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, , , , , , ,

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, , , , , ,

EPCs – latest news

Tomorrow 9 January 2013 sees the coming into force of changes in the regulations regarding Energy Performance Certificates.

The government announced these changes to the EPC, and air conditioning inspections regime, on 19 December 2012. The changes come from the EU Directive (Council Directive 2010/31/EU) on the energy performance of buildings (EPB Directive 2010). The directive mainly consolidates the regulations but there are some significant changes in relation to the contents, issue and display of EPCs.

In relation to residential lettings the significant changes are as follows:
• property advertisements are to include details of the energy performance certificate rating ( the A-G rating) where available;
• the requirement to attach the front page of the certificate to any written material is to be removed;
• listed buildings are exempt from the need to have a certificate on their sale or rent.

The above does get around some of the problems that agents have been facing such as how to attach a front page to the particulars on display in the window. However agents will nevertheless have to produce the EPC to potential tenants and there is no additional leniency in respect of obtaining it, and the penalties have not been amended for failure to comply.

Remember the other requirements still apply and you can read about them on our previous blogs here.

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, , , , , , , , ,

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, , , ,

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, , ,

All very frustrating, but what are the options?!

Painsmith has recently encountered the Kafkaesque world of the tenancy deposit protection schemes, specifically the DPS and its new rules relating to the release of the deposit following a court hearing.

DPS is currently refusing to release deposits where the courts have not specifically ordered it and they have changed their rules to reflect the same. Under rule 29 (a) DPS will only release the Deposit if the Court Order specifically refers to the Deposit and how much to be paid out to the tenant.

Several of our landlord clients have obtained a possession order on the grounds of rental arrears and are finding it impossible (or very nearly impossible….or just very expensive) to get the deposit released, even where the contract specifically allows for the deposit to be applied against rental arrears.

Of course it is always open for the tenant to agree the release of the deposit to the landlord, but once possession is obtained many tenants lose interest in co-operating with their former landlord.

In the absence of an agreement from the former tenant the landlord is left to apply to the scheme to ask for the release of the deposit. We believe this should simply be a matter of drawing the scheme’s attention to the court order for possession and rent arrears and the clause in the contract, which allows the deposit to be used against rental arrears, where applicable.

However on more than one occasion recently a landlord’s application to the DPS for the release of the deposit has been refused and the applicant referred to clause 29 of the terms and condition ( see above) and informed that if they want DPS to release the deposit to them they must either arrange for the Court Order to be amended or a Third Party Debt Order to be obtained.

Concurrently, courts are refusing to make orders that would satisfy the DPS rules with many judges refusing to address the issue of the deposit on the grounds that it is a matter for the scheme and they do not want to usurp the jurisdiction of the Adjudicator.

You will recall that part of the point of these schemes was to take the matter of deposit handling away from the courts and instead use an alternative dispute resolution, that is the Adjudicator. However landlords find themselves facing courts that refuse to deal with the deposit because it is a matter for the scheme, and the scheme refusing to release the deposit without a court order so the whole thing becomes farcical.

Painsmith has historically been involved in deposit protection reform and we would suggest that between the schemes and the courts there needs to be some clarification.

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

Energy Act 2011

Many of our readers have heard about the Energy Bill in some form or other.

The Bill was given the force of law on the 18 October 2011.

The basic issue for our readers is that:

• The Act includes provisions to ensure that from April 2016, private residential landlords will be unable to refuse a tenant’s reasonable request for consent to energy efficiency improvements where a finance package, such as the Green Deal and/or the Energy Company Obligation (ECO), is available.

• Provisions in the Act also provide for powers to ensure that from April 2018, it will be unlawful to rent out a residential or business premise that does not reach a minimum energy efficiency standard (the intention according to the Department of Energy and & Climate Change is for this to be set at EPC rating ‘E’).

Before the deadline of April 2018, the Secretary of State will need to pass regulations so that a landlord can not let a property until the above has been complied with. There does not appear to be any indication of when this might be however, the current Energy and Climate Change Secretary Chris Huhne has made his intentions clear about introducing the regulations.

The Act only applies at present to tenancies governed by the Housing Act 1988 or the Rent Act 1977 and so does not apply to Common Law or Company Let agreements but this could change and if it does we shall update. The other issue to note is that the Act does not apply where the EPC has been obtained prior to the Regulations coming into force.

