Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

New CMA Guidance for Lettings Professionals

The Competition and Markets Authority (CMA) which replaced the OFT earlier this year issued on the 13th June 2014 “Guidance for lettings professionals on consumer protection law”. Plainly for anyone involved in the Lettings Industry a must read document!

Much of what is included within the guidance is not new. It helpfully pulls together various guidance which has been issued and incorporates it in one document. The underlying principle throughout is that letting professionals must act fairly with all they come into contact with. This is a positive obligation which you must actively set out to achieve. This objective mirrors the Consumer Protection Rules and also the CAP Guidance on advertising issued last year.

We will be studying the guidance carefully and watching how over the ensuing months this is applied by both CMA and Trading Standards officers in their dealings with agents.

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, , , , , , ,

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, , , , ,

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, , , , , , , , ,

Electronic Signatures: Can we use them?

We have over the past few months seen a rise in the number of enquiries we receive about the use of “electronic signatures” for the signing of tenancy agreements.

This area is complicated and not 100% clear. For the purposes of this article when we refer to a tenancy agreement we mean an assured shorthold tenancy (“AST”). Historically the rule has always been that you should obtain a “wet” signature on the tenancy agreement from both the Landlord (or the Landlords agent) and the Tenant before commencement. Many agreements are also drawn up that they are a deed and the signatures are witnessed. Generally for a valid AST of 3 years or less this does not have to be by deed and so does not strictly require a witness.

There are various providers of electronic signatures which have a method of encryption and digital certificate which can be used to provide an audit trail of how, when and by what address/information they were created. It is obviously important that before opting for any electronic signature system that you ensure you are satisfied as to the system and that it can, if required, provide to you the proof and evidence which a Court may seek. EU Directive 1999/93/EC sets out the standard which should be met.

The Electronic Communications Act 2000 provided that electronic signatures can be used as evidence of a signature (see section 7 of this Act which provides a definition). This Act came into force in July 2000. The Land Registry also indicated it would be looking at adopting electronic signatures but at this time this appears to have been shelved for the time being.

What the Act means is if you have an electronic signature you can rely upon this as evidence in a Court of Law. This means is if you can satisfy a Court that there is a valid electronic signature you will then have a valid tenancy. If this was an agreement which had to be completed as a deed to comply with the Law of Property (Miscellaneous Provisions) Act 1989 (i.e. for a tenancy of more than 3 years) then this system would probably not work and you will probably need wet signatures. To satisfy a Court you would need to produce an audit trail and be able to explain how the system worked. Unless challenged by a party it is likely that a Court would accept this at face value.

It is worth bearing in mind that since of course a tenancy agreement does not have to be in writing even if a party did challenge the validity of the electronic signature it may well still be possible to show that the “agreement” was evidence in writing of the terms which had been agreed. This would be in the same way that when agreements are challenged you would often look to rely upon the conduct of the parties and correspondence/emails to satisfy a court as to the terms.

All of the evidence appears to be that there is no reason why a tenancy agreement can not be signed electronically provided you use a reputable form of electronic signature. There may be other issues relating to making sure you have correctly identified the parties but your existing procedures hopefully would cover this. We do, however, expect that it is likely that there will be some case law and no doubt at some point the Courts will give guidance on what they will expect to see but for the moment we are not aware of any such guidance.

What seems clear is that this form of completing agreements is going to become the norm. If anyone has any experiences relating to the use and interpretation by the Courts please do let us know. In the meantime if and when we hear we will blog further!

Filed under: England & Wales, , , , ,

Fire Safety revisited

We have had a few queries regarding the Fire Safety (Protection of Tenants) Bill on which we have previously blogged, and so here is our update: the Bill failed to complete its passage through Parliament before the end of the session. This means the Bill will make no further progress and will not become law.

To recap, this was “a bill to require landlords to provide smoke alarms in rented accommodation; and connected purposes”. All landlords were to be required to install a mains operated battery backed smoke alarm before the tenancy agreement is signed.

