As mentioned in my earlier post, there is now a new Landlord Law Blog, and therefore this is the last post here. The new blog can be found at www.landlordlawblog.co.uk. Please can you change any links you may have to this blog, and any RSS or other settings.
You can see what the new blog looks like from the picture, but please go and look for yourself.
www.landlordlawblog.co.uk
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
If you rent out furnished holiday accommodation, you should buy this book. At present there are tax advantages in renting out furnished accommodation, but on 10 April, this will all change. Carl Bayley has written this book to explain the changes that will take place, and give guidance on what should be done in the run up to 10 April 2010.
Landlords will (or should) already be aware of Carl Bayley as a tax author, as he has written a number of well received books in the past, such as How to Avoid Property Tax.
This book will only be relevant for a few months, so (if you own a holiday home you rent out) should be bought as soon as possible to maximise the value you can get from it. Areas covered are:
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
See also my new website The Lodger Landlord.
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The National Landlords Association (NLA) and spareroom.com are both calling for the rent a room tax scheme tax threshold to be increased. It has been £4,200 since 1997 and since then prices have risen considerably. To quote the NLA:
"The NLA supports the Raise the Roof campaign's call for the Rent-a-Room threshold to be increased to £9,000 pa. The scheme threshold has not changed since 1997, while the average single room rent has increased by more than 75%. This has resulted in the majority of landlords who let a room being required to complete a tax return removing much of the benefit of the scheme. At a time when household finances are becoming increasingly stretched, and there is an ever greater need for affordable housing, the Government should do all it can to incentivise potential landlords to let a room."The story has now been picked up by the Independent who have reported it here. You can read more about the campaign, and sign the petition here.
Several things I have been planning for a while will come to fruition shortly.
The Newsletter
The Landlord Law newsletter is an important part of my service. However, the newsletter mailer I have been using almost since we started in 2001, is now a bit old and clunky. I am therefore changing to using a professional company, Constant Contact. My web designer Gill and I have been working on the new template, which looks great!
However the new service requires the database to be re-created. The annual members list will be uploaded, so annual Landlord Law members don't need to do anything. However I do need all those on my free newsletter list to sign up again, which you can do here. The first of the new newsletters will be sent out later today (12 November) so if you want to receive it you should sign up now!
However all is not lost if you read this too late, as you will be able to read the most recent newsletter on the site (something else I have wanted to do for a while). I will be putting a link to todays newsletter on the site shortly.
A new blog
My web designer and I are also working on a new blog design, which should go live in a week or so. At that time the blog url will change (as we are coming off blogger) so watch this space, as you will need to amend any links you may have. However my feedburner feed url should not change.
If you receive the new newsletter today, let me know what you think.
[Later - the mailing went out all right, you can see the new newsletter here.]
Well done High Court Enforcement company Shergroup for setting up the Sherbet foundation charity, aimed at families affected by enforcement.
Shergroup along with other enforcement officers have a clear responsibility to enforce the orders and judgments of the courts. However as a result of this work they also felt that they also wanted to help those who were really in hardship and were being pursued by creditors who probably didn’t appreciate how tough it was for the family they were visiting. Through this unique charity, they are able to use the insights obtained by their visits to debtors, to recommend deserving cases to the Sherbet foundation.
You can read more about how the charity works here. If you want to make a donation, there is a giftaid form on the site.
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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I have been contacted by a landlord who has drawn my attention to a thread on the popular LandlordZone forum:
“Briefly, the rental property has been in the hands of the receivers since July 2008. The receivers accepted the tenancy and collect rent from the tenant (the tenancy is now periodic). The deposit was originally protected by the landlord, however, Mydeposits cancelled the landlord's membership (and therefore the protection) because the landlord was subject to a receivership order, which is contrary to the rules of the scheme.This does seem to be a difficult situation and one that may become more common with more landlords falling into receivership. What do you think?
The deposit has not been paid to the receivers (so it appears they are not liable). The landlord cannot protect the deposit as it's against mydeposits' rules (I guess it's possible the DPS would accept it). Tenant may not succeed in a claim for return of the deposit because the tenancy hasn't ended. So, how can the tenant take action under s.214(1) to ensure the deposit is protected when firstly, the landlord did comply and the cancellation was not his decision, and secondly, the deposit has not been 're-paid' so can there be any duty to comply a second time when the landlord has complied once.
