In my last post I talked about the case of my poor clients, evicted by their landlords’ mortgagee. In fact the situation was worse that I let on, as not only were they evicted, they also didn’t get their deposit back!
There is quite a lot of discussion about tenants evicted unfairly by landlords in retaliation for something that they have done, such as complain about repairs. However there is another type of unfair eviction where tenants do not even get the benefit of the two months notice under section 21 which tenants receive in a retaliatory eviction. I am talking about tenants who get evicted by the landlords mortgage company when the landlord fails to meet his mortgage payments.
I was consulted by tenants on one of these cases recently. They had rented what they believed to be their dream home, only to find two months later, the bailiffs at the door. It was a complete surprise to them because the possession order had been obtained before the property had been let to them!
Yes, amazing though it seems, the possession order was made several weeks before the tenancy was granted, and the date for possession in the order had actually expired the day before my clients tenancy started (by the way they know I writing this and have given their consent). Therefore the notice which mortgagees are required to serve on occupiers of properties did not help them, as it had been served over six months ago!
The property was rented via an agency and the question comes to mind – what is the agents obligation here? Under agency law an agent is generally not liable for the acts or omissions of its principal. However what if the property they are presenting to the public as a suitable home, is one which is vulnerable to repossession from the moment the ink dries on the tenancy agreement?
I had a word with one of my letting agent clients about the sort of checks that are generally done in the business against their landlord clients and the properties they take on. It seems that the answer is ‘not much’ Apparently landlords are sometimes asked to sign a form saying that they are authorised to let the property and that there are no legal problems or other problems with it. Well that’s not much good is it? A dishonest landlord is going to sign that without a qualm.
I can’t help feeling that there should be some sort of obligation on agents to check this sort of thing. After all in this case the agent was offering to let through its business, a property which had a substantial defect – i.e. it was vulnerable to repossession at any moment. It seems wrong for the agent to be able to pocket its commission (taken from my clients rent) and then say “sorry gov, nothing to do with me”. Which is in effect what they are doing.
What do other people think?
I was amused to read that Inside Track, the company that charged thousands of pounds for courses promising to teach people how to be property millionaires, has now itself gone into administration.
I am not a property investor myself, neither am I a millionaire (I wish!) but I would have thought that if people want to make money from property, something along the following lines would be necessary:
A recent article in Inside Housing looks at how landlords are using the governments review of the private rented sector to call for a review of the HMO licensing system, which they say is not working. One organisation is asking for it to be done away with altogether, allowing landlords to ‘self regulate’.
The main criticism of the HMO licensing scheme is the way the license fees vary across the country, with some authorities charging over £1,500 per property and others charging under £200. I have to say I have a lot of sympathy with landlords complaints here, our own Landlord-Law list of licensing fees shows a very wide variation. This cannot be right.
However in my opinion one of the best chances of dealing with poor conditions in properties and rogue landlords should be via the local authorities and the licensing scheme. The problem is though that in many cases they are not using their powers properly, most likely because of lack of resources. The Inside Housing article mentions a "substantial fine slapped on a Liverpool landlord last month" and this is quoted as showing that the regime is working. I am really pleased that at least one bad landlord has got his comeuppance under the regs, but suspect that there are many others slipping through the net. The fact that this item is newsworthy (when if the councils were doing their job, such orders would be common practice) is telling in itself.
Which is a pity, as if the local authority powers, which they already hold, were being used as they should be, then this would do a lot to solve the problems of substandard housing. It really needs an outside body to enforce standards, it is unfair to expect tenants to have to do this themselves. Not only because they are then at risk of retaliatory eviction under section 21, but also because bringing a legal action is a stressful, and (unless legal aid is available, which often it is not) expensive process which many tenants do not want to undertake.
Furthermore, why should they have to? Under the Housing Act 2004, poor standards are technically a crime and local authorities are the organisation charged with enforcement. We do not expect victims of burglaries to hunt down and prosecute the thieves. Why should victims of substandard housing have to sue their landlords in order to obtain the decent standards they are entitled to under the law? The situations are not wholly parallel, I agree, but it is a valid point of view.