The tenant would have been required to test the smoke alarm at least once a month and notify the landlord of any defects, who would then be required to carry out the repairs. There was to be a criminal penalty of up to 2 years in prison and/or a fine of up to £5000.00.

Filed under: England & Wales, , , ,

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

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

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

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

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

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

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

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

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

Filed under: England & Wales, FLW Article, ,

Squatters

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

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

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

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

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

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

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

Service charges: what do you need to know?

Over the past two decades the rules dealing with service charges have changed completely and there now exists a fairly comprehensive set of rules which as can be seen in cases reported from the Leasehold Valuation Tribunal (LVT) can catch out the unwary.

The starting point for all Property Managers and Leaseholders must be the actual Lease itself. It is no good to say “Well good practice is this…” if the lease does not allow or includes a particular mechanism this must be followed. One of the things which many leases contain is some sort of Certification mechanism. If this is included In the lease unless and until this process is followed in full the service charge will not be payable and unless done in a reasonable period of time may not be payable at all! As to what is reasonable this will always depend upon the actual circumstances but usually a common sense interpretation will be given.

Next are the various statutory rules governing service charges and the collection of these. Some of the main items can be summarized as:

1. All demands must contain a Summary of the Leaseholders rights. Without this no valid claim has been made.
2. Leaseholders are entitled to inspect accounts and all receipts and invoices.
3. Leaseholders are entitled annually to a copy of the insurance policy.
4. Any works which will cost any one leaseholder more than £250 must be subject to a detailed consultation following a set formula
5. If there are any costs associated with works and if for any reason the sum cannot be demanded within 18 months details of the amount etc and the fact it will be claimed must be notified to the leaseholder.

The above gives a brief synopsis of some of the major pitfalls that lie in service charges and the recovery.

Today most disputes about residential service charges even if begun via the Court will normally be actually adjudicated on by the LVT. This is a specialist property Tribunal. The LVT has jurisdiction to deal with most disputes as to the reasonableness of service charges and can make set offs although it does not have jurisdiction to deal with breach of covenant claims. Generally the process before the LVT is similar to the County Court although not always as formulaic. The LVT will issue Directions and then list a matter for hearing. At the hearing there will usually be a panel of a Chairman (usually a lawyer), a Surveyor and sometimes a third lay member. The panel will often inspect the property before the hearing and then go on to hear evidence before usually retiring to then give a written decision within about 6 weeks of the hearing.

Parties should be aware that on occasion even if issues are not raised by a party the Tribunal may raise them such as the service of appropriate consultation notices and Summary of Rights and Obligations. Property Managers should always have available these documents when they attend an LVT and be able to show that they have complied. Without it the consequences can be significant as the LVT seems to be taking a tough line on compliance. What is often said to be the real benefit of the LVT is that generally it has no powers to award costs. In certain circumstances it can award a party its costs up to a maximum of £500. It is also able to order that a particular party should pay to the other side any fees paid to the LVT and also to adjudicate on whether the costs may be included as a future service charge expense. It is worth noting that many commentators believe it is likely that the jurisdiction of the LVT will be increased and the rules on costs will be changed probably giving the LVT powers to award up to £5000 per party.

It is vital that all Leaseholders and Property Managers give careful consideration as to the lease and the rules. In particular Owner Managed blocks (e.g. where the Leaseholders have purchased their own freehold) do need to be aware that these rules apply equally to them and there is no opt out simply because in effect the freeholders and leaseholders are one in the same. If in doubt you should look to take advice at an early stage to prevent problems later!

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

Cancellation Notice

In a recent case in Watford County Court an agent sought his commission for the successful sale of a property in October 2009.

The Defendant defended the claim on the basis that no Cancellation
Notice in the prescribed form pursuant to the Cancellation of Contracts in a Consumer’s home or Place of Work etc Regulations 2008 had been served.

In response to this defence the agent was relying on schedule 3 of the Regulations which excludes certain contracts from the Regulations. One such contract is for the sale or rental of immovable property.

However, the court held that the contract entered into by the parties was not a contract for the sale or rental of immovable property but one of marketing and as such schedule 3 did not apply.

