LVT decided that whilst the amount charged was reasonable on the true construction of the lease the premium was not payable by the leaseholder. It would appear that this point was not itself taken by the parties but raised by the LVT itself.

Once again the Upper Tribunal made clear to the LVT that it is not for them to take points and certainly not without referring the issue to the parties for their comments. If we stop there it is important that all parties in approaching the LVT bear in mind that panels are now less likely to raise issues of their own motion and so parties must make sure they have properly considered what points they may have in their favour. The Upper Tribunal has made clear over the past 18 months that the LVT should be slow to interfere and raise points if not raised specifically by the parties.

The above being said the Upper Tribunal took the view given the landlord as part of its appeal had put forward its arguments it was reasonable for the upper Tribunal to determine the issue. The landlord contended that it was unusual for a lease to not include a term allowing the landlord to recover the cost of the insurance. He relied upon the fact that until this application both parties had assumed that the lease did allow recoverability. The landlord invited the tribunal to imply such a term into the contract relying upon Liverpool City Council v. Irwin [1977] AC 239. The Tribunal took the view that given this was a lease containing detailed provisions regulating the parties relationship and on the face of it contained all terms it was not appropriate to imply such a clause. Further the Tribunal took the view that it was not necessary to imply such a term to give effect to any other terms of the lease in the way that often the term “reasonable” is implied. Finally the tribunal decided that it was not necessary to imply such a term to give business efficacy to the lease (although we are sure the landlord did not agree with this!).

As a result the appeal was dismissed and the landlord could not recover the cost of insurance as the lease did not allow recoverability. As we have said before it is vital that a careful review of the lease is made. Anyone taking on block management should always ask to see all the leases and check with the Land Registry that no variations have been granted. Only when you have done this will you be sure as to what can and cannot be recovered as any failings are likely to find themselves laid at the managing agent’s door if they have not previously been drawn to the freeholder’s attention

Filed under: England & Wales, , , ,

Private Rented Sector Consultation

Just a reminder to everyone in the Rental Industry that the Communities and Local Government Select Committee is currently conducting an enquiry into the private rented sector. Submissions have been invited from any interested party dealing with the private rented sector. Submissions should be emailed to clgev@parliament.uk by 17th January 2012.

In particular submissions are being sought in connection with possible rent control and also regulation of the sector. Full details can be found here.

Filed under: England & Wales, , , , , , , , ,

Why do Courts let Tenants make Unmeritorious Applications?

Many landlords and agents will have come across the situation where they have successfully been granted an Order for possession and then receive from the Court (often the day before execution of a warrant) an application from a tenant requesting the Court to set aside an Order on the basis of grounds either previously advanced at the original hearing; or on matters not strictly relevant to the possession process. For parties not experienced with the Court process this can seem inherently unfair to landlords; and be seen as the tenant simply “playing the system”. From the solicitors point of view it is also often frustrating having to explain to the Client that the process must be gone through before possession can be obtained.

The Courts are required to give proper consideration to any application made. Generally applications should be heard at an oral hearing at which both parties should have the opportunity to attend. Recently this approach was affirmed by the Court of Appeal in Frey and others v. Labrouche [2012] EWCA Civ 881 . In this case an application to strike out a claim was made. The Judge at the start of the hearing indicated that he thought the application was unsustainable and he was not going to hear from Counsel of the Appellant. The Appellant claimed that the judge’s refusal to hear the application was a breach of their fundamental common law right to present the case. The Court of Appeal agreed and stated that a judge could not properly dismiss the application without giving the applicant a fair opportunity to put its case. It was vital that justice was seen to be done.

Whilst it is accepted that judges can (and should under the Civil Procedure Rules) take a robust stance this does not preclude parties making applications and the Court should give proper consideration and allow oral argument. This is why applications, even when made at the eleventh hour are listed and heard even when this can delay the execution of a warrant or other process.

Filed under: England & Wales, ,

Daejan v. Benson: where are we at?

We have made various posts about service charges etc on long leaseholds but still have questions asked about the infamous case of Daejan v. Benson.

To recap this started life as an LVT claim as to whether service charges were recoverable or if they were capped due to a failure by Daejan to comply with Service Charges (Consultation Requirements) (England) Regulations 2003 and subsequently on application to dispense with the need to consult under the Landlord and Tenant Act 1985. In both instances the LVT found against Daejan who appealed to the Upper Tribunal (Lands Chamber) who in November 2009 upheld the LVT decisions. So off went Daejan to the Court of Appeal.

