Another tenancy deposit decision

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

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This is a report of a case kindly provided to me by Simon Parrott of Palmers Solicitors (Bedford).

I am writing following a recent hearing at Bedford County Court on 28th October, to let you know the result of my case. I act for the landlords.

The circumstances of the case were that the tenancy deposit had not been protected at the time that it was taken (1st June 2007). Then, approximately 13½ months later (mid July 2008), this was discovered by my clients after receiving a request from the Tenants for confirmation of the Deposit Protection Scheme. My Clients immediately took steps to protect the deposit with DPS that same day and then served the “prescribed” information upon the tenants. The tenants denied receipt of various letters and documents but they had received proof of the protection three times over by the end of July, and by the time they issued their proceedings claiming the penalty (mid August). We made an application to strike out the case under CPR24 and the hearing on 28th was our summary judgment application.

The Judge granted our application and struck out the claim on the ground that there was no real prospect of success. The essence of the judgement was that, considering the wording of Section 214 of the Housing Act, the Judge was satisfied that because we had paid the money into DPS we were able to satisfy the initial requirements of “an authorised scheme”. Having then served this information upon the tenants, the tenants were then able to obtain confirmation from the scheme administrator that the deposit was being held in accordance with the scheme. The tenants were therefore not able to get over the initial test of Section 214(1). The Judge also had quite considerable regard to the notes to the Housing Act, and in particular note 503, and was satisfied that the time for consideration of the Landlord’s rectification of his default was at the Court hearing.

One particular issue of the case was that my clients were unable to use any of the group insurance schemes available to them because by the time they discovered their mistake the tenancy had outlived its contractual term and was therefore a statutory periodic tenancy. Neither TDS nor MyDeposits would allow them to protect the deposit in those circumstances and my clients were, therefore, only able to protect the deposit by paying it into the statutory scheme (DPS). Whilst we were therefore unable to satisfy the initial requirements of Section 213(3), the Judge accepted my submission that by accepting payment of the deposit out of time the DPS scheme “initial requirements” allowed a late payment into the scheme which then enabled the Landlord to escape the penalty provisions of Section 214(4).

I am grateful to Richard Jones at Bury & Walkers for letting me have a copy of the Harvey v Bamforth report and whilst our District Judge was persuaded to read the report, he stressed that he didn’t feel himself bound by that as precedent.

This case makes it clear that, as things stand at present, tenants are unlikely to succeed if their landlord has protected the deposit before the issue of proceedings, and possibly if it is protected afterwards so long as this is before the hearing date.

I understand that these proceedings were issued by the Money Claim Online procedure. I recently came across this practice note here (you can also locate it by putting tenancy deposit in the search box on the Court Service web-site home page) which indicates that section 214 claims should really be made using the Part 8 procedure. It appears that in due course the CPR will be amended to provide for this.

Two B&Bs and one Hotel – three book reviews in one

From time to time I do book reviews on the Landlord-Law site, and several of these have been for a publisher called How to Books. They specialise in publishing really nice self help books on a wide range of topics. Books reviewed for them in the past include Tony Booths excellent Buy to let Handbook and How to Invest in the UK Property Market by Gerry Fitzgerald.

The publishers recently sent me three books, two on running B & Bs (one in England and the other in France) and one on buying and running a hotel. As they are not really landlord and tenant books, I decided to review them on this blog instead of on Landlord-Law, and as they form a theme I thought it would be nice to review them together. I will review them in the order that I read them.

Running a B&B – a landlady’s guide by Christabel Milner
This is an absolute gem of a book, which I enjoyed reading very much. I expect we have all at some time or another thought about running a bed and breakfast. Ms Milner, who has been a landlady for 27 years, is very experienced and it shows in her book.

The book is very clear and precise as well as entertaining. She starts by telling us how she started in the business, and the properties she has developed and run as B&Bs. Part One then looks at what is involved in running a B&B, for example whether your home is suitable and how it can be adapted, and also considering whether there will be a market for your business locally. Part two then goes into the reality of running the B&B covering practical matters such as linen, keeping the room in readiness, bookings, taking payments, marketing, and of course the breakfasts. There is also an excellent chapter on personal safety.

Although I have no intention of running a B&B I found the book enchanting. How wonderful it must be to arrive at Ms Milners house on a cold and rainy day, to be ushered into a warm welcoming room, with its crisp clean linen and generous hospitality tray! With Ms Milner herself, there to assist if you need her, but discreetly withdrawing to her own quarters when you don’t. A touring holiday staying at B&Bs is one of the great ways to see Britain, and this book will help anyone who want to be a part of that. Highly recommended.