The court also held that this was a commission contract and therefore caught by the Regulations. Therefore where no Cancellation Notice had been provided then pursuant to clause 7(6) the contract is unenforceable.

The agent’s case was dismissed.

Thank you to Mr Kennedy who brought this case to our attention.

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

More Safety Legislation?

The Fire Safety (Protection of Tenants) Bill is currently before Parliament. It’s objective is to ensure that all rented residential properties have a fire detection system which complies with modern standards. This means that all landlords will be required to install a mains operated battery backed smoke alarm before the tenancy agreement is signed.

If the legislation is passed the tenant will be required to test the smoke alarm at least once a month and notify the landlord of any defects, who will then be required to carry out the repairs.

Where a landlord fails to comply with the legislation commits an offence with a sentence of 12 months in prison and or a fine of £5,000 or for more serious offences up to two years in prison and or a fine.

The bill is in its very preliminary stages and because it is not directly supported by the government it is extremely unlikely to be made law. There will also be a need for secondary legislation to be created to pass enforcement powers to local authorities. This means that enforcement will probably be by trading standards or environmental health officers as is the case with EPCs or HMOs. Given the substantial pressure on local authority budgets this new challenge is unlikely to be welcomed.

Filed under: England & Wales, FLW Article, ,

Mortgage Protection Notice Requirements Set Out

Further to our previous post on the bringing into force of the Mortgage Repossessions (Protection of Tenants etc) Act 2010 the Statutory Instrument setting out the notifications required to be given to possible tenants or occupiers of the property and the form of those notices.

The Dwelling Houses (Execution of Possession Orders by Mortgagees) Regulations 2010 requires that the mortgagee gives notice t the time they apply for a Warrant of Execution to instruct the County Court bailiff to enforce a possession order. When doing so they must also send a notice to the property by first class post or by hand delivery or personal service addressed either to the tenant in their own name or to “The Tenant or Occupier”. The form of this notice is set out in detail and it specifies all the details of the Court who will be dealing with the matter and the details of the mortgagee who is seeking possession. It also spells out the tenant’s new rights under the Act to ask for a stay of 2 months in the execution of the warrant and the process by which this is to be done.

This is a welcome development in ensuring the increased protection of tenants. It is a shame that it has taken so long to implement after so many tenants have suffered short notice evictions due to landlords not seeking mortgagee consent for their letting and then failing to pay the mortgage.

How much use a two month delay will really be to tenants is not clear but it is certainly better than nothing.

Filed under: England & Wales, , ,

Housing Act Threshold Increase

It is now being widely reported that the maximum Housing Act 1988 rent threshold is to be increased to £100,000 as from 6 April. Some commentators are incorrectly calling this a retroactive change. A retroactive change is one that applies backwards in time. This does not. What is occurring is that the threshold is being changed for all tenancies. Therefore the change will apply to currently existing tenancies. While this is not retroactive it does mean that tenancies which are already in place where the annual rent is in excess of £25,000 but below £100,000 will automatically become ASTs. The date of change for currently existing tenancies is uncertain and has been variously reported as 6 April and 1 October. Tenancies that fall outside the Housing Act 1988 for other reasons, such as lettings to companies, will be totally unaffected.

Tenancies that fall into the Act as from the changeover date will need to have their deposits put into protection with an authorised scheme immediately unless they were already protected (the TDS scheme has been dealing with deposits on non-Housing Act tenancies since inception) and such tenancies will need to follow the usual provisions for termination by service of section 21 notices etc from that date.

There are several interesting problems raised by this change.

For one it could be argued that all tenancies falling into the tenancy deposit regime after 6 April or 1 October (whichever it is) will automatically be in breach of the requirements to protect deposits as they will have had their deposits placed into protection more than 14 days after they were received. This problem was raised in the Draycott v Hannells case (see paras 47-49) but the Court made no ruling on the point.

Secondly, there will be difficulty with tenancies that are due to end less than 2 months after the changeover date. Landlords will not be able to serve valid section 21 notices giving the statutory minimum two months notice to end the tenancy after the date to bring such tenancies to an end at the end of their fixed terms. It is not clear if a notice served before changeover would be valid for the purposes of s21 and it could only be so if the deposit had already been protected prior to service.

