As mentioned in my earlier post, there is now a new Landlord Law Blog, and therefore this is the last post here. The new blog can be found at www.landlordlawblog.co.uk. Please can you change any links you may have to this blog, and any RSS or other settings.
You can see what the new blog looks like from the picture, but please go and look for yourself.
www.landlordlawblog.co.uk
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
If you rent out furnished holiday accommodation, you should buy this book. At present there are tax advantages in renting out furnished accommodation, but on 10 April, this will all change. Carl Bayley has written this book to explain the changes that will take place, and give guidance on what should be done in the run up to 10 April 2010.
Landlords will (or should) already be aware of Carl Bayley as a tax author, as he has written a number of well received books in the past, such as How to Avoid Property Tax.
This book will only be relevant for a few months, so (if you own a holiday home you rent out) should be bought as soon as possible to maximise the value you can get from it. Areas covered are:
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
See also my new website The Lodger Landlord.
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The National Landlords Association (NLA) and spareroom.com are both calling for the rent a room tax scheme tax threshold to be increased. It has been £4,200 since 1997 and since then prices have risen considerably. To quote the NLA:
"The NLA supports the Raise the Roof campaign's call for the Rent-a-Room threshold to be increased to £9,000 pa. The scheme threshold has not changed since 1997, while the average single room rent has increased by more than 75%. This has resulted in the majority of landlords who let a room being required to complete a tax return removing much of the benefit of the scheme. At a time when household finances are becoming increasingly stretched, and there is an ever greater need for affordable housing, the Government should do all it can to incentivise potential landlords to let a room."The story has now been picked up by the Independent who have reported it here. You can read more about the campaign, and sign the petition here.
Several things I have been planning for a while will come to fruition shortly.
The Newsletter
The Landlord Law newsletter is an important part of my service. However, the newsletter mailer I have been using almost since we started in 2001, is now a bit old and clunky. I am therefore changing to using a professional company, Constant Contact. My web designer Gill and I have been working on the new template, which looks great!
However the new service requires the database to be re-created. The annual members list will be uploaded, so annual Landlord Law members don't need to do anything. However I do need all those on my free newsletter list to sign up again, which you can do here. The first of the new newsletters will be sent out later today (12 November) so if you want to receive it you should sign up now!
However all is not lost if you read this too late, as you will be able to read the most recent newsletter on the site (something else I have wanted to do for a while). I will be putting a link to todays newsletter on the site shortly.
A new blog
My web designer and I are also working on a new blog design, which should go live in a week or so. At that time the blog url will change (as we are coming off blogger) so watch this space, as you will need to amend any links you may have. However my feedburner feed url should not change.
If you receive the new newsletter today, let me know what you think.
[Later - the mailing went out all right, you can see the new newsletter here.]
Well done High Court Enforcement company Shergroup for setting up the Sherbet foundation charity, aimed at families affected by enforcement.
Shergroup along with other enforcement officers have a clear responsibility to enforce the orders and judgments of the courts. However as a result of this work they also felt that they also wanted to help those who were really in hardship and were being pursued by creditors who probably didn’t appreciate how tough it was for the family they were visiting. Through this unique charity, they are able to use the insights obtained by their visits to debtors, to recommend deserving cases to the Sherbet foundation.
You can read more about how the charity works here. If you want to make a donation, there is a giftaid form on the site.
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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I have been contacted by a landlord who has drawn my attention to a thread on the popular LandlordZone forum:
“Briefly, the rental property has been in the hands of the receivers since July 2008. The receivers accepted the tenancy and collect rent from the tenant (the tenancy is now periodic). The deposit was originally protected by the landlord, however, Mydeposits cancelled the landlord's membership (and therefore the protection) because the landlord was subject to a receivership order, which is contrary to the rules of the scheme.This does seem to be a difficult situation and one that may become more common with more landlords falling into receivership. What do you think?
The deposit has not been paid to the receivers (so it appears they are not liable). The landlord cannot protect the deposit as it's against mydeposits' rules (I guess it's possible the DPS would accept it). Tenant may not succeed in a claim for return of the deposit because the tenancy hasn't ended. So, how can the tenant take action under s.214(1) to ensure the deposit is protected when firstly, the landlord did comply and the cancellation was not his decision, and secondly, the deposit has not been 're-paid' so can there be any duty to comply a second time when the landlord has complied once.
It seems completely crazy to me that the scheme is permitted to cancel a protected deposit in these circumstances - the whole point of the schemes is to protect against landlords/agents' 'bad' behaviour. Landlords cannot unprotect a deposit during a tenancy without evidence of reprotection, so why are schemes allowed to do this?”
This book is written by the owners of the popular SpareRoom.co.uk flatsharing web-site. It is addressed to 'sharers,lodgers, and everyone renting out a room', and is very much a companion book to their web site service. As the authors have been working in the field for such a long time (their London flatsharing site, intolondon.com having launched in 1999), they clearly know what they are talking about.
If you are looking to flat share or rent a room, particularly if you are looking for a place in London, this is an excellent book. It provides all (or nearly all) the information you need to have, in an accessible manner. There are also insets giving the personal experience of landlords and tenants, as well as the authors.
Helpful chapters include:
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Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
There is new tenancy deposit case report in the November issue the Legal Action Magazine, Da Costa v. Pinter, which took place at Bromely County Court in April 2009.
Here the tenancy agreement provided for a monthly rent of £1,950 but also stated 'Payment required in advance of £4,200'. The agents invoice described £2,250 of this sum as a deposit, and at the end of the tenancy the tenants asked for it back. As it was not forthcoming they issued county court proceedings for its return and also claimed the fine of three times the deposit sum. The deposit was then protected, after the issue of proceedings.