How to Buy and Run your Own Hotel by Mark Lloyd
We all think we could run a B&B, but what about a hotel? Mark Lloyd had worked for years in the hospitality industry organising events, but had always wanted to run a hotel. This is the story of how he and his wife, together with their two young children, took the plunge and bought a hotel in Chipping Sodbury in the Cotswolds (in fact this hotel here).

Although this book gives a very good description of what is takes to buy and run a small ten roomed hotel, it is very uneven and I felt could have done with a lot of tidying up. Reading it from cover to cover, I found I was continually reading the same stories and the same points (good ones admittedly) over again. For example a detailed description of the day they took over the hotel is given twice – once in chapter 5 and then again at the end of the book. As a book it seemed to be at one time looking at things chronologically and at other times by topic, which was a bit confusing. However there are some great stories and Mr Lloyd is an entertaining writer.

The book paints a very clear picture of what it is like to take over a hotel, and the amount of work involved. In fact so busy are they that I am surprised that Mr Lloyd found the time to write a book at all. At the time of writing the book Mr Lloyd and his family had been there some 18 months. It was rather a shock to discover towards the end of the book, that fairly shortly after taking over, he had had a serious accident and had been hospitalised for several months. What a nightmare that must have been for him and his family!

For all its organisational inconsistencies, this book really is essential reading for anyone considering buying and running a hotel. I now know for sure that it is not something I want to do!

How to start and run a B&B in France
Do you sometimes tire of dreary old England with its constant rain and cold? Why not up sticks, buy a run down property in La Belle France and run it as a B&B? This is what Deborah Hunt and her husband did, and this book tells you how to do it.

This is a very well organised book and an excellent guide. Mrs Hunt and her husband are both architects and not surprisingly the whole process of renovating French property is gone into very thoroughly. In fact I would recommend this book to anyone who is considering buying and doing up property in France, irrespective of whether they intend renting out rooms. Mrs Hunt is also very clear about the different system in France and the process of buying French property and running a business.

If you are intending moving to France, obviously you will need to speak French. The book helpfully gives many lists of suitable words ands phrases, and every chapter ends with a hint on how you can improve your French (e.g. watch the TV news in French and read a French newspaper).

The book is very helpful on the different culture in France and the differences in what you will be expected to do as a B&B landlady in France as opposed to England. The author also looks at the different characteristics and expectations of different nationalities. Shamingly, English children are the worst behaved.

One charming feature of this book is that it is illustrated by Deborah Hunt’s own line drawings, which show different types of property and features. I also liked the cover illustrations (Susie Home - www.leperchoirdespaons.com).

At the end of the book, Mrs Hunt recorded interviews with five other English proprietors of French chambers d’hotes. These were fascinating and served to give a more rounded view of what can be done. All in all I would thoroughly recommend this book to anyone considering moving to France.

Generally
It has been fun reading these three books end to end and I have thoroughly enjoyed them all. They are all far more informative that I can describe here, and are all good reads in their own right, whether or not you are considering becoming a B&B landlady or hotelier.

Happily however they have not convinced me to change my job or to uproot and move to France. I enjoy running my legal and internet business too much, and however pretty France may be, I have no desire to always be a foreigner, plus I am dreadful at languages! But for a short period I lived the dream vicariously through these books, and that was enough for me.

NB If you want to buy any of the books, you will find them in the Amazon box in the right hand column of this blog.

The Deposit Protection Service – problems answered

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

Since the tenancy deposit protection regulations came into force in April 2007 I have done quite a few blog entries on this subject, and there have been many comments from landlords and tenants. Some of these have been highly critical of the company running the custodial scheme, The Deposit Protection Service (DPS). In view of this, I thought it was only fair that I should contact them to give them an opportunity to respond to the criticisms which have been made about their service.

The DPS do not think it appropriate that they respond directly in this blog. However from what they have said to me, it appears that most of the problems complained of can be answered as follows:

• It is essential that the information inputted when registering the deposit is correct. For example, if incorrect bank details are given then the claim cannot be progressed. If this happens the DPS will write to the landlord telling them that the information inputted is invalid and inviting them to deal with this so that their claim can be progressed.
  
• When making a claim to have the deposit repaid, it is essential that the correct repayment ID is given otherwise the claim will be rejected.
  
• The DPS also need to hear from both the landlord and the tenant before the deposit money can be repaid. It is up to the party seeking repayment to chase the other party. The DPS will not do this for you.
  