The Court of Appeal gave its judgment in late January 2011 (Daejan Investments Ltd v Benson & Ors). The Court of Appeal upheld the previous decisions and therefore found against Daejan. Not put off Daejan sort leave to appeal to the Supreme Court and was granted the same at the end of June 2011. Currently we understand that the matter is likely to be heard by the Supreme Court and judgment given towards the end of this year.

So where does this leave the law? If you are a Landlord (whether arms length or residents) you must ensure that you comply with the Section 20 Consultation requirements to the letter! To do otherwise leaves you open to significant risk that costs will not be recoverable. As the law stands the financial consequences to the freeholder are not a matter for the LVT to take account of when considering prejudice. What needs to be shown is that a failure to comply must not cause any genuine prejudice to the Leaseholders. Whilst LVT’s may have substantial sympathy with residents management companies under the regulations no differentiation is made. LVT’s currently are likely to take a strict view given the fact that the current statement of the law was supported by both the Upper Tribunal (Lands Chamber) and the Court of Appeal.

Landlords and those advising them do have options. Given the serious ramifications of a decision going against a Landlord after works have been completed it is worth bearing in mind that they can apply for a prior determination. When there is opposition to a scheme and it is clear from the conduct of some leaseholders that they will challenge the works this may mean despite there being a delay that an application should be made to the LVT. Given most LVT panels can hear cases with fairly short timescales ( assuming no appeals) then this can be factored in to the process and quotes etc can be obtained which perhaps have a longer “shelf life” than normal to allow for an application. It seems to us that given the various rules and regulations specifically allowing prior determinations this must be the prudent step given that it provides Landlords with a safety net to check compliance if any doubt in the Landlords or their agents mind.

We will of course have to see what view the Supreme Court takes and we will be sure to blog on this when we know more!

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

Break Clause requirements go both ways.

As I am sure many of you who subscribe to the helpline will be aware, the advice for a Landlord or an agent invoking a break clause to bring about an end to the tenancy agreement is to follow the provisions of the break clause exactly. If this means serving the notice by hand whilst balancing a bowl of water on your head then that is what needs to be done.

The Avocet Industrial Estates case makes clear that this is not just the case for the Landlord and Agent but also the Tenant.

In this case the requirements of the break clause in a 10 year commercial lease, were that the break would be ineffective if “any payment” due under the lease remained unpaid and if a sum equivalent to 6 months rent was due. The day before the break date the tenant handed a cheque for 6 months rent which was due to the Landlord and handed back the keys. The Landlord challenged this claiming that simply handing a cheque does not constitute the amount being paid. This would mean that there were still monies owed at the break date and the break invoked by the Tenant should be ineffective.

The court agreed deeming that a cheque was not legal currency and therefore there was default interest amounting to £130 still owed. This meant that both requirements of the break clause were not satisfied and the Tenant could not rely on the break clause. The court accepted that the result was rather harsh but the decision was based on the legal principle of certainty.

This case simply demonstrates that parties continue to do things without reading the tenancy agreement. On the helpline we often have people that serve section 21s by hand and assume that its deemed served the same day if posted before 4.30pm. However the tenancy agreement states something different, which is that it is deemed served the next day. The section 21 is therefore invalid. This is common and should not be if people just took 10 minutes to read the agreement, assuming you are familiar with it is simply not good enough.

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

Subletting

It does appear to be quite common now that the person that signs the tenancy agreement as the tenant is not in fact the person that is actually residing at the property. Sometimes agents carrying out periodic viewings attend properties expecting to see a family and are faced with as many as 15 complete strangers.

So what can the law do to help? In Rose Chimuka’s case, she was convicted of fraud and sentenced to 4 years and 3 months imprisonment.

The scam involved Chimuka, often using a false name, approaching estate agents saying that she was looking for a large family home to rent. She would discuss school catchment areas and often confirm that her husband worked away.

However, rather than moving in with family, Chimuka would advertise locally for tenants so that she could sub-let the property to other tenants without the property owners consent or knowledge. She would then sub-divide the houses she had rented and put locks on internal doors and permit up to 15 people in some cases to reside in the properties.

Chimuka would collect rent money in cash from her ‘tenants’ and fail to pay her own rent for the properties she was renting.