The Judge (District Judge Burn) accepted that the sum paid was a deposit and awarded the claimants the deposit money and the fine of £6,750. However the interesting part of this case is the quote from the Judge:
"The purpose of the Act is to try to ensure that landlords secure tenancy deposits in a recognised deposit scheme at the start of the tenancy, so that the deposit can be returned to tenants quickly when the tenancy ends, and that disputes about the deposit can be resolved under the schemes' procedures without the need for court proceedings.
Landlords who describe a deposit as something else, who do not secure it promptly in a deposit scheme as required by the Act, then fail to return the deposit when the tenant leaves (especially if this is without good cause, thereby forcing the tenant to start court proceedings to recover the money) but who then at the last minute after the tenant issues proceedings, pay the deposit into a scheme, are clearly flouting the spirit of the legislation and, on my interpretation, the letter also.
If the s213 and s214 remedies are not applied in a case such as the instant one, the Act would be rendered virtually toothless when landlords flout its provisions."
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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This post first appeared on Roberta’s excellent My Property Mentor Blog on 19 October 2009.
You may not be aware of this- I certainly was not-but HMRC are actively searching for landlords who are avoiding paying tax either by accident or by design.
HMRC is actively searching local newspapers for information on planning applications for flat conversions.
If the planning application was for a number of flats within one house they will try to find out if the landlord was filing a tax return. (Sneaky!) They are checking for a ‘UTR’- Unique Taxpayer’s Reference. This 10 digit number is ta way for them to start the chase up. It allows them to see if the taxpayer was declaring the letting income. If you are then you would be entered on the “Not Worth Further Pursuit” database.
However…..
If you are Self Assessment registered and not declaring the income, the fun begins. They will send a 116 form, requesting information from the District Valuer, this tells them how much the landlord paid for the property, date of purchase and from whom the landlord purchased it. ( eeek!)
The next step is for them to check Experian to seek any further linked addresses to your name. If so, they will send more 116s, and see if more properties were not declared. More often than not, this yields spectacular results for the HMRC.
So, what if they are unsuccessful? Well, they may ask the District Valuer for a ‘Covosearch’, a historical list of properties, bought by the landlord, or possibly members of the landlord’s family friends and associates. If by chance the family member is a minor, they will suspect the landlord of attempting to limit his tax liability, and that non-compliance was taking place. (You have been warned!)
Further Enquiries
Now, if they decide that you are part of non-compliance, your case would be then be subject to a full enquiry. On the other side of the coin, if you are not on Self Assessment, you would be referred to the ‘Hidden Economy Team’, where you would be requested to complete returns with the letting income included. OK, hands up those who knew just how much power the HMRC have to chase you? How many investors have been advised by greedy marketeers and brokers into setting up sizeable portfolios in their family members/ kids/ friends names to avoid the many forms of tax?
Other Ways They Can Chase You
Apart from the local newspaper, another source of locating non-compliant landlords is via a Gangmasters’ project of licensed labour providers, which may have offshoots of properties owned in which a vast amounts of tenants were placed in just one room. (When we had a large influx of EU members there were stories of Polish workers living cheek by jowl in this manner.) Usually a family member would be acting as the landlord, leaving the Gangmaster to exploit the workforce.
Yet another way of locating non-compliant landlords is to establish (via the London Information System (LIS) database) how much housing benefit was paid to a landlord by a local council for the tenants. Local councils are duty-bound to place this information on the LIS database for HMRC.
Last but not least, they can also find, via LIS, rental income submitted to HMRC from letting agents. (Ed: they may also be able to track you via the tenancy deposit schemes which pass information on to the government)
Get Your Tax Sorted-NOW!
This government is very strapped for cash and in my opinion we can expect more of this type of behavior. We know already that banks are employing forensic accountants more and more now too (see my recent blog here for more info). The situation is likely to get worse as the government search more actively for spare cash trapped in the system. The tax man is coming folks- you have been warned. Sort your stuff out sooner rather than later.
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If you need help, Roberta's service may be able to assist. You can email her via her main website http://mypropertymentor.co.uk.
Reading (rather late) the October issue of Property Investor News, I came across these interesting snippets of news:
Insurance
Apparently a survey by insurance firm Direct Line for Business has thrown up the fact that many landlords are cancelling their insurance policies 'to save money'. Presumably these are people who are signed up to their own insurance schemes (otherwise how would they know)? I could not find any mention of this on their web-site, however I did note that their landlord insurance does not cover lettings to students.
Maintenance insurance for agents
Another one on insurance. Apparently many letting agents are carrying out maintenance work on rented properties without being properly insured. Agents are warned to watch out for this and not do any maintenance work unless they are sure they are covered. Apparently many office policies for letting agents exclude cover for this, meaning that agents won't even be covered for changing a light bulb. You are warned!
Student stereotypes
Finally research by Rookwool shows that actually students are not as rowdy as everyone thinks, as there is only one complaint made for every 557 students. Many student are actually more concerned with studying hard and getting a good degree, "and arguably may have more to fear from the noise generated by the rest of the town".
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
Tenancy agreements and information on tenancy agreements is an important part of the Landlord Law service that I provide. Sometimes people find it difficult to locate all the tenancy agreement related resources on the site, so I have done this page of links to help them:
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
This is a myth largely created by letting agents, as an important part of their income stream comes from charging landlords for ‘renewals’ for tenants. But they are not actually necessary.