Whether or not landlords believe that this:

“The Green Deal is a win-win opportunity for landlords by removing the upfront cost of work to upgrade the property making it cheaper to run, more environmentally friendly and ultimately more attractive to rent.” (Chris Huhne, Secretary of State)

The fact is that the legislation is coming into force and agents should warn landlords of it so they have more than enough time to carry out the energy improvements.

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

Ground 14

Most of you will have heard about the coalition governments crack down on anti social behaviour especially in light of the recent rioting and looting. However, the coalition government is taking it that one step too far, in our humble opinion, and suggesting that those that are convicted of anti social behaviour should be evicted from rented accommodation even where the anti social behaviour has nothing to do with the rented property.

In August 2011 the Department for Communities and Local Government released its consultation on “A new mandatory power of possession for anti-social behaviour.” The consultation is aimed at making Ground 14 of Schedule II of the Housing Act 1988 a mandatory ground for possession.

Looking at the consultation itself statements that should be noted are:

“It is clearly right that eviction for anti-social behaviour should remain exceptional: the loss of one’s home is a serious sanction and eviction may simply displace the problem elsewhere rather than providing a long term solution.”

“But where landlords turn to possession as a last resort in order to provide respite to communities and as a serious sanction against perpetrators that process can take too long”.

“Most importantly though lengthy possession proceedings mean that the suffering of victims is further extended”.

“….serious anti-social behaviour and criminality beyond the immediate neighbourhood of the property can clearly be taken into account”.

The consultation then asks those that wish to respond to consider the following questions:

1. Do you agree that we should extend the scope of the current discretionary ground for possession for anti-social behaviour and criminality in this way?
2. Do you agree that we should construct a new mandatory power of possession in this way?
3. Are these the right principles which should underpin a mandatory power of possession for anti-social behaviour?
4. Have we defined the basis for the new mandatory power correctly? If not, how could we improve the definition?
5. As a landlord would you anticipate seeking possession using the mandatory power in some or all of the instances where this would be available?
6. Are there other issues related the introduction of a mandatory power for possession for anti-social behaviour that we should consider?

So how to respond in a rational and clearly though out manner, difficult, but here goes.

If Ground 14 is made mandatory both social and private landlords will be allowed to issue possession proceedings not only where the tenant is convicted for anti-social or criminal behaviour but also if the occupier or a visitor of the tenant has such a conviction. So will this lead to problems with the convicted father visiting his children? Does this contradict one of the coalition government’s aims, to promote family life, I think so.

Its quite clear that this consultation is in response to the riots in August and that there was as much though put behind it as Teresa May’s statement about the Right to Family Life and the cat. But whilst the consultation appears to recognise that the court process is too long it makes no reference to why that is and no reference to how that should be improved. Even where landlords have mandatory grounds for rent arrears the process can take too long with agents and landlords taking their frustrations out on us poor, overworked lawyers (its true!).

One has to wonder however with the current housing shortage and the problems that were recognised with the younger generation following the rioting whether moving people on is really the best we can do. We live by the principle that “if you do the crime you must serve the time” but after that time people are entitled to get on with their lives because this justice system promotes the right to rehabilitation. It is obviously very difficult for some to accept this especially where they have been victims of a serious crime but this consultation is not promoting re-habilitation it is promoting ostracising certain sections of the community which can lead to an increase in crime and looting.

This cycle must end and housing, communities and the court system needs investing. Under Ground 14 it is possible to get possession where the tenants are a nuisance in our experience and this is simply going too far.

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

OFT evaluates Foxtons!

Not the company but the infamous outcome of the case.

On the 19th July the Office of Fair trading released a press release on its evaluation of its consumer enforcement case against Foxtons for breaching the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs). In February 2010, the OFT secured an enforcement order from the High Court when it ruled that Foxtons’ renewal commission terms were not transparent, this led to Foxtons amending some of the terms. The evaluation has now found that the OFT intervention has resulted in positive benefits for consumer landlords that use Foxtons with an estimated annual benefit of at least £4.4 million.

The enforcement order relating to Foxtons declared that the terms listed below are unfair, not binding, and may not be used or relied upon in contracts with consumer landlords:

a. Terms which require landlords to pay renewal commission to Foxtons after the sale of their property to a third party because the original tenant remains in occupation.

b. Terms which require landlords to pay a sales commission to Foxtons in the event they sell the property to their tenant.

c. Terms relating to renewal commission, where the tenant remains in occupation, and in some cases an occupant introduced by the tenant, after the initial fixed term where the agent is not asked to provide any additional service.

