Revolving door for housing ministers

Did you know that the new housing minister is the ninth since labour came to power in 1997? They are:

1997 – Hilary Armstrong
1999 – Nick Raynsford
2001 – Lorde Falconer
2002 – Lord Rooker
2003 – Keith Hill
2005 – Yvette Cooper
2006 – Ruth Kelly
2007 – Hazel Blears
2008 – Caroline Flint
2008 - Margaret Beckett
2009 – John Healey

How can the department hope to have a consistent policy with so many different ministers? Roof Magazine (the source of this information) is generally approving of Mr Healey’s appointment. However with a general election looming on the horizon, he is obviously not going to have that long in post.

From the press one rather gets the impression that ministerial posts are mere tokens of Prime Ministerial approval or disapproval (depending on the post). However they are also government departments that affect all our lives. It would be nice if after the election, the next housing minister (assuming he or she is effective) could stay with us a bit longer.

Homeless hostel VAT bill withdrawn

Readers may remember that in December I reported that a new homeless hostel in Newcastle was at risk because the VAT had ruled that it was a commercial building and not a hostel (mainly because they did not have a workable definition of a homeless persons hostel) and that therefore VAT was payable. The VAT bill (£315,000) would have put the company into liquidation and put other hostels at risk.

You will be pleased to learn that following an appeal by the company, the decision has been overturned and the VAT bill withdrawn. Phew!

Banks swiping our cash

An article in the Observer today 'Banks exploiting obscure law to raid accounts and recover debts' prompts me to remind readers on housing benefit (HB), or landlords of tenants on housing benefits, of the advantages of using Credit Unions.

If you find it difficult to keep your bank account under control, you are always at risk that your housing benefit is going to be used up and will not be available to pay out to your landlord, thus putting your home at risk. Under the new rules which came into force last year, the new housing benefit, Local Housing Allowance (LHA), has to be paid (save in a few circumstances) to the tenant. Whereas before tenants could ask that it be paid direct to landlords, to safeguard their home.

Quite a few credit unions offer a service whereby they will ringfence any HB/LHA paid in, so it gets paid out to the landlord and cannot be used for any other purpose. I am compiling a list of credit unions offering this service on my Landlord Law site which you can see here. If you know of, or work for, any other credit unions offering this service, please let me know and I will add them to the list.

Credit unions would also be a safe haven for money being saved up for other purposes, to keep it safe from regular banks offsetting it against debts, as described in the Observer article.

FIve legal housing/landlord & tenant law blogs

When I first started blogging in February 2006, there were only a few British legal blogs. For a while I think I was the only blogger covering housing/landlord and tenant law. However since then a few more have started up. I thought it would be nice to list them.

1. Nearly Legal
http://nearlylegal.co.uk/blog
This is my top pick. Started by an anonymous paralegal seeking a training contract (hence ‘nearly’ legal), it has developed into an authoritative source of housing law. During this time we have seen Nearly obtain his training contract and qualify as a solicitor, and he is now working as a housing lawyer in a ‘good’ London firm. Dissuaded from giving up his blog (claiming lack of time) by squawks of dismay from his devoted audience, the blog is now written and run by several specialist housing barristers and solicitors (including Nearly himself) and is, we understand, now citied in court hearings by Counsel and Judges. My favorite moment was a year or so ago, when a junior government minister posted a comment and Nearly thought it was someone playing a joke (it wasn't!).

2. The Painsmith Landlord and Tenant Blog http://painsmith.wordpress.com
This is a fairly recent housing blog, from specialist housing law solicitors PainSmith. However, it is a very welcome addition on the legal/housing blogosphere. The posts are always interesting, well written and accurate, and have often alerted me to points I had not previously been aware of. A highly recommended blog.

3. William Flack Blog
http://blog2.wflack.com
William Flack is a solicitor, and partner in Flack and Co, a small firm specialising in housing and social benefits law in London. William tends to write fairly long posts covering mostly social housing law.

4. Housed
http://rehoused.wordpress.com
A blog about housing law by a bloke doing legal aid housing law work. Posts are often fairly short and there is a lot of comment on working with the legal services commission (a thankless task, I gave it up ten years ago). There are also useful reference pages.