In a way, this post follows on from my last Urban Myth post about tenants staying on after the fixed term not being squatters. In that post I explained that under the Housing Act, assured and assured shorthold tenancies continue automatically after the end of the fixed term, as either a monthly or weekly ‘periodic’ tenancy, depending on how the rent is paid.
This does not mean to say that tenancies should not be reviewed at the end of the fixed term. Or, so far as the landlord are concerned, two months before the end of the fixed term, as that is the length of notice he will have to give if he wants them to leave.
However many, many tenancies run on as periodic tenancies quite happily for years. Often landlords and tenants prefer the flexibility of a periodic tenancy and do not want to be tied in for a longer term. For example if tenants expect to be moved to another town for their job but do not know exactly when.
The most important reason for ‘renewing’ a tenancy is to increase the rent. This is often done at this time, as if a tenant signs a new tenancy agreement or renewal form with the new rent, they cannot then challenge the rent figure if they think it is too high.
Another important reason for ‘renewing’ a tenancy for a further six months or a year, is to create certainty, and tenants often want the security of a fixed term, where they can only be evicted if they fail to pay rent.
However if you and your tenant would prefer the tenancy to roll on on a periodic basis, do not allow your letting agent to bully you into a ‘renewal’ for a further fixed term.
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Do you know of any 'urban myths'? Or have you had any problems with this particular urban myth? Please post a comment if so, I would love to hear from you.
Click here to see all the Urban Myths.
At the recent CLT Conference I attended, there was an excellent talk by Professor Martin Partington OBE (former Law Commissioner) on possible future developments in the Private Rented Sector (PRS). I set out below a very condensed version of his notes (with his permission).
He started by saying that the PRS is now a key feature of the housing market and one which the government needs to encourage. He looked briefly at the prospect of large scale investment in the sector (most private sector landlords have only a few properties) such as the Kick Start delivery initiative, and concluded that it remains to see if these actually result in any developments, although it could happen.
The Rugg Review
Turning to the Rugg Review, this was commissioned by the government after the Law Commission (under Professor Partington) had spent several years carrying out an extensive consultation and research exercise in the same areas. Needless to say, there is a strong suspicion among many that the Rugg Review was commissioned because the Law Commission’s report did not say what the government wanted!
The Rugg Review recommendations can be summarised as follows:
I was interested to read a report sent to me by Sally Chicken (Director of the Rainbow Saver Anglia Credit Union) regarding some research carried out by Leeds City Council and its partners. This was to see whether resaerch carried out in 2004, which concluded that up to £9 million each year was lost to the local economy through people having to pay out excess interest to doorstep lenders, was actually correct.
The reserch findings are as follows:
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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An interesting article in the Cash section of the Observer today looks at the increasing tendency of tenants to check up on their landlords before signing a tenancy agreement. And quite right too! As has been reported on this blog in the past, innocent tenants have been known lose their homes at short notice and through no fault of their own, due to their landlords dishonesty. To quote the article:
"When the Council of Mortgage Lenders (CML) started compiling buy-to-let data in the second half of 2005, only 200 investment properties were in mortgage arrears of three months or more. By the first half of this year, this had soared to 5,400. Repossessions of investment homes also climbed, from 400 to 2,800, during the same period."Rules are now being put in place to protect tenants from this sort of thing, but even if they do not actually get evicted, the threat of eviction can cause massive worry and upset.
At the CLT Housing Conference last Wednesday which I attended, some interesting points were made by David Smith (of Pain Smith Solicitors) in his talk.
Consultation for additional licensing
Local Authorities can apply for additional licensing powers but the regulations include requirements that proper consultation be carried out first with relevant parties, which should include, for example, local letting agents. If this is not being done, it is possible that any prosecution for failure to have a license (i.e. under the additional licensing powers) could be challengeable by way of judicial review as being an improper use of LA discretion,
HHSRS inspections
The Housing Health and Rating System is a system of inspecting properties introduced by the Housing Act 2004, where properties are assessed against 29 ‘hazards’. Properties which fail the inspections and show ‘category 1 hazards’ are then served with enforcement notices. However Local Authorities have, in most cases, a duty to serve notice in advance of the inspection, on landlords or agents. If this is not done, then landlords can apply to the Residential Property Tribunal for the notices to be quashed, which in most cases will be granted.
Hazard score calculations
When doing an inspection under the HHSRS, Environmental Health Officers (EHOs) are supposed to do the calculations before embarking on enforcement and prosecution. Landlords being prosecuted, and their advisors, should therefore ensure that they ask the LA to provide its complete calculation of the hazard scores at the earliest opportunity along with some evidence as to when the calculation was made. If these are not forthcoming landlords may be able to successfully defend the proceedings brought.
Appeals to the Residential Property Tribunal (RPT)
Time limits for this are tight and rigidly enforced by the RPT, so landlords should not delay if they consider they have a valid case. Often time is wasted by referring the matter to MPs, local Councillors and the media. Although these can all be helpful in many matters, correspondence with them will not be accepted by the RPT as a valid reason to excuse late submissions. Note also that it is the date the paperwork arrives at the RPT which is the date calculation point, not when it is posted, so if there is any likelihood of a postal delay, you might want to consider delivering it personally or paying for a courier (note that the RPT are not on the DX - the private delivery system used by many solicitors and other professional organisations).
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These are just a few of the points made by David in his talk, but enough to see that this is a complex area of law. If you have a problem relating to LHA or HHSRS, a good solicitor who knows his way around the legislation and has experience in the practice and procedure is important. Davids firm Pain Smith are well worth considering, as they are one of the few who have real expertise and experience in this area of work.