It seems completely crazy to me that the scheme is permitted to cancel a protected deposit in these circumstances - the whole point of the schemes is to protect against landlords/agents' 'bad' behaviour. Landlords cannot unprotect a deposit during a tenancy without evidence of reprotection, so why are schemes allowed to do this?”
This book is written by the owners of the popular SpareRoom.co.uk flatsharing web-site. It is addressed to 'sharers,lodgers, and everyone renting out a room', and is very much a companion book to their web site service. As the authors have been working in the field for such a long time (their London flatsharing site, intolondon.com having launched in 1999), they clearly know what they are talking about.
If you are looking to flat share or rent a room, particularly if you are looking for a place in London, this is an excellent book. It provides all (or nearly all) the information you need to have, in an accessible manner. There are also insets giving the personal experience of landlords and tenants, as well as the authors.
Helpful chapters include:
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Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
There is new tenancy deposit case report in the November issue the Legal Action Magazine, Da Costa v. Pinter, which took place at Bromely County Court in April 2009.
Here the tenancy agreement provided for a monthly rent of £1,950 but also stated 'Payment required in advance of £4,200'. The agents invoice described £2,250 of this sum as a deposit, and at the end of the tenancy the tenants asked for it back. As it was not forthcoming they issued county court proceedings for its return and also claimed the fine of three times the deposit sum. The deposit was then protected, after the issue of proceedings.
The Judge (District Judge Burn) accepted that the sum paid was a deposit and awarded the claimants the deposit money and the fine of £6,750. However the interesting part of this case is the quote from the Judge:
"The purpose of the Act is to try to ensure that landlords secure tenancy deposits in a recognised deposit scheme at the start of the tenancy, so that the deposit can be returned to tenants quickly when the tenancy ends, and that disputes about the deposit can be resolved under the schemes' procedures without the need for court proceedings.
Landlords who describe a deposit as something else, who do not secure it promptly in a deposit scheme as required by the Act, then fail to return the deposit when the tenant leaves (especially if this is without good cause, thereby forcing the tenant to start court proceedings to recover the money) but who then at the last minute after the tenant issues proceedings, pay the deposit into a scheme, are clearly flouting the spirit of the legislation and, on my interpretation, the letter also.
If the s213 and s214 remedies are not applied in a case such as the instant one, the Act would be rendered virtually toothless when landlords flout its provisions."
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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This post first appeared on Roberta’s excellent My Property Mentor Blog on 19 October 2009.
You may not be aware of this- I certainly was not-but HMRC are actively searching for landlords who are avoiding paying tax either by accident or by design.
HMRC is actively searching local newspapers for information on planning applications for flat conversions.
If the planning application was for a number of flats within one house they will try to find out if the landlord was filing a tax return. (Sneaky!) They are checking for a ‘UTR’- Unique Taxpayer’s Reference. This 10 digit number is ta way for them to start the chase up. It allows them to see if the taxpayer was declaring the letting income. If you are then you would be entered on the “Not Worth Further Pursuit” database.
However…..
If you are Self Assessment registered and not declaring the income, the fun begins. They will send a 116 form, requesting information from the District Valuer, this tells them how much the landlord paid for the property, date of purchase and from whom the landlord purchased it. ( eeek!)
The next step is for them to check Experian to seek any further linked addresses to your name. If so, they will send more 116s, and see if more properties were not declared. More often than not, this yields spectacular results for the HMRC.
So, what if they are unsuccessful? Well, they may ask the District Valuer for a ‘Covosearch’, a historical list of properties, bought by the landlord, or possibly members of the landlord’s family friends and associates. If by chance the family member is a minor, they will suspect the landlord of attempting to limit his tax liability, and that non-compliance was taking place. (You have been warned!)
Further Enquiries
Now, if they decide that you are part of non-compliance, your case would be then be subject to a full enquiry. On the other side of the coin, if you are not on Self Assessment, you would be referred to the ‘Hidden Economy Team’, where you would be requested to complete returns with the letting income included. OK, hands up those who knew just how much power the HMRC have to chase you? How many investors have been advised by greedy marketeers and brokers into setting up sizeable portfolios in their family members/ kids/ friends names to avoid the many forms of tax?
