My Deposits open to all

Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.

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I have seen quite a few news and other items on the internet reporting the statement from the ‘my deposits’ tenancy deposit scheme confirming that, unlike Tenancy Deposit Scheme (run by the Dispute Service), they will not be withdrawing cover from unaccredited agents (see my report here).

However this is hardly surprising as my deposits is a partnership between the National Landlords Association and Hamilton Fraser Insurance. Presumably Hamilton Fraser are more minded to provide cover to all, being part owners of the business, than the (unnamed) insurers of the Tenancy Deposit Scheme. Even so, the press release states that my deposits will be introducing more stringent financial checks.

The third tenancy deposit company, The Deposit Protection Service, as the ‘default’ provider, is always open to all landlords and agents (see further here).

Good luck President Obama

When I watched the inauguration yesterday I half wished I was American. When I watched the Panorama programme on American healthcare later on iplayer I was thankful to be British. America is a wonderful country with a great history and heritage, but we have things to be proud of too.

It is ironic that at a time when the USA has a president which the majority of British support after the hugely unpopular Bush, we are warned that the ‘special relationship’ is about to take a nose dive.

However no matter. We are not the problem, so perhaps it is right that we take a bit of a back seat in the presidential intray. And hopefully our scientists can work together now to save the planet.

I wish him all the best.

Centrepoint – Charity of the month (January 2009)

Centrepoint is a charity which for 40 years has been helping homeless young people in London, and more recently in the North East. Young people are given temporary accommodation, and are then helped to sort themselves out. The aim is that those helped will then move on and be able to live useful lives.

With unemployment rising, there are likely to be more youngsters on the street rather than less.

To read more, and to make a donation, click here.

Obtaining credit – small firms penalised

I feel I should record my recent (successful, sort of) attempts to obtain credit. We are actually doing fairly well at the moment (all things considered) but I decided I needed a small one year loan of about £3,000 to help me pay my tax, and help fund the purchase of a new printer and a few other bits and bobs.

About five days ago I telephoned Exclusive Benefits Plc, a finance company originally recommended by the Law Society, which I have often used in the past to get business loans. The first news I received was that they had been told that they could not lend to solicitors firms with less than three partners. "I’m so sorry" said the nice man at EB, "I know it goes against all that the government has been saying, but that is what we have been told by lenders". He then went on to say that they could make a loan to me, but only on a personal basis. The main difference, it turned out, was that the money would be paid into my personal account rather than the business account, and as the main purpose of the loan was to help me pay my tax, that would be all right.

He then broke the news to me that the APR would be 17.9%. "What!" I yelped, "But bank base rate is 1.5%!!" “I know, I know” he replied "but the banks are very unwilling to lend and, as the loan is only for £3,000, that is the best we can do". Well I need the money so I told him to go ahead.

The next day he rang back, even more apologetic, to tell me that he had now been told that the APR would be 24.4%. "I’m really sorry about this" he said "I don’t like having to quote interest rates at over 20%, but that is all that is available". However we worked out that the actual difference to me would be about £9 per month, which looked at in that light is affordable, if annoying. "And you can always pay back the loan early if you wish" he reminded me. We agreed that he would send out the paperwork to me, but that I would have a word with my bank, Lloyds TSB, to see if they could do any better.

I then rang my bank manager, a new manager who I have not yet met or spoken to. His assistant said that he was on an appointment, and could she help? I told her that I was enquiring about a small one year loan of £3,000 to help pay my tax. "Well", said the assistant, "I think you had better make an appointment and come in and see him". I explained to her that I already had an offer of a loan elsewhere but only at a very high interest rate, and was ringing up to see if my own bank could do something better for me. However it would not really be economic if, to obtain this, I had to give up half a days work. Could I perhaps speak to my bank manager about it, and see what the prospects were? She said that she would pass my message on and that he would get back to me. I am still waiting for the call.

So reader, I have now signed the paperwork for the 24.4%APR loan and will hopefully receive the money in the next few days. The lender, in case you are interested, is the Co-operative Bank. I suppose I am lucky to have got a loan at all in these days. But is it very disheartening to learn that small firms are being discriminated against by lenders in this way, after all we have been told by government. Something should be done about it. Gordon?

The Dickens case

Those who have read articles here in the past about ASBO landlord Dickens will find an excellent report on the Nearly Legal site here.

The new MacBook

I treated myself to an Apple MacBook over Christmas. I am still feeling a bit guilty about it because, frankly I could have got something much cheaper - but I wanted to try a Mac! Having got it though I am really pleased I did.

The MacBook I bought was the cheapest available, the small white one, not the new and more expensive aluminum. I did wonder if I could get something in the sales, but it seems that Macs are not included in the current frenzy of discounting. Somehow I find that comforting.

