Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

Deregulation Act 2015

The long awaited Deregulation Act received Royal Assent on Thursday 26 March 2015 and provides an immediate amendment of the law in relation to tenancy deposits. These changes are very welcome for landlords following the flurry of cases following Superstrike v Rodrigues.

The Superstrike amendments:

  • If the deposit was received before 06 April 2007 and went period before 06 April 2007

The position set out in Charalambous v Ng  continues to apply.

  • If the deposit was received before 06 April 2007 but was renewed or went periodic after 06 April 2007

If the deposit has not been protected, the landlord now has a period of 90 days from 26 March 2015 (or before the Court hearing to determine a tenant claim for compensation or to determine the landlord’s claim for possession under s.21, whichever is the earlier) to protect the deposit and serve the prescribed information.

  • If the deposit was received after 06 April 2007

If the deposit has been protected and the prescribed information served at the outset, provided the deposit remains the same with the same scheme, the landlord will be treated as if he/she has complied. There is no need to re-protect the deposit and/or re-serve the prescribed information on renewal or roll over into a period tenancy.

If the deposit has not been protected at all, the Act doesn’t change the landlord’s liability.

Other Tenancy Amendments

The Act also provides many other amendments not only relating to landlord and tenant law. For our readership, the following are important:

  • Section 30 clarifies PainSmith’s view (see our blog here) that an agent can sign and serve the prescribed information on behalf of the landlord. The section amends The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 to make this explicit without the need to refer to the primary legislation. All references to “the landlord” within the Order have been amended to read “either the landlord or a person who acts on the landlord’s behalf in relation to the tenancy”.

 

  • Section 35 of the Act removes the requirement from s.21(4)(a) for the date of expiry of such a notice to be the last day of a period of the tenancy.

 

  • Section 36(2) provides that a s.21 notice cannot be given during the first 4 months of a tenant’s occupation under a tenancy agreement. This gives the tenant the same 6 month security of tenure but makes timing of the notice trickier where possession is required at the end of a 6 month term.

 

  • Section 36 also provides that a s.21 notice will only have a shelf life of 6 months after which possession proceedings cannot be issued on the notice. This is contrary to the previous approach that the Courts were taking that a s.21 notice could be relied on until it was waived.

 

  • Section 37 allows the Secretary of State to require landlords to use prescribed forms for s.21 notices. There is currently no prescribed form but Section 37 leaves it open that this might change.

 

  • Section 40 requires a daily apportionment of rent to be paid back to the tenant in the event that the tenant has paid rent in advance but a s.21 notice is subsequently served requiring the tenant to give up possession of the property during the period that the rent payment covers.

 

The Act also contains provisions to prevent the retaliatory eviction of tenants following orders being made by the local authority relating to disrepair at rental properties. The provisions are set out in Section 33 of the Deregulation Act but they are not yet in force. Watch this space for further details on the enactment of these amendments, which is expected to be towards the end of this year.

Filed under: England & Wales, , , , ,

The Assured Tenancies and Agricultural Occupancies (Forms) (England) Regulations 2015

Some of you may have seen that as at 6th April 2015 new forms have been prescribed for certain notices and applications with the most relevant to our readership being those in respect of Section 8 and Section 13 of the housing Act 1988 (as amended).  We will be updating the Notices for sale on our Shop and also those contained in our Document Vault (for our Helpline subscribers) and will put up a post once done.

In the meantime you should be aware that if from the 6th April 2015 you are looking to serve one of these notices it must be in the new form or it will be invalid.

So what are the changes?

In the main they are minor changes to the guidance notes.  With regards to the Section 8 Notice it is to take account of the fact that two new grounds (Grounds 7A and 14A) have been enacted. For the section 13 notices it is to update them to provide that the forum for referring any rent not agreed is the First Tier Tribunal (Property Chamber) which now undertakes the functions of the Rent Assessment Committee.

So the changes are minor and probably practically make very little difference for most of what you do, but be warned the new notices must be used or you do run the risk of any reliance you place on such a notice being challenged!

Filed under: England & Wales, , , ,

I predict a riot – Anti-social behaviour Crime and Policing Act 2014

The Anti-Social Behaviour Crime and Policing Act 2014 (the Act) was given royal assent in March 2014. It amends the Housing Act 1988 to include a new mandatory grounds for possession based on anti-social behaviour. Sections 97 to 100 ( in Part 5) of the Act deal with the new grounds for possession relating to Assured Tenancies ( of which Assured Shorthold Tenancy is a subset). These provisions are not yet in force, and will come in via a Commencement Order sometime in the future.

New ground 7A

In summary ground 7A of schedule 2 of the Housing Act 1988 will provide that the court must give possession if any one of 5 conditions are met:

1. the tenant and/or another occupier or visitor has been convicted of a serious offence and that offence took place in or near the property; or elsewhere but against a tenant/occupier of the property; or against the landlord or agent
2. the tenant/occupier or visitor has breached an injunction to prevent nuisance and annoyance( which is a new injunction to be introduced under this act)
3. the tenant/occupier or visitor has breached a criminal behaviour order ( also new order under this act) and that breach was in or near the property, or caused or was likely to cause harassment to a tenant/occupier or landlord/agent, wherever it took place.
4. the property has been closed down under s73 of the Act. The court has a power to prohibit entry to a property where the use of the premises has resulted in or likely to result in serious nuisance to members of the public.
5. the tenant is in breach of an abatement notice relating to statutory nuisance ( breach of Environmental Protection Act 1990 or noise nuisance

The grounds will not be made out if the conviction is in the process of appeal, or has been overturned.

There are time limits: for example for 1,3 and 5 the notice must be served within 12 months of the conviction; for 2 within 12 months of the court making its finding; and for 4 within 3 months of the closure order. The date that the notice expires and after which the landlord could bring proceedings will be one month from the date of service during a fixed term tenancy, or for periodic tenancies, the earliest date that the tenancy could be brought to an end by a notice to quit. Interestingly the reference to the common law principal of notice to quit suggests that in a periodic tenancy, where a landlord can give only two months’ notice at any time, a notice given under 7a will need to expire at the end of a period of the tenancy.

Why ground 7A? Because the mandatory grounds for possession go from 1-8 so this ground has been shoe-horned in at no 7A and is not related to ground 7.

Will it ever be used? In a fixed term then possibly, especially if the fixed term is for a relatively long period with no break clause. In a periodic tenancy arising after the end of a fixed term, unless and until the use of section 21 is limited, why use ground 7a, which would require a hearing and expire at the end of a period, when you could simply serve two months’ notice under the ruling in Spencer v Taylor and the accelerated procedure.

The discretionary ground 14 is also to be amended to make it a ground if the tenant or occupier “has been guilty of conduct causing or likely to cause a nuisance or annoyance to the landlord of the dwelling-house, or a person employed (whether or not by the landlord) in connection with the exercise of the landlord’s housing management functions, and that is directly or indirectly related to or affects those functions”. There is no need for the conduct to take place at the rented property.

Controversially, ground 14ZA is added to include that the tenant/occupier has been
convicted of an offence which took place during, and at the scene of,
a riot in the United Kingdom.

Filed under: England only, , , , , ,

Spencer v Taylor and Superstrike v Rodrigues revisited.

Spencer v Taylor [ 2013] EWCA Civ 1600

The Court of Appeal ruled that when serving notice on a tenant in a statutory periodic tenancy, provided there was once an initial fixed term, Landlords may serve valid notice by giving not less than two months’ written notice i.e according to the provisions of section 21 (1)(b) of the Housing Act 1988. There is no need for the notice to expire at the end of a period of the tenancy; even if the period is six months, the Landlord need only serve two months’ notice in writing.