The National Landlords Association (NLA) conference is to be held this year at Birmingham on 20/21 November. I will not be there (having already travelled once to Birmingham, from Norwich, for the Landlord & Buy to Let Show I felt that was enough). However it looks to be a good event.
Looking at the program, the main theme is the future, with talks and panel sessions looking at proposed legislation changes and future trends. The speakers include Ian Austin MP, Caroline Davy of Shelter and Ian Potter of ARLA, along with Simon Gordon and David Salusbury of the NLA. It should be an interesting event. NLA are a good organisation and do a lot for their members, for example the recent undertaking obtained from the Conservative Party on payment of local housing allowance.
Mind you, the NLA is not the only landlords association around, and those in the Eastern Counties looking for an organisation to join may also want to consider the Eastern Landlords Association, plus there are others, either nationally or in other specific locations. However, the NLA is now the largest, particularly after its recent merger with the SPLA.
If you attend the NLA Conference, I would be interested in your feedback, so please do leave a comment below.
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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I wrote several posts on the Office of Fair Trading v. Foxtons case in July. As I find I am having to refer to these quite a lot in advice to clients, I have decided it would be helpful to have one page with links to them all.
OFT Victory in Foxtons unfair contract terms case.
This is my initial report on the case, and explains the judgment.
The OFT v. Foxton case - commission on renewals
This item looks specifically at what the judgment says on the question of commision on renewals, with reference to the status of these clauses now, and quotes extensively from the wording of the Judgement.
Letting agents - instead of renewal fees
This post discusses what some dishonest agents are doing to replace the renewal commission they are losing, and discusses also the 'fiduciary duties' of agents (which seem to have been forgotten by many agents).
Advice for landlords seeking to recover commisison post OFT v. Foxtons
This post gives some guidance to landlords on what they can do now (ie as at July 2009 to the date of this post) if they think they may have a claim against their agents as a result of the Foxtons case.
If you want me to advise on your specific circumstances, please see here for details of my advice services. Note however that I only do limited case work nowadays so I am not able to issue proceedings or act on your behalf in any court claim you may wish to bring against your agents.
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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When speaking to Simon Gordon of the National Landlords Association (NLA) recently at the Landlord & Buy to Let Awards dinner, he was telling me about their lobbying work, and how they attend all of the party conferences. Well it seems as if all this has paid off as the conservative party have now announced that they will reinstate direct rent payments to landlords where housing benefit tenants choose, if they become the next Government.
Of course that is a fairly big if, although some people consider it is a 'done thing'. The NLA are now calling on the government to bring forward their planned review of the Local Housing Allowance (LHA).
The fact that LHA cannot normally be paid direct to private landlords (although it is paid direct to social landlords and mortgagees) has long been a bone of contention, and, the NLA claim, is a major factor in landlords deciding not to let to tenants on benefit.
NB Until the rules are changed, landlords could always consider suggesting to tenants that they use a Credit Union account for their benefit.
As some of you will know, today I was speaking at the CLT 12th Annual Residential Landlord & Tenant Update. The great thing about speaking at one of these events is that there are eight other brilliant speakers to listen to (and I get CPD).
The day started with an interesting overview of recent developments from Rafael Runco, the Deputy Housing Ombudsman,. There was then an excellent presentation on HMOs and the HHSRS from David Smith of Pain Smith Solicitors (and landlords looking for help in these areas could do a lot worse than instruct his firm, one of the few who have real expertise in this area). I also enjoyed the talk from Tracey Bloom on possession orders and the problems with suspended orders and tolerated trespassers.
In the afternoon we had a great talk from Professor Martin Partington, who some of you may remember was responsible for overseeing part of the Law Commissions housing law reform program. This was followed by a fascinating talk from Sue Highmore, formerly of Linklaters and now a freelance writer and trainer, on the new Equality Bill which is currently going through Parliament. The day finished with talks from Professor James Driscoll, and Siobhan McGrath, Senior President of the Residential Property Tribunal (which I was not able to stay for).
The main 'new' thing I learned on the day is that the government is likely to increase the rent limit for assured shorthold tenancies from £25,000 to £100.000, probably with effect from April 2010. Which will of course bring many more properties into the ambit of the tenancy deposit regulations. But I will write more about this if it is confirmed.
But a good day all round and I now have lots of notes and new information which can form the subject matter of new blog posts (unless I can persuade the speakers to write the posts themselves as a guest blogger!).
At the recent Landlord & Buy to Let Awards ceremony, the presenter Konnie Huq had an interesting story about a ploy used by a large firm of agents she now regrets having used.
The told her that they had found a tenant who was willing to rent her flat for five years. 'Think of it' they said to her, 'Five years rent sorted, isn't that great?'. Agreeing that it did indeed sound good, Konnie signed the forms, only to find that agency then required their commission for the whole five years paid in advance! Even though she had not received any of the rent!
Of course later on, there were problems with the tenants failing to pay rent, which she had already paid commission on ...
Moral - don't ever sign up for more than six months with a new tenant you know nothing about. And be aware that not all agents are looking after your best interests. Even though they should be (as discussed here).
Have you suffered from any similar problems? If so, please leave a comment.
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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I was at the Landlord & Buy to Let Show at the NEC Birmingham on Friday and Saturday. An enjoyable two days, although I had a bit of a journey to get there (4-5 hours cross country by train from Norwich).