5. Ethan’s Snail in that legal bottle blog
http://ethans-way.blogspot.com
My fifth blog is named after that famous (to lawyers) negligence case. It is an interesting blog with some good posts, but I was distressed to see that nothing has been written since October last year. I was in two minds whether to include it, but have decided to leave it in, in the hope that he will start blogging again.

So thats the five. Six, including mine (the Landlord Law Blog, in case you have forgotten, the one you're reading now). If you know of any other housing/landlord and tenant legal blogs let me know and I will add them to my blogroll (NB I know there are some good property law blogs out there, but this list just covers tenancy law). I will take a look at the non lawyer sites another time.

NLA publishes merger court order

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

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Having been alerted by a twitter posting by the National Landlords Association (NLA) stating that their web-site page on the merger between the NLA and the National Federation of Residential Landlords/Southern Private Landlords Association had been updated, I was intrigued to see that they have published the court order online. Being a lawyer I naturally downloaded this immediately. You can see it here.

It is an interesting document. Not only does it make it absolutely clear that the case has been dismissed in its entirety, it also gives an indication of the level of cost of this litigation to the claimants.

For example clause 7 states that costs are to be paid on an indemnity basis. This means that when assessing the costs bill, the court will be more generous to the defendants than they would normally. Courts only award costs on an indemnity basis if they consider that the losing party's case was singularly undeserving.

In addition, specific awards on account of costs were made of £85,000 to the NLA and £45,000 to the other defendants by 5 June.

FInally, the order specified that the claimants must destroy an electronic database (presumably of membership) provided to them by the NLA under a previous court order, together with all copies. This part of the order was backed up by a penal notice. So if the claimants are found not to have done this, they are liable to be imprisoned, fined, or have their assets seized.

Blimey! A strong order then. It just goes to show that litigation should not be undertaken lightly. If you lose, it can be very expensive.

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Rent increases in periodic tenancies

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

Most landlords know that after the fixed term of a tenancy has ended, if it is an assured or an assured shorthold tenancy, section 5 of the Housing Act 1988 intervenes and provides for a new 'periodic' tenancy to be created. This tenancy runs from month to month (if rent is paid monthly) or from week to week (if rent is paid weekly), and the section provides that it will be subject to the same terms and conditions as the preceding fixed term tenancy.

So that landlords are not stuck with the same rent forever, the act also provides for a special procedure, for these periodic tenancies, for increasing rent. This is set out in section 13. Landlords need to serve a special notice (which must be in the proper form) proposing a new rent. Tenants can challenge this and ask for it to be reviewed by the "Rent Assessment Committee" (part of the Residential Property Tribunal Service). If the rent is not challenged within one month, the proposed rent in the notice becomes the new rent.

But what is the situation where the tenancy agreement already includes a rent review clause? This situation was considered by the High Court in a recent case London District Properties Management Ltd v. Goolamy. Here Mr and Mrs Goolamy's tenancy agreement contained a rent review clause providing for rent to be increased annually by 5%. However the landlords had served a notice under s13 proposing a much higher increase. Which rent increase procedure would apply?

The Rent Assessment Committee held that they had no jurisdiction to review the rent as the clause in the tenancy agreement continued under s5. The Landlord appealed to the High Court.

The High Court allowed the appeal. They pointed out that at the start of section 13 two types of periodic tenancies are mentioned. Statutory periodic tenancies and all other periodic tenancies. With the statutory periodic tenancies, the section 13 procedures take precedence. With the other periodic tenancies, the contractual rent increase procedure (if any) takes precedence. So as this was a statutory periodic tenancy, the landlord could use the section 13 procedure. The case was therefore sent back to the Rent Assessment Committee to review the rent.

So landlords can use the s13 notice procedure when their tenancies run on under statute, even if their tenancy agreements include a rent review clause. Unless of course this case is appealed and the decision overturned.

Tenancy deposits with student lets

Readers may be interested in hearing about the solution to a problem experienced by a Landlord Law member, Roger, who lets to students.