We blogged on this here.

So why are we bringing it up again? Our original blog advised caution in moving over to the practice of serving notices on statutory periodic tenants under s21 (1)(b) on the basis that the tenant might appeal, and that the decision might take time to trickle down to the lower courts. Indeed the tenant did apply to appeal the matter to the Supreme Court but has been refused leave to appeal, which means that the Court of Appeal decision continues to be good law unless and until a new case on the same issue reaches the Supreme Court.

Helpline subscribers can access a notice that follows the ruling in Spencer v Taylor from our document vault to use in statutory periodic tenancies.

Where there was never an initial fixed term, or where a fixed term is expressed to continue on a contractual periodic basis, the provisions of section 21 (4)(a) should be followed.

Superstrike Ltd v Rodrigues [2013] EWCA Civ 669 (14 June 2013)

When a fixed term assured shorthold tenancy ends, a statutory periodic tenancy arises. That tenancy is a new tenancy for the purposes of the deposit protection legislation ( ss212 to 215 Housing Act 2004 as amended by the Localism Act 2011). At the end of the fixed term the Landlord/Agent is deemed notionally to have returned the deposit and then re-received it. This means that the requirements to comply with the deposit protection rules kick in once more – you need to protect the deposit in a government authorised scheme and serve the appropriate prescribed information.

We blogged on this here

So why are we bringing this up again? Because although our advice has always been to re-serve the prescribed information, we did not know how the courts were going to apply Superstrike. We have had brought to our attention the case of Gardner v McCusker. In this county court case the Landlord had failed to (re)serve the prescribed information when the tenant’s fixed term ended and a statutory periodic tenancy arose and then served a section 21 notice. The court found that the landlord had not complied with the deposit protection requirements and that the section 21 notice was invalid. One swallow does not make a summer. This is one county court decision. It is not binding on other courts. However, why risk the point being raised and exposing yourself to a penalty and failed possession proceedings? There are plans afoot to amend the deposit protection legislation with amendments to the Deregulation Bill which is currently going through Parliament. A court decision might come along which says that the prescribed information served in the fixed term satisfies the requirement to serve when a statutory periodic tenancy arises. Until then, just get into the habit of serving new prescribed information whenever an SPT arises and save yourself some trouble later.

Filed under: England & Wales, , , , ,

Section 21 news ( and comment)

Spencer v Taylor [ 2013] EWCA Civ 1600.

The Court of Appeal has recently revisited the requirements of section 21 of the Housing Act 1988 and its application to statutory periodic tenancies, which in due course is likely to significantly alter and simplify the way notice is served on statutory periodic tenants of an Assured Shorthold Tenancy (AST).

The facts

The Landlord, Mr Spencer, served notice on his tenant, Miss Taylor who was on a weekly statutory periodic tenancy following on from a fixed term agreement. From the transcript of the judgment it would seem that the notice was sent in the usual format that most agents use, and was a “standard” section 21(4)(a) notice. (There is no statutory required standard form but a customary standard form has developed).

The expiry date was in the format approved in the case of Elias v Spencer, i.e. it required possession “after 1/1/2012 or (b) at the end of your period of tenancy which will end next after the expiration of two months from the service upon you of this notice” (i.e. the “saving provision” as approved in Lower Street Properties v Jones.

Possession proceedings were brought once the notice expired. The tenant defended the proceedings arguing that the given date of expiry of the section 21 notice was not the last day of a period of her tenancy and that the saving provision gave a second date, which invalidated the first. In other words a continuation of the interpretation of the requirements of section 21 (4)(a) Housing Act 1988.

The tenant defended successfully in the first instance. The Landlord appealed successfully in the High Court. The Tenant appealed to the Court of Appeal.

The Court of Appeal

The appeal judge hearing the tenant’s appeal in the Court of Appeal, Lewison LJ, concentrated on the requirements of section 21 as a whole, starting with section 21(1) finding:

1. The fixed term tenancy came to an end on its expiry date for the purposes of section 21(1)(a).
2. No other tenancy had come into existence save for a statutory periodic tenancy (which we now all know is a new tenancy following Superstrike!).
3. The landlord gave the tenant two months’ notice.
All three conditions of s21(1) were satisfied and therefore the court could give possession

The significance

To go back (briefly) to basics: section 21 of the Housing Act 1988 provides the mechanism by which a landlord can recover possession of his property that has been let on an AST. A court can grant a possession order under section 21 (1), or under section 21 (4) if certain conditions are satisfied.

Prior to the judgment in this case, the courts have been finding that section 21(1)(b) applied only to serving notice during the fixed term of an AST. This line of thinking is supported by section 21(2), which provides that notice may be given under section 21(1) before or on the day the fixed term comes to an end, even if a statutory periodic tenancy arises part way through the notice period.

Once a statutory periodic tenancy had arisen, it was understood that section 21(4)(a) applied: “without prejudice to any such right as is referred to in [s21(1)], a court shall make an order for possession of a [property] let on an AST which is a periodic tenancy.

The requirements of section 21(4)(a) are that: “…the landlord…has given to the tenant a notice in writing stating that, after a date specified in the notice, being the last day of a period of the tenancy and not earlier than two months after the date the notice was given, possession…is required by virtue of this section”; and “…that the date specified…is not earlier that the earliest day….the tenancy could be brought to and end by a notice to quit…”

It is well known in the industry that adhering to the requirements of section 21(4)(a) have been tricky to the point of ridiculousness. Possession claims have historically been thrown out of court simply because the landlord required possession on the wrong date, or asked for possession “on” a date, rather than “after” (see Fernandez v McDonald [2003] EWCA Civ 1219). There has been much case law interpreting section 21 (4)(a), some of it to alleviate the harsher requirements of the section, ( see for example Lower Street Properties v Jones in which the court approved the use of the “saving provision” to avoid the risk of putting an incorrect date on the notice).

The law therefore is now that a landlord wishing to gain possession of his property let on an AST which was a fixed term and has become periodic needs to give only two months’ notice in writing, pursuant to section 21 (1)(b) and need not concern himself with rental periods.

So what about section 21 (4)(a) and the case law surrounding it? Fernandez v McDonald [2003] EWCA Civ 1219, the leading case that requires notices under s21(4)(a) to demand possession “after” rather than “on” a date? Lord Justice Lewison considered that that case fell “squarely within section 21(1) rather than section 21(4)”. However he emphasised that his comments on Fernandez v McDonald were not part of the “ratio decidendi” of the case ( i.e. not part of his judgment). Therefore the case law surrounding section 21 (4) ( a) remains good law, but it is section 21 (1)(b) that governed Spencer and Taylor, and by extension any notice served on a periodic tenancy ( statutory or otherwise) that was once a fixed term.

Comment

This judgment is surprising perhaps in that it has come apparently out of the blue, when agents and solicitors up and down the country have accepted ( if reluctantly) the difficulties and specific requirements of serving valid notice on statutory periodic tenancies. However it is well known that there has been significant ( and many would say understandable) criticism of the section 21 (4)(a) requirements and so the idea that the Court of Appeal has moved to simplify things is not so surprising. Further, Lewison LJ’s interpretation is of section 21 is not new – it is just new to the courts.