I arrived at about 3.30pm, so was able to talk to a few people before doing my talk (Essential Legal Points for Landlords). So I chatted with the staff from Alan Boswell, Richard Bowser, editor of Property Investor News Magazine, and a young man from Legal4Landlords. I was delighted to learn that he and his colleagues regularly check up on the law with Landlord Law, but taken aback to learn that they are not members! Maybe I should make my free tips less informative! My talk went reasonably well, with some good questions afterwards.
After the talk I did a bit of a wander. It was particularly nice to meet up again with Tom Entwistle of the excellent LandlordZone website. We were both attending the Landlord & Buy to Let Awards dinner that night as we had both been Judges. Also at our table were Simon Gordon, Head of Communications of the National Landlords Association (NLA) and the glamorous Sussanne Chambers, director of the NLA. It was nice to have an opportunity to talk to them, and it was a good evening.
It was also interesting (having been involved in the Judging) to see who won. The awards were announced by Konnie Huq, a television presenter. I don’t watch a lot of TV so had not seen her show, however she was charming, gave a very nice speech, and did as good a job as one can of reading out all the information about the awards winners. At our table we thought it might have been nicer to have the winners go up and receive their awards personally after they had been announced, however that was not her fault. The winners got the chance of having a picture taken with her afterwards, which I suppose will be a longer lasting memory (and one which will no doubt go up on many of their websites).
Unfortunately I failed to make a note of the winners as they were announced (too busy chatting) but I will do a link to the winners list once it is available. (NB - a list of the winners has now been published via here.)
On Saturday my talk was at 11.00am (Dealing with Rent Arrears) which went off fairly well. One of those attending was Liz Mooney, landlord Support and Development Officer at Sandwell Forums, and it was very nice to talk to her afterwards. She edits the newsletter, ‘The Bugle’ - I have not read it properly yet, but flicking through I see that one of the articles is headed ‘Another Senior Moment’. Glad its not just me then.
So thank you to the organisers, and apologies to anyone I spoke to who I have not mentioned here. But feel free to add a comment and remind me! Or just give comments on your experience of the event generally. I would welcome your views. And for those who attended the talks - did it meet your needs, and are there any other talk topics you would like me to do in future?
I do come across this view sometimes. Landlords telling me that their tenant has no right to stay on in their property, because he (the landlord) only agreed to let them live there for (say) six months.
In a way the law is rather pitched against landlords. Tenants can leave without penalty at the end of a fixed term, and don’t even have to give the landlord any warning that they are leaving (although it is a different matter if they stay on). However if the tenant does not want to move out, the landlord must service a two months notice, get a court order for possession and then instruct the County Court bailiffs before he can get his property back.
With assured and assured shorthold tenancies (i.e. most of those which started after 15 January 1989) the Housing Act 1988 specifically provides that if tenants stay on after the end of their fixed term, the law will create a new tenancy, a 'statutory tenancy' (because it is created by statue). This will be a ‘periodic’ tenancy, starting immediately after their fixed term ends, and will run on from month to month or from week to week, the 'period' depending on how their rent is paid. Apart from this, all the terms and conditions of the preceding ‘fixed term’ tenancy will continue to apply.
So when landlords (and tenants) say that tenants staying on ‘do not have a tenancy’ this is not true. They do. And so they are not squatters!
Do you know of any 'urban myths'? Or have you had any problems with this particular urban myth? Please post a comment if so, I would love to hear from you.
Click here to see all the Urban Myths.
Médecins Sans Frontières is an international humanitarian aid organisation that provides emergency medical assistance to populations in danger in more than 70 countries. This means not only those places in the headlines but other countries and places that few have every heard of. Difficult but essential work.
You can read more about what they do on their web-site. If you want to make a donation you can do so via this page where you can find your national office.
Lance Godard is am American twitterer who interviews lawyers on twitter 'one tweet at a time'. All interviews have 22 questions and follow a similar format. Once done they go on his web-site 22tweets.com. I was 'twitterviewed' on 13 October, and Lance has given me permission to reproduce it here. His questions are in bold.
Today we’re tweeting w/ UK solicitor @tessashepperson, who specializes in residential landlord and tenant law
@tessashepperson thank you for joining us today on Twitter. Tell us: who is @tessashepperson?
Thank you for twitterviewing me! Who am I? Solicitor, wife, mother, blogger, author, Dr Who fan, the list is endless
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Tell us about your law practice.
I am a sole practitioner, and work through my website service www.landlordlaw.co.uk - a 1:many service
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What type of clients do you represent?
Mostly private residential landlords, some tenants and letting agents, occasionally other solicitors too
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What is the single most important legal issue affecting those clients?
Hard to single out one issue. The credit crunch has affected us here, as it has everywhere, & caused problems eg with rent
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That’s understandable. What do you tell every new client before you start working for them?
As I practice via the internet I rarely meet clients face to face. I send them my standard ‘client care’ email
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Interesting; I hadn’t thought about that. Tell us about one of more significant client representations you’ve had.
Alas I have had no big cases. However I am a trail blazer in the delivery of legal services via the internet
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Why do your clients hire you?
Because I really understand my niche. Although I do less casework now, the subscription service is more important
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What’s the most active area of your practice at the current time? Is that typical?
Just now I’m doing a lot of writing, blogging, talks at landlord events & wkg towards a web-site upgrade. Fairly typical
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You offer legal info via subscription for landlords & tenants. What are benefits of this model for clients?
a 1:many service is more efficient than 1:1, so it is less expensive. I help people do to things for themselves
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How do you market that practice?