Landlords often point the finger at agents accusing them of not carrying out the right checks etc. However, when you are faced with prospective tenants giving false information it can be difficult to detect the lies until it is too late. PainSmith Solicitors has obtained possession proceedings in these circumstances and whilst the proceedings can be slow (due to court backlogs) we have obtained possession at the first hearing. So there is hope and the courts are sympathetic to landlords in these situations.

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

EPC- newspaper adverts and window cards

At the last ARLA regional meeting in London, Marveen Smith noted that many of those attending were not happy with the changes to the EPC regulations.

Therefore having called some people and then some more people we were referred to:

Do newspaper adverts or window cards for property lets meet the definition of written particulars? No. The requirement to attach a copy of the front page of the Energy Performance Certificate to written particulars is where an agent proposes to provide written particulars to a person (i.e. a specific individual) who may be interested in buying or renting the building. This implies that a copy of the front page of the Energy Performance Certificate does not need to be attached to ‘advertising material’ – ie – a newspaper or window card.

Can the Energy Performance Certificate be re-sized if the written particulars are produced in A5 format?
The Energy Performance Certificate can be reproduced in a smaller size provided it is still legible and meet any other legal obligations, such as the Equality Act 2010.

Want to read more then click here.

We understand that the guidance will be adhered to therefore we strongly recommend that you keep a copy in the office just in case the enforcement team comes knocking…..

One thing we would like to make clear is that this guidance does conflict with the legislation. Therefore despite the existence of the guidance, agents could still be pursued by trading standards and as such it will be a commercial decision on what to do and what not to do with the EPC and the marketing material they use.

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

Data Protection

A letting agent has been found guilty under section 55 of the Data Protection Act and the Criminal Attempts Act.

The agent was fined £200 and ordered to pay a £15 victim surcharge and £728.60 prosecution costs by Highbury Magistrates Court.

The offence was uncovered in June 2011 when the Department for Works and Pensions (DWP) received a call from the agent who was fraudulently trying to access the account of a tenant on benefits. The DWP investigated before reporting the matter to the Information Commissioners Office (ICO).

The agent had no authority to access the tenants’ information held by the DWP and it was only when the agent could not recall the tenant’s middle name that the DWP became suspicion.

Unlawfully obtaining or accessing personal data is a criminal offence under section 55 of the Data Protection Act 1998. The offence is punishable by way of a financial penalty of up to £5,000 in a Magistrates Court or an unlimited fine in a Crown Court.

So what should you do if you want to check the details given to you by a tenant or potential tenant?

A signed letter of authority should be obtained from the tenant and then the DWP contacted to obtain the information you need. The DWP will want sight of the letter of authority which could be faxed before any telephone call.

Whilst the fine was small the agent and the company are no doubt having to deal with the publicity that this case has attracted. It simply is not worth it in such a competitive market and guidance can be sought on the ICO website.

Finally the Data Protection Act is likely to be replaced by the new General Date Protection Regulation which is likely to be introduced next year. Agents should take this seriously and should consider implementing changes if they are aware that staff is not adhering to the law as ‘strictly as they should’.

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

SUBJECT TO CONTRACT: WHAT DOES IT MEAN?

Many people dealing with short term residential tenancy agreements will have seen the term “subject to contract” used but what does this actually mean?

The basics are that in English law a contact does not have to be in writing (and in this context we are talking about usual residential tenancy agreements). For a contract to be made one part has to offer to do something, e.g.. let a house, on the basis they will receive something in return, e.g.. Rent, and this offer is then accepted by the other party telling the person who made the offer. This could simply be a conversation.

To avoid contracts being unintentionally created most agents make clear that all negotiations are “subject to contract”. In practice many agents have a standard form of words on emails or letterhead setting this out. This mans that the parties are free to have negotiations and in principle reach an agreement. It is usually at this point that an actual tenancy agreement will be sent out. Provided the initial negotiations are “subject to contract” even at this point no contract will have been created. This means that the parties are not yet bound by the terms.

For the contract to bind all the parties both sides need to physically complete the document. What this usually means is that the Landlord (or his agent when so authorised) and the Tenant will each sign their part of the agreement. Usually these agreements will then be returned to the agent who will then oversee completing the transaction by exchanging and completing the documents by dating the same. It is at this point that the contract is completed and the parties are then bound by the terms.