On the face of it then, Spencer and Taylor has removed the onerous requirements of section 21 (4)(a) from fixed term ASTs that have become periodic. Gone is the need for the saving provision lest the date of expiry be wrong. Gone too is the need to work out what is the “period” of the tenancy when the rent day does not match the beginning and end dates of the fixed term. Instead the landlord/agent simply needs to ensure proper service of the notice according to the terms of the tenancy agreement, and to ensure that he gives at least two months notice in writing as if serving the notice during the fixed term of the tenancy in accordance with section 21(1)(b).

However, some words of caution:

Although this Court of Appeal judgment is good law today this point may be appealed to the Supreme Court and may be overturned in the next year or two. A notice which satisfies section 21 (4)(a) will also satisfy the looser requirements of section 21 (1)(b). Most tenants give back possession and do not quibble over the validity of notices, but if they do, possession claims are usually done on the paper (accelerated) procedure or a 5 minute possession hearing with a District Judge. Court of Appeal judgments take time to trickle down to the lower courts and do you really want to have to set yourself up for an argument or risk an adjournment when you could just serve notice to expire at the end of a rental period?

Tenants wishing to serve notice are still bound by the common law rules which would mean that if they are on for example, a quarterly periodic tenancy, their notice period must still run for a clear quarter and expire at the end of a rental period ( or on the day rent is due). Spencer v Taylor gives landlords a much easier way of serving notice while leaving the tenants with much more onerous requirements.

So after breathing a sigh of relief that we can all forget about section 21 (4)(a) in practice we would suggest that, in light of the above, agents might like to keep the practice of serving notices that comply with section 21 (4)(a), at least for the near future.
Section 21(4) a will continue to apply to contractual periodic tenancies which never had an initial fixed term, and to tenancy agreements which provide for an initial term to continue on a contractual periodic basis . The latter may become more prevalent following the Superstrike ruling as a way of avoiding the need to serve prescribed information, and it should be noted that for the purposes of section 21 (1)(a ) the tenancy will not have come to an end at the end of the fixed term and therefore section 21 (1) (b) will not apply.

In conclusion, the ruling in Spencer v Taylor is good law and should in the long run make serving notice on tenants much simpler. However for the moment our advice is that if you do change your systems to serve section 21 (1)(b) for all but contractual periodic ASTs, you should do so knowing that the courts might take some persuading that the notice is validly served. You will also have to keep an eye out for any Supreme Court reversals. If you are prepared for this then fine, otherwise it might be easier to let others beat the path first.

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

Whose address? Sections 47 and 48 Revisited

We have heard on the grapevine that some agents are currently being advised that following the Land Tribunal ( Upper Chamber) decisions of Triplerose Ltd v Grantglen and Beitov Properties Ltd v Elliston Martin , they should not use an agent’s office and address as an address for service for the purposes of Sections 47 and 48 of the Landlord and Tenant Act 1987 (LTA1987). There have even been suggestions that tenancy agreements should be amended to require the tenant to serve notices on both the landlord and the agent. We disagree.

The Beitov and Triplerose cases concerned service charges, and the decision was crucial to long leasehold premises. We blogged on this here.

Section 47 of the Landlord and Tenant Act 1987 (LTA1987) provides that where any written demand is given to a tenant of residential leasehold property, then that demand must contain:
a) the name and address of the landlord and
b) if that address is not in England and Wales, an address for service.
and that any part of the amount demanded that consists of a service charge will not be treated as being due until such information is furnished by notice given by the landlord to the tenant.

The Beitov case decided that the wording of s47 means that where any written demand is given to the tenant the Landlord must put his or her actual address on the demand, not a care of address or agent’s address. A demand for service charges will be invalid without. The sanction for failing to give the actual landlords address in section 47 of the LTA 1987 is that service charges are not due.
However assured shorthold tenancies do not require the payment of service charges. The sanction for breach of section 47 is of no consequence.

By contrast, ASTs are affected by the provisions of s48 of the Act. The sanction for failing to comply with s48 is that rent is not treated as falling due BUT s48 requires only “an address in England and Wales at which notices may be served on him by the tenant”.

In short we disagree for two reasons:

1. Rent is covered by s48 – and where it is demanded the requirement is only to supply an address for service in England and Wales
2. Requiring tenants to serve notices on both landlord and agent is too onerous an obligation in residential AST lets. There is too much scope for the tenant to get confused and fail to serve on one or other address. Arguably such a term would be unfair and unenforceable, especially as Landlord only has to serve on the property.

Our position remains that it is fine to use an agent’s address for service in ASTs.

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

Deposit News

1 April 2013 has seen more changes to deposit protection.

There are now four authorised schemes: TDS, DPS and mydeposits have been joined by Capita tenacy deposit protection scheme . This is an insurance based, rather than custodial scheme, meaning that the deposit is held by the agent or landlord.

It’s all change in the established schemes too. TDS have relaxed their rules and have summarised the main changes on their own blog here and in pdf form here.

DPS has introduced an insurance based scheme. You can read about it here.

Mydeposits scheme in Northern Ireland went live on 1 April 2013. See their press release here.

Filed under: England & Wales, , , , ,

Trips and slips with Section 21 Notices

The agent, landlord or lawyer must comply with the requirements of the deposit protection rules. To serve a valid section 21 notice the deposit must be protected and prescribed information served pursuant to section 213 of the Housing Act 2004 as amended by the Localism Act 2011 within thirty days of the tenancy starting or the deposit being taken whichever is earlier. If the deposit is not protected then a valid section 21 notice cannot be served until either the deposit is handed back to the tenant in full or with agreed deductions. If the Prescribed Information (“the Information”) has not been served then a valid section 21 notice cannot be served until the Information is served . (N.B. doing the above will not avoid any potential claim for failure to protect the deposit).

Notices need to be served in accordance with the terms of the notice provisions in the tenancy agreement; such as notices being served by first class post deemed served two working days later. Notices served pursuant to a “break clause” must comply with section 21 (1)(b) of the Housing Act 1988 AND the provisions of the clause itself. The courts will interpret the terms of a break clause strictly.
Another major hurdle relates to notices served pursuant to section 21(4)(a) Housing Act 1988. It is easy to get the date wrong, where the fixed term runs from different dates to the rent payment date. The courts have approved a “saving provision” whereby the notice can ask for possession “ after the end of the period of your tenancy which will next end after the expiration of 2 months from the service”. The believed end date is included within an accompanying letter.
If the property requires licensing under part 3 Housing Act 2004 for a House in Multiple Occupation (“HMO”) being selective licensing of residential properties. A licence will be required or an application in the pipeline before service of a section 21 notice.

Top Tips to serving a valid section 21 notice:
1. Check that the deposit is registered and Prescribed Information served BEFORE serving a section 21 notice.
2. If the deposit is not protected then hand the deposit back to the tenant either in full or with agreed deductions.
3. If the deposit is in a scheme but the Prescribed Information not served, serve the prescribed information BEFORE serving the section 21 notice.
4. Check the tenancy agreement for the service of notice clause. Does notice have to be served in a certain way? If so, do it.
5. Is notice being served pursuant to a “break clause”? Follow the requirements of the clause.
6. If the tenancy is periodic the 21(4)(a) notice use the “saving provision”.
7. Don’t cut dates too fine. A longer notice period might be quicker than re-serving a notice.
8. Check the HMO licensing requirements with the local authority.
9. Rent: Continue collecting the rent and passing it on to the landlord.
10. Make the landlord aware a section 21 is a notice seeking re-possession not forcing the tenant to move out without possession proceedings. The notice allows the judge to grant mandatory repossession in Court

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

I Haven’t Protected the Deposit? What can I do?

As regular readers of this blog will be aware the 6th April 2012 saw the amendments made to the Housing Act 2004 by the Localism Act 2011 come into force.