A few ads, writing articles for relevant journals, my blog , twitter, but most people seem to find me through Google
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How do you describe what you do to people you meet at networking events?
I run an online legal information service for residential landlords and tenants
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You blog at Landlord Law Blog. Who is it written for? Why should they read it?
I started it 3-4 years ago as somewhere I could comment on issues + I thought it wd be fun. Readers can learn a bit & ask Qs
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Interactive approach (like service). What’s the general sentiment in the UK regarding lawyers using social media?
I recently mentioned Linkedin at a lawyers mtg & got asked if it was an online dating site! A few eg @BrianInkster get it
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Wow. What specific impact on referrals and/or client engagements have you realized from Web 2.0 activities?
Blog: My stats show that many visitors come to my website from my blog & it has helped raise my profile. Twitter: its early days
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How much time do you spend each day developing / enhancing your brand?
My husband tells me, too much! But it is always in my mind, say 25/7?
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25/8? A lot of time either way…. What is the most significant issue currently facing the legal profession?
In England we have a new Legal Services Act. But above that I think the internet/web 2 will have a profound effect
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What will the legal landscape look like in 10 years?
People will expect to do business online as a matter of course. Most legal sources will be freely available online, but …
… people won’t understand it so will still need us. More work than lawyers now care to think about will be commoditised
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Interesting. What would you do if you weren’t a lawyer?
I really enjoy writing so would probably have ended up as some kind of writer.
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How do you want to be remembered?
An innovator who pioneered the online delivery of legal services for ordinary people
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What do you do when you’re not working?
I enjoy reading detective novels, cooking, watching Doctor Who, and spending time with my lovely family
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What advice can you pass along to lawyers currently under- or unemployed due to the economic crisis?
Decide what you really want from life, then work out how to achieve it. There is usually a way, you just have to find it
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And our final question for you: what advice do you have for people going to law school today?
Try to get some wk experience in a law office first, if you find you enjoy law, then go for it, otherwise do something else
That’s valuable advice to close this interesting twitterview. Thanks so much for staying up late to tweet with us!
It was a pleasure! Best wishes from across the pond!
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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Most of the complaints I hear about regarding the Deposit Protection Service (DPS) are from landlords. However they are not the only sufferers. Today I received this cri de coeur from Miss C:
"The DPS paid my deposit back to my landlord in July 2009, despite me claiming it back. They claim they wrote to me, but I did not reply to their letter, so they gave the deposit to the landlord.Where indeed. There seems to be little comeback in this sort of situation. Miss C tells me
When I phoned them to find out what was happening to the deposit, they told me it had been paid to the landlord, I stated I had received no communication from them, asked why they had not phoned, they said they are not allowed to. I then asked why they had not e mail me, to see why I had not responded, they said they did not have to.
I have made 3 or 4 complaints to them, and sent a letter to their chief executive, who said they sent me a letter, I asked if he had proof of posting, he said no.
I am now in no mans land, I borrowed the deposit from my parents, so I have no deposit to put down on a new let, where do I go from here?"
"The whole point is, they say they posted a letter to me, which I did not receive, and because I did not answer it they gave my deposit to the landlord. I asked them what happens if you are on holiday, they never replied. Surely they must be accountable to somebody?"Does anyone have any suggestions? Have you had a similar experience with the DPS? If so, please leave a comment.
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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I have just read an interesting case (Hunt v. Hussesin, Epsom County Court) in the housing section of the Legal Action Magazine, which should serve as an awful warning to landlords tempted to lock out their tenants.
In May 2003 Mr Hunt took on an assured shorthold tenancy of a room from Mr and Mrs Hussein, at a weekly rent of £90. However three months later he lost his job. It looks from the report as if he was applying for Housing Benefit, but notwithstanding this, and also notwithstanding a threatening letter sent by the local council, Mr and Mrs Hussein forcibly evicted him by changing the locks and refusing to let him back in again.
Poor old Mr Hunt (45) then had a rather rotten time, sleeping where he could, and it was three months before he was able to find somewhere else to live. Not surprisingly this experience had a very negative effect on him, and four years after the eviction he was diagnosed by a psychiatrist as suffering from severe depression, agoraphobia and 'paranoid ideation' (whatever that is), and was found unfit to work. The psychiatrist's view was that the root cause of his mental deterioration was the trauma of the eviction by the Husseins back in 2003.
However the Husseins were not going to be allowed to get away with it. The local authority prosecuted them under the criminal jurisdiction in the Protection from Eviction Act 1977, and Mrs Hussein was fined £300 and ordered to pay costs of £250. However this was small cheese compared with what was to come next. This was a civil claim based on breach of contract and tort (presumably funded by a no win no fee agreement, Mr Hussein being represented by the Surrey Law Centre), and in July 2009 judgement was entered against Mr and Mrs Hussein.
The judgement was for £56,678.
This was made up of damages of £125 per day for 65 days, damages for personal injury of £45,000, special damages of £100 and interest of £3,453 (plus of course interest will be accruing at a daily rate until the judgement is paid).
The Judgement was a default judgement, which means that the proceedings had been ignored by Mr and Mrs Hussein. However this will not help them, as a 'freezing injunction' was made in respect of their properties, and no doubt Mr Hunt's solicitors are now applying for charging orders and orders for sale. Let us hope for Mr Hunt's sake that there is some equity in them (particularly as the poor man has had to wait so long).
But I expect Mr and Mrs Hussein will now regret treating Mr Hunt so badly. Be warned!
