Welcome to the Landlord Law Conference 2013 here in Bury St Edmunds! We are running a live-blog of the the proceedings throughout the day courtesy of Samir Jeraj, a Landlord Law Blog contributor. For those on twitter, the hashtag for the day is #lllconf.
9:50am Graeme Gee kicks off the day with the opening line, “I do believe I’m live!”
There’s a change to the program – 2pm Michael Morgan from TDS is stepping in for Tom Derrett to talk deposits.
10am Up comes Tessa Shepperson from Landlord Law ahead of schedule. Straw poll shows about half and half of delegates are landlords and another half are lettings agents.
Tessa’s looking at tenancy agreements in her presentation. These are not mandatory yet, but this was recommended by the Law Commission a few years ago, but are essential according to Tessa. They’re needed for tenants receiving housing benefit, provide protection for both sides, and are the professional thing to do.
What type of tenancy do you have?
Assured Shorthold Tenancy – created by 1988 Housing Act and default tenancy type since February 1997.
Assured Tenancy - created by 1988 Housing Act and mostly in social housing. Section 21 eviction procedures can’t be used with these types of tenancies.
Protected Tenancy – created by the 1977 Rent Act, which had very strong renters rights. Only under rent arrears or suitable alternative accommodation can tenants be evicted. Quite a few around still, but diminishing over time.
Unregulated/Common Law tenancy – not governed by the 1977 Act or the 1988 Act. Mostly used in commercial lets. Common law tenancies also include places where rent is less then £250 (£1000 in London) or more than £100 000 a year. Another common law tenancy is some types of student lets rented out by the educational establishment.
Brief explanation of Common Law – law that has developed over hundreds of years built around custom and practice used by judges and put into case law. For example, there’s a common law rule that, unless otherwise stated, rent is due in arrears – you would have to put in a tenancy agreement that it would be due in advance.
Tessa moves onto shared properties. Three ways to deal with this:
1) Rent to one person and get them to take in lodgers (often used in student housing where one student is the child of the landlord). But having three or more lodgers could turn it into an HMO (House in Multiple Occupation).
2) Joint several tenancy agreement. Shared responsibility among tenants Again, three or more tenants could create an HMO.
3) Rooms in a shared house. Separate rooms and tenancy agreements with shared facilities. Used in houses with young professionals where people are often coming and going. Same rule on three tenants creating an HMO. More difficult for tenants to exclude the landlord from access to the common/shared areas.
I’ve just taken a rough count of 100 attendees. I’ll try and find an official estimate from the organisers later.
Need to be clear who is paying which bills (landlord or tenants) and to have a schedule.
Pets – useful to have this sorted out in tenancy agreements – there’s useful guidance on the Landlord Law website and other orgs.
Tenancy agreements need to be in plain English and in clear print. All tenancy agreements are regulated by the Unfair Terms in Consumer Contracts Regulations 1999. Any individual clause may be challenged for being unfair. These are enforced by the Office of Fair Trading (see the Foxton’s Case for an example).
Now onto questions.
Tenant’s notice to quit – strictly should end at the period of a tenancy.
Access to common areas, what about checking fire safety = as long as you give them warning it should be fine. Bit of a fuzzy area of law.
10:30am Now we’re onto Simon Parrot Agency Law
Why have an agent?
- you can’t do everything yourself
- time pressure
- lack of knowledge or experience in management
Agents can deal with these issues on the landlord’s behalf. A lot of commerce/business generally depend on employing agents.
In agency law a principal (landlord) employs an agent (letting agent) to contact to a third party (tenant) on their behalf. So the agent is basically the principal.
The talk is being interspersed with examples of strange laws – e.g. it’s illegal to get a fish drunk in Ohio.
1) An agency is created by written authority or contract
2) Can be created on the basis of an oral agreement (though not ideal!).
3) An Agency can also be from implied authority in cases of custom, necessity, or emergency. For example where the landlord hasn’t specified how a deposit should be protected. Or another example is where there are emergency repairs needed.
Apparently the next section is complicated (!)
4) Ostensible Authority – a principal can be bound by the actions of an agent, even if it is against the agent’s authority. For example where a ‘no pets’ clause is in the agency contract, but not in the tenancy agreement.
In Alabama it is illegal to be blindfolded whilst driving
Agent’s fiduciary duty – a relationship of trust and confidence which carries the highest duty of care. Breach of this is deemed a ‘fundamental breach of contract’ – meaning that a contract with an agent could be terminated immediately. For example
- the agent cannot delegate their office
- not to accept bribes
- not to make secret profit – more common than you would think e.g. taking a cut on repairs costs without it being specifically allowed in the agency contract.
- pay over monies held on time
Florida – you’re not meant to have ‘relations’ with a porcupine. Right…… I can only imagine the debate in the state legislature.
Terminating an Agency Agreement
1) Contractual termination (e.g. if it’s for a fixed period of time or if a notice period can be given). There could be a termination fee such as a months rent or a tenant find fee.