Prior to these changes various court decisions (in particular Tiensa v. Vision Enterprises Ltd [2010] EWCA Civ 1224 and Gladehurst Properties Ltd v. Hashemi [2011] EWCA Civ 604) rendered the provisions on enforcement of the deposit protection scheme, in the words of Lord Justice Sedley, “a dead letter”. These decisions meant that where a deposit had not been protected it was relatively easy for landlords and agents to avoid any of the penalties as included in section 214 of the Housing Act 2004. The changes were meant to correct the errors in the original drafting and give the Housing Act 2004 real teeth.

The changes mean that if a deposit is now not protected (and more below as to what this means) properly then the landlord and/or agent will be subject to a penalty amount if the tenant makes an application to the Court. The other serious consequence is that a landlord will not be able to serve a valid Notice under section 21 of the Housing Act 1988 (Section 215 Housing Act 2004). This Notice allows a tenancy to be ended without the landlord having to prove any fault on the part of the tenant and is a sure way for a landlord of obtaining possession.

To properly protect a deposit there must be strict compliance with the rules of one of the authorised schemes (section 213 Housing Act 2004). This now means that the deposit must be protected within 30 days of receipt (not necessarily the same as the start date of the tenancy), together with the giving of any and all prescribed information and any other requirements of the particular scheme (some require an advice leaflet to be given). If the deposit has not been fully registered within this scheme the general view currently is whilst you can register the deposit out of time this will not afford you protection.

So if the deposit is not properly registered what can happen? Firstly you will not be able to use a section 21 Notice to seek possession. The court forms for accelerated possession have been changed to ensure that details of the deposit and its registration are included. In our experience Courts are looking at this information and considering if deposits have been properly registered. The tenant may also make an application under section 214 of the Housing Act 2004 to seek a return of the deposit and also a penalty amount.

The Court has the power to order the return of the deposit in full to the tenant or that it is paid into an authorised scheme. Whilst prior to the changes the Court had to award a penalty amount of three times the deposit this has been amended so the Court can award an amount between one and three times the deposit amount. It is here that the Court retains some discretion as to the amount. It will be for the landlord or the agent to adduce evidence to try and mitigate this amount perhaps by showing that there was a technical breach, financial hardship etc. Clearly an award requiring the return of a deposit and also a penalty of three times the deposit (which of itself could be more than 4 months rent) will be crippling to many landlords and if such a claim is made as a counterclaim in rent arrears proceedings may wipe out any and all arrears meaning that possession is not granted.

With regards to section 21 notices if the authorised scheme has not been strictly complied with the landlord cannot serve a valid Notice. At this stage there are no particular cases relating to the changes and how in practice the Court will look at this situation. It is however believed that simply complying with the requirements out of time will not of itself allow you to then serve a valid section 21 Notice. Section 215 does provide that you can return the deposit in full to the tenant. It is believed that tenants will be advised not to accept the return of the deposit so in this way preventing a landlord from being able to serve a section 21 Notice. If the tenant brings a claim under section 214 Housing Act 2004 and this has been determined, withdrawn or settled this will allow the landlord to then be able to serve a section 21 Notice. If a section 21 Notice cannot be served this would then mean that a landlord could not rely upon this mandatory no fault ground to bring possession proceedings. A tenant would then find themselves in the position of almost being akin to an assured tenant only able to be made the subject of a possession order if one of the grounds to Schedule 2 of the Housing Act 1988 had been made out.

We are yet to see how the Courts interpret the amended Act and whether they give landlords “get outs” as they did previously. Most people will not want to be the no doubt expensive guinea pig to test this situation. The will of Parliament was to give the legislation teeth as part of the regulation of the private rented sector. It is vital that you do comply and if you become aware of a deposit which has slipped through the net take advice.

Filed under: England & Wales, , , , ,

Attention all Landlords!

We draw your attention to this recent decision of the Upper Tribunal which has caused a stir amongst leasehold lawyers in relation to service charges.

Section 47 of the Landlord and Tenant Act 1987 (LTA1987) provides that where any written demand is given to a tenant of residential leasehold property, then that demand must contain:

a) the name and address of the landlord and
b) if that address is not in England and Wales, an address for service.

Section 47 goes on to provide in subsection 2 that any part of the amount demanded that consists of a service charge will not be treated as being due until such information is furnished by notice given by the landlord to the tenant.

In Beitov Properties Ltd v Elliston Martin it has been decided that the wording of section 47 LTA 1987 means that where any written demand is given to the tenant the Landlord must put his or her actual address on the demand, not a care of address or agent’s address. A demand for service charges will be invalid without.

According to the Tribunal “The purpose of the requirement in section 47 to include in any demand the name and address of the landlord, in my judgment, is to enable a tenant to know who his landlord is, and a name alone may not be sufficient for this purpose. To provide an address at which the landlord can be found assists in the process of identification”.

It is noted however that the sanction for failing to give the actual landlords address in section 47 of the LTA 1987 is that service charges are not due. Nothing is said about rent and as such we are of the opinion that where you have an AST landlords and agents can continue to use care of addresses. If the position changes we will of course let you know.

Most people are aware also aware of section 48 LTA 1987. Therefore to complete this article we should mention subsection (1) which requires a landlord to furnish the tenant with an address for service, which can be a care of address or agent’s address but must be an address in England and Wales. Unless and until the landlord gives an address for service in England and Wales then rent will not be treated as falling due.

Filed under: England & Wales, FLW Article, ,

Why do I need a tenancy agreement?

The simple answer to this question is that for most circumstances you do not strictly need a written agreement however if you don’t this can have unintended consequences!

As regular followers of the blog will know the starting point for determining the terms and what you should do in a particular instance is the tenancy agreement. If no written agreement exists it will be a question of trying to recollect what was discussed and possibly looking at any letters or emails about the negotiations to determine the parties intentions. This can result in the terms being unclear particularly if a dispute has arisen.

Assuming we are discussing Assured shorthold tenancies, which are the majority of private letting agreements, as many of you will know this is now the default tenancy in most cases ( for exactly what is an assured shorthold tenancy see the Housing Act 1988 as amended). If you are taking a deposit you are now required to register such a deposit with an approved scheme of which there are three. As part of this process you are required to give certain prescribed information. If you do not do you will not have complied with the rules. Most standard agreements which can be purchased ( such as those we produce and are for sale in our shop on our website) incorporate this information. For this reason giving an agreement, practically, can be easier to ensure the information is given and nothing is missed.

If then you have a written agreement you can specify the exact terms. Whilst you cannot contract out of rules laid down by Parliament, such as the landlords responsibility to keep the property in repair, you can make sure everything is clear. This can be things as diverse as the length of term and break clauses through to restrictions on smoking or loud music (although you might want to have a look at the Office of Fair Trading (OFT) guidelines to check the likely enforceability of your clause). Such comprehensive agreements allow you to effectively manage your investment and to make sure that both sides are clear as to what to expect from the other. Having an effective list of rules of occupation can assist in helping any potential disputes being seen off as having a clear reference to point to.

Whilst sorting out the paperwork can sometimes appear to be a chore if and when you are faced with a dispute it is vital. As we have repeatedly blogged the courts will take the agreement as the starting point. If you have no agreement in writing often the courts will find it difficult to impose onerous terms on one or other party unless it can be shown unequivocally that this was agreed. Whilst relying on terms other than rent or operation of a break clause to evict can be difficult in our experience without a rewritten agreement it is almost impossible.

So take 5 minutes and make sure you have an agreement which is up to date and covers what you want and require.

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

It’s not the lawyers! It really isn’t!