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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Regular readers may remember that back in June the National Landlords Association (NLA) published the court order made in respect of the merger litigation.
I have now been provided with a copy of the Judgement in this case by the NLA, who wondered if I could put it into layman's language! Judgements are tricky to read for non lawyers, because the Judge is mainly concerned to explain the legal reasons for his decisions to other lawyers. So ordinary readers are often baffled! This judgement is par for the course but it not too impenetrable, if you know where (and how) to look. The decision was that of HH Judge Pelling QC (sitting as a Judge of the High Court) and was made on 21 May 2009. NB Most quotations (i.e. where I do not say otherwise) in this post are extracts from the Judgement.
There were six claimants. The first was Mr Michael Stimpson, the driving force behind this case. The five others were members of the SPLA who agreed with him.
The defendants were (1) the SPLA itself (i.e. the legal entity), (2) - (5) directors of the SPLA who made the decision (although Mr Richard’s status as director was arguable), and (6) the NLA who, it was claimed, had taken the company's assets in bad faith knowing that the merger was not properly valid.
By way of background, the Southern Private Landlords Association (SPLA) was set up by Mr Stimpson some time ago, and he was the President and a director of the company. The SPLA (as is the NLA) was a company ‘limited by guarantee’. This is a special type of limited company, which is explained on the Companies House web-site as follows:
“A company limited by guarantee is an alternative type of incorporation used primarily for non-profit organisations that require corporate status. A guarantee company does not have a share capital, but has members who are guarantors instead of shareholders. The guarantors give an undertaking to contribute a nominal amount towards the winding up of the company in the event of a shortfall upon cessation of business. It cannot distribute its profits to its members, and is therefore eligible to apply for charitable status if necessary.”
The purpose of the SPLA, as described by the Judge ,was
“to represent the interests of private landlords by lobbying on behalf of its members, providing advice and assistance to its members, and also providing facilities such as insurance and mortgages for the benefit of its members by negotiation with the commercial providers of such services. Members are members for each year for which they pay an annual subscription. If they fail to pay the subscription they cease to be members one month after the subscription has become due.”
This is very similar to most landlords associations, including the NLA.
The history behind this case is that at the SPLA’s AGM on 4 April 2008, 94% of the voting membership voted in favour of a resolution authorising the committee to start negotiations, and if appropriate to merge, with another suitable landlords association.
The committee duly went away to do this, and the organisation the majority of the board decided they wished to merge with was the NLA. This was not surprising as the NLA is probably the largest of all the landlords associations, one of the reasons for this being its mergers with smaller associations.
As pointed out by the Judge, “objectively, the merger was one that benefited the members, not least because it gave them access to a large organisation providing services which were the same as, or more extensive than, those provided by the first defendant and at a lower annual cost.”
However, the merger was opposed by Mr Stimpson, although “no coherent reason for this has been advanced by him”. In the same paragraph (14) the Judge goes on to say:
“The defendants maintain that the inference is that the first claimant was and is motivated by a desire to maintain or regain control of the [SPLA], which he founded and which he had been involved with for many years and to do so without regard to the objective best interests of the members. This point has been highlighted in the evidence and has not been answered.”
Or in other words, Mr Stimpson wanted to hang on to control of the SPLA at all costs. Presumably this is because if the merger went ahead he would lose the position of spokesperson for landlords which he has enjoyed in the past, as the NLA have their own people for this.
The Judge continued:
“No attempt has been made by the claimant [i.e. Mr Stimpson] to explain why substantively the merger of the [SPLA] with the [NLA] is not in the interests of the members. The claimant’s case is advanced exclusively by reference to points of process rather than substance. There is some evidence ... of significant in-fighting at director level which has absorbed funds and distracted attention from the provision of services to members.”
Meaning that being unable to find a good reason to oppose the merger, Mr Stimpson resorted instead to blocking it by other means, and arguing with the rest of the committee. So, how did he block the merger?
The Judge: “there came a point when [Mr Stimpson] decided to stop attending Board meetings in order to prevent such meetings being quorate and so stifle the conduct of the claimant’s business.”
By way of explanation, in companies, for a board meeting to be able to make decisions which will bind the company, there needs to be a minimum number of directors attending - this is called a quorum. Mr Stimpson was able to make the SPLA meetings inquorate because he and one of the other directors, a Mrs Kerslake (‘inferentially’ his ally) stayed away. Putting both of them, as pointed out by the Judge, in breach of their statutory duties as directors.
Two important meetings then took place on the 23 and 30 June 2008. At the first meeting a Mr Harrison was appointed as director. This, it is claimed, was an invalid appointment as the meeting was inquorate at the time (even though the board tried to telephone Mrs Kerslake). This is important because it was only by the presence and votes of Mr Harrison that another director, Mr Anthony Richards was appointed on 25 June, and it was only with their votes that Mr Barry Markham (one of the other SPLA directors) was authorised to sign the agreement to merge with the NLA.
The argument put forward therefore in this litigation was that the merger was invalid as it was agreed at an inquorate meeting.
The thought in my mind as I read this, was that surely it would be wrong (or inequitable, to use the legal word) for Mr Stimpson to be able to rely on his own breach of directors duties, by deliberately not attending the board meetings, to prevent a merger with which he did not agree? This is a point picked up by the Judge later.
At the hearing on 21 May, the Judge had to decide, whether the litigation should be permitted to continue. Directors of limited companies (which in some cases may not be owned by the persons making the decisions) are obliged by law to act in the best interests of the company. Therefore, when deciding this case, the Judge had to ask himself “would a hypothetical director acting in accordance with the law and in the best interests of the company and its members, allow it to continue” (my words here not the Judge’s).