2) Other meth0ds: breach of contract (works both ways – i.e. a lettings agent could terminate a contract if the landlord breaches it), reasonable notice under an undefined (i.e. ongoing) contract.
Vermont – women must obtain permission from their husbands to wear false teeth.
Practical considerations in choosing an agent:
- ARLA or other professional membership
- TDS membership
- Quality of stock
- Number and type of properties
- Do the property managers, and accounts staff work in the same office as the agency staff?
- Check the Management Agreement (i.e. avoid Foxton’s situation!)
- Fees structure (cheap isn’t necessarily best, and neither is expensive!)
- trade contracts and repair authorities
- rent payment periods
- mystery shop
What about agents double-dipping by charging tenants and landlords? The ASA have got it right, there’s no need for secrecy on charges. Do you want to go with an agent who’s ripping off tenants? Reference should be made in the tenancy agreement.
Oral agreements – what about recording a conversation as evidence? Simon is unsure, but thinks so depending on how the information has been gathered.
Fiduciary duty – if the agency breaches the agency agreement does it affect the tenant if they’ve acted in good faith? No, it’s a tripartite agreement.
Where an agency agreement has a very long termination period is it unfair? The landlord could probably still give a reasonable notice and possibly compensation in County Court for lost commission.
It’s coffee time! Back in 30mins for HMO Law
11:45am And we’re back! Now onto David Smith for HMO law.
What is an HMO? Well, an HMO is not necessarily an licensable HMO.
Under 2004 Housing Act, a household is family e.g. Couple plus child, plus cousin is a household. But a Couple plus a child, plus a family friend is an HMO. David tactfully avoids discussion of polyamorous arrangements – maybe it’ll be asked as a question.
Other HMO aspects:
- paying rent
- share basic amenities
- must be 3+ tenants
- solely residential use (though this isn’t clear)
Licensing of HMOS:
Mandatory, additional, and selective licensing = all carried out by Local Authorities.
Mandatory Licensing = 5+ tenants plus 3+ storeys (original rationale was fire safety).
Additional Licensing = defined by Local Authorities (who must consult, but not necessarily take on board comments). Must be used to address issues with HMOs. Example of such a scheme is Oxford, which requires annual licensing.
Selective Licensing = nothing to do with HMOs. Allows Local Authorities to licence all rental property in an area after consultation. Must be an area of anti-social behaviour where it is linked to poor management of housing by landlords. Used in Newham and Salford.
A lot of issues arise from number of storeys. Storeys include adapted floors, entrances and businesses (even if separate).
Applying for a licence:
- needs to be accurate or could lead to licence being withdrawn/not granted
- keep a copy and records of forms, postage, and payment.
- you’re protected if you’ve got your application in
Challenging licensing can happen
- through a judicial review:
- will delay rather than stop a licensing scheme
- should be part of a coordinated campaign
- need a consortium
- act quickly
E.g. Hyndburn Council lost a case where their consultation had been poor. Thanet Council won a case where they were challenged on the decision made by councillors. Oxford Council case delayed, reviewed, and then phased in their scheme over a year.
Management Regulations apply to All HMOs and not just licensable HMOs. Criminal offence to breach these. Main obligations:
- check fixed electrical wiring every 5 years
- Fire safety
- Clean at start of tenancy
- Notice of managers contact details needed – very difficult to defend if it’s not there!
- generally safe (falling, balconies, high places – climbing out of a window onto a flat roof is not safe!)
- Kept tidy (esp. Gardens and outside areas)
- Rubbish managed
Top Tips – passive management won’t work in an HMO
- Keep good records
- Keep exit routes clear
- Maintain smoke detectors
- look out for rubbish
- remember to put up the contact details notice!
Offences and prosecutions:
David says all of his clients are basically guilty of something, but that he’s always had the number of charges reduced.
- not being licenced
- breach of licence
- refusal to allow access for inspection – the local authority is 100% allowed to inspect your property
- failure to respond to notices seeking information – not defendable, so don’t do it!
- breach of management regulations – recent case of 118 separate charges relating to one property (though eventually convicted of 8).
- Fines are £5000 max. (£2000 – £3000 average) for these offences, but with a max. of £20000 for overcrowding per offence
- Keep records
- be polite but firm and guarded with local authority officers
- get statements in writing
- avoid interpreting hopefully into statements
- make your application for a licence anyway (makes a difference even if you’re being prosecuted)
- take expert advice early on as many local authority officers are not clued up on the law
How do you determine if a relationship is casual or not? (This could be where things get awkward) Apparently you would have to do this with difficulty – get written proof from a tenant.
Now onto Residential Property Tribunal Service with John Murray
The Residential Property Tribunal Service is part of HM Courts Service. Five regional offices which hear cases from time to time. All its powers derive from statute (unlike courts). Three people sit on the panel: a lawyer chairman, valuer, and a lay member.
Is responsible for:
- Residential Property Tribunal
- Leaseholder Valuation tribunals
- Rent Assessment Committees
Rent Assessment Committees – determine fair rents under the 1977 Rent Act. Normally where a tenant and landlord and/or the rent officer disagree. They also look at 1988 Act rents with Assured Tenancies, and Assured Shorthold Tenancies within the first six months (never had a case of this so far in the North).