The system can seem cumbersome but provides safeguards for both sides. Usually both sides want to have the opportunity to have negotiations. In particular Landlords will often wish to check references and ensure monies etc are paid before the agreement is actually completed. Tenants may be looking at more than one property. It is vital then that parties understand that once they sign (or Landlords give the agent authority to sign), exchange and date the agreement they will be contractually bound. If a party does not want to become bound until some condition or additional authority is given they should either withhold the signed agreement or make clear the terms upon which they agree to the agreement being completed. Once completed either side can then require the other to comply with their obligations.

Subject to contract is a useful device to protect all parties but you should be clear as to when completion has taken place and only allow completion of an agreement if you actually want to be bound by the contract! Once completed there may be no way back.

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

Common Questions- “Olympic Lets”

1. Are the tenancies ASTs?
Most of you will be aware that for an AST the conditions are that the property is let to an individual who will use it as their principle home. Many Olympic visitors will be here in the UK on holiday therefore it is safe to assume that they will not be residing here and so will not have ASTs but “holiday lets”. These are simply common law tenancies. However some visitors maybe visiting contractors or employees and they will be working either at or during the Games. In those cases the property that you let could actually be let under an AST and the tenant could potentially remain there for 6 months provided they pay the rent as you will not be able to remove them using a section 21 notice. You are therefore strongly advised to find out the purpose behind the visit in order to safeguard the landlord’s position.

2. Do I have to protect the deposit?
Where a tenancy is not an AST then the deposit protection provisions of the Housing Act 2004 do not apply. However the risks described above should be borne in mind and there is no harm in registering a deposit if you are unsure.

3. Do I have to grant a tenancy at all?
It will be seen as a tenancy unless a landlord is living in the property and sharing basic amenities with an Olympic visitor. If you are concerned that the visitor could be eligible for an AST then you could adopt a serviced apartment arrangement whereby you provide services which are so extensive that they are incompatible with the tenants presumed right to exclusive possession. This will prevent the occupancy being a tenancy at all and so the protection granted by the Housing Act 1988 will not apply. However, this can be very hard to do in practice.

4. What about HMOs and licensing?
Whether the property is considered an HMO will depend on how many occupiers there are and whether they are occupying as their only and main residence. It is assumed that migrant workers occupy the property as their only or main residence. However, anyone here for a holiday will not be doing so. As always, the advice is to consult your local authority in cases of doubt.

5. I have heard there is some issue with short lets.
Lettings under 90 days inside London can be controlled by local authorities. A number of them will do so during the Olympic period. However, the control is by way of planning and requires a planning permission to be obtained for a short letting. However, a breach of planning is not a criminal offence. The local authority will have to identify the breach and then serve an enforcement notice. It is only once this notice has expired that an offence is committed. Normally these notices give a period of time to put the planning breach right and by the time this is up the Olympics will be over and the short let will have ended. However if you want to be cautious you should be able to obtain the permission for a modest fee.

6. What if the tenants do not leave at the end of the term?
The usual common law principles apply to a holiday let. That is that the tenant must vacate at the end of the tenancy. If they do not then landlords may apply for possession to the Courts the day after the term ends.

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

Is my property an HMO?

For a full definition go to s254 & 257 Housing Act 2004. For those who want a translations, read on.

This area is not straight forward so we have tried to make sense of the legislation and hope that you find this helpful! Basically, there are two definitions of HMO.

1. Whether your property is a house, or a flat, if you rent it out, and the property has 3*** or more occupiers ( note you need to count the occupiers not just the tenant, including children) and these occupiers make up more than one household*, sharing basic amenities ( e.g. kitchen, bathroom), then the property is likely to be an HMO for the purposes of the Housing Act 2004. There are other criteria, for example, the property must be the principal home of at least one of the occupiers. A Student house is considered the occupiers’ principal home thanks to s259 (2)(b). There are exceptions, including owner occupiers, prisons, care homes, student halls of residence, convents.

*For the purposes of the legislation a household includes members of the same family. Family members include partners** and relatives , partner’s relatives, partner’s relatives’ partners.

**Partner = husband, wife, civil partner (i.e. the other half of the couple)

*** Strictly speaking section 254 of the legislation states that 2 occupiers making up more than one household i.e. 2 non-related sharers, is an HMO but schedule 14 contains a series of exceptions which cannnot be HMOs’ and one of these is 2 person properties. Therefore these properties are not HMOs’.

2. A house that has been converted into flats may also be an HMO for the purposes of the Housing Act 2004. If it was converted not in accordance with the Building Regulations 1991, and one-third or more of the flats are let on leases of less than 21 years then the building may qualify as an HMO.