Delays in possession hearings are not common in our experience but they can happen. In the case of Benesco Charity Ltd v Kanj and Unknown Persons the occupiers of a property were granted permission to appeal a possession order thus delaying the execution of the bailiff warrant for possession.

Benesco granted Speedway Tyres a 10 year lease. Mr Kanj set up the company but it was his wife that was the director of the company. Speedway and an associated company, Speedway Autocare Ltd (Autocare) was placed into a creditors voluntary liquidation.

The liquidator appointed for both companies disclaimed the lease. This meant that Speedways obligations under the lease were at an end. However this did not put at an end any lease that Speedway may have granted to third parties for the property. Mr Kanj received notification of the disclaimer.

Benesco then issued possession proceedings on the basis that Mr Kanj and the other unknown persons were trespassers. Mr Kanj defended on the basis that at some point he was granted a sub tenancy by Speedway or Autocare. However at the hearing Mr Kanj then changed his position and stated that he did not have a personal tenancy but that a tenancy had been granted to Autocare by Speedway.

There were other issues too but dealing with the delay aspect, the court decided that upon reading the witness statements it did appear as though the issue over the sub tenancy needed to be dealt with and as such the witness statements could not be rejected at a possession hearing which is summary in nature.

A person is entitled where there are matters raised in the witness statement to take the matter to trial. The court found that on the evidence there was an arguable case that at least Autocare had a sub tenancy. The court accepted that it was not clear what the true position was but stated that Mr Kanj and his wife could be cross examined in court and should not have been dismissed out of hand.

The moral of the story…….delays are possible even when the tenants/occupiers case appears to be groundless.

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

Setting the record straight….

It has come to our attention that some companies claiming to be experts in the field of Landlord and Tenant law are advising agents not to serve section 8 notices until tenants are into their third month of arrears because some judges insist that to serve a notice during the second month is “no longer acceptable”. The companies go on to suggest that certain firms deliberately issue notices prematurely in order to ensure adjournments and thus increase their own fees.

Leaving aside the accuracy of the statements and without joining in any mudslinging, Painsmith comments as follows:

1. Under ground 8 of schedule 2 of the Housing Act 1988, if rent is payable monthly and at least two months’ rent is unpaid the grounds for possession are made out. Rent means rent lawfully due from the tenant. This is spelled out in the Housing Act. Where rent is payable in advance but the tenant does not pay the rent on the payment date, then from the day after the rent payment date that months’ rent is lawfully due but unpaid, and ground 8 is made out.
2. Painsmith deals with hundreds of section 8 notices a certain number of which lead to possession proceedings for rent arrears. Painsmith has never experienced a judge adjourning a hearing on the basis that the section 8 notice should have been served in the third month.
3. Where the tenants pay quarterly then ground 8 is made out if “at least one quarters’ rent is more than three months in arrears”. In this case then you would need to wait until the tenant was three clear months in arrears.

Of course there is no compulsion to serve a section 8 notice on ground 8 immediately that the ground is made out. However the law is clear: where a tenant pays monthly in advance ground 8 is made out the day after the second unpaid rental due date has passed. As the leading landlord and tenant legal practitioners in this field Painsmith has a duty to set the record straight.

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, , , , , ,

“Why Do I Need Court Proceedings? And What Do These Involve?

Many of our readers will know why there is a need to obtain a Court Order to evict residential tenants however for those that do not we hope the below helps.

If someone is occupying a residential property whether lawfully or not then an Order of the Court is required (a Possession Order) which generally can only be enforced by County Court bailiffs or Sheriffs Officers. This is true of squatters and tenants but this blog post is limited to tenants. If you evict a Residential Tenant from their home without a Court Order you can find yourself as Landlord (or others who assist in this such as an agent) liable to both civil action for damages and a right of re-entry from the tenant and also possibly criminal prosecution under the Protection from Eviction Act 1977 which can render you liable for a fine or in severe cases a custodial sentence. For these reasons alone it is vital that the correct procedure is adopted to avoid such penalties.

If therefore the Landlord wants to get his or her tenant out he should make sure he follows the correct process. The starting point will be the tenancy agreement itself to see on what basis the tenant can be evicted. If the Landlord simply wants the property back and there are no major breaches then generally the fixed term will need to be ending or for the agreement to have a break clause which the landlord can rely upon. Most types of residential tenancy require some form of notice most usually a s.21 notice and for others some form of Notice to Quit.

If there are breaches of the agreement itself such as none payment of rent then different notices may need to be served such as a s.8 notice for assured tenancies (including Assured Shorthold Tenancies).

Once the notice has expired an application can be made to the Court. Usually this will be the County Court local to the tenanted property. Whilst you can apply for possession through the accelerated (a misnomer!) process where you have a expired s.21 in the case of a s.8 or where you wish to seek costs, rent arrears and interest as well as possession pursuant to the expired s.21 then you will be listed for a first hearing. This should be within 8 weeks of issue but we have experienced recently delays which we have posted about. At the hearing if the Judge is satisfied that you have complied with the rules then unless your tenants have a Defence you should obtain a Possession Order. This will usually be for either 14 or 28 days but the Court can extend the time up to a maximum of 42 days.

Once you have this Order the tenants should vacate by the date given, if they do not then you will have to apply to the Court for a bailiff appointment. This will then be listed and again usually within about 4-6 weeks. Whilst the bailiff does not have power to use force to evict the Tenants in our experience we have found that the bailiffs are very effective at doing their job and persuading tenants to leave.

It is perhaps worth highlighting a point we have made in previous blogs given the current state of the economy. We are seeing more and more tenants who are approaching the Local Authority to be rehoused once given notice by their Landlord. Sadly most Local Authorities will not properly consider the tenants request for re-housing until a date has been fixed for the bailiffs appointment and the tenants themselves will be advised that if they vacate before-hand then they will have made themselves voluntarily homeless and the Local Authority will not assist.

So once the bailiff has executed the warrant the landlord will hopefully gain possession to relet his or her property to another.

It is important that all the way through you get the process right. If not then the whole procedure can be delayed substantially and the costs for the Landlord can escalate. This blog assumes no defence has been lodged and only gives a brief overview.

We appreciate that Landlords often at the time of evicting a tenant wish to limit their financial exposure and hence we offer a capped price eviction service but it can often be a false economy to not take advice on the whole process at the outset!

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

Back to Basics 4: Section 21

A section 21 notice is not a notice to quit. Many people that call the helpline refer to a section 21 as a notice to quit even today and it’s not, so stop it!

A section 21 notice is used by the landlord when he wishes to gain back possession of the property at the end of an assured shorthold tenancy, pursuant to a break clause or even where the tenant is in the periodic period of the tenancy. There are two types of section 21 notices that a landlord can serve on a tenant. The section 21(1)(b) notice and the section 21(4)(a) notice.

Although both notices refer to section 21 they should not be confused with each other especially given that have very different notice requirements. If the wrong notice is served and relied upon then it can delay or hinder possession proceedings.

Depending on whether the tenancy is either of a fixed term or a statutory periodic will depend on which notice a landlord will need to serve.

The Section 21(1)(b) Notice – Fixed Term:

A section 21(1)(b) is served during the fixed term of a tenancy. A landlord serving this notice must give not less than two months notice stating that he requires possession. The notice should specify a date “on” which the landlord requires possession. The notice cannot expire before the end of the fixed term unless the landlord is relying on a break clause in the tenancy agreement. Therefore a notice should not be dated to expire before the last day of the tenancy as this would make the notice invalid and whilst it could be dated to expire on the last day of the fixed term there are many out there that believe that dating the notice to expire on the last day makes the notice invalid. We at PainSmith do not.