It was apparent as soon as I had taken it out of the box, that I was dealing with a quality product. For example, the power supply box has neat little prongs which slide out for winding excess cable around, and where the cable plugs into the machine it is magnestised so it does not wobble. I was a bit worried about not being able to use the machine easily but actually it was all fairly straightforward and intuitive - for example it logged itself into our wireless network without me really having to do much at all.

The screen is wonderful! I am gradually watching all my DVDs again, just to see how great they look. On the Mac you just shove the CDs into a slot at the side, which I think is much better.

In order to get best use out of my new mac, I bought Mac OS X Leopard: The Missing Manual by David Pogue, which has been brilliant. I have worked through it over the past week and it has taught me lots I would never have known otherwise. So, after about 2 weeks use, what do I like and what do I dislike?

Likes:

• The screen! Much better quality that any other screen in the house I think!
  
• The ability to scroll by using two fingers on the touch pad
  
• The spotlight search facility - a great way to find things
  
• The dock (which I have put on the left, where my MS Office tool bar goes on my PC) - and I like the way the icons bounce up and down as the programs open
  
• The helpful menulets at the top
  
• I also quite like the finder box design, used for all folders
  
• The fact that I don’t have to worry about viruses as apparently macs are immune to them
  
• The MacBook is much lighter to carry around than our clunky old Dell laptop (now taken over by my son)

Dislikes:

• For someone whose eyesight is getting gradually worse, the icons and font (on the macbook at any rate) tend to be a bit small (this is presumably something the young things at Apple who do the designing won’t have a problem with, yet ...)
  
• I rather miss the links in the bar at the bottom of the screen for moving from one program to another that you get in PCs (there’s a thing called expose (fn and F9) which tiles all your programs so you can find a hidden window, but I have not really got used to it yet)
  
• It is confusing that the buttons to close programs are at the top left rather than at the top right as in windows, also they are very small (although quite pretty)
  
• I don’t like Pages very much - I bought iwork to get the full mac experience (plus it is cheaper) but I think that this was a mistake, I should have got Office for Mac. At the time though Office seemed the boring option
  
• There are also problems in that some of the specialist software I use on my PC won’t work on the mac, this also includes the admin area of Landlord-Law which was designed for me using a PC! So I don’t think I will be replacing the office PC yet.

Generally I am finding the mac better for recreational use (such as watching DVDs and messing around on the internet) rather than work stuff, which I find it easier to do at the desktop PC. The screen is so much bigger on my PC (albeit of a lesser quality) so I can see everything better, and I prefer using Word. I suspect however that as time goes by I will get to like the mac more and more. I am gradually becoming as it were bilingual.

Overall it has been a good experience. However if you do get a mac, do get the missing manual book too.

Preventing drug factories in rented properties

I have recently been provided by Suffolk Police with an excellent guide to spotting and dealing with drug production in rented properties. This is an increasing problem, for example drug producers renting houses for the sole purpose of growing cannabis. This is very bad for the landlords as not only will it affect their reputation, but also considerable damage can be done to their property, plus it will have a very negative effect on the neighbourhood as a whole.

All landlords should read the full document (which you will find here) but here are a few tell tale signs of cannabis production:

• Windows permanently covered from the inside
  
• Visits to the property at unusual times
  
• A large number of pots and lights being moved in to set up the ‘factory’
  
• Tenants not living at the property
  
• A vent protruding through the roof or a rear window
  
• A pungent smell coming from the premises
  
• Large amounts of soil and pots in the back garden
  
• Noise coming from equipment such as cooling fans
  
• Shared walls in terraced houses being damp to the touch

The leaflet also gives guidance on how to spot and avoid drug producers as tenants. For example:

• Be very suspicious if you are offered a substantial cash sum ‘up front’ for immediate access – insist on all tenants going through your application process
  
• Be rigorous in referencing potential tenants and take photo identification
  
• Be suspicious if tenants ask you not to visit the property, particularly if they ask to meet you to pay rent in cash rather than have you visit the building

Apparently also many drug criminals use a ‘Front Couple’. These people will appear to be a genuine average respectable couple looking to rent a property for their own use. After they have been shown around the property by the landlord and have taken
possession of the property, they will disappear without trace. They will then be replaced by members of the drug gang who will convert the property for drug production or cultivation.

The leaflet ends with the following warning:

If you have reason to believe there is an illicit lab on a property and you have been exposed directly, leave immediately, wash your face and hands. Call 999, request the police and report what you observed. If you have reason to believe your exposure has been extensive, contact your doctor. Some of the chemicals involved in creating these drugs are toxic, corrosive and carcinogenic.