• If the other party refuses to co-operate, then the single claim process can be followed. This may end in Adjudication if the other party does respond, otherwise the claim will be settled without the other party. Alternatively, if both parties are contactable and cooperating then the adjudication process can be used. In both these instances the party wanting to claim the money will have to apply to the DPS for the necessary forms.
  
• The DPS do not deliberately delay payments to accrue more interest, they cannot do this even if they wanted to - they can only claim their agreed fees. They also point out that the Government have no access to these funds and do not make any financial gains from this scheme

For more information about the DPS service, you can visit their web-site at www.depositprotection.com, and there is a telephone helpline 0870 7071 707.

Tenancy Deposit Protection – test case?

I have been contacted by a London tenant who is bringing a claim against his former landlords and their agents under the tenancy deposit protection legislation. He is looking for a local firm of solicitors to assist him with his claim (preferably on a pro bono or ‘no win no fee’ basis), which he hopes will be a ‘test case’. He tells me that the facts are briefly as follows:

- A well-established London based Estate Agency accepted a deposit to be held against a 1-year AST. The Agent registered the deposit with TDS over 5-months after the 14-day window allowed by UK Housing Law. The Agent never notified the Tenant of the deposit registration details despite repeated requests from the tenant.
- When the tenancy concluded, the Agent returned the deposit back to the tenant only after the tenant threatened legal action, and even then it was returned after a reasonable deadline was given by the tenant for its return without legal action.
- The tenant has filed a claim in West London County Court for 3x the deposit as per UK Housing Law. The Agent has stated that they will fight the claim and have retained the services of specialist housing solicitors.

Anyone interested in assisting can contact the tenant at tnhill@london.edu.

Twitter update

I wrote a blog entry about twitter when I first signed up. However on reflection perhaps this was a bit negative. Having used twitter for a couple of weeks I feel it is time to give a more positive update.

I have found it really good. I am now putting notifications of all new developments on Landlord-Law onto twitter so anyone who want to know what I am doing can follow me and find out. I know that a few people have set up twitter accounts just so they can do that, which is nice.

However I have also found some good twitter accounts to follow. The most fun must be Stephen Fry. At the time of writing he is filming in Kenya, and us twitterers following get regular updates, including pictures. However perhaps the most interesting are the news accounts – I am now subscribing to the Guardian, Law Tweets, The Times Law, the Times Property, BBC breaking news, UK Parliament and Number 10 Downing Street.

Following twitterers is also a good way of letting them know that you exist, and often they in turn follow you. So, for example, my tweets are now being followed by Stephen Fry, No 10, and the UK Parliament to name but a few. This is initially very flattering until you realise that they are also following lots of others. Stephen Fry for example is following over 7,000 so I doubt whether he reads them all or he would do nothing else!

I have particularly enjoyed the news tweets, and it is nice when my husband tells me a news item to be able to say ‘I already knew that’. Smug but true.

As a lawyer it is also very interesting to be kept informed, on a day to day basis, of what is happening in Parliament. As a result of this I may check out more the development of housing related bills and read the online information in the excellent UK Parliament web-site.

So all in all I would recommend twitter. It allows me in easy way to keep people informed of new Landlord-Law content, and keeps me up to date. A good combination.

Poverty is a state of mind. Discuss.

I read on the internet that yesterday was blog action day on poverty. I have rather missed the boat on that, but perhaps I can put in my tuppence ha’penny worth now. And be a bit controversial!

So. Poverty is a state of mind. Is it? If you live in somewhere like Africa during a time of famine, then no, it is real and there is not a lot you can do about it. However if you are lucky enough to live in the first world, then surely there is the opportunity for us all to escape poverty. I would suggest that one of the main thing which prevents this is your state of mind.

Everyone has in them the potential to do well. Everyone. I believe that the two great catalysts for this are belief in yourself and education. Assuming you live in the UK (this is a British blog) education is available to us all. There are evening classes, the open university, or just libraries where you can read books for free or use the internet. If you can’t read, there are classses where you can learn. With education will (hopefully) come belief in yourself and self worth.

Don’t believe negative things that people say about you. For example, many, many women have no ambition in life because they were told repeatedly when they were a child that they were stupid, only fit for marriage, and that their brothers were more important than them. But that’s not true! I believe that everyone has something they are good at or have the potential to be good at. If you think this isn’t true of you, then this just means you haven’t found out yet what that thing is.

Believing in yourself is very important. It carries you forward when other people might drop back. It propels you on to work at something when perhaps it might be easier not to. If you truly believe in yourself, work hard, and are not stupid, then you should eventually get somehwere. (Out of poverty at any rate)

Not being stupid is important though. I don’t think success depends on being very, very clever – just being sensible. And also I think, not being greedy. Many of the problems we have today are down to people being greedy. As we are now finding out.