Other issues that need to be noted are that tenants have 6 months security of tenure and so a landlord can not issue court proceedings on a section 21 until the tenant has been in residence for 6 months. The other issue is that any notice served pursuant to a break clause should comply with the provisions of that break clause and then finally if the notice is served in the fixed term to expire in the periodic period it’s still a section 21 (1) (b) that needs to be served.

The Section 21(4)(a) Notice – Periodic Tenancies:

A section 21(4)(a) is served after the fixed term has expired when the tenancy is a statutory periodic tenancy. A landlord serving this notice must give two clear months notice stating that he requires possession and the day on which the notice expires must be at the end of a period of the tenancy. The section 21(4)(a) notice often causes the most confusion amongst landlords due to the fact that if the wrong date is specified on the notice then it becomes invalid. To avoid this pitfall it is vital that a landlord looks at the tenancy agreement to assess what the tenancy period is.

Some of you are aware that unlike a section 21(1)(b) a date need not be specified on the notice and instead the ‘saving provision’ can be used following the decision of Lower Street Properties Ltd v Jones however, rather oddly we still find some of you are dating the notice. Why complicate things?

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

Back to basics 2: Notice to Quit

A second opportunity to delve into the basics of Landlord and Tenant law has arrived. This time I am looking at Notices to Quit and the common pitfalls that are easily made but fatal to the effectiveness of the Notice.

It is important first of all to nip in the bud a common misconception when it comes to Notices to quit. They and Section 21 notices are NOT one of the same thing. They indeed are used in completely different situations. Granted, the way they are applied can be seen as similar, however they should not be confused as it would result in a notice as useful as a chocolate teapot.

A notice to quit is a tool to be used to bring about the end of a common law/company let tenancy. Section 21 notices are used to end an assured shorthold tenancy. So if the tenancy agreement that is in place is an AST serve a Section 21 not a Notice to Quit.

A point of law that makes numerous Notices invalid is when the date of expiry should be and when it should or can be used. The date of expiry must be either at the end of a complete period of the tenancy or on the first day of the new period. If this is a little too vague, there is an alternative method. The case of Chez Auguste Ltd v Cottat stated that there was no need to give an exact date on the notice. This may appear harsh on the tenant but there was a caveat to this declaration. It just needs to be clearly identifiable to a reasonable tenant as to when the Notice will expire. As well as this, it cannot be used in the fixed term unless it is used in conjunction with a break clause.

There are certain other points that must be followed when the Notice has been served. Once the Notice has been served, rent cannot be demanded. Payment of mesne profits (equal to the rental sum) must be taken instead without prejudice to the effect of the notice to quit. It must be made clear to everyone who looks at the transactions that there is no intention to create a new tenancy found. Street v Mountford tells us that if there is no intention to create legal relations then no tenancy is created. This is particularly important because the last thing you want as a Landlord or Agent is to get to the point where the Notice to Quit has expired and possession is close, only to find that the tenancy will continue due to a few seemingly innocent statements.

These requirements must be strictly applied otherwise the notice will generally be found to be invalid. It may seem like a lot of effort but caution is the best approach. Make sure as many checks as possible take place and that will ensure that time is not wasted, particularly in a situation like possession matters where time is generally of the essence.

A number of you may well be signed up to our helpline. If you indeed are and wish to access a Notice to Quit, then it is available via the document vault which you have access to.

It is worth noting that if it is a common law tenancy and your sole ambition is to gain possession at the end the of the fixed term, a letter stating you require possession will suffice. A letter will also suffice if the tenancy has a break clause, again no Notice to Quit is required to exercise the right. A Notice to Quit is only required once the tenancy has become periodic.

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

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, , , , ,

Section 8: Back to Basics

From time to time it is important to go over old ground. It can be easy to lose track or just need a quick reminder of the basics of possession cases.

Section 8 notices, as I’m sure you are all aware, can be used as a vehicle to gain possession of the property whilst at the same time obtaining the rent arrears that may have developed. There are a number of different situations that can trigger the requirement of a Section 8 notice which could be scrutinised in an incredible amount of detail. With regards to this blog entry, I am going to focus more specifically on the mandatory and discretionary grounds and how they differ in the courts eyes in particular with relation to the more common grounds for possession i.e. grounds 8,10 and 11.

The Housing Act 1988 s.7(3) stipulates that when the court feels that any of the grounds listed in Pt 1 of Sch.2 of the 1998 Act are satisfied then possession must be granted for that property. If this is compared to Pt 2 which substitutes the phrase ‘must be’ with the far less convincing ‘may be’ then it starts to become clear why having mandatory grounds is infinitely more desirable that simply pinning hopes on discretionary grounds. As a general rule we as a firm only advise issuing proceedings on mandatory grounds unless the evidence is particularly strong on discretionary, as we have found that judges tend not to be too receptive to the idea of handing over possession of the property to the landlord and making the tenant potentially homeless, unless there is overwhelming evidence against them or the mandatory grounds have been met.

The most commonly used of the grounds for possession are 8, 10 and 11. Ground 8 is mandatory whereas 10 and 11 are discretionary. If for example the tenant at this point pays some of the rent arrears to the landlord, enough to just about drop below the 2 month minimum requirement (if it was a monthly rental period) to claim ground 8, it would mean the claim would be resting on discretionary grounds which, as explained earlier, are far from reliable, particularly in matters involving rent arrears. The discretionary grounds in cases such as this service the role of supporting the mandatory ground and are normally too weak by themselves to satisfy possession criteria. As soon as the mandatory ground is lost the case for the landlord is generally lost along with it.

This is not always the case. However, if a mandatory ground can be relied upon it is preferable to do so rather than assuming possession will be granted on discretionary.

With discretionary grounds, on the making of an order for possession, the court can postpone the order for as long as the court sees fit. In this period the court will normally issue certain conditions with regards to the payment of the rent arrears as well as any other conditions that the court deems applicable. If these conditions are followed, the court can discharge or rescind the possession order if it sees fit. Can you see the pattern here? The level of discretion available to the court is illustrated by the repeated use of the term ‘if the court sees fit’. The only discretion available to the courts when it comes to mandatory grounds is a delay from the usual 14 days to a maximum of 6 weeks in cases of exceptional hardship, but this in itself has a high threshold in which to satisfy.

In light of the above costs need to be considered and proceedings against a tenant to gain possession is not an insignificant sum. To risk this sum on the courts discretion, particularly when the order for possession would result in the tenant being made homeless, may not be the best course of action.

This blog has been drafted in response to a comment. Thank you for your continued support Valerie.

Filed under: England & Wales, , , , ,

Houseboats

In Mew and Just v Tristmire Limited the leaseholder obtained possession orders upon the expiry of 2 notices to quit.

Mew and Just lived in houseboats which were located in a rectangular shaped plot around the edge of a harbour. The houseboats are converted landing craft which were constructed locally during the Second World War. They were subsequently modified and made water tight and habitable. They were once capable of floating but now rest on wooden platforms which are supported by wooden piles driven and cemented into the bed of the harbour. Services such as water, gas and electricity were connected but they could also be easily disconnected.

An expert giving evidence at court confirmed that generally houseboats can be removed by crane and then floated to a new location however in this case given the age and condition, if the houseboats were moved they would be probably be damaged or destroyed.

When Mew and Just purchased the houseboats they did not purchase the plot that the houseboats were situated in, they were owned by Tristmire who served a number of notices to quit and section 13 notices to raise the rent. However Mew and Just claimed that they were not licensees of the plots but assured tenants under the Housing Act 1988 and as such the notices were invalid.