In this press release the OFT has stated that they are concerned about the number of agents that are unaware of the Foxtons case and have contacted these agents to advise them to ensure that the terms of business are transparent.

If you need help with the terms of business you may be interested to note that we do provide a drafting a service.

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

Localism Bill, AGAIN!

You are probably tired of the posts on this Bill but we thought that some of our readers would be interested to note that Lord Shipley has recommended the following addition:

“Standards for private sector lettings and management agents:

The Secretary of State may by regulations set the standards that private sector lettings agents and management agents must adhere to.”

We would like to hear from anyone on whether they think this is a good thing or not and if so why. If its any consolation to those not wanting what we suspect is an attempt to register agents, we do not think that this will survive the committee stage.

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

Consultation process…

The Leasehold Valuation Tribunal (the LVT) in Southall Court v Tiwari reduced a landlord’s claim for service charge contributions from 48 leaseholders from £2,053.42 to £482.50 per flat. The Landlord was granted permission to appeal to the Upper Tribunal.

The landlord had fulfilled its obligations under Section 20 of the Landlord and Tenant Act 1985, the leaseholders’ however failed to comment in response to the consultation process for substantial works to the roof. The leaseholders’ claimed that the reason for failing to reply was because it was obvious that the matter would be referred to the LVT. The reason for this we assume is because in the report it is stated that “Southall Court has probably been the subject of more applications to the Tribunal than any other property in the country”. On appeal the Upper Tribunal held that where the leaseholders have failed to comment then the landlord is entitled to assume that there are no objections to the works. This is the case even where it is obvious that the matter would be referred to the LVT. The Upper Tribunal held that it was the duty of the leaseholders’ to respond during the consultation process and that in this case where no comments were made the landlord had acted reasonably throughout.

At the LVT the landlord’s expert gave evidence and confirmed that there were no current leaks in the roof and that it could have staggered on for a few more years. The LVT inspected the property and agreed with the expert’s oral evidence. However the Upper Tribunal held that the landlord had a wide discretion as to the programme of works it adopted and applying that principal to this case came to the conclusion that the LVT was not entitled to find that the landlord’s works were unreasonable. This was especially so given the expert findings that the roof had only a further 12-18 months useful life.

The leaseholders’ attempted to argue that the existence of a sinking fund was irrelevant in this matter. However, the Upper Tribunal disagreed with this and dismissed the leaseholders’ attempt to argue that given the small sinking fund it was unreasonable to carry out the works. The Upper Tribunal found instead that the fund made very little difference between the reasonableness of a decision to re-cover the roof now or in 12-18 months time.

The landlords appeal was accordingly allowed and the leaseholders’ were ordered to pay £2,053.42 each.

We have had many agents undertaking block management contact us about the consultation process and we hope that this blog emphasises how important it is for agents to advise leaseholders’ to take part and comment in time.

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

Back Again….

Some of you will note that we have blogged on the Localism Bill previously and the expected changes to the Housing Act 2004 specifically the sections on the registration of deposit. The amendments were not supported by the Commons and it was assumed that alternatives would be proposed. However, no such alternatives have been proposed and Lord Best has therefore introduced the original amendments into the Lords.

The Bill started its committee stage on 20 June and given that in the House of Lords committees are always ‘committees of the whole House’, i.e. every peer is able to contribute a huge number of amendments are expected.

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

Landlords Register………

On the 14th June a Bill was introduced under the 10 Minute Rule. The Bill makes provision for a register of private landlords; to require private landlords to take certain actions in the event of anti-social behaviour by their tenants; to give additional powers to private landlords and local authorities in cases of anti-social behaviour by tenants; to establish a community fund to which private landlords must contribute; and for connected purposes

The 10 Minute Rule allows an MP to make his or her case for a new bill in a speech lasting up to ten minutes. An opposing speech may also be made before the House decides whether or not the bill should be introduced. If the MP is successful the bill is taken to have had its First reading.

The second reading is scheduled on the 18 November 2011. You will as always be kept up to date.

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

Small Claims or what?

Ministers are consulting on increasing the value of disputes that will be allocated to the small claims court from £5,000 to £15,000, or even £25,000, as part of radical shake of the court system as we know it.