An example of how important belief is. Two years ago everyone believed in the financial system, so loans were made, and everything ran well. Now people have lost their belief in the system to such an extent that the banks are not even lending money to each other. The difference is a collective state of mind.

So, is poverty a state of mind? Perhaps not, but staying in poverty is, in many cases because of a state of mind. Change the mindset and you have a good chance of changing your life. My recipe for success therefore (moderate success that is, not becoming a millionaire) is education, self belief /self worth, hard work, not being stupid about things, and not being greedy. Try it and see!

Go to work on a poem

When my son Patrick was younger (he is now 12) we often read poetry together, but we hadn’t done any for quite a while. Quite by chance I was looking through a poetry anthology (looking for a reference) recently during that part of the morning before he goes to school, and suggested that we read a bit. I was thrilled when he actually switched off the cartoons and said, yes that would be nice. So this is our new routine.

I tend to be a bit of a re-reader of poetry (rather than reading new stuff), my all time favourites being Ozymandias (Shelley) and The Solitary Reaper (Wordsworth). I am also very fond of my Mothers favourite - Stopping By Woods On A Snowy Evening (Robert Frost). Patrick’s favourite poem seems to be The Snake (D H Lawrence).

I have started reading him the Rime of the Ancient Mariner (Coleridge) which may take us a while.

What shall we read after that?

Strutting my Stuff

I have had a few gratifying initiations to speak recently. Last month I spoke at London Landlords Day and also to the Lambeth Landlords forum, which were both very enjoyable.

This month I am due to speak to the CLT 11th Residential Landlord & Tenant Update Conference 2008 on 23 October, where I will be giving a possession proceedings update. CLT courses are always rather on the expensive side, however CLT have agreed to allow my annual members to attend this (and another conference I am doing in February) at subscriber rates, which means a discount of £100. Members can find out more about this in the Landlord-Law special offers section.

Nothing so far in November (I was invited to do the Landlord & Buy to Let Show in Birmingham, but couldn’t face the travel) but on 3 December I will be doing a presentation at the Residential Landlord and Tenant Update, organised by Professional Conferences, called Possession 'Claims For Private Landlords – A Formula For Success'. One of my co-speakers on this conference will be Jan Luba QC so I am quite excited about that. I have wanted to hear him speak for ages, but as I generally have more than enough CPD (and being a bit of a tightwad) I can never justify the cost of attending his courses.

Finally, I was really pleased to be invited to talk about Landlord-Law at the 2009 Legal IT Show on 4 February. My web designer Gill Bishop will be there with me, to answer all those tricky technical questions on things I don’t really understand. So if you are interested in how the site was developed and how it works, please do come along.

If you would like me to speak to your organisation please do get in touch. I always try to speak when invited if I can, but this is subject to my being able to travel to the venue – I live in Norwich and do not drive, so am dependent on the trains. You can find more about the talks that I can offer here.

Amazon inflation

Having written a book review of Make Cash in a Property Market Crash by Mark Homer and Rob Moore, I went as I usually do, to put a link from my review page to the book on Amazon. I was amazed to see however that the book had a sale price of £105.75. However the book itself, on the desk before me, had a price on the back cover of £16.97.

Either something has gone very wrong, or this is an attempt by the boys (who self published) to ensure that all purchases of the book are via their web-site www.progressiveproperty.co.uk. The boys appear to have few flies on them, so I suspect it is the latter. Needless to say, the web-site provides other (no doubt more expensive) services.

Energy Performance Certificates – have you got yours?

Today is the day that the regulations regarding Energy Performance Certificates (EPCs) come into force.

If you are a landlord you now need to provide an EPC (or a copy of one) to everyone who asks for particulars of your properties, and/or all who view your properties, or at the very latest, by the time the tenancy agreement is signed.

If you are a prospective tenant, you should make sure your landlord gives you an EPC as soon as possible. In todays world of increasing energy prices, gas and electricity bills will be an important part of your outgoings. Properties which are energy efficient could save you a lot of money. It may even be cost effective to pay a bit more rent for them.

But what if the landlord refuses to give it to you, and just laughs at you for asking? Well he does not have to give you one if he thinks that you are not serious about renting the property, or if he has made his mind up not to rent to you (perhaps because he thinks you are a trouble maker for asking for an EPC …).

However if you think he is deliberately flouting the law, you can complain about him to your local Trading Standards Office. They will then contact the landlord, and if they think he is breaking the law they can serve a penalty charge notice, which carries a fine of £200. No doubt once this has happened to a landlord once, he will take care to see it does not happen again!