Scenario 1:
• Do you rent out your property?
• Is the property a house or a self contained flat?
• Is it occupied by more than 2 households* who share at least one basic amenity ( e.g. kitchen, bathroom)?
• Do you ( as landlord) live elsewhere ( i.e. you are NOT one of the households)?

If you answered YES to ALL the above questions then your property is most likely an HMO.

Scenario 2:
• Do you rent out your property?
• Is the property a house or self contained flat?
• Is it occupied by more than 2 households who share at least one basic amenity ( e.g. kitchen, bathroom)?
• Do you as landlord live in the property ( i.e. you make up one of the households?)
• Do you have 3 or more unrelated people living in the property with you?

If you answered yes to ALL the above questions then your property is most likely an HMO.

Scenario 3:
• Do you rent out your property?
• Is the property a converted block?
• Does it comprise only self-contained flats?
• Are one third or less of the flats owner occupied [ an owner occupier is someone with a lease of at least 21 years]?
• Was the conversion done before 1991, and therefore not compliant with 1991 Building Regulations?

If you answered yes to all the above questions then your property is most likely an HMO.
NB a purpose built block of flats, built after 1991 will not be an HMO, but its individual self-contained flats may well be.

If you are not sure as to the status of your property, then do look in the legislation here.
Next: The property that I let/manage is an HMO. What does that mean for me?

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

The Localism Act

Most landlords and agents are aware of the current provisions relating to tenancy deposit protection under the Housing Act 2004. Many will also be aware of the damage that has been done to the provisions by the many, many, many, many court decisions. As a reminder two of the Court of Appeal decisions:

Tiensia v Vision Enterprises Ltd (t/a Universal Estates) – a landlord can protect the deposit at any stage, even if more than 14 days have elapsed since it was received, without penalty as long as they do so before the case comes before a court.

Gladehurst Properties Ltd v Hashemi – a tenant could not bring a claim for an unprotected deposit at all once the tenancy was over.

The government has therefore resolved the problems posed by these cases by radically amending the legislation. This is being done by way of the Localism Act, which should come into force on or around the 6th April.

The New TDP Legislation
The changed legislation has three components:
1. Alteration of the current 14 day timescale for protecting the deposit;
2. The closing of current loopholes exposed by the courts;
3. Change to the current regime of penalties.

1. Under the old current provisions the landlord is obliged to protect the deposit and provide the prescribed information to the tenant and any relevant person within 14 days of receipt, however this 14 days will be changed to 30 days from the date of receipt.

2. The decisions in Tiensia and Hashemi will no longer assist landlords who have failed to register the deposit within the 14 days. Therefore, a landlord will be obliged to protect the deposit within 30 days and if he fails to do so he is in breach of the legislation and the tenant can immediately issue proceedings against him or his agent. Protection after 30 days, or after issue of proceedings, is not sufficient to cure the landlord’s failure. Landlords will not be able to argue the Hashemi point once the tenancy is over either as tenants are also going to be entitled to issue proceedings once the tenancy has ended. The so-called ‘must also’ loophole, which allowed landlords to return the deposit to a tenant before a hearing and then assert that the court could not return that money to the tenant and therefore it could not ‘also’ make an award of the three times penalty, has also been closed by the simple expedient of removing the word ‘also’ from the text of the legislation.

3. The draconian three times the value of the deposit penalty will also cease. The court will have a discretionary power to award a penalty of between one and three times the value of the deposit. Therefore, a landlord who has protected the deposit as soon as they became aware of the problem and acted reasonably will be penalised at the lower end of the scale while landlords who have been less cooperative will find themselves penalised at the top end of the scale. If a landlord has however failed to protect they will be liable for not less than a penalty of one times the deposit.

What has changed?
This all means that the Tiensia and Hashemi decisions will not have any force after the 6th April. However, many parts of the legislation are wholly unchanged. There is no change in the definition of a deposit, or the restriction on taking property as a deposit instead of money. So, court decisions which interpret these unchanged parts of the legislation are not affected.

There is no change in the requirement to protect the deposit within a set time after it has been received in connection with an AST. So money that the landlord or agent has obtained which is intended to be used in relation to an AST agreement falls within the legislation.