So what were the points that such a hypothetic director (one of a number of fictitious persons regularly called upon by Judges to help them with their decisions) would consider, in the Judges view?
The first point is that this was not a normal trading company but a not for profit organisation existing as a company limited by guarantee Its members do not own it in the normal way but are “transient affiliates” their membership depending upon whether or not they have paid their membership fee.
Second, the directors had not ‘given away’ the company, but acted in accordance with a resolution properly passed at the company’s AGM.
Third, the terms of the transfer were that members would receive the same or better services without additional charge, and indeed the “services to be provided were equal to or better than those provided by the [SPLA]”.
Thus, the Judge decided “a director properly advised would conclude that this claim was a hopeless one, viewed on its own and aside from the quoracy issue“. So apart from a few financial matters which the Judge felt were not important, the only point which had any chance of success was that the merger decision was “tainted by inquoracy”. However, the existence of a realistically arguable claim is not sufficient to justify litigation, in these circumstances. Other things need to be taken into account as well.
First is the actual sum claimed in compensation. In the Judge’s view the basis of the SPLAs potential income claimed, was flawed, as it depended on members continuing to be members. However there were also the assets which had been transferred to the NLA, which could perhaps be returned. But would this be a good decision for the company?
One telling point is the position of the six former employees of the SPLA. Three of these have been employed by the NLA. However if the litigation succeeded, they would be at risk of losing their jobs. To quote the Judge :
“here a relatively small number of employees are at risk when in reality the members of the first defendant are not, for they were provided with services at least as good as those formerly provided by the first defendant, down to the date their subscriptions expired at no additional cost and can obtain continuing services by paying a subscription to the sixth defendant which in fact is less than that that was charged by the first defendant.”
There is then the question of costs. Mr Stimpson, it seems, is wealthy and can afford it (lucky him!). However the SPLA would be at risk of insolvency if it lost, and its prospect of attracting members would be limited if they become aware that a lot of the energy of the company would be concentrated on fighting this litigation rather than looking after their interests. Overall therefore, concluded the Judge, the hypothetic director would probably decide against continuing the litigation.
However, continued the Judge, even if he were wrong about the hypothetic directors probable decision, he still felt it was wrong to allow the claim to continue. Reasons being:
A questionnaire had been circulated to SPLA members, and although there was a majority in favour of continuing the litigation, this majority was quite small.
Mr Stimpson and his co-claimants had not given any evidence to show that the merger was not in the interests of members, and all the evidence was that the NLA would provide a similar if not better service at a lower price. This indicated bad faith on their part.
Finally, there was the conduct of Mr Stimpson himself in attempting to prevent the merger by causing the meetings to be inquorate, rather than attend them and argue against it. “The reality is” concluded the Judge “that the claimant wishes to bring the contemplated proceedings because he does not want to see the first defendant lose its identity or to lose control of it.”
So the Judge’s decision was to refuse permission to continue the litigation, and the order was made regarding costs as discussed in my previous post. An interesting decision, and one which shows that directors who seek to block decisions they do not agree with by improper means will not ultimately be successful.
If anyone wants to read the decision in full, they can do so here.
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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I have recieved an interesting e-circular from the Deposit Protection Service. It is essentially correcting a circular they sent earlier to dissociate themselves from a company. However apparently they also said in that earlier circular:
“The DPS would recommend landlords obtain an independent Inventory because one conducted by a landlord or agent would not be considered independent in the event of a dispute”.
This has obviously caused behind the scenes problems, and no doubt vociferous complaints on behalf of landlords unwilling to incur (or unable to afford) the additional expense of an inventory clerk, as they now say:
"With regard to the statement concerning the validity of self-produced inventories, The DPS wishes to make clear that its Adjudication Service is obligated to consider all evidence placed before it when considering a Dispute and that there is no reason why an Inventory properly produced by a landlord or agent, which is duly signed by all parties in the correct way, should not be considered entirely valid."
However, notwithstanding this, I think the first statement is very telling, and probably reflects the real attitude taken towards landlords' own inventories. Landlords should take note therefore that independent inventories conducted by an inventory clerk are likely to be given greater weight at arbitrations than one done by themselves.
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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Many thanks to the Nearly Legal Blog for reporting this Housing Benefit Appeal case which will be of great interest to all landlords whose tenants' rent is paid by Housing Benefit (HB) /local housing allowance (LHA).
Landlords can require the HB to be paid direct if the rent is more than 8 weeks in arrears under Regulation 95 of the Housing Benefit Regulations 2006. However where, under the tenancy agreement, rent is payable in advance (as is the case with practically all tenancy agreements), Local Authorities have been refusing to pay until the period for the rent has passed. So if a tenant fails to pay rent at the start of the second month, they would not pay rent direct until after the end of the second month. Meaning that landlords would lose a months rent. The reason the local authorities did this was because Housing Benefit Local Housing Allowance Guidance Manual told them so.
However in a recent decision in Coventry supported by the Guild of Residential Landlords the Judge held that this was wrong, and said that the landlord should be paid compensation, saying:
"Rent is in arrears once the contractual date for payment has passed irrespective of whether rent is due in advance or in arrear. Regulation 95 of the 2006 Regulations refers to a liability to pay rent and the liability in this case is to pay rent in advance"
The question now is, will all landlords who have suffered as a result of this rule in the past, be able to claim compensation ...
You will find a report of the decision on the Guild of Landlords website here.