However there are a few defences available to landlords. One is if they have ordered an EPC at least 14 days ago and despite chasing it up, have not received it yet. The other is if the tenant is so desperate for accommodation that he cannot wait for an EPC to be obtained, provided the landlord serves it on him at the first opportunity.

The general hope, is that having to obtain and serve EPCs in relation to rented property will highlight their efficiency or otherwise (mostly otherwise I suspect for the majority of properties) in their use of energy. Hopefully this will prompt more landlords to do something about it, to make their property more attractive to tenants. Or that tenants will demand that something is done about their expensive to heat properties. Thus helping to improve the carbon footprint of the nation.

Lets hope it does. For more information about energy saving in general see the Energy Savings Trust web-site.

Tenancy Deposit Protection Schemes - news and views

I have seen several news items on the internet recently (eg here) quoting a report from the My Deposits tenancy deposit scheme, which apparently says (I have not been able to find the original report) that tenants are losing out, as 12% of claims are lost by tenants not properly following the terms of their tenancy agreement.

Excuse me, but doesn’t that also mean that 88% of landlords are losing their cases?

Meaning that under this scheme (primarily used by landlords rather than agents), more landlords are found wanting than tenants. Does that not perhaps also indicate that the TDPS was, perhaps, a good thing after all? (Contrary to the squawks of the landlords associations before the schemes were set up, including the NLA which now runs the My Deposits scheme).

Looking around at the schemes web-sites for more news, I see that the Dispute Services scheme web-site states that they are finding that only 2% of cases need adjudication, a lower than anticipated figure. As we do not know the percentage of My Deposits cases which go to arbitration, it is difficult to make much comment. However one could speculate that if there are more disputes in the My Deposits scheme (which is aimed at landlords) than in the Dispute Services scheme (which is aimed at agents), then that would indicate that agents tend on the whole to deal with deposits in a more responsible way than landlords. Needless to say, agents have been saying this for years.

There is also of course the shocking statistic put forward by the DPS of 62% of landlords not protecting the deposit at all (discussed in my post here).

Even though 88% (i.e. most of) of disputes with landlords are won by tenants, I suspect that it is still mostly only the good landlords who have protected their deposits, and that the worst landlords are still getting away with it.

Saving pdf tenancy agreements and forms

The Landlord-Law tenancy agreements are all in pdf format. This has always been the case, for a number of reasons. Most people can access and use pdfs whatever sort of computer they have via the free Adobe Reader (which you can download from www.adobe.co.uk); they are easy (relatively) for me to create; and I can protect the template via the Adobe security system.

However a few landlords have complained that they cannot save the information in the fields. This is of course quite true, but it is nothing to do with me it is down to how the Adobe software works. If you complete a form with form fields using the free reader, when you close or save the document, the information on the 'fields' will be lost. You therefore have to be very careful to ensure that you have printed out sufficient copies of your document before closing.

If you have the Adobe Acrobat software this is not a problem. Acrobat saves the information in the fields, so you can open the document up again later, either to amend the information or print it out again. If you have Adobe Acrobat Pro as I have, you can even change other peoples forms (so long as they have not protected them). However this software is pretty expensive at about £3-400 plus, and most small landlords will not want to pay this. Indeed many of them will be quite happy with just printing the form out, and will not want to store it electronically. After all it is the paper copy with the tenants' signature on, which you will need in court.

However if you do want to save the wording, there is an answer. You need to 'print' the form, using special software. This software creates a new pdf document exactly the same as the document on the screen, so it will include all the information you have typed into the 'fields'. You won’t be able to change anything on this new document though, the fields won’t be there, just the wording you put in them. This could be very useful – for example if you want to email a tenancy agreement over to a tenant.

Adobe has this feature with its own Acrobat software – it used to be called the distiller although it may be called something else now (I am out of touch with what they do). I used to use it all the time (for sending court forms over to clients for them to sign), but then after I had some work done on my computer earlier this year it suddenly started producing a load of squares instead of text. I spoke to my computer people, who did not know how to fix it, but the computer man suggested that instead I use this free software called CutePDF Writer. It worked a treat and I have used it ever since.

So if you are a user of forms with form fields (preferably from the Landlord-Law website!) and want to save a copy of what you have done, but do not want to splash out on the Acrobat program, I would suggest you give it a try.

(Needless to say however, I make no warranties regarding it, and if it trashes your machine I am not liable!! But then I would say that, I am a lawyer.)

Tenancy deposits – another happy customer

One of the tenants who posted comments to my item on tenancy deposit protection - 62% failure, subsequently bought my kit 2 and was on the point of issuing proceedings. She has now contacted me to say that her landlord has finally caved in and paid back the whole of her deposit. "Which", she said, "is all I ever wanted!"