Roger uses a Shorthold Tenancy Agreement (four students per house) and formerly obtained a Rent Guarantee from the parents. The procedure then (i.e. before the introduction of the tenancy deposit protection schemes) was that he would take a deposit (so that they did not go elsewhere and not tell him, which has happened) and wait for the parents to return the Guarantee (which can take weeks). However he was concerned about this procedure after the introduction of the tenancy deposit scheme and whether it would bring into play the requirement to protect the deposit within two weeks of payment.

Roger needs to ensure that the 4 students who have confirmed that they wish to rent a house do not change there minds while he is waiting for their parents to return the signed Rent Guarantee. This is critical because the university issue their list of houses available early in February and if landlords do not rent their house soon after this date it can be very difficult finding tenants.

Roger spoke to an advisor at My Deposits who confirmed that it would be acceptable to take a sum from the tenants, e.g. equating to the first months rent, inform them that this is a 'non returnable holding sum', and not take the deposit until the parents return the Guarantee. At this point the Tenancy Agreement can be finalised with the holding sum covering the first month's rent, the further sum paid at that time being used for the deposit.

My Deposits also confirmed via email that this procedure was appropriate. Their email stated:

"I can confirm this procedure as advised by my colleague is correct. When the monies paid by the tenants is classed as a ‘non refundable holding fee’ this would not require a protection with our scheme until the agreement is finalised and the monies is classed as the actual deposit for the AST agreement. You would then be able to proceed with your deposit protection with our scheme and provide the tenants with the prescribed information as required under the current legislation."

FSA to regulate sale and rent back sector

Homeowners in distress who have sold their property to a 'sale and rent back' company in the belief that they will be able to live their for the rest of their lives, only be to kicked out a year later, will be pleased to learn that this sector is now to be regulated by the Financial Services Authority.

An interim regulations period (while they work out how to regulate it properly - although the draft rules are said to be 'near final') will start on 1 July 2009 and firms will be expected to apply for 'interim permission' between this date and 1 August. A consultation paper is expected for September, with full regulation from the end of June 2010.

During this interim period, firms will need to meet FSA threshold conditions including the requirement to have adequate resources and to be run by fit and proper people. Firms will also have to comply with the Principles for Businesses and meet a number of systems and controls and conduct of business rules.

You can find a bit more in policy statement and in the FSA's statement of the 3 June here.

Night falls on Night Jack blog

A chill wind is blowing through the halls of anonymous blogdom, after the High Courts decision that the writer of Night Jack, an anonymous police blogger who told it like it was, did not have the right to prevent The Times naming him.

I am in two minds about this. On the one hand, if you are employed and want to say truths that your bosses would rather keep hidden, you really have to go anonymous. On the whole, despite the whistleblower legislation, whistleblowers do not have a good track record of keeping their jobs. However whistleblowers often perform a valuable function in bringing to light matters in the public interest, so on the whole they are a Good Thing.

On the other hand, anonymous blogging can allow people to say things, unpleasant things, which they would not normally do in their real name, using their cloak of anonymity to make malicious and untrue statements and spreading false rumours, perhaps for personal gain. I don’t know of any instances where this has actually happened but I can see the potential. In view of the fact that things tend to hang around on the internet, buried in the search engines, for a long time, this is definitely a Bad Thing.

So where does the public interest lie? I suppose really it is on the side of the anonymous bloggers. There are very many anonymous blogs out there, many of them legal blogs, which, as well as being informative, are very entertaining, and the blogosphere would be much a poorer place without them.

Consultation on private housing in Northern Ireland

A report on the BBC web-site states that plans to overhaul the private rental sector are being considered in Northern Ireland.

The key proposals are -

• A central scheme for tenants' deposits so that landlords cannot simply refuse to pay back deposits for "flimsy reasons"
  
• Government deposit guarantee for vulnerable people who cannot afford them
  
• An independent body to manage disputes between landlords and tenants and encourage compliance with their tenancy agreement
  
• New fitness standards implemented by 2015. Landlords penalised if they do not meet these standards
  
• Much greater awareness of the rights of tenants and the responsibilities of landlords
  
• Longer periods of notice to quit for long term tenants.

You can read more about it in the press release from the Department for Social Development in the Northern Ireland Executive.