The small claims track, which is not a court but a procedure within the county court is designed to serve as a low-cost, user-friendly, informal forum for resolving disputes without the need for a lawyer. A key feature of the track is that in the vast majority of cases legal costs are not recoverable from the losing party which reduces the risks for both sides and encourages economic settlement.

There have been many different opinions on this change ranging from welcoming the news because it will make it easier for consumers to take cases without the risk of exposure to costs, to the concern that a lack of legal representation will lead to inequality between the parties when one party can afford a solicitor and the opposing party can not.  

The agents reading this blog will obviously have concerns about their ability to recover small debts. When they call us for advise they are told that in most cases it is not economical to instruct us to pursue the matter on their behalf. There is also the risk that by increasing the threshold of the small claims track parties will have no incentive to settle sooner rather than later. The financial incentive to save costs rather than pursue a expensive litigation matter will no doubt be eroded. 

 However mediation assessment meetings will be made compulsory in small claims, so to a large extent mediation will become almost impossible to avoid. Agents are therefore advised to familiarise themselves with the mediation process in order to ensure the swift and cost effective resolution of future disputes. 

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

Squatters

No doubt most of you will have heard about squatters taking over Colonel Gaddafi’s son’s £11 million mansion in London. Apparently the group calling themselves Topple The Tyrants claim they took over the house because they “didn’t trust the British government to properly seize Gaddafi’s corrupt assets”.

Whatever your opinion on the above is and on squatters in general most clients that we assist with these matters continue to be taken aback when we inform them that squatting is not a criminal offence. It really isn’t….

However the UK Coalition Government is now proposing to make squatting a criminal offence and have in the meantime published some guidance to assist those with squatters.

Section 7 of the Criminal Law Act 1977 states that it is an arrestable offence for a squatter to fail to leave a residential property when asked to do so by a residential home-owner who wishes to occupy the property. There is therefore a criminal element which allows the police to assist and to enter and arrest anyone suspected of criminal damage and theft.

We have all heard the myth of “squatter’s rights” which is in fact no such thing. Section 6 of the Criminal Law Act 1977 makes it an offence to use violence or threats of violence to gain access to premises when there is someone in the premises who is opposed to such entry. However, this does not apply to an occupier who does not have a right to be there and was introduced to protect for example, tenants from unscrupulous landlords.

Whilst the legislation will be welcome there does not seem to be any indication of when it will be introduced. Whether you believe that this is something that should be legislated on when we are in the middle of a financial crisis or whether people should take responsibility for their own properties is of course a debate for another day.

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

Changes to Court Procedures

The UK coalition government has published proposals to reform the way cases are handled in the county courts. In respect of housing litigation, the proposals include retaining the £1000 small claims limit to housing disrepair cases and the provisions of the protocol mandatory for rent arrears and mortgage possession cases.

The deadline for responses to the consultation is the 30 June 2011.

The protocol for rent arrears applies to social landlords, such as local authorities and housing associations, not to private landlords.

The protocol reflects the guidance on good practice given to social landlords and private registered providers in the collection of rent arrears. It recognises that it is in the interests of both landlords and tenants to ensure that rent is paid promptly and to ensure that difficulties are resolved wherever possible without court proceedings.

Its aim is to encourage more pre-action contact between landlords and tenants and to enable court time to be used more effectively. The protocol requires specifically for the landlords to contact a tenant as soon as possible after the tenant’s rent arrears accrue, to discuss the arrears, the tenant’s financial position and his or her entitlement to benefits.

The protocol no doubt leads to suspended possession orders in order to allow the tenant the opportunity to repay the arrears however, given the current problems we have with court backlogs this is a welcome consultation as it is hoped that it will assist with reducing the number of claims issued.

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

Fire Safety in Wales

On the 7 April the Domestic Fire Safety (Wales) Measure 2011 became law.

The legislation requires the installation of a fire suppression system (sprinkler system to you and I) in all new or converted residential properties. Landlords will be required to ensure that the system is operating effectively prior to the start of the tenancy.

With any new or converted build when applying for building consent this legislation will also need to be complied with. This means that along with the standard drawings for the build there must be paperwork about the fire suppression system. If these details are incomplete or insufficient this will delay the building works altogether.

Failure to comply with the legislation will result in a maximum fine of £5,000 and will be enforced by the local council.

Filed under: England & Wales, England only, ,

Fire Safety Update.