This landlord had made a deduction for 'cleaning' despite the fact that there had been a clear inventory report, and tried to justify his failure to protect the deposit (which meant that my client could not use the free arbitration service to challenge his deductions) on the basis that his agents should have done it.

Obviously he has now taken some advice and found that his position was a bit shakier than he had thought. So it is worth tenants persisting with claims regarding tenancy deposits. Most landlords do not want to risk a court claim if it is clear that they are in the wrong.

See also my earlier post here.

Twitter twitter, tweet tweet …

I have decided to go on to twitter. For those who don’t know what this is, it is one of those social networking sites from America. You sign up and then every now and then you do a tweet. This is a short statement of what you are doing. Like 'I am having a cup of coffee' or 'I have just put the washing into the machine'. Anyone who is interested can sign up to follow your tweets, and find out what you are tweeting about. And you can sign up to follow other peoples tweets.

Put like that it all sounds a bit silly. But I suppose fun. However, there is a bit of marketing in there (being a bit of an entrepreneur I have to think of marketing, it sort of goes with the job, not that I have a job being self employed …).

For example I have discovered this thing called twitter feed. This puts notes of entries of my blog onto my twitter page. So those following my tweets will know when I have blogged. Then I can (and have, you can see it if you look to the left) put a feed from my twitter page onto my blog. So people following my blog can see what I am twittering about. All pleasingly circular and possibly futile.

I haven’t found anyone to follow yet, apart from Nearly Legal. Being of a slightly more mature generation, none of my friends really do that sort of thing. Or at least I have not found any yet, although it is early days. The Nearly Legal tweets are all feeds from the NL web-site, some of which seem to be reports of my postings on my blog. Which of course I already know about, having done them (and of course they are also reported on my twitter page). More circularity.

So what will I twitter about? I will probably use it to tell the world what I am doing on the Landlord-Law site, what new items have been loaded up and the like. I will probably also tweet about work related things I have done, such as talks, conferences etc. And I will probably from time to time just answer the question on the twitter text box, which is 'What are you doing?'. Which at the moment is writing this blog.

Guest article – a view from the United States, from Kelly Kilpatrick

The Landlord-Law blog being a British blog, generally only looks at housing in England and Wales. However, this article, kindly provided by Kelly Kilpatrick, gives a transatlantic viewpoint. Note that the opinions expressed in this article are those of Kelly and do not necessarily reflect mine. If you are outside England & Wales and would like to write something about housing in your country, please contact me.

Consistency in Policy Regarding Tenant-Landlord Relations

Over the last several years, much has been done in the United Kingdom to reform Housing regulations. First came new laws to license owners of HMOs (Houses in multiple occupation). The reasoning behind this was that the owners of these properties were able to make a great deal of money without having to adhere to any sort of standards in regard to their tenants’ conditions.

Many HMOs were seen to be in poor or shabby condition, not providing the necessary function nor were they providing the amenities that the tenants were paying hard-earned money for. Although some landlords are still unlicensed, much progress has come with these reforms, benefiting both tenant and landlord.

The benefit of licensing an HMO ensures that the property in question meets certain standards and criteria. The tenant benefits by having a place to live that meets legal criteria and is suitable for habitation, making it worth the money spent on rent. The landlord, in turn, fixes up his property to meet the criteria and increases the value of his property as well as the amount of rent he is able to charge.

How does this compare with what is done in the United States? Each state handles its dealings with housing quite differently. What’s done in New York is handled in a completely different way than it is in Texas, for example. Housing authorities exist, but deal primarily with government-subsidized housing projects for those who live beneath the poverty line.

Generally speaking, there is a whole variety of ways tenants and landlords deal with one another in the states. In Texas, for example, the landlord of a rental property can ask for references or may not. He can ask for a deposit, and does not have to prove this deposit is protected, unlike the new tenancy deposit protection laws in the UK require landlords to do. Additionally, tenant and landlord can agree upon the terms themselves or sign a leasing agreement. None of this, however, is required by law.

Conditions in housing in the States also vary quite greatly from locale to locale. Since there is no standard law to which all landlords must adhere, the system is quite flawed, filled with fraud and unsettled disputes, much like it was in the UK before these wide-sweeping reforms were put into place. It is common practice to put shabby materials in a rental property, only to be able to subtract it from a tenant’s lease at the end of the term.