The argument put to the court by Mew and Just was that the houseboats have a degree of permanence so as to make them part of the plot and cannot now be removed without their disintegration. That even if they were in good repair they were just like houses on stilts which are not intended to be removed.

But the court found for Tristmire and held that that the houseboats remained essentially boats, albeit adapted for residential use. They were constructed elsewhere and placed in the plot and did not as such form part of the realty and therefore remain as chattels. The court compared the houseboats to caravans, which as designed, are moveable.

Therefore because the houseboats did not become affixed to the land Mew and Just could not become assured tenants and were indeed licensees and the notices were therefore valid.

We often get asked whether ASTs can be granted for houseboats and it is a grey area as confirmed above. It is the degree of permanency that is relevant and this detail needs to be obtained before any decision is made.

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

Article 8, the Tenant’s Human Rights.

We have been asked a few questions recently about a tenants right to remain in a property when there are rent arrears. We understand that some landlords and agents are concerned that tenants are defeating possession claims pursuant to Article 8 of the European Convention on Human Rights.
>
> The reason for this concern is probably due to the recent cases in the Supreme Court. In Hounslow LBC v Powell, Leeds CC v Hall and Birmingham CC v Frisby the Supreme Court held that where a local authority brings possession proceedings relying on mandatory grounds for possession any defence to the claim, can include the tenants entitlement to have the proportionality of his eviction assessed under Article 8.
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> Given that these cases are concerned with social landlords as opposed to the private market, I will briefly explain the facts of the Powell case.
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> Mrs Powell fell into arrears and upon serving her with a notice to quit, Hounslow County Council issued possession proceedings. Mrs Powell admitted that there were rent arrears but then also averred that the reason for the arrears was due to the delays and errors made by Hounslow in processing the benefit claim.
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> Hounslow has since offered Powell suitable accommodation.
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> The reason for this article is to reassure those landlords that believe that tenants who are on benefits have rights to the property beyond that provided for in the Housing Act 1988.
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> The cases have one thing in common that is local councils who are subject to the test of proportionality when they apply for possession. This test of proportionality is not expected to be relevant in the private sector as that would prevent landlords from managing their own property in the manner they see fit within the parameters of the Housing Act 1988.

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

Rent Arrears on Common Law Tenancies- Last Chances to Act

Landlords who have common law tenancies which will become ASTs on 1 October and whose tenants are in arrears of rent should act now.

Once those tenancies become ASTs the tenant will need to be in 2 months of arrears before the landlord stands a good chance of securing possession in Court. If proceedings are issued before the tenancy converts then it will not become an AST, even if the Court hearing is after 1 October, and the landlord will be able to seek possession under the common law rules of forfeiture. These require the Court to award possession however small the level of rent arrears. While the tenant has the option of paying the outstanding rent and staying in the property he will also be obliged to pay the landlord full interest and their legal costs so the tenant has an incentive to pay up and the landlord does not lose out.

By contrast if the landlord waits until after 1 October he will need to wait for a full two months worth of rent arrears to accrue, give 14 days notice under section 8 of the Housing Act 1988 and then start proceedings. In Court he will get an order for the arrears, interest, but probably less than his total legal costs but the tenant has no right to stay if they pay the landlord. Therefore the incentive on the part of the tenant to pay the debt is much reduced.

However, proceedings must be issued by the Court before 1 October. In practice this means they will need to have been sent to the Court by 27 September at the very latest.

Filed under: England only, , ,

DCLG FAQs Regarding ASTs after 1 October

The DCLG have decided the final version of their FAQs regarding the Housing Act 1988 rent increase threshold to be placed on their website. We have seen an advance copy and are pleased to note that some changes have been made as a result of representations made to the DCLG by this firm, among others.

Most notably the DCLG has now resiled from their earlier position that all tenancy deposits for tenancies that have converted to ASTs must immediately be protected on 1 October. This is a view that we have previously criticised. The DCLG have listened on this point and the FAQ now states:

We do not consider that deposits taken before 1 October will need to be protected as these were not taken in connection with a shorthold tenancy and therefore do not meet the criteria for protection specified in the Housing Act 2004.

However, agents and landlords should be aware that this is a matter for the Courts to decide and it would be wise to protect deposits on 1 October and certainly on any renewal of the tenancy.

DCLG has, however, maintained their position that a section 21 notice issued in respect of a tenancy which becomes an AST on 1 October cannot expire until 6 months after that date, ie. not before 1 April 2011. This is a view that we do not agree with and have previously criticised. We are pleased to note that the DCLG has watered this position down in the light of our representations and now says that it will be for the Courts to make a final decision on this issue. Doubtless such a case will appear in the Courts in short order.

You can view all of our blog posts on the Housing Act 1988 rent threshold increase by following this link.

Filed under: England only, ,

Housing Act Threshold Changes Coming Soon

It is now less than a month to the change in the maximum rent threshold of £25,000 found in the Housing Act 1988 in England.

We have written a large number of posts on this topic which can be found by following this link.

Filed under: England only, ,

Short Lets After 1 October

We have recently come across another unanticipated issue which may become a problem after 1 October. A number of properties in London are let on ‘short lets’ to individuals working or holidaying in London. In the past the high rents charged on these properties meant that they were excluded from the Housing Act 1988. However, with the increased rent threshold this exception will apply to far fewer of these properties.

Premises being let for the purposes of a holiday in London will still fall outside the Housing Act 1988 and these will not present a problem. However, properties being let to individuals who are working in the UK for a short period and where the rent is below £100,000 per annum (pro rata) will now fall under the Housing Act 1988. This of course means that the tenant is entitled to 6 months security of tenure in the property.

To clarify, there is no requirement that a property which falls under the Housing Act 1988 is let for 6 months as is sometimes believed. It is perfectly possible to let such a property for a shorter term. However, a Court is simply not empowered to give possession on a section 21 notice any sooner than 6 months from the start of the initial tenancy. Therefore letting a property for a shorter period is a calculated risk on the part of the landlord as he is at risk of the tenant continuing to pay the rent and simply staying for 6 months with little or no recourse.

What options does the landlord have? If the landlord has resided in the property before as his main residence then he can give a notice before the tenancy begins under ground 1 of Schedule 2 to the Housing Act 1988. This would allow a section 8 notice to be given at any stage giving the tenant 2 months notice to vacate provided that the landlord wishes to reside in the property again as their main home. Otherwise the only option will be to avoid creating a tenancy at all. If a landlord wishes to do this then they will need to provide some services as a part of the agreement which will require access to the property. A landlord who was providing regular cleaning and fresh towels and linen as a part of the agreement should be able to argue that he has not created a tenancy at all but has only created a licence and so the provisions of the Housing Act 1988 will not apply at all. Of course, this will involve a lot more organisation on the part of the landlord but it may be worth it if it is necessary to be sure that vacant possession of the property can be obtained.

Filed under: England only, FLW Article, , ,

Harsh Results in Rent Increases After a Long-Lease Ends

A recent case has exposed a very unfortunate loophole in the law which might have harsh consequences for certain long leaseholders.