Thirdly, forfeiture actions for rent arrears may also be in some difficulty. Actions commenced prior to the changeover date will fall under the provisions of the Act after that date and so tenancies which have technically been ended by the service of a claim form (which is the rule in forfeiture cases) may be held to have been revived by the legislative change. If so the action can only proceed on the service of a valid section 8 notice unless the Court exercises its discretion to dispense with the service of such a notice.

Finally, the various tenancy deposit protection schemes will face a sudden rise in the number of tenancies being registered with them and, presumably, in the number of disputes they have to resolve. Those disputes will, naturally, be for greater sums of money and will inevitably be more complex. This may prove hard for schemes to deal with under their current financial and business constraints.

There is a tendency to blame the Government. However, it is not clear that they had much choice. The Housing Act 1988 simply gives a power to change the threshold figure from one number to another and not to get creative as to the implementation of that process. Admittedly, there were other legislative routes to dealing with the issue but they would all have taken more time. This is a change that needed to be made and it would have been difficult at any time. However, there is still a feeling of an unseemly dash to push through these changes in advance of a presumed election in May.

However, the Government could certainly have done far more to make the position clear by publicizing the changes more aggressively and also by (simply) publishing the legislation in good time so that we can actually take a look at it.

PainSmith Solicitors are running a seminar looking at the changes in London on the evening of 25 March. More information at www.painsmith.co.uk/seminars.

UPDATE: We are now given to understand that the necessary statutory instruments have yet to be finalised to bring the threshold change into force. However, the Government is intending to have these in place in time for 6 April with the intention that the actual changeover date will be 1 October.

Filed under: England & Wales, , ,

New Regulations and Agent’s Terms of Business

The Provision of Services Regulations 2009 came into force on 28 December 2009 and apply to all United Kingdom jurisdictions. These were brought into force to comply with the EU Service Directive which required compliance by (strangely) 28 December 2009.

The main effect of these regulations is to require that certain information is made available to users of services in the UK. A large number of services are covered by the regulations including lettings and estate agency and solicitors. While there are a number of ways that this information can be provided it is probably easiest for it to be put into the Terms of Business.

Key information that is required is:

  1. Business name and the status of the business (eg. partnership, limited company, sole trader etc.)
  2. A business address and full contact details (this is partly to deal with internet businesses who wilfully make their business details obscure)
  3. Registration details of any entry in a trade or public register and any statutorily required registrations (for agents this will mean details of their OEA and OFT registrations)
  4. There is also a general requirement to make clear your charges and the other terms on which services are provided.

Some information must also be made available on request. This includes:

  1. The price being charged for the services provided or where that price is not available the method of calculation
  2. Information on any code of conduct to which the supplier is held

Information required under the regulations must be provided in a clear and unambiguous manner and must be available before the contract is concluded.

There is no direct offence of failure to comply with the regulations. However, the Office of Fair Trading, local Trading Standards officers, and the Department of Enterprise, Trade and Investment (in Northern Ireland) have the power to take action for a breach of the regulations.

The Department for Business Information and Skills has provided guidance on the regulations.

PainSmith Solicitors are able to supply updated terms of business which are fully compliant with the regulations.