Predatory leasing is not practiced out in the open, but many apartment complexes and leasing companies use the old bait and switch to get people in the door in order to lease them something different. Many times, paperwork gets “lost,” and the terms of the lease have been changed, only to be discovered by the tenant at an inopportune time.

Naturally, most people who wish to spend their money with someone who is reputable and has established guidelines for the leasing agreement, as well as terms by which the deposit is released once the rental term is up.

Although it was a tough transition for many Britons, the HMO licensing act, as well as the tenancy deposit protection legislation has provided safeguards for both tenant and landlord alike. This has ultimately changed the face of tenant-landlord relations into a market that is now more consistent than ever before.

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This post was contributed by Kelly Kilpatrick, who writes on the subject of the colleges for criminal justice. She invites your feedback at kellykilpatrick24 at gmail dot com (although please also post feedback on this blog!).

Credit Unions and Local Housing Allowance

As I have written about before, Credit Unions can provide a useful service to tenants who want their Local Housing Allowance payments to go direct to their landlords. Many tenants prefer this, as it prevents them spending the money by mistake and thereby making themselves vulnerable to being evicted. However under the new rules payment direct to landlords will only be done now in exceptional circumstances.

However some credit unions have a service where they arrange for a special bank account to be set up to receive the payment. They will then pay it over to the landlord. As the money is ring fenced and kept separate, there is no danger of it being swallowed up by the tenants overdraft, and their homes will be safe.

I am now compiling a list of credit unions who offer this service on my web-site www.landlordlaw.co.uk which you can see here. If you know of any other credit unions which offer this can you please let me know.

Affordable housing is not affordable

It seems that 'affordable housing', a term much bandied about nowadays, is actually not really affordable at all. Generally the phrase is taken to mean that the property is available at below full market cost or rent. Much is often made of the 'affordable' element of housing in new developments. However are they really affordable for low income families?

In an article in the excellent Property People magazine (available foc to annual members of my online service www.landlordlaw.co.uk) we are told that the term 'affordable' has recently been defined in monetary terms by a team of researchers (led by Peter Ambrose, visiting professor in housing studies at the University of Brighton, working closely with the Zacchaeus 2000 Trust and London Citizens).

The team calculate that the amount affordable for housing for a family of two adults and two children, living in east London, is £135 per week (at the present time). Not surprisingly the researchers also found that the only housing available at this price is local authority or registered social landlord (housing association) housing. Privately-rented housing or low cost home ownership would is completely out of the question.

So affordable is not affordable. Rather like the accelerated possession procedure is not really accelerated. Does anyone have any other similar examples of misleading phrases from government?

Another mortgagee / tenant eviction case

I have another mortgagee evicting innocent tenant case for you. Here I was consulted by the letting agent who had been contacted by the distressed tenant. She had just found out she was being evicted, after having received the normal notice which is served on the occupier of the property in these cases. My client was furious as he felt that the landlord had deceived him, plus he was concerned that this situation would reflect badly on his agency business, although it was no fault of his. The property had apparently been owned by the landlord for some time, had been previously rented out by another agency, and there was nothing to alert him to the mortgage problems, otherwise (he told me) he would never have taken the property on.

His main concern was for the tenant however, and he attended Court where he spoke to the Judge about the case.

Apparently this was a second mortgage, and the mortgage company had not been paid since the tenancy started three months ago. The agent asked the Judge, on behalf of the tenant, if he would grant a stay or make a 56 day order, to allow the tenant to continue to live in the property until the end of her tenancy. The solicitor for the mortgagee asked for a 28 day possession order. After considering matters the Judge decided to make a 28 day order. However the tenant will have in the region of 2 months in the property before any bailiffs appointment, which will allow her time to find somewhere else to live (although apparently she had fallen in love with the property and will be sad to leave).

I suggested to the agent that he might want to review his agency terms and conditions and consider including a clause (assuming there is not one there already) specifically providing for the landlord to warrant that all mortgage payments for the property were fully paid up and would continue to be paid for the period of the tenancy. This would mean that if the landlord did default, he would be in breach of his agency agreement, which might give the agent more freedom of action. Agents might also want to consider calling for proof that the mortgage is paid up when taking on new instructions, so as to avoid a situation such as that in my previous post, where an order for possession had been made before the property was ever let to the tenant.

With the property crisis deepening, we will probably be seeing more and more of these sad cases.

The Sheffield Case

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

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The Residential Landlords Association is pretty pleased with itself, as it has successfully challenged a claim by a tenant, supported by the CAB, against a landlord who was in breach of the tenancy deposit regulations.