As for the suggestion that landlords should regulate themselves, this is laughable. I wholly agree that many, probably a majority, of landlords are law abiding and provide decent properties which not only comply with the standards but surpass them. However how are these landlords, or indeed the landlords associations, going to do anything about the non compliant landlords? They may not approve of them, but that isn’t going to do any good! The only way that landlords could self regulate would be if membership of a landlords or similar association were made mandatory and the associations given powers to act against members who breach their standards. This is one of the options being looked at by the Law Commission in their responsible renting project. However many landlords associations do not want this role.
My preference would be for regulation of non complaint landlords to be done by an outside body, the most appropriate being the Local Authorities, as they already have powers in this respect. The main reason why this is not being done properly already, is a lack of resources. Which means under funding by the government. Over to you, Gordon.
There is a very interesting, if worrying, article on the Guardian site here about the credit crunch and the effect it is having on housing. I was shocked to read that mortgage repossessions are likely to go up to 45,000, from 8,000 in 2004.
The article also makes other telling points, such as for example the income of support charities is likely to go down as few people can afford to donate, and the value of their investments plummet.
Bad news for us all.
In view of the current financial situation, I have added a new members only service to my Landlord-Law site, a Rent Arrears Action Plan. This is in five parts (the first part being preliminary information) and contains detailed guidance to landlords on what they should do from the moment their tenant first falls into arrears, up to considering court action. It contains precedent letters which can be printed off and used, the possession notices, and checklists, so landlords can keep a record of what they have done.
It is important that rent arrears are dealt with promptly, not only for the landlord but also for the tenant. If rent arrears are allowed to build up (and I have seen some horrendous rent arrears in my time) then they will get to such a state that the tenant will never be able to pay them off. Whereas if the tenant starts dealing with them at an early stage, it may be possible for an installment plan to be arranged, which will allow the tenant to stay in the property. The landlord will then not be faced with the expensive of court proceedings, a large rent arrears bill, and all the bother of having to find a new tenant. Often when people fall into debt they will pay the person or company which is shouting the loudest. So if the landlord does not do anything, this will often result in the tenant giving other debts priority.
Even if the tenant cannot afford, long term, to stay in the property, if things are dealt with promptly then it may be possible for things to be kept under control until the landlord can evict the tenant under the cheaper section 21 procedure. This will allow the tenant to apply for local authority housing which, if the tenant has a family, they will be entitled to. However if the tenant is being evicted for serious rent arrears, the tenant may also have lost the right to be re-housed if the Local Authority consider he is responsible for the eviction himself (i.e. because he did not pay rent when he should have done).
Most landlords are reasonably humane people and will want to help their tenants if they can. However, many will not know what to do when tenants fall into arrears, or understand the situation their tenants are in vis a vis Local Authority re-housing. Hopefully this new service will be of assistance.
I was pleased to read in this report that in Kings Lynn, Local Authority officials are checking up on HMOs. There is not much point in having laws to legislate HMOs, poor conditions in property, and the like if nothing is done about it.
As was pointed out by Mark P in the comment here (you need to scroll down), many Local Authorities are unable to do anything due to lack of funds, so it is good to see that are taking their responsibilities seriously.
My feeling is that the only way properties owned by the worst landlords are going to be improved for their tenants is via action from Local Authorities. Probably the most effective course of action would be for the LAs to do the repair work themselves and then re-coup the cost from the landlord. They do actually have the power to do this now, but perhaps for them to use these powers, their right to recoup the cost from the landlord should be beefed up a bit. If landlords feel that they are going to lose their rent for a few months or years, it may persuade them to put their own house in order, so as to avoid it being put in order for them.
I have just listened to an interesting program on Radio 4 (via the listen again facility) which is on problems tenants at the lower end of the market experience. The presenter finally managed to speak to one of the landlords whose properties featured in the program, who took the view that he was spending loads of money doing up properties for ‘scumbags’, who then don’t look after them properly (leading, he implied, to the condition the presenter found them in). Hmm.
It is very sad that this sort of thing is still going on, and that some tenants are frightened to report poor conditions because they are scared of being evicted. Either legally via section 21 or by the boys coming round to evict them forcibly.
The program mentioned the current review of the private sector being undertaken at York University, and it will be interesting to see if there are any suggestions in the report on how to deal with this sort of thing.
The program pointed out that the majority of landlords are responsible and provide decent properties. No doubt they would be very happy to see the back of the criminal landlord who gives them all a bad name.
At the time of writing you can listen to the program via this link, but I am not sure how long this will stay online.