Many of our readers will recall that we previously blogged on the Fire Safety (Protection of Tenants) Bill 2010-11. Although we stated in this article that the Bill was unlikely to be made law, we thought it may interest some to note that the second reading of the Bill is now scheduled for some time in October this year.

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

Making better use of Energy Performance Certificates and data.

On 2nd March 2011 the Department for Communities and Local Government released a publication detailing consultations on the effectiveness of EPCs in a number of areas.

The Climate Change Act 2008 commits the UK to a statutory target to reduce its carbon emissions. With the UK dedicated to reducing its emissions by 80% in 2050 any strategy that assists with this target is going to be welcome. The EPC provides vital information on the energy efficiency of buildings which allows the government to assess whether we are on the way to the target reduction.

Therefore the consultation is aimed at improving the effectiveness of the EPC with a view to making better use of the energy performance data.

The consultation while wanting to improve and enhance the use of the EPC it is also looking to extend the scope of the requirement to include:

Houses in Multiple Occupation (HMO)
At present the law does not require EPCs to be produced when rooms are rented out in a HMO property however, the recommendation is for EPCs of the whole property to be made available to prospective tenants. This will ensure that from the outset when the first room is let the Tenant will have access to a valid EPC of the whole building. As a valid EPC lasts 10 years the obligation on the Landlord is unlikely to be considered onerous.

Short Term Holiday Lets
At present EPCs are not required for short term holiday lets as people renting a holiday home for a short period of time would be unlikely to consider energy efficiency when selecting a property. However the DCLG proposes that EPCs should be required if holiday lets are rented out for a combined total of four months or more in one year. This ensures that properties rented for less than four months are still immune from the requirement.

Extension of Display Energy Certificates to a Commercial Building
A Display Energy Certificate is like an EPC except it records the actual energy consumption of that building up to a period of three years. The recorded energy consumption must then be displayed as a certificate in a similar format to an EPC. Currently they are only required for public buildings larger than 1,000m2 and are required to show how efficiently the building is operated. The Certificate is accompanied by an Advisory Report which sets out three levels of cost-effective improvements which can improve the building’s efficiency.

Given that commercial property is responsible for 18% of carbon emissions in the UK the proposal to extend DECs to commercial properties is an attractive one. Current government plans aim to reduce the floor area in public buildings to 250m2 and it is hoped that the DCLG proposals to initially pilot the scheme voluntarily to commercial buildings will be taken up.

Finally the DCLG is also looking to clarifiy when an EPC is required on the sale or letting of building. The DCLG has put forward a proposal to amend Regulation 5(2) of the 2007 Regulations making it clear that the Regulations require Landlords to make an EPC available to a prospective tenant as soon as they request either information about or to view a building, and they further seek to remove the opportunity for Landlords to defer making an EPC available until contracts are exchanged on sales. The amendment is not a complete rewording of the regulation but clarification that Landlords must make an EPC available at the earliest opportunity.

Whether you like or dislike the introduction of the EPC, buildings account for 50% of the UKs carbon emissions and a reduction is needed.

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

Localism bill

As some of you will recall we mentioned some possible changes to the Tenancy Deposit Protection legislation. These TDP changes do not however, appear to have survived the committee stage of the bill. This is not to say that they will not get back in later but it is of some concern that what we considered to be improvements has been overlooked.

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

Deposits, set for change?

The Localism Bill rather surprisingly (or not, depending on which side you are on) includes new sections which are designed to make amendments to the Housing Act 2004 and specifically to the tenancy deposit protection provisions.

The changes are intended to clarify the concept of ‘initial requirements’ and remove the late protection loopholes as discussed in Draycott v Hannells and Tiensia v Universal Estates. The Bill also hopes to remove the loophole of returning the deposit to the tenant in full prior to any proceedings and then asserting that s214(4) does not apply because in the absence of a deposit they can not be subject to the three times penalty.

If the changes are implemented tenants should find it far easier to pursue landlords or agents who have failed to protect their deposits and landlords will not be able to register the deposit and escape liability after the initial 14 day period.

From the landlords point of view the changes are an improvement because it is hoped that the law will be a little more certain with less grey areas and loopholes! The Bill will also be introducing a variable penalty rather than a fixed 3 times the deposit penalty. The tenant will be entitled to their deposit back or have it paid into the custodial scheme and then will also receive a further sum of money equivalent to not less than the deposit and not more than three times the deposit.