You can also ring crime stoppers on 0800 555 111

Tenancy deposit protection award made to tenant in new case in Birmingham

I have learned from the excellent 'Recent developments in Housing Law' section of Legal Action Magazine, of Ferguson v. Jones (November 2008) a new tenancy deposit case in Birmingham County Court.

Here Mrs Jones was an assured shorthold tenancy. Her landlord failed to protect her deposit within the prescribed 14 days. It was only protected after he had commenced proceedings for possession (we are not told whether these were pursuant to section 21 or section 8, presumably section 8) and after Mrs Jones had counterclaimed for disrepair, plus the ‘fine’ of three times the amount of the tenancy deposit, as prescribed by s214(2) and (3) of the Housing Act 2004.

District Judge Sheldrake held that the court had no discretion under s214(4) and had to order the landlord to pay the fine. The Judge commented that the statutory provisions would be otiose if the landlord could escape the penalty in s214(4) by placing the deposit in an authorised scheme after the 14 day period. To have interpreted s214(4) in any other way would have been contract to parliaments intention.

Just to remind you, the relevant sections of 214 read as follows:

214 Proceedings relating to tenancy deposits:
(1) Where a tenancy deposit has been paid in connection with a shorthold tenancy, the tenant or any relevant person (as defined by section 213(10)) may make an application to a county court on the grounds—
(a) that the initial requirements of an authorised scheme (see section 213(4)) have not, or section 213(6)(a) has not, been complied with in relation to the deposit; or
(b) that he has been notified by the landlord that a particular authorised scheme applies to the deposit but has been unable to obtain confirmation from the scheme administrator that the deposit is being held in accordance with the scheme.

(2) Subsections (3) and (4) apply if on such an application the court—
(a) is satisfied that those requirements have not, or section 213(6)(a) has not, been complied with in relation to the deposit, or
(b) is not satisfied that the deposit is being held in accordance with an authorised scheme,
as the case may be.

(3) The court must, as it thinks fit, either—
(a) order the person who appears to the court to be holding the deposit to repay it to the applicant, or
(b) order that person to pay the deposit into the designated account held by the scheme administrator under an authorised custodial scheme,
within the period of 14 days beginning with the date of the making of the order.

(4) The court must also order the landlord to pay to the applicant a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order.

(5) Where any deposit given in connection with a shorthold tenancy could not be lawfully required as a result of section 213(7), the property in question is recoverable from the person holding it by the person by whom it was given as a deposit.

(6) In subsection (5) “deposit” has the meaning given by section 213(8).

You can see the whole section of the act on tenancy deposits here

Landlords should take note of this decision, and make sure that the deposit is always protected within the 14 day period.

DPS open to all landlords

Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.

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Having seen comments on forums about the Deposit Protection Service refusing to accept deposits from landlords, for example if the money is paid over more than 14 days after it is paid to them (putting them in default of the scheme, unable to evict tenants under s21, and vulnerable to being sued for the ‘fine’ of 3 x the deposit sum), I thought I had better check this out with the company itself.

However I am pleased to confirm that the rumour is incorrect, and that there are no rules preventing landlords from being able to protect deposits, with the DPS as any rate (things are different with the other two schemes).

Or to quote my DPS contact:

"We accept deposits at anytime, there is no validation on the system preventing payment. We issue reminders if payment is not received within four weeks but that's as far as our enforcement remit allows. We are the default scheme open and inclusive to all."

Note however that the fact that the DPS will accept deposits out of time, does not mean that landlords are in any way excused from complying with the 14 day rule!

TDS ditches unregulated agents

TDS, the tenancy deposit scheme aimed at letting agents, has now announced that it will only accept agents and landlords who are members of recognised professional bodies as members from now on. With effect from 6 April 2009 they will be withdrawing membership from current non regulated members.

This action, it appears, has been taken at the insistence of TDS insurers. Another manifestation of the credit crunch perhaps?

The official press release states that they will be writing, not only to all their unregulated agents but also to the tenants of unregulated agents.

Indeed I have learned of one case where TDS have already written to an agent and his tenants (on 2 Jan, before the press release). The agent (who is very reputable) is not surprisingly very upset about the effect this is having on his tenants, particularly as he was given no warning that TDS were going to do this, and therefore had no opportunity to contact his tenants first to explain what action he will be taking regarding their deposits. I understand that a formal complaint will be going in very shortly to TDS about this. Surely it is not beyond the wit of TDS to leave a week or so between writing to the agents/landlords and their tenants?

The press release suggests that agents should be a member of either the Association of Residential Letting Agents (ARLA), The National Approved Lettings Scheme (NALS), the National Association of Estate Agents (NAEA), or the Royal Institution of Chartered Surveyors (RICS). They do not mention other relevant professional organisations such as the Law Society and the Guild of Letting and Management. Presumably members of these organisations are not going to be ‘evicted’ from the scheme also?