Filed under: England & Wales, Northern Ireland, Scotland, , ,

Distance Selling

We have noted a marked increase in queries regarding consumer protection legislation. As such a little reminder about the The Consumer Protection (Distance Selling) Regulations 2000 may be of some help.
These regulations are secondary legislation under the European Communities Act 1985 and the intention behind them is to regulate distance selling business transactions. That is contracts concluded at a distance where there has been no face to face contact, which are for the provision of services. Tenancy agreements are specifically included within the general scope of the Regulations, because the tenant will have been supplied with a service, and so the Regulations will apply to landlords in distance selling situations and therefore agents should familiarise themselves with the basic provisions.
The regulations have 2 important effects for landlords regarding distance contracts, which the agent should ensure that the Landlord is aware of:
1. allow the tenant the right to cancel the distance contract
2. require that a landlord (or agent on his behalf) provides certain specified information to the tenant
The Regulations imply a right to cancel by the tenant into any distance contract under the Regulations unless this right has been specifically excluded by agreement of the parties.
Cancellation operates when the tenant gives a notice of cancellation to the landlord or the agent on his behalf if permitted. Where it applies, the right to cancel can be exercised by the tenant within seven working days of concluding the agreement if the Written Information requirements have been complied with, or within three months and seven working days if they have not.
Agents should note that the tenant’s right to cancel does not apply for the supply of services if the tenancy has started and the tenant has been informed that there will be no rights to cancel the contract once it had started. It is therefore recommended that agents attempt, where possible, to have the agreement signed in their presence at the time they release the keys for the property.
The Written Information that must be supplied to the Tenant prior to the signing of the tenancy agreement is mostly in the tenancy agreement itself and includes such things as the Landlord’s and where applicable the Agents contact details, the fees in arranging the agreement if applicable, the rent payable, the duration of the agreement and so on.
We have noted that many people assume that the Regulations apply to Guarantor Agreements however given that the Guarantor receives no service for entering into the agreement, this is inaccurate.
Incidentally, contrary to some advice we have seen, the Cancellation of Contracts Made in a Consumer’s Home or Place of Work Etc Regulations 2008 also does not apply to guarantee agreements as no service is provided and it does not cover tenancy agreement but do cover agent’s terms of business.

Filed under: England & Wales, , ,

Further Energy Performance Tweaks

The Energy Performance of Buildings (Certificates and Inspections) (England & Wales) (Amendment) Regulations 2009 came into force on 10 August 2009.

These make a small amendment to the EPC regulations to allow for disclosure of EPCs, recommendations and Display Energy Certificates on the sale of properties. Where an EPC is produced for a property which is for sale and the rating on the certificate is in bands F or G the keeper of the EPC register (ie. one of the licensed bodies who register and maintain records of inspectors) is permitted to disclose the certificate to the Energy Saving Trust Ltd, a body licensed by government to provide information and advice in relation to energy saving in the home.

The objective of the disclosure is to allow the trust to provide information to the owner of the property on things they can do to improve the efficiency of the property and grants that might be available to pay for the improvements.

In general this will have limited effects on the sector except to encourage improvement of less efficient properties. This may be of benefit as these properties are generally less desirable and harder to sell although, in truth, most agents will already be pointing vendors and landlords towards the trust and its free advisory services in any event.

Filed under: Uncategorized, , ,

Gas Safe Register Confusion

Gas Safe Register appear to be advising on their helpline that a landlord is obliged to obtain a new gas safety certificate every time a tenancy is entered into, notwithstanding any current gas safety certificate that is in place. This is not the position.

The Landlord (or the Agent if it forms part of the terms of business) is required to arrange the annual preparation of a gas safety certificate and ensure that throughout any tenancy a valid gas safety certificate is in place at all times.

An annual gas safety check must be carried out by a Gas Safe Registered engineer. A record of the safety check must be kept for 2 years. A copy of the certificate must be issued to each existing tenant within 28 days of the check being completed, and in any event before the commencement of a tenancy.

This is consistent with the advice as given on the Gas Safe Register website.

The relevant legislation can be read here.

Filed under: Uncategorized, ,

Sale and Rent Back Regulation

The Financial Services Authority has released more details of its plans to regulate the sale and rent back sector. In the downturn this sector has grown substantially and unscrupulous lenders have excited the interest of the Office of Fair Trading and HM Treasury due to a lack of good information being given to consumers.  This is an interim regime and will ultimately be replaced by a full regime which is expected to come into operation on 30 June 2010.

Unauthorised firms operating in the sale and lease back sector will now need to seek authorisation from the FSA.  The scheme is expected to come into operation on 1 July 2009 and firms will have until 1 August 2009 to seek authorisation.  Already authorised firms will need to apply for a variation of permission to allow them to continue to operate.