The benefit of this regime for the landlord is that when making an order the Court will consider why the landlord did not protect the deposit, what the landlord knew or should have known about his obligations, and how quickly he resolved the situation. This means that landlords that are still ignorant of the legislation may still be penalised but they may be subject to a more manageable penalty.

It is not certain or clear whether the amendments will make it into the legislation but given the case law surrounding this issue it is likely that the amendments will become law.

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

Oxford, again….

We have been provided with a copy of a letter that Oxford City Council is distributing to relevant parties in the lettings industry.

As regular readers will know, the Labour government amended the planning use classes in April 2010 to limit the C3 use class and created a C4 use class for HMOs’. We reported on this here.

After the election the new coalition government amended the General Permitted Development Order to allow movement between the C3 and C4 classes. This was reported here.

Local Authorities can opt out of the GPDO by making an Article 4 Direction and requiring planning permission to switch from C3 to C4 use. Oxford is stating that they have a shortage of housing and a high demand for HMO accommodation. This might appear to be inconsistent with a policy of increased planning control but Oxford justify the policy by stating that there is a shortage in all types of accommodation and that wholesale conversion to HMOs in all areas means that other areas are not satisfied. However, Planning Policy Statement 3 requires local authorities to adopt planning policies that provide sufficient living accommodation for all types of use. It will be for Oxford to show that their new restrictions on HMO accommodation do not violate this policy statement.

Finally, there is some doubt as to whether Oxford’s article 4 Direction will actually matter. As we explained in this post the fact that a property use moves from one use class to another does not automatically mean it is a material change of use, which requires planning permission.

It should also be noted that Oxford is not permitted to charge a planning application fee for applications made as a result of an Article 4 Direction and one possible way of frustrating the proposals is simply for a large number of landlords to make applications thereby tying up resources.

Thank you to Mark at College and County

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

HMO Changes in Northern Ireland

Some key changes in the way HMOs are operated are forthcoming in Northern Ireland.

Currently the legislation governing HMOs is part IV of the The Housing (Northern Ireland) Order 1992. This is being amended by some new and proposed legislation.

The first change is being made by the Housing (Amendment) Act (Northern Ireland) 2010 which was passed on 13 April 2010, although it has yet to come into force. The new Act makes a small amendment to the 1992 Order in order to clarify the definition of HMO. Currently the definition of an HMO in article 75(1) states that:

house in multiple occupation” means a house occupied by more than 2 qualifying persons, being persons who are not all members of the same family.

The change amends article 75(1) to make clear that the definition of family is to include “uncle, aunt, nephew and niece”. Apparently this is to recognise that members of an extended family increasingly live under the same roof while still forming one household.

The second change is proposed as part of the consultation on the Draft Regeneration and Housing Bill. Much of the bill is of little interest to the PRS. However, the key alteration is to who deals with the setting of HMO standards and creation of schemes. Currently the Housing Executive is required to prepare and submit a scheme to the DSDNI for its approval. This power is now to be devolved to individual councils. This will allow for HMO schemes to be tailored by each council to their individual needs but has the downside, which has been evident in England & Wales of massive differences between individual local authorities. This may be reduced by the fact that the DSDNI has to approve each scheme but there is the danger that disputes over the contents of different Council schemes will lead to a raft of wasteful litigation. These issues do not appear to have been addressed at all in the consultation document.
This consultation is available for responses until 26 April 2010.

Filed under: Northern Ireland, , ,

Long Leases in Scotland

Those who know about Scottish law will be aware that it is not now practically possible to create a lease in excess of 20 years in Scotland. Additionally, feus were prohibited in 2000 and most were converted into an ownership for the vassal. A similar arrangement is now being proposed for certain long leases which have survived previous reforms.

The Land Tenure (Reform) Act 1974 acted to prevent longer leases occurring because it allowed landlords to terminate the lease at any point after 20 years. This meant that no tenant would normally be prepared to enter into any such arrangement and longer leases accordingly dropped away. However, some leases, created prior to that Act, are still in existence and were not removed by the various legislation in 2000 and 2003 which aimed at removing feudal tenures. Some of these leases are ludicrously long (one million years in the case of several in Paisley). In 2006 the Scottish Law Commission produced a report suggesting a further ‘clean up’ of these anomalous leases by converting what it called ‘ultra-long’ leases into a right of ownership.

The Scottish Executive has responded to this report by producing a consultation supplemented by a draft bill in which it proposes converting any lease for more than 175 years which has more than 100 years left to run into a right of ownership for the tenant.