As regular readers of this and other housing blogs will know, the regulations appear to say that if a landlord fails to protect a deposit under one of the government authorised schemes, and serve a notice containing prescribed information on their tenant, within 14 days of receiving the deposit, they will be ordered by the court to repay the deposit (or protect it with the custodial scheme) and pay the tenant a fine of three time the amount of the deposit money.

There is a lot of confusion about these regulations, and Judges on the whole appear reluctant to enforce them. There are quite a lot of conflicting decisions coming from the courts. However these are all County Court decisions and are mostly unreported.

The Sheffield case (which you can read about in an RLA press release and in an article in the Solicitors Journal) involved a situation where the deposit had been protected, but the landlords agent had failed to serve the notice. The notice was then served out of time, but the tenant went ahead anyway and issued the proceedings. At first instance the Judge made the award in favour of the tenants. However the landlord, funded by the RLA, appealed the decision. It came before HHJ Bullimore who ruled that the landlords were not in breach and the fine was not payable.

However what was not decided at the hearing was whether the landlord would have been in breach if he had served the notice after the issue of proceedings rather than before. The RLA take the view that the it is the date of the hearing which is important, not the issue of proceedings. They base this view on the notes to the Housing Act 2004. These have this to say about proceedings relating to tenancy deposits:

"503. If at the court hearing the court is satisfied that the landlord has not complied with the initial requirements of a scheme or provided the information required by section 213 (6)(a) or that the deposit is not being safeguarded by an authorised scheme the court must either order the person holding the deposit to repay the deposit to the applicant or pay it into an authorised custodial scheme within 14 days of the order being made. The court must also order the landlord or his agent to pay the applicant an amount equivalent to three times the deposit."

The RLA take the wording 'if at the court hearing' at the start of the paragraph to mean that so long as the requirements are satisfied before the hearing takes place, the landlord will not be penalized. However this is not the only interpretation of these words – it could just be a statement of when the decision will be made by the court - it would after all be highly inappropriate for the Court to make any decision before the hearing!!

My feeling is that if the landlord can get off the hook by complying with the requirements on the day before the court hearing, this is grossly unfair. It will in effect be encouraging landlords only to protect deposits where tenants bring court actions, and will mean that it will be virtually impossible for a tenant ever to succeed in such a claim. However I agree that it is unfair to penalize landlords who act in good faith and who only fail to comply through error (as was the case in the Sheffield case, where the deposit had in fact been protected).

We should also remember, that although this was an appeal, it was not the Court of Appeal, so this decision is not binding on anyone. County Court Judges will probably take note of it, but they do not have to follow it. We really need a test case to be taken up to the Court of Appeal.

But isn’t it ridiculous that a major court case has to take place before the effect of a piece of legislation can be known. Surely there must be a better way?

London Landlords Day 2008

Thursday was London Landlords day – this is an annual event put on by all the local authorities in London for their landlords. It is currently run on their behalf by a company called Accession.

I was doing a talk called 'Dealing with Tenants Rent Arrears'. This is a new talk, based largely on my new(ish) Rent Arrears Action Plan section on Landlord-Law. It was just going to be about what to do when tenants fall into arrears with a short section on preventative action at the beginning, but then the organizers in their wisdom sent out a flyer saying (without consulting me first) that I was going to tell everyone how to prevent rent arrears arising in the first place! I wish! Still I decided I had better add a few more slides, so that turned into quite a largish and important part of the talk (which I am now thinking of turning into an article).

I think the talk went well. It was in the auditorium which I think seats about 400. There seemed to be quite a lot of people there for my talk, although it was difficult to see much beyond the blinding lights which shone into my eyes whenever I tried to peer out in the audience.

If you were one of those people, thank you for coming along and I hope you enjoyed it. Some of you took up my invitation to let me have your business card or email address so I could send you a pdf of the presentation. These have all been sent out, apart from a few where I could not read the handwriting. So if you have not had it, that is the reason!

I also took the opportunity (while walking to and from the station) to take a few digital photos of houses and flats in the surrounding area which, being Kensington, is posh. Eagle eyed readers of Landlord-Law have probably noticed that it is now festooned with pictures of property. I now take pictures whenever I go anywhere new, much to the irritation of my family ("come on Mum …"). There are some stunning blocks of posh flats on the Kensington side of Olympia, some of which may well be rented out, although I would surprised if any of them are ASTs (where the rent must be under £25,000). Square clips of these will gradually get onto the Landlord-Law site, hopefully giving it a bit of class, and making it a bit more representative, most of the current pictures having been taken in Norwich.

Apart from a jaunt to Lambeth in a couple of weeks to speak at their Local Authority forum, and my normal slot in the CLT October property conference in October, that is it for my speaking this year. At the moment anyway.