Therefore, the county court guidance that states that taking the last months rent in advance at the start of the tenancy is probably a deposit remains valid, as does the Court of Appeal decision which holds that a promise to pay money at some future date does not qualify as a deposit, as this requires money to be paid by the tenant with the intent that it will be returned. Likewise, the obligation to serve the prescribed information properly and in full also remains unchanged. It also remains the case that a lettings agent is liable for a failure to protect the deposit and can be sued in preference to the landlord. However, the advent of the new variable penalty would now allow a court to make an order against the agent with the penalty fixed at the lower end of the scale if they were not responsible for registering the deposit.

One component of the Hashemi decision also remains valid that is that any claim for an unprotected deposit must be taken by all the tenants together and not by one acting unilaterally without the consent of the others.

Section 21
Where the deposit has not been registered and the prescribed information not sent to the tenant within 30 days the landlord only really has one option if he seeks vacant possession. That is to hand the deposit back to the tenant and the serve the notice. Landlords will of course not be happy about this as many like the security of being able to call for that money when there are dilapidations, so this is all the more reason for getting it right.

What do you need to do now?
It is not clear whether the new provisions will apply to tenancies that began before the 6th April 2012 however we advise that agents and landlords should begin to check agreements now and register deposits and provide prescribed information if they discover they have not done so to avoid the new scale penalties.

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

Reminder of HMOs’

Local authorities are gaining confidence in using their powers to introduce compulsory additional licensing of HMO landlords.

For example Oxford County Council is celebrating its “groundbreaking new powers” for licensing HMOs. From Monday 30th January every HMO in Oxford City Council’s area must be licensed and “every landlord who owns a property where three or more unrelated tenants live and share facilities such as the kitchen and bathroom will be required to get a HMO licence”.

Cardiff has announced a consultation period to consider extending its HMO licensing to two further wards.

Brighton and Hove City Council is consultation additional HMO licensing.

Nottingham City Council took the step in March 2011 to make an article 4 direction. providing that “from 11th March 2012, it will become necessary to obtain planning permission to convert a family dwelling (Use Class C3) to a HMO with between 3 and 6 unrelated people sharing (Use Class C4) throughout the whole of the Nottingham City Council area. Planning permission is already required for properties shared by more than 6 unrelated people”

The above is but a sample. Many other local authorities are looking to make Article 4 directions. Agents and Landlords are advised that if the property is an HMO, check with the local authority as to their current (and future) licensing requirements.

Given how complex this area is we will blog on HMOs’ further with:
1. Is my property an HMO?
2. My property is an HMO what do I need to do about that (ie the regulations for ALL)?
3. Local Authority says my property needs a licence – what do I need to do and penalties?
4. Council tax and other issues.

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

TDS

We have blogged on the issues surrounding the release of Deposits following possession proceedings here. Many of you will be interested to note that the TDS have replied to this blog here.

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

Security for landlords

From the 1st of this month the Land Registry launched Form LL which allows landlords to register a restriction for free against the title of their home when they do not live at the property. The restriction is designed to help prevent forgery by requiring a solicitor or conveyancer to certify they are satisfied that the person selling or mortgaging the property is the true owner.

Property is usually the most valuable asset people own. It can be sold and mortgaged to raise money and is therefore an attractive target for fraudsters. The properties most vulnerable to fraud are usually empty, tenanted or mortgage-free. To help prevent forgery, absent owners can ask the Land Registry to enter a Form LL restriction on the title.

This is something that landlords that are abroad or far from the tenanted property should consider and agents are asked to consider mentioning this to their clients.

The cynics out there are probably thinking that there is another reason why the Land Registry has released this practise note and it is to do with the compensation they have to pay out when something like this happens however it’s easier to register a restriction than seek compensation when you are abroad.

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

Money Claims- Changes to the rules

From the 19th March 2012 all claims for money only started in the County Court and not already subject to special procedures under the CPR will now be known as “designated money claims”. All of these claims must now be sent to the County Court Money Claims Centre which is based in Salford. The claims will then technically be issued out of the Northampton County Court.

For these money claims the Business Centre in Salford will be the administrative office. When you issue your proceedings you will be required to specify which is your “preferred court” for dealing with matters if the claim gets transferred. The usual rules on transfer will still apply so the claim will if against an individual be transferred to his or her home court. This centre will deal with all matters up to and including the filing of allocation questionnaires. Only at that point will the claim be transferred out.