Other Ways They Can Chase You
Apart from the local newspaper, another source of locating non-compliant landlords is via a Gangmasters’ project of licensed labour providers, which may have offshoots of properties owned in which a vast amounts of tenants were placed in just one room. (When we had a large influx of EU members there were stories of Polish workers living cheek by jowl in this manner.) Usually a family member would be acting as the landlord, leaving the Gangmaster to exploit the workforce.
Yet another way of locating non-compliant landlords is to establish (via the London Information System (LIS) database) how much housing benefit was paid to a landlord by a local council for the tenants. Local councils are duty-bound to place this information on the LIS database for HMRC.
Last but not least, they can also find, via LIS, rental income submitted to HMRC from letting agents. (Ed: they may also be able to track you via the tenancy deposit schemes which pass information on to the government)
Get Your Tax Sorted-NOW!
This government is very strapped for cash and in my opinion we can expect more of this type of behavior. We know already that banks are employing forensic accountants more and more now too (see my recent blog here for more info). The situation is likely to get worse as the government search more actively for spare cash trapped in the system. The tax man is coming folks- you have been warned. Sort your stuff out sooner rather than later.
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If you need help, Roberta's service may be able to assist. You can email her via her main website http://mypropertymentor.co.uk.
Reading (rather late) the October issue of Property Investor News, I came across these interesting snippets of news:
Insurance
Apparently a survey by insurance firm Direct Line for Business has thrown up the fact that many landlords are cancelling their insurance policies 'to save money'. Presumably these are people who are signed up to their own insurance schemes (otherwise how would they know)? I could not find any mention of this on their web-site, however I did note that their landlord insurance does not cover lettings to students.
Maintenance insurance for agents
Another one on insurance. Apparently many letting agents are carrying out maintenance work on rented properties without being properly insured. Agents are warned to watch out for this and not do any maintenance work unless they are sure they are covered. Apparently many office policies for letting agents exclude cover for this, meaning that agents won't even be covered for changing a light bulb. You are warned!
Student stereotypes
Finally research by Rookwool shows that actually students are not as rowdy as everyone thinks, as there is only one complaint made for every 557 students. Many student are actually more concerned with studying hard and getting a good degree, "and arguably may have more to fear from the noise generated by the rest of the town".
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
Tenancy agreements and information on tenancy agreements is an important part of the Landlord Law service that I provide. Sometimes people find it difficult to locate all the tenancy agreement related resources on the site, so I have done this page of links to help them:
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
This is a myth largely created by letting agents, as an important part of their income stream comes from charging landlords for ‘renewals’ for tenants. But they are not actually necessary.
In a way, this post follows on from my last Urban Myth post about tenants staying on after the fixed term not being squatters. In that post I explained that under the Housing Act, assured and assured shorthold tenancies continue automatically after the end of the fixed term, as either a monthly or weekly ‘periodic’ tenancy, depending on how the rent is paid.
This does not mean to say that tenancies should not be reviewed at the end of the fixed term. Or, so far as the landlord are concerned, two months before the end of the fixed term, as that is the length of notice he will have to give if he wants them to leave.
However many, many tenancies run on as periodic tenancies quite happily for years. Often landlords and tenants prefer the flexibility of a periodic tenancy and do not want to be tied in for a longer term. For example if tenants expect to be moved to another town for their job but do not know exactly when.
The most important reason for ‘renewing’ a tenancy is to increase the rent. This is often done at this time, as if a tenant signs a new tenancy agreement or renewal form with the new rent, they cannot then challenge the rent figure if they think it is too high.
Another important reason for ‘renewing’ a tenancy for a further six months or a year, is to create certainty, and tenants often want the security of a fixed term, where they can only be evicted if they fail to pay rent.
However if you and your tenant would prefer the tenancy to roll on on a periodic basis, do not allow your letting agent to bully you into a ‘renewal’ for a further fixed term.
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Do you know of any 'urban myths'? Or have you had any problems with this particular urban myth? Please post a comment if so, I would love to hear from you.
Click here to see all the Urban Myths.
At the recent CLT Conference I attended, there was an excellent talk by Professor Martin Partington OBE (former Law Commissioner) on possible future developments in the Private Rented Sector (PRS). I set out below a very condensed version of his notes (with his permission).