Time taken to get possession of a property through the courts – an example

One of my clients has a non paying tenant living in a property in the jurisdiction of the Luton County Court. Proceedings were issued on 19 March and an order for possession was obtained on mandatory grounds on 11 May, when the tenant was ordered to vacate on or before 25 May. She did not do so and I was instructed to apply for a bailiffs appointment. The papers were sent out on 29 May.

Today my client asked me to find out what was happening. It took some time before the bailiffs clerk answered the telephone. She informed me that all warrants are now issued in Basildon, so are sent there on receipt at Luton. Our warrant had been issued yesterday, on 10 June. When they get a batch back at Luton they will then fix the bailiffs appointments. They are currently listing for about 8 July, so my client can expect (if he is lucky) an appointment within about two weeks of that date.

So my client having issued proceedings in mid March will not get possession of his property until mid to late July, four months later.

Landlords should be aware that this is the sort of time delay you can expect when issuing proceedings for possession. My client was lucky in that the court made a 14 day order rather than a six week order (which can happen – if it had happened in this case the tenant would have been ordered to leave on or before 22 June). They should also be aware that it can take up to two months for a bailiffs appointment to be fixed in some courts, so it really is important to get on with things, and not delay.

Good news for tenants - receivers of rent now eight times more likley

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

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A report on the BBC site today regarding problems experienced by buy to let landlords indicates that mortgage companies now seem to be more willing to appoint a 'receiver of rent', as opposed to evicting the tenant so they can sell as mortgagee in possession. This is good for tenants, as it means that they can stay on in the property, paying their rent to the mortgage company rather than the landlord.

The report states:

"In the first three months of 2008, there were just 300 receivers of rent appointed, compared with 900 repossessions. In the first three months of this year 2,400 receivers of rent were appointed - an eight fold increase and far more than the number of buy-to-let repossessions."

If you are a tenant whose property is being repossessed by your landlord's mortgage company, it is always worth getting in touch with the mortgage company and suggesting that they should consider appointing a receiver of rent and allow you to stay in the property.

The Woodland Trust - Charity of the Month (June 2009)

Founded in 1972, the Woodland Trust is the UK's leading woodland conservation charity. It has four main aims and objectives:

1. Preventing further loss of ancient woodland
   
2. Restoring and improving woodland biodiversity
   
3. Expanding the area of new native woods
   
4. Increasing people's understanding and enjoyment of woods

At present it is trying to raise sufficient money to purchase almost 400 hectares (1,000 acres) of existing conifer woodland at Cwm Mynach within Snowdonia National Park, a site of extraordinary wildlife abundance, with buzzards, ravens, owls and otters.

To contribute to this or to support Woodland Trust generally, click here.

New tenancy deposit case - deposit paid before 7 April 07

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

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This is a new case reported in the excellent Legal Action Magazine, Saad v. Hogan from the Brentford County Court.

Ms Hogan paid her deposit, £1,000, in November 2005. Her tenancy was renewed in November 2007. In June 2008 the landlord brought proceedings for possession based on the serious rent arrears ground. Ms Hogan counterclaimed for the 'fine' of three times the deposit amount on the basis that the deposit had not been protected, and asked that this be offset against the rent arrears.

The Judge at first instance found for the landlord and made the possession order. This was on the basis that there was no obligation on the landlord to protect the deposit, as no deposit moneys had been paid when the tenancy was renewed in November 2007, but only before the regulations came into force on 7 April 2007. Ms Hogan appealed.

The appeal Judge viewed the case differently. He found it extraordinary that there was no provision in the legislation for this situation. However the main purpose of the legislation was to protect deposits. Although there had not been any physical or electronic payment of money in November 2007, in a sense there had been a payment at that time. He allowed the appeal, and awarded £3,000 to Ms Hogan to be offset against the rent arrears.

As this case was an appeal to the County Court Judge it will have more authority than District Judge decisions. However it will still, technically, not be binding. It would be nice if this could go to the Court of Appeal, so this point could be settled.

However the case does support the view generally taken by lawyers, that deposits paid before April 2007 are caught by the regulations if a new tenancy agreement is given to the tenant after that date.

Dr Ian Gibson MP

Leaving landlord and tenant law to one side for a moment, as a Norwich Citizen, I would like to make a statement in support of Dr Ian Gibson. He is, I know, a hardworking and conscientious constituency MP, who has stood up for what he believed in, and is one of the very few qualified scientists in the house.