This is a significant change and reduction in the work which local County Courts will handle in the first instance. Generally for many people issuing money claims themselves it may be easier to simply use Money Claims Online to deal with making the claim rather than paper applications. We wait to see what if any further effects these changes may have on the Courts. You should be aware that if you are contemplating enforcing via the High Court (e.g. by Sheriffs Officers) you may be better advised to issue your claim out of the local High Court District Registry although the rules on financial limits still apply.

Filed under: England & Wales, FLW Article, ,

Can Freeholders charge for Consenting to Underletting?

Most long residential leases today contain some provision about underletting. Often the clause in the lease will require the Leaseholder to obtain the prior consent of the Freeholder or their managing agent. It is when this consent is sought that problems can arise.

As ever the starting point should be the lease. Many leases have a specific provision indicating something along the lines of ” not to underlet without the consent in writing of the Landlord such consent not to be unreasonably withheld”. In those circumstances an application should be made to the Landlord prior to each and every subletting. Recently the Lands Tribunal in the cases of Holding And Management (Solitaire) Ltd v Norton and Bradmoss Ltd, Re 10 Meadow Court considered whether Landlords were entitled to make a charge in such situations.

The LVT at first instance had determined that the Landlord could not recover costs. Consideration was given to Section 19(1) of the Landlord and Tenant Act 1927. The Lands Tribunal made clear that in their opinion Section 19(1) allowed a Landlord as a reasonable condition of granting Consent to require payment of their reasonable costs. Further the Lands Tribunal went on to confirm that in its opinion such a charge would then be a variable administration charge and the LVT had power under Schedule 11 of the Commonhold and Leasehold Reform Act 2002 to determine the reasonableness of the charge. The answer is therefore that the Landlord can recover these costs subject as ever to the lease terms.

At this stage the Lands Tribunal has requested submissions as to the reasonableness of the charges proposed in these various cases and we await further guidance. Clearly Freeholders will have to justify each and every charge they make and to be able to explain how the charge has been calculated both as to the particular development and their own organisation. Hopefully some further guidance will be offered as this is an area which many investor leaseholders often feel that Freeholders simply use as a mechanism to charge high fees to simply profit from the freehold rather than to cover any reasonable costs which they may have incurred. A case of watch this space ….

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

Survey of tenants in private rented sector.

The university of Winchester has launched a survey of tenants in a private rented sector. There is a real shortage of good information about the sector and Tenant’s experiences of it. Again, the government is in danger of making policy decisions in this information vacuum. PainSmith ask all readers of this blog to promote this survey to any tenants in a private rented sector they deal with.

The survey can be found at http://www.survey.winchester.ac.uk/prs

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

LEASE INTERPRETATION: WHAT DO COURTS AND TRIBUNALS LOOK AT?

We have over the past few months referred in our articles to the fact that the starting point for LVTs and Courts in leasehold disputes is the lease itself.

Often residential leases were drafted many years ago and are in a format which even to professionals can be difficult to assess but what are the steps that the Court and LVT go through to determine the terms?

Initially they will go through the document. For a long residential lease all of the terms must be in writing. Some terms will be very clear and easily interpreted. This will often be the case in respect of terms over payment of ground rent and insurance. Certainly for any lease which has changed hands over recent years it should be in a format covering all the major areas such as rent, insurance, service charge, repairs etc as conveyancing solicitors should be checking that the lease complies with Council of Mortgage Lenders (CML) requirements. These requirements require these fundamental terms to be covered in a clear and satisfactory manner.

What is often more complicated is the extent of a clause. This can be particularly true of service charge clauses. Many of these clauses are written in a very general manner with some kind of “sweeping up” clause whose function is meant to be to cover everything not expressly stated. Be warned they do not always work!

The general principle is that clauses are given a meaning which a reasonable person would understand and words are given there ordinary meaning. Courts will not tie themselves in knots in carrying out an interpretation even if the natural meaning gives a strange result. If this is the case other remedies may be open to the parties such as rectification if they can fulfil the grounds. The Courts and LVT will not imply terms into an agreement and will expect all the terms to be present in the document relied upon.

If then a clause is still unclear and or could be interpreted in a number of ways generally it will be decided in a way most beneficial to the person not seeking to rely upon that clause. This is due to the fact that the burden of proof will be upon the person relying upon the clause to prove that meaning. It is for this reason that “sweeping up” clauses often do not achieve the desired effect.

Usually the terms are clear but it is vital that proper consideration is given to the terms. Anyone buying a lease (or a freehold) should understand what the rights and responsibilities under the lease are. Certainly as can be seen in the published LVT decisions often in service charges Freeholders and their Agents try and argue that it would be perverse to not allow them to recover management fees, accountancy fees etc and whilst a Panel may have sympathy if the lease does not cover this the hands of the LVT are bound.