He started by saying that the PRS is now a key feature of the housing market and one which the government needs to encourage. He looked briefly at the prospect of large scale investment in the sector (most private sector landlords have only a few properties) such as the Kick Start delivery initiative, and concluded that it remains to see if these actually result in any developments, although it could happen.
The Rugg Review
Turning to the Rugg Review, this was commissioned by the government after the Law Commission (under Professor Partington) had spent several years carrying out an extensive consultation and research exercise in the same areas. Needless to say, there is a strong suspicion among many that the Rugg Review was commissioned because the Law Commission’s report did not say what the government wanted!
The Rugg Review recommendations can be summarised as follows:
I was interested to read a report sent to me by Sally Chicken (Director of the Rainbow Saver Anglia Credit Union) regarding some research carried out by Leeds City Council and its partners. This was to see whether resaerch carried out in 2004, which concluded that up to £9 million each year was lost to the local economy through people having to pay out excess interest to doorstep lenders, was actually correct.
The reserch findings are as follows:
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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An interesting article in the Cash section of the Observer today looks at the increasing tendency of tenants to check up on their landlords before signing a tenancy agreement. And quite right too! As has been reported on this blog in the past, innocent tenants have been known lose their homes at short notice and through no fault of their own, due to their landlords dishonesty. To quote the article:
"When the Council of Mortgage Lenders (CML) started compiling buy-to-let data in the second half of 2005, only 200 investment properties were in mortgage arrears of three months or more. By the first half of this year, this had soared to 5,400. Repossessions of investment homes also climbed, from 400 to 2,800, during the same period."Rules are now being put in place to protect tenants from this sort of thing, but even if they do not actually get evicted, the threat of eviction can cause massive worry and upset.
At the CLT Housing Conference last Wednesday which I attended, some interesting points were made by David Smith (of Pain Smith Solicitors) in his talk.
Consultation for additional licensing
Local Authorities can apply for additional licensing powers but the regulations include requirements that proper consultation be carried out first with relevant parties, which should include, for example, local letting agents. If this is not being done, it is possible that any prosecution for failure to have a license (i.e. under the additional licensing powers) could be challengeable by way of judicial review as being an improper use of LA discretion,
HHSRS inspections
The Housing Health and Rating System is a system of inspecting properties introduced by the Housing Act 2004, where properties are assessed against 29 ‘hazards’. Properties which fail the inspections and show ‘category 1 hazards’ are then served with enforcement notices. However Local Authorities have, in most cases, a duty to serve notice in advance of the inspection, on landlords or agents. If this is not done, then landlords can apply to the Residential Property Tribunal for the notices to be quashed, which in most cases will be granted.
Hazard score calculations
When doing an inspection under the HHSRS, Environmental Health Officers (EHOs) are supposed to do the calculations before embarking on enforcement and prosecution. Landlords being prosecuted, and their advisors, should therefore ensure that they ask the LA to provide its complete calculation of the hazard scores at the earliest opportunity along with some evidence as to when the calculation was made. If these are not forthcoming landlords may be able to successfully defend the proceedings brought.
Appeals to the Residential Property Tribunal (RPT)
Time limits for this are tight and rigidly enforced by the RPT, so landlords should not delay if they consider they have a valid case. Often time is wasted by referring the matter to MPs, local Councillors and the media. Although these can all be helpful in many matters, correspondence with them will not be accepted by the RPT as a valid reason to excuse late submissions. Note also that it is the date the paperwork arrives at the RPT which is the date calculation point, not when it is posted, so if there is any likelihood of a postal delay, you might want to consider delivering it personally or paying for a courier (note that the RPT are not on the DX - the private delivery system used by many solicitors and other professional organisations).
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These are just a few of the points made by David in his talk, but enough to see that this is a complex area of law. If you have a problem relating to LHA or HHSRS, a good solicitor who knows his way around the legislation and has experience in the practice and procedure is important. Davids firm Pain Smith are well worth considering, as they are one of the few who have real expertise and experience in this area of work.
The National Landlords Association (NLA) conference is to be held this year at Birmingham on 20/21 November. I will not be there (having already travelled once to Birmingham, from Norwich, for the Landlord & Buy to Let Show I felt that was enough). However it looks to be a good event.