The proposed bill contains mechanisms for sporting rights to be preserved for landlords. This is unsurprising as one of the reasons for the creation of such leases was to preserve these rights for landlords whose primary interest in the land was for its leisure facilities. They are also of substantial value in some cases and there would be difficulty in compensating landlords for their loss. The bill also proposes to compensate landlords for the loss of their title in the land to be based on the rent level and calculated in a similar manner as was carried out during the abolition of feus. There are also provisions for higher levels of compensation to be payable in certain limited circumstances if the landlord serves an appropriate notice on the tenant. It is intended that higher levels of compensation will be payable by way of instalments.

The consultation continues until 30 June 2010.

Filed under: Scotland, ,

Welsh Consultation

The Welsh Assembly is currently consulting on a series of changes to Landlord and Tenant law in Wales. Housing is now a fully devolved competency for the Assembly and they appear determined not to simply follow blindly in the footsteps of England.

The consultation, entitled the Private Rented Sector in Wales looks at a number of changes to the structure of the sector, many of which have been discussed or brought into force already in relation to England.

The proposals that the assembly are considering are:

  • A national landlords register
  • Independent regulation of letting and managing agents
  • A review of why tenancies end with the aim of encouraging landlords to offer longer term tenancies
  • An increase in the Housing Act 1988 rent threshold from £25,000 as has already been carried out in England
  • Improving the data collected on the sector
  • These are all things which have been considered in England or actually implemented in England or Scotland. However, in England there is unlikely to be much further action due to the intervention of the election and the changing priorities of any new Government. Wales may well find itself leading the way, therefore, as they have the time (and energy) to enact some of these measures.

    This may well represent the beginning of a sea change in Landlord and Tenant law with the growth of a new type of lawyer, one who specialises in Welsh matters.

    The consultation closes on 14 May.

    Filed under: Wales only,

Landlords Warranties and Agents

We have been pondering the new proposals from the Government in response to the Rugg review. Many of them are as expected.

What is deeply concerning about the proposals is one specific aspect of agent regulation. One of the key requirements of any regulation regime is “Enforceable undertakings around the quality of stock let and managed by agents (including energy efficiency)”. This represents a potentially radical change in the legal position.

It has long been the case that landlords make no warranty as to the fitness for habitation or the suitability of the properties they let. To use the words of the House of Lords, “Caveat Lessee”. Additionally, it has generally not been the case that agents have a liability for their landlord’s actions. These proposals seem to wish to change that position.

If it is the case that agents have to give undertakings on stock quality they will then be forced to impose those undertakings on their clients. However, a landlord who is not using an agent will not have the same requirements and will not have to warrant the quality of their stock. This is plainly iniquitous. The position could be even more unfair where an agent is not managing the stock and is employed solely on a let-only or tenant-find basis. If the sole role of the agent is to find a suitable tenant and set u a tenancy then they should not have to give any undertaking as to the quality of the stock after the expiry of their instruction.

Additionally, this will mean that agents increasingly will be fixed with liability for the actions of their principals. Of course, this already occurs to some extent. Agents have liability for Gas Safety Certificates, some liability in relation to improvement notices under the HHSRS where they are collecting the rent, and a degree of liability for failure by landlords to register tenancy deposits. However, it is debatable whether this liability should be extended further, particularly where individual landlords do not themselves have such a liability.

Any situation where landlords using agents are held to a stricter standard than those not using agents is plainly ludicrous. Agents already do much to improve the quality of management and standards in the properties they are involved with simply be promulgation of good advice and best practice. To add a formal requirement that agented properties should have a standard of fitness that does not currently exist is simply wrong. If the Government wishes to address this issue then the answer is to bring forward legislation that alters the Common Law position on landlord’s warranties.

If this is the sort of proposal that the current Government believes is appropriate for the industry then lettings agents could be forgiven for hoping that it is not returned to office later this year.

Filed under: England & Wales, , ,

New Announcements on HMOs

The Department for Communities and Local Government has today published its response to comments made on a previous consultation on the planning status of HMOs and has also launched a new consultation in relation to additional and selective licensing powers.