Again early consideration of the contractual terms can prevent disputes and if in doubt parties would be well advised to take specialist advice to avoid costly Court or LVT cases.

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

How to prepare for an LVT Hearing in respect of service charges

For many people having an LVT hearing can be a daunting prospect and there first experience of dealing with a Court or Tribunal particularly in an unrepresented capacity.

For the purpose of this blog post we are specifically referring to applications made under Section 27A of the Landlord and Tenant act 1985 although the principles apply to all LVT cases.

These applications can be made by either the Freeholder or a Leaseholder and the purpose is to determine whether a charge is payable and the reasonableness of the same. In making its determination the LVT will have regard to the terms of the lease and then whether the statutory processes have been complied with.

Whoever makes the application is required to complete an application form. Copies of the forms and guidance notes may be obtained from the Justice department website.

As part of the application you should specify exactly what it is you are seeking. It is important to make this clear so that the LVT is clear what is being sort. Often if the Freeholder this will be the whole of particular years and if the Leaseholder they may wish to object to specific charges. This should be set out clearly and specify which service charge years are being referred to.

The application should have attached to it a copy of any relevant lease and other relevant documents. If it is the Freeholder we would recommend this should include:

• Any and all service charge demands with summaries of tenants rights etc as appropriate
• Copy of relevant lease
• Copy of any Consultation documents etc

If it is the Leaseholder then they should attach:

• Copies of demands received
• Copy lease
• Copy of any consultation notices you have received
• Copies of any correspondence disputing the sums

Remember that the LVT when they first look at the application will want to understand what the claim is about. This will assist the LVT in issuing Directions or listing for a Pre Trial Review (PTR).

If there is an oral pre trial review the LVT will want to use this to identify the issues and then issue clear guidance as to what should happen. It is crucial that both sides consider the case from this point of view. The LVT will not be deciding the case then but making sure all is in order for a hearing.

It is vital that parties follow the Directions given. The time scales are there to help all parties. You should read the Directions carefully and make sure you understand what is required. In particular the fact that you need to supply copies of all documents you will look to rely upon for proving your case. Often the Directions are detailed and very specific for the matters in dispute particularly if there has been an oral PTR.

Generally the LVT cannot refuse to admit documents (even if late) but must give everyone ample opportunity to consider. This could result in a hearing being adjourned if there is a late submission and possibly an application being made that such behaviour should result in a costs penalty (the LVT can order costs of up to £500 a party). If a party attends at a hearing and tries to submit late documents the LVT will consider whether it can give a short adjournment for the other party to consider the documents but the hearing itself could be adjourned. The LVT will not be happy with submissions on the day unless there is a very good reason given the effect this can have on the LVT being able to decide the matter.

It is vital that when preparing for a hearing that a proper bundle is prepared. This should include an Index and the documents should all be paginated in order and placed in a folder. These bundles must be supplied in good time to the LVT office so that the Panel has a reasonable opportunity to consider before the hearing. This will assist the LVT in considering the matter and whilst the panel should not draw any adverse inferences from a late submission they are only human. Late submissions and badly prepared bundles will not assist your case! It is worth asking someone to consider your bundle and submissions to see if a person who knows nothing about your case can properly understand the points you are making and can follow clearly the documents and submissions you want the LVT to understand.

Remember that at the hearing often the LVT will raise there own questions and points and so even if the other side has not raised something the LVT may still do so itself. This is particularly true of making sure that demands comply with the various statutory requirements and or consultation when required.

The LVT panel will usually not have met until the day of the hearing but will have been sent out the bundles etc. If they have received these in good time they will be better prepared for dealing with the case. The LVT will normally be proactive in managing the case in front of them and this is assisted by timely receipt of documents in good order. The panel is there to decide the matter and a case is always helped by good preparation on the part of the parties.

If in doubt about anything then you should refer to the Clerk at the LVT dealing with your case. Whilst they cannot give you legal advice they can help with understanding what is required or that you need to do.

LVTs are used to having parties appear in front of them unrepresented and pride themselves on being user friendly. For both Freeholders and Leaseholders they can effectively deal with matters in a timely way particularly with a well presented case.

We are always happy to advise and if necessary represent Freeholders and Leaseholders with all such applications.

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

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