When I read in the paper about the 'Star Chamber' hearing which concluded that he should be de-selected, I was reminded of the many cases I hear (when taking statements with my husband for his employment tribunal practice) where an employee is dismissed after a 'disciplinary hearing', which is not really a hearing because the deciders have already made their minds up. However employees can bring a claim to tribunal. Dr Gibson has no redress.

He is reported as saying that he has broken no rules and still has not been told exactly what he has done wrong. From what I have read, it seems that he is being criticised for allowing his daughter and her partner to live rent free in his flat, and then selling it to them at an undervalue. However

• No one is denying that Dr Gibson lived in the flat for about three days in most weeks
  
• His daughter was apparently not permitted under the 'rules' to pay him rent or contribute towards the utility bills (why not?)
  
• It was sensible (prudent even) for security reasons, to have someone else living in the flat, so it was not empty when Dr Gibson was away

As for selling the flat at an undervalue, only Dr Gibson lost out financially here. Sure the daughter had a windfall, but so have many other people in all sorts of circumstances. I can think of far more reprehensible things to do than providing for your family.

I think it is enormously unfair that Dr Gibson has been singled out in this way, when other MPs have not. I would suggest it is the rules which are a fault rather than Dr Gibson. If what he did was so wrong, why did the fees office not tell him so? There is a nasty suspicion as well, that he was thrown to the wolves because he has not been afraid to speak his mind against the government in the past.

I am also concerned that everyone seems to be quite happy for their to be a 'Star Chamber' at all. To quote Wikipedia, the Star Chamber in the sixteenth century became "a symbol of the misuse and abuse of power by the English monarchy and courts". Is this what we want in England today?

I am concerned that most people appear to consider this sort of thing acceptable, and are happy to condone trial by newspaper and dismissal of a decent hard working MP by an process which appears to be unconstitutional and against natural justice.

Landlord licensing and agent regulation – impact assessments now published

Those interested in the governments consultation paper issued in response to the Rugg Report, will also be interested in the impact assessments which have now been published by the Department for Communities ands Local Government .

Impact assessment for regulation of Landlords
This is available to download from here. This shows that there are two options under consideration. The first is full licensing, which would involve a five year fee of £500 per property. The second is a web based national register. This will involve an annual fee of £30-50 per landlord.

Although both options are discussed in the report, it is clear that it is just the second option, the web based register, which is being seriously considered. All landlords will be required to sign up to this, although landlords who are members of existing organisations (presumably landlord associations) will be passported into the register. In return for signing up to the register, landlords will be offered benefits such as free documents e.g. tenancy agreements, and property advertising.

The report analysis is on the basis of 1 million landlords with 3 million properties.

Impact assessment for regulation of Agents
This is available for download from here. There are only two options discussed in the report, doing nothing and mandatory regulation. Regulation is the favoured option.

The report states that there are around 8,000 letting agents, only half of which are members of a professional organisation (such as ARLA or RICS). The large number of unregulated agents is undesirable as they are not compelled to have any client money protection or undergo any training on property management. Apparently some 60% of landlords use letting agents to manage their properties, so many landlords are at risk of poor practice by unregulated agents.

The report estimates that existing members of professional organisations will be passported into the scheme. Others will have to pay a joining fee in the region of £180 pa, and all agents will then have to pay an annual fee in the region of £120 pa.

Implementation of this (which has been widely called for across the industry) will protect both landlords and tenants from fund misappropriation, and will provide a more 'level playing field' for those agents who are currently operating properly (with the associated costs which this involves).

Note that I have set up an answer form for those wishing to respond to the governments consultation paper here. This now provides links to these two impact assessments.

mytenancydeposit.co.uk - not a recognised tenancy deposit company

I, and probably many landlords and other property professionals, have received notifications from both The Deposit Protection Service and MyDeposits warning that the web-site mytenancydeposit.co.uk is not that of a government authorised tenancy deposit scheme.

Landlords and agents should beware. If you protect your deposit with this company, this will not constitute compliance with the tenancy deposit regulations. You will remain vulnerable to a court claim from your tenants for the 'fine' of three times the tenancy deposit amount.