In July 2009, the CLG launched a consultation on possible ways to deal with the creation of ‘HMO ghettoes’, where large numbers of HMO properties cluster together in a small area. We reported on this here. This issue is particularly prevalent in areas with high student populations. There were several proposals to deal with this but the most highly advocated, and the one most supported by the consultation was to create a new planning use class specifically for HMOs. Currently, dwelling-houses make up the C3 use class and are defined as properties comprising one household with up to 6 occupants. The definition of household is unclear but is not the same as that used by the Housing Act 2004. HMOs falling outside this class were uncategorised and required planning permission to be sought but a large number of smaller HMOs fell within the class and had no involvement from planning officers. The proposed changes will mean that a new use class is created which will be for HMOs specifically and will replicate the definition in s254 of the Housing Act 2004. That is properties rented to three or more occupiers where those occupiers do not form one household. The change will be implemented by an amendment to the Town and Country Planning (Use Classes) Order 1987 which will come into effect on 6 April 2010. In short, properties to be rented to three or more sharers after that date will require planning consent. This change has enormous potential effects. A large number of properties are let to small groups of sharers and are therefore HMOs without ever becoming licensable. Properties that are to be let in this manner after 6 April will require planning permission to be sought in advance. As the government accepts, this will lead to a significant rise in planning applications. What it appears not to have realised is just how large that rise could be and, in addition, that there will be a concomitant rise in planning appeals. It is not yet clear whether an application for the new use class will be met by an addition of that class to the current one or whether the use class will be changed. If it is the latter then landlords will, of course, need to make another application to change the use back again if they wish to let to a family. Landlords will therefore need to choose between letting to families or as an HMO or resign themselves to making regular applications for a change of use.

In addition the the response the CLG has published a ‘short’ consultation for a change in the process by which local authorities gain permission for additional and selective licensing schemes under the Housing Act 2004. Additional licensing allows for a local authority to license HMOs that fall outside the mandatory licensing set by Government. Selective licensing allows for the licensing on non-HMO landlords in areas of low-housing demand where there is a problem with anti-social behaviour. Currently in order to be permitted to carry through such licensing a local authority must carry out a consultation exercise and then seek the permission of the Secretary of State to go forward. The intent is to give a blanket permission to all local authorities so that they need merely carry out the consultation exercise. On the face of it this seems perfectly reasonable. However, when we consider that a number of authorities have been refused permission for additional or selective licensing or have been asked to provide more information then there must be doubt as to whether it is appropriate for this control to be removed. There is certainly a danger of a number of costly and time-consuming judicial review applications in order to challenge the local authority consultation process. For a landlord facing a prosecution such action, while unattractive, may be preferable to a substantial fine.

Although the Government, in announcing these measures reiterated their commitment to a landlord registration scheme this is something that will require primary legislation and, unsurprisingly, will not make it into this Parliament and, unless Labour wins the election, presumably not into any Parliament. One is therefore left to wonder if the latter measure is an effort to introduce partial landlord registration by the back door.

We do not usually comment on political matters, but it is disturbing to see these measures, along with others, being introduced in very short order in April. It immediately gives rise to concerns as to the level of consideration that has been given to the measures and their likely effects. It also gives the appearance of measures being forced through prior to an election in order to score points with the electorate or simply on the basis that the Conservative party, should they win an election, will be too busy to reverse them. One hopes that is not what is going on but if it is then it is sad to see cheap political point-scoring at the expense of the private rented sector which houses a significant percentage of the population and makes a substantial contribution to, an already weakened, economy.

Filed under: England & Wales, , ,

Building Regulation Consultation

The Department of Communities and Local Government has today (just in time for Christmas!) published a new consultation regarding the authorisation of self-certification schemes under the Building Regulations. Essentially as the Regulations have become more complex they have become difficult to police effectively. This was recognised back in 2002 and was dealt with by licensing certain organisations (such as CORGI, FENSA and OFTEC) to ensure that their members carried out work to the appropriate standard. Therefore where work had been carried out by a member of an approved organisation it could be assumed that it complied with the Regulations and it would not need to be inspected by the relevant local authority’s building inspectors.

Over time this system has got a bit mixed up due to slightly differing standards applied to and adopted by various licensing organisations. This has led to suggestions that work done by one organisations tradesmen is of a lower standard than another which also causes an unfair competition model.

In an effort to resolve these issues the Government has already suspended the certification of new bodies and now plans to provide new criteria for certifying approved bodies. Existing bodies will have to be recertified under the new criteria.

The consultation itself is on the nature of these criteria, the new application process and the consumer protection aspects. The consultation closes on 19 March 2010.

Filed under: England & Wales, , ,

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