Looking at the program, the main theme is the future, with talks and panel sessions looking at proposed legislation changes and future trends. The speakers include Ian Austin MP, Caroline Davy of Shelter and Ian Potter of ARLA, along with Simon Gordon and David Salusbury of the NLA. It should be an interesting event. NLA are a good organisation and do a lot for their members, for example the recent undertaking obtained from the Conservative Party on payment of local housing allowance.
Mind you, the NLA is not the only landlords association around, and those in the Eastern Counties looking for an organisation to join may also want to consider the Eastern Landlords Association, plus there are others, either nationally or in other specific locations. However, the NLA is now the largest, particularly after its recent merger with the SPLA.
If you attend the NLA Conference, I would be interested in your feedback, so please do leave a comment below.
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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I wrote several posts on the Office of Fair Trading v. Foxtons case in July. As I find I am having to refer to these quite a lot in advice to clients, I have decided it would be helpful to have one page with links to them all.
OFT Victory in Foxtons unfair contract terms case.
This is my initial report on the case, and explains the judgment.
The OFT v. Foxton case - commission on renewals
This item looks specifically at what the judgment says on the question of commision on renewals, with reference to the status of these clauses now, and quotes extensively from the wording of the Judgement.
Letting agents - instead of renewal fees
This post discusses what some dishonest agents are doing to replace the renewal commission they are losing, and discusses also the 'fiduciary duties' of agents (which seem to have been forgotten by many agents).
Advice for landlords seeking to recover commisison post OFT v. Foxtons
This post gives some guidance to landlords on what they can do now (ie as at July 2009 to the date of this post) if they think they may have a claim against their agents as a result of the Foxtons case.
If you want me to advise on your specific circumstances, please see here for details of my advice services. Note however that I only do limited case work nowadays so I am not able to issue proceedings or act on your behalf in any court claim you may wish to bring against your agents.
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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When speaking to Simon Gordon of the National Landlords Association (NLA) recently at the Landlord & Buy to Let Awards dinner, he was telling me about their lobbying work, and how they attend all of the party conferences. Well it seems as if all this has paid off as the conservative party have now announced that they will reinstate direct rent payments to landlords where housing benefit tenants choose, if they become the next Government.
Of course that is a fairly big if, although some people consider it is a 'done thing'. The NLA are now calling on the government to bring forward their planned review of the Local Housing Allowance (LHA).
The fact that LHA cannot normally be paid direct to private landlords (although it is paid direct to social landlords and mortgagees) has long been a bone of contention, and, the NLA claim, is a major factor in landlords deciding not to let to tenants on benefit.
NB Until the rules are changed, landlords could always consider suggesting to tenants that they use a Credit Union account for their benefit.
As some of you will know, today I was speaking at the CLT 12th Annual Residential Landlord & Tenant Update. The great thing about speaking at one of these events is that there are eight other brilliant speakers to listen to (and I get CPD).
The day started with an interesting overview of recent developments from Rafael Runco, the Deputy Housing Ombudsman,. There was then an excellent presentation on HMOs and the HHSRS from David Smith of Pain Smith Solicitors (and landlords looking for help in these areas could do a lot worse than instruct his firm, one of the few who have real expertise in this area). I also enjoyed the talk from Tracey Bloom on possession orders and the problems with suspended orders and tolerated trespassers.
In the afternoon we had a great talk from Professor Martin Partington, who some of you may remember was responsible for overseeing part of the Law Commissions housing law reform program. This was followed by a fascinating talk from Sue Highmore, formerly of Linklaters and now a freelance writer and trainer, on the new Equality Bill which is currently going through Parliament. The day finished with talks from Professor James Driscoll, and Siobhan McGrath, Senior President of the Residential Property Tribunal (which I was not able to stay for).
The main 'new' thing I learned on the day is that the government is likely to increase the rent limit for assured shorthold tenancies from £25,000 to £100.000, probably with effect from April 2010. Which will of course bring many more properties into the ambit of the tenancy deposit regulations. But I will write more about this if it is confirmed.
But a good day all round and I now have lots of notes and new information which can form the subject matter of new blog posts (unless I can persuade the speakers to write the posts themselves as a guest blogger!).