Firms wishing to apply for authorisation should look at this page on the FSA website which contains information to assist with an application including the type of information that will need to accompany the application. The FSA states that the page will soon also contain draft application forms.

Filed under: Uncategorized, , ,

Electrical Safety in Dwellings- A Reminder


The Gas Safety (Installations and Use) regulations 1998 require landlords to ensure that the gas appliances in their property are safe.  These regulations were supported and policed by the Council for Registered Gas Installers (CORGI) and now the Gas Safe Register.

There are similar statutory requirement for landlords to maintain electrical systems under their control in a safe condition, the legislation is less explicit and there is no electrical equivalent of the Gas Safe Register.

There are 2 main Acts of Parliament that place a statutory duty on Landlords to ensure that the electrical equipment in their properties is safe.

1. The Consumer Protection Act 1987

2. The Health and Safety at Work etc. Act 1974

The Consumer Protection Act affects all persons who let property in the course of their business because it defines them as “suppliers”, i.e. they are supplying goods to the tenant. There are several items of secondary legislation under the umbrella of the Consumer Protection Act that are directly relevant to the supply of electrical goods, including:

1. The Low Voltage Electrical Equipment Regulations 1989

2. The Electrical Equipment (Safety) Regulations 1994

3. The General Product Safety Regulations 1994

4. The Plugs and Sockets etc. (Safety) Regulations 1994

A failure to comply with the Electrical Equipment (Safety) Regulations 1994 and the The Consumer Protection Act 1987 is a criminal offence and may result in:

  • A fine of £5,000 per item not complying
  • Six month’s imprisonment
  • Possible manslaughter charges in the event of deaths
  • The Tenant may also sue you for civil damages
  • Your property insurance may be invalidated

The Consumer Protection Act provides a defence of “due diligence” if it can be shown that the landlord or agent took all reasonable steps to avoid committing an offence – you will need documentary evidence of this.

The regulations are enforced by the Health & Safety Executive.

Although there is no statutory requirement to have annual safety checks on electrical equipment (PAT testing) it is advisable to have periodic checks done by a qualified electrician.

Electrical appliances and fittings within the property need to be SAFE and in good working order, but the legislation does not require the landlord to obtain a electrical safety certificate. However, if any electrical fittings or appliances within the property cause harm to a tenant the landlord/agent could be held liable.

Therefore in order to minimise the risk of something going wrong with the electrics landlords and agents are advised to make visual inspections and have periodic checks carried out by a qualified electrician. The landlord could also keep supplied appliances to a minimum, ensure that operating instructions and safety warning notices are supplied with the appliances and make sure that tenants know the location of and have access to the main consumer unit, fuses and isolator switch.

In January 2005 legislation under Part P of the Building Regulations made it a requirement that for certain types of electrical work in dwellings, plus garages, sheds, greenhouses and outbuildings to comply with relevant standards. It is therefore necessary to ensure that a competent electrician must carry out the work. For DIY electrical work you must belong to one of the Government’s approved Competent Person Self-Certification schemes or submit a building notice to the local authority before doing the work. Any Landlord, regardless of whether they see themselves as running a business or not, should look to comply with these regulations to ensure that all electrical equipment supplied is safe.

It should also be remembered that Houses of Multiple Occupation have their own electrical testing requirements.  The Management of Houses in Multiple Occupation (England) Regulations 2006 require that HMOs should have their fixed wiring tested every five years.  This applies equally to licensed and unlicensed HMOs.

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LACORS on Cancellation of Contracts

On my weekly NFOPP email I was directed to this article on their website which mentions LACORS guidance on the Cancellation of Contracts Made in a Consumer’s Home or Place of Work Etc Regulations 2008.
Unsurprisingly LACORS takes the view that the Regulations apply to Estate (and presumably also Lettings) Agents.
What is more interesting is one of the scenarios in the guidance which we have reproduced here:

2.3.3 – During an estate agent’s visit to the consumer’s home, if the consumer has been able to review the information required by the Estate Agents Act 1979 and the Estate Agents ( Provision of Information) Regulations 1991 and then agrees to the quotation provided by the estate agent and says “Yes” to contracting with the estate agent for his services. The estate agent says “I’ll go back to the office and finalise the contract and send it through” – the Regulations are likely to apply as the contract is made following the offer made by the consumer. The estate agent needs to be careful to give the written notice of the right to cancel at the point the offer is made by the consumer.