Certain long leaseholds are protected under the terms of Part 1 of the Landlord & Tenant Act 1954. The qualification for this protection was that the tenancy was for more than 21 years and the tenant would otherwise have fallen under the protection of the Rent Act 1977 save that the rent was too low too qualify for that protection. At the end of the term of such tenancies the tenant would originally have gained the protection of the Rent Acts. These provisions are being phased out after the introduction of the Local Government and Housing Act 1989 and a wholly new scheme set out in Schedule 10 applies. This scheme provides that the original lease continues until specified notices are served at which stage the tenancy changes into an Assured periodic tenancy under the Housing Act 1988. Part of this process includes a process by which the parties are to agree a new monthly rent and if they cannot agree the Rent assessment Committee has the power to set an appropriate rent. Quite properly, when setting the rent the RAC is required to exclude from its consideration any increase in the rent that would be attributable to improvements the tenant has made to the property. Therefore if the tenant has fitted a new kitchen during the long lease the landlord cannot take advantage of it to seek a higher rent once the tenancy becomes Assured.

Naturally, once the tenancy has become Assured the landlord is entitled to increase the rent to a market level every 12 months using the normal procedure supplied by section 13 of that Act. Bizarrely, although the RAC is required to exclude consideration of tenants improvements on the initial setting of the rent it is not permitted not do so on any subsequent determination of the rent. Therefore although a tenant who fits a new kitchen will not be liable to pay a higher rent for that improvement when he or she first gets the Assured tenancy, the landlord will be able to seek a higher rent due to that improvement 12 month later using the usual section 13 process.

Essentially this is precisely what has occurred in the case of Hughes v Borodex which came before the Court of Appeal a few months ago. The Court of Appeal held, with regret, that it had no power to change the rent assessment of the RAC which had taken into account the tenant’s improvements on setting the rent under a section 13 notice. What makes this case even more unjust is that the RAC determination took the rent over the sum of £25,000 per annum making it possible for the landlord to evict the tenant as the Housing Act 1988 no longer applied to her tenancy.

Regrettably, if all this had occurred just a few months later the tenant would have been protected by the increased rent threshold for Housing Act 1988 tenancies that will be introduced on 1 October 2010.

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

After a Section 21 Notice Expires

We are often asked the question of what the situation is once a notice pursuant to section 21 of the Housing Act 1988 expires.

Thanks to the decision of the House of Lords in Knowsley Housing Trust v White it is known that a tenancy agreement for an assured or assured shorthold tenancy does not in fact come to an end until the Court Bailiff has executed an order for possession. Therefore the service of a section 21 notice does not in itself bring a tenancy to an end. This means that the measures of only referring to rent as mesne profits after the service of section 21 notice are not necessarily required (although they may be a good idea so as not to confuse busy District Judges!).

If a tenant wishes to stay after the expiry of a section 21 notice for a short period this can easily be dealt with by simply sending a letter advising the tenant that the landlord will not be enforcing the expired possession order until a specific date. Subscribers to the PainSmith helpline service will be able to obtain a suitable letter from the document vault on their website.

Section 21 notices have no finite lifetime in which they can be used, they oldest reported case involves a section 21 notice which expired 6 years before the possession action began. Therefore agents should not be overly focused on the section 21 notice and tenants staying on after it has expired and more on making sure they have not offered a new tenancy which might override the notice.

Filed under: England & Wales, FLW Article, ,

Uncertainty About Tenancy Agreements Approaching 1 October

We have been asked a lot of questions recently about how to draw up a tenancy agreement in the run up to 1 October.

The short answer is that it does not really matter. Tenancies that will become ASTs on 1 October will become ASTs on that date irrespective of what the actual agreement says. Equally, they will not be ASTs before that date irrespective of the wording on the agreement.

Therefore agents can draw up these tenancies on Common Law Agreements now and accept that the agreement will misdescribe itself from 1 October or they can draw them up as ASTs now and accept that the agreement will misdescribe itself until 1 October. Alternatively, the agreement can state that it will change to an AST on 1 October or a new agreement can be issued on that date. All of these are reasonable approaches and each agent and landlord should decide what works best for them. Anyone purporting to sell some form of agreement that will deal with the situation is really just taking money for old rope and this is the reason that this firm has chosen not to produce a special tenancy agreement to cover the transitional period.

What will be necessary for members of The Dispute Service will be to make sure that the prescribed clauses required by the scheme are incorporated into the Agreement after 1 October. This can easily be done by sending the tenant a letter setting out the clauses and stating that they will be incorporated into the agreement. It would be wise to ask the tenant to sign and return a copy for recording purposes.

Don’t forget that when the deposit is registered a copy of the registration certificate, the information required by the Housing (Tenancy Deposit) (Prescribed Information) Order and the appropriate scheme leaflet must also be sent as well.

Filed under: England only, ,

Assured Tenancies After 1 October 2010

We have posted already (several times) on the issue of the increase in maximum rent threshold under the Housing Act 1988 which will occur on 1 October 2010.

While it is well understood that this will increase the number of assured shorthold tenancies it has been forgotten that the Act also includes assured tenancies, that is market rent tenancies with a security of tenure for life. These will also be affected by the change.

Therefore non-Housing Act tenancies which began after 15 January 1989 but before the 28 February 1997 will not convert to ASTs on 1 October but will convert to Assured tenancies. Equally, formerly Assured tenants who have lost their protection due to their rent being raised above the £25,000 threshold will regain their assured status.

Presumably this will affect relatively few tenancies but the effect will, of course, be profound. Landlords in this position would be well advised to make sure that they have clearly and unequivocally terminated these tenancies prior to 1 October by either evicting the tenants or, at the very least, signing deeds of surrender and granting new ASTs.

Filed under: England & Wales, England only, ,

Housing Act Rent Increase Order Published

The Government has finally published the necessary statutory instrument to change the maximum rent threshold for tenancies under the Housing Act 1988. The Assured Tenancies (Amendment)(England) Order 2010 has been laid before Parliament as at 25 March 2010 and will come into force on 1 October 2010.
Despite all the suggestions from the Government that they were trying to decide the best way of making the change work they have ultimately gone for the simple approach. On 1 October the threshold will change from £25,000 to £100,000. While this is not, as has mistakenly been stated, a retroactive change it will affect tenancies that are already in place on 1 October. Therefore a tenancy that has started before 1 October which is for a rent in excess of £25,000 per annum but for less than £100,000 per annum will on 1 October automatically convert to an AST.
This will mean that a number of tenancies will, on that date, potentially need to have their tenancy deposits protected and will also fall under the section 8 notice regime for breach of contract and the section 21 notice regime for the termination of the tenancy.
Technically this poses a potential problem in three areas:

  1. Tenancy deposits that have been taken for tenancies starting before 1 October which have become ASTs on 1 October will have had the deposit taken more that 14 days before it is registered. This may leave the landlord and agent open to a claim for the usual penalties. There is of course the reasonable argument that the deposit was taken at a time that the tenancy was not an AST and therefore that there is no need to protect in much the same way as there was no need to protect deposits taken prior to 6 April 2007 when the tenancy deposit legislation first came into force.
  2. Where Court proceedings have been started for breach prior to 1 October there is a potential argument at the time it reaches trial that the tenancy is now an AST and the appropriate notices have not been served.
  3. For tenancies that end shortly after 1 October there will not be time between 1 October and the end date to serve the necessary two months notice under section 21. If the notice is served before 1 October, at the time when a tenancy has not become an AST there may be some doubt as to its validity.

All of these problems will not doubt need to be worked out by the Courts.
It should be noted that the change is being carried out in England only. It is not certain what the Welsh Assembly will choose to do. They have an ongoing consultation on the private rented sector which discusses a similar threshold change but this does not end until 14 May so they will, presumably not act until at least that date. However, the pressure to act in Wales is somewhat lower as rents there do not tend to reach the levels found in some parts of England.

Filed under: England only, , ,

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