There are only three companies you can protect your deposit with:

1. The Deposit Protection Service - www.depositprotection.com
   
2. My Deposits - www.mydeposits,co.uk, and
   
3. Tenancy Deposit Scheme (from the Dispute Service) - www.thedisputeservice.co.uk

Information on the My Tenancy Deposits site show that it is owned by a company called MTD Secure Limited. A search at Companys House shows that this company was incorporated on 28 January 2009,. The company has offices in Newhall Street, Compton in Birmingham.

Landlords may become liable for tenants' water bills

According to a report in the Times today, the government is considering a report from Ofwat recommending that landlords should be made liable for water bills, if these are not paid by departing tenants,

The reason for this is the high level of unpaid bills suffered by water companies. They are often a low priority for payment as they are not allowed to disconnect. For example the Time reports that Northumbrian Water has increased its provision for bad debt from domestic users by £2 million to £30 million.

Recovery of unpaid bills is difficult. "Quite often by the time we have found out who the tenants are, they have gone," Mr Cuthbert, MD of Northumbrian Water said. "We are talking to the Government about what help they can give us here. One proposal would be to make the landlord liable."

However landlords should not panic immediately as the measure would require primary legislation. A draft report is expected to be published in the next few weeks with a final report later in the year.

Letting to tenants with pets

The Dogs Trust estimate that in the region of 40% of us in the UK have pets. Probably mostly dogs, cats and caged birds. As about 12-15% of the population live in rented accommodation it is fair to say that there must be many potential tenants looking for accommodation who have pets.

However many landlords routinely reject all pets as a matter of course, worried about the potential damage they could do to the property and its contents, and virtually all tenancy agreements have clauses prohibiting pets as standard.

However a report available on the Dogs Trust 'lets with pets' web-site challenges this viewpoint and suggests that many landlords are foolish to reject out of hand many people who would, along with their pets, prove to be excellent tenants. A survey carried out by the Dogs Trust also shows that

• 78% of pet owners reported that they had experienced difficulties finding privately rented accommodation that would allow their pets
  
• 54% of pet owners were never able to find a suitable property that accepted pets, and
  
• 8% of people had to rehome their pet

A landlord therefore who is willing to allow pets in his property will find that he has a much larger pool of potential tenants and is likely to let his property quicker, and to tenants who will probably stay for longer, meaning fewer voids.

In order to assist landlords, at Landlord-Law we have produced a new tenancy agreement specifically for landlords letting to tenants with pets. It contains special 'pets' clauses in the terms and conditions and fields for details of the pets, their vet, and someone who will look after them in case of emergency. You can read about it in the article 'Letting to tenants with pets' which you can download from here.

91% of tenants suceed at arbitration say My Deposits

A news report out by My Deposits shows that 91% of tenants get their money back at tenancy deposit arbitrations. The report states:

"Figures from mydeposits.co.uk show 91 per cent of dispute cases settled by the scheme's independent adjudication service found in favour of the tenant. The average amount in dispute was £733, which is significantly lower than the average deposit of £1,052.

In only nine per cent of cases landlords and letting agents were able to withhold the full deposit."

However the report goes on to say that only a small proportion of deposits, 0.35%, actually go to arbitration. This could mean though that it is still largely only the good landlords who are protecting deposits, and that the bad landlords, the ones who will habitually make unjustified deductions, are still refusing to comply.

It would be interesting if the Deposit Protection Service could follow up their survey reported in July 2008 (and discussed by me here) that 62% of landlords were failing to protect.

The Law Bazaar

If you are looking for a lawyer, there is a new option available now. This is the Law Bazaar (reported by the Guardian here). Set up by solicitor Costas Andrea, fed up with the huge sums made by claims companies just for referring work to solicitors, this allows clients and lawyers to make contact direct.

Lawyers and clients (from any country - it is an international site) can both register on the site free of charge. Both appear as anonymous, although lawyers are rated on the basis of client feedback. Clients can load up details of their case and then lawyers and client can discuss the case before the client chooses a firm to act. At that stage the lawyer pays a modest fee to the site (£50 or £150 for PI cases).

As it is free of charge, all lawyers should register. There is nothing to lose and they may gain some lucrative work.