My correspondent (the solicitor of the aggrieved agent) points out that TDS action appears to be excessive, as they should have weeded out any ‘bad apple’ agents at the time of application. He also queries whether this action is within the government guidelines for TDS schemes to be available to all.

It certainly seems to be an unfortunate glitch, and will undoubtedly cause a lot of upset among blameless (albeit unregulated) agents, who it should be pointed out, are already paying a considerably higher membership fee to TDS, than for example ARLA agents are.

Two other questions to ask are:

1. Have TDS considered finding alternate insurers (admittedly probably difficult in the current economic climate), and
2. Are there any grounds for the unregulated agents, about to be evicted from the scheme, to sue?

I would be interested to hear from any affected parties as to the effect this will have on them and what action, if any, they are taking against TDS.

Credit crunches I have known

I met one of the partners of the firm I used to work for this morning, and chatting to him reminded me of the crashes and crunches of the past.

I was at school in the 1970s and the winter of discontent. It seemed great fun as a kid when the power went off. We had to use candles. My dad cooked our dinner on a makeshift barbecue in the yard (he never did it again, much to my disappointment) and we had a coal fire. But other than that I can’t really remember much about it.

Then there was the depression in the early 1980s. I was just out of University and living up north. It is the only time in my life I have been completely unable to find a job. No-one was interested in my geography degree. I cheered myself up by reading War and Peace in about 5 days, reading non stop all day. Its a funny feeling when you read non stop all day like that. But it helped.

Mainly as a result of the early 80s crunch, I moved down south to live with my parents, and started the long process of qualifying as a solicitor (London external law degree while working, and then the Law Society finals). During this time I bought the smallest flat in Blackheath. After passing my last set of exams (and taking a lifelong vow never to do any more, ever), I took a year off to travel, after which I planned to move up to Norwich to do my articles (thats what we called it back then, articled clerks, not trainee solicitors).

That was 1988. During that year the government decided to get rid of MIRAS. Couples all over the country were desperate to buy before the deadline. I can remember sitting in the British Embassy in Mexico City reading in The Times about the selling frenzy back home. “Well”, I thought, “Should be all right selling the flat when I get back”. Ha! I arrived back to the property market crash. It took me nearly a year to sell my flat. (Later of course I wished I had kept it ...).

The property crash went on for some time. Lots of people were in negative equity. Sales went through the floor. During my stint in the conveyancing department at work (articled clerks did 6 months in four different departments then, I don’t know what they do now), I had hardly anything to do. I can remember sitting in my office and reading the Yellow Pages (not as boring as it sounds, I was researching local services) and looking up obscure points of law in Halsbury.

So here we are again. Crunch time. They say it is the worst ever (apart from the 1930s depression), but in many ways many of us are much better off (in England that is). When I was a child, for a long time we had no fridge or TV, and I don’t think we were particularly unusual. Personal computers had not been invented. When I was at University, no-one had a car, we all used bicycles. Things feel more prosperous now.

But we will have to see how it goes during this new year of 2009. Good luck to you all. And a happy new year.

Musings on the tenancy deposit protection scheme

Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.

One of my landlord clients who has successfully defeated a nuisance claim brought by her tenants under the tenancy deposit protection legislation, has reported an interesting conversation she had with the Judge. Apparently the Judge said that the judiciary generally are unhappy with the legislation. The main reason being the automatic aspect, as they do not like having their decision power taken away from them.

That’s fair enough and I can understand their point of view. The trouble is, that if the Judges have a discretion whether to make the award or not, it makes it impossible for us advisors to give any meaningful advice. Inevitably different Judges will decide similar cases in different ways. This will result in injustice overall, as it is inequitable for a tenant’s right to an award to depend on the particular viewpoint of the Judge concerned (who may not be experienced in housing work). If the award is automatic then people know where they are.

It is important also to understand the reason for the legislation in the first place. It is to force landlords (many of whom are still in denial) to use the tenancy deposit protection scheme. A scheme set up to protect tenants from the injustice of landlords (not all of them by any means but a fair number) effectively stealing tenants money by unreasonably refusing to return deposits.

If landlords see a window of opportunity many of them will continue to refuse to protect deposits, rendering the new scheme useless. It will of course mostly be the ‘bad landlords’ who will do this – ‘good landlords’ are on the whole already compliant.

So automatic penalties are the best way of preventing avoidance. It is harsh justice on those who offend through ignorance, however this is not the only field where ignorance of the law is no defence – and there are many sources of free help and information. This legislation has been in force for over a year now - there is really no excuse for non compliance any more.

Incidentially, my client had protected her deposit and had the paperwork to prove it.