This is an interesting view. LACORS is essentially saying that if a verbal agreement is made for business to commence then the notice must be handed over at that stage and cannot wait until the written contract is signed.
This is, of course, quite logical as a verbal agreement concluded on agreed terms is enforceable immediately and does not need to be reduced to writing. However, agents should take care and consider at what stage they are at with a landlord if they are talking to him face-to-face in his own home or place of work. If they are taking away from the meeting that they can immediately start marketing a property and can get th terms signed along the way then they should have handed over a cancellation notice and could potentially be liable to prosecution.

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Gas Safe Register

Boarding my train to London this morning I saw a poster campaign for the new Gas Safe Register. The successor to the old CORGI Landlords Gas Safety Certificate regime. While it is good to see promotion of gas safety, landlords and agents should make sure they are familiar with the new system and ensure that all their contractors are properly registered.

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New Gas Safety Regime

From 1 April 2009 CORGI will no longer be the official gas safety regulation body. The role will be taken over by the Gas Safe Register which is operated by Capita.

This has occurred because CORGI’s contract with the HSE came to an end and, while they tendered for a renewed contract, they were beaten by Capita who have promised a gradual reduction in the cost to gas engineers as well as an aggressive public awareness campaign.

From 1 April engineers must be registered with the Gas Safe Register to carry out work. Old CORGI registrations will not be valid. Engineers have had since January of this year to sign up with the new scheme so there will be no grace period.

From a landlord or agents point of view it is important to check that gas engineers that have previously been used are registered with the new scheme. All members will have ID cards and they can be checked either on the register website or by telephoning 0800 408 5500.

Current landlords gas safety certificates issued by CORGI engineers will remain valid, even if they expire after 1 April 2009 but on expiry they will have to be replaced by certificates conforming to the new scheme. After 1 April any certificate produced by an engineer not registered with the new scheme will not be valid.

A leaflet is available giving more information which also includes a picture of the new ID card.

The responsibilities and penalties as regards failing to have a valid certificate remain unchanged.

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Smoke Control in Wales

From 31 December 2008 the The Smoke Control Areas (Exempted Fireplaces) (Wales) Order 2008 has introduced certain exemptions to the Clean Air Act 1993 in Wales.

This allows that certain types of stove, mainly wood-burners are exempt from this legislation because they are particularly clean-burning.

From a landlord’s point of view it might be worth considering fitting one of the exempted stoves if refitting is being contemplated. In tandem with this it will be important to have a clause in the tenancy agreement to ensure that the tenant burns the appropriate fuel.

On a wider point where a property with a stove is being let it is important that a clause is inserted in the lease to specify the burning of the correct type of fuel. Many stoves are limited in what they can burn and will be damaged if the wrong fuel is used. It will be hard to make a claim for what is an expensive item if such a clause has not been inserted.

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Cancellation of Consumer Contracts

Under the Cancellation of Contracts Made in a Consumer’s Home or Place of Work Etc Regulations 2008 new restrictions were imposed on certain types of contract from 1 October 2008.

The regulations do not apply to tenancy agreements but they do apply to agent’s terms of business with landlords. The regulations only apply where the contract is concluded (ie. signed) in the consumer’s home or workplace with the agent present. If they are mailed out and back or signed in some other place then the regulations will not apply.

Contracts that are made in the consumer’s home or workplace are able to be cancelled within 7 days of being made. Agent’s can seek reimbursement of any costs they have incurred provided that the consumer has agreed in writing but there is no right to claim any form of fees.

Contracts that fall under the regulations must include a notice setting out the consumer’s right of cancellation and failure to provide this is a criminal offence punishable by a fine of up to £5,000. In addition, clauses in the agreement will not be enforceable until such notice is given.

PainSmith Solicitors are able to supply copies of such notice on request.

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