As an aside, I wrote an article about Rent Assessment Committees for The Guardian last year if you want to know more about them.
Leaseholder Valuation Tribunal – often around service charge disputes and consultation on works. Relatively simple process that doesn’t carry a charge. Deals with Enfranchisement – where a single or group of people wish to take on the freehold and set up a management company. Also handles leasehold extension (to agree a price for extending a lease), variation of leases, the Right to Manage, and Breach of Covenant.
Resident Property Tribunal – does everything else! Cases heard under Housing Act 2004, Park Homes (under Mobile Homes Act 1983), and Rent Repayment Orders. Includes: HMO licensing, improvement notices, EDMOs, overcrowding notices, and Right to Buy.
All you need to do to use the Service is to make an application yourself, or a County Court Judge may refer the case. A procedural chair will set directions as to what should happen, when, and what information is needed. The day of the hearing may require an inspection of the property. The hearing is informal, which takes place locally, and is a quasi-judicial process. The tribunal reaches a decision, not normally on the day, but within 14 days of the hearing.
- Diarise and be organised
- avoid making it personal
- read the law and look at similar cases and their decisions
- don’t overcomplicate
- use Scott Schedules (i.e. a spreadsheet)
- Make logical and chronological statements – make it easy to read and understand
- Evidence – documents, invoices, receipts, and comparables.
In a case where the leasehold agreement doesn’t work and the block is falling apart could they go to the RPTS? It sounds like it is beyond what the tribunal could do. Would require complete overhaul.
Now onto lunch! Back at 2pm for Deposits
And we’re back with Michael Morgan on Deposits.
In an example of what must be called poor communications strategy, a landlord once sent Michael a letter started ‘Dear Fascist b******s’. The point is that TDS are a neutral arbiter in deposit disputes and aren’t on anyone’s ‘side’.
The tenant’s deposit belongs to the tenant (it is already their money!), unless deduction can be justified based on evidence on the balance of probabilities.
Alternative dispute resolution means a process outside of the traditional court route. Paper-based process on which decisions are made – no visits and no witnesses.
Less than 2% of deposits come to TDS as disputes.
Communication is vital to preventing disputes.
- Remind tenants of their obligations under the tenancy agreement before it ends
- make sure the tenant can attend the ‘check out’ if at all possible and note any points of disagreement
- take into account betterment and wear and tear – and be realistic
TDS will accept words, pictures, and videos. They will not accept ‘physical evidence’. Will also consider anything the tenant admits to.
Other types of evidence:
- signed tenancy agreement – needs to state what the deposit can be used for and if it can be used to award costs
- Inventories, check-in, and check-out reports – can be produced by a landlord or a tenant. Having similar formats for check-in and check-out reports helps! Date changes to inventory and who made them.
Example of a bad check-out report which wasn’t dated or signed. It also seems to resemble one of those traumatic bits of homework handed back to you covered in red ink.
Photographs/video are good for a general overview of condition and unusual items, as well as minor damage. Scale is important to convey. Cannot capture everything, can be altered (especially dates) – get tenants to sign the check in and check out report and photos.
- Invoices, receipts or estimates
One invoice is ok, but two or three quotes helps establish the market rate. A breakdown of work/costs against the check out report would be very clear.
- Witness statements can be evidence if put in writing. Can’t take hearsay evidence.
- protect the deposit
- negotiate deductions with the tenant
- understand the process for adjudication
- try to view your evidence from the POV of an independent third party
- is what you’re asking for reasonable?
Looks at the TDS website for case studies or phone them up for advice.
Someone has asked about definitions of deposit. Defining it may exclude its use. It’s used to fulfill any breach of the tenancy agreement.
What happens if the landlord refuses to hand over the deposit after adjudication? TDS is insurance-backed, so the tenant will get their money back.
Does it cover rent arrears? Yes. They would need to show a rent statement.
Now fellow LLB contributor Ben Reeves-Lewis on Harassment.
Much more complicated than bad landlords and good tenants. Rogue landlord is too simplistic a phrase – councils should work with landlords to make sure issues do not arise in the first place. A lot of it is amateur or new landlords not knowing how to comply with the law.
That said last year, a landlord removed all the floorboards when their tenant didn’t pay rent. One tenant had been placed under a curse by their landlord using chicken blood and salt.
Normal process is that a tenant complains to the council and the officer then goes to speak to the landlord, who are normally very annoyed.
Harassment should be thought of in terms of the effects of an action and not its intention.
Most councils have a tenancy relations service who deal with harassment and illegal evictions. They also have power to take landlords to court and to take out injunctions. Best way is to mediate and talk it out first.
Harassment is a civil and criminal offence. Councils tend to take cases under criminal law, which could take up from 18 months to two years. Civil offences are much quicker and more punitive (criminal fines are quite low and landlords are rarely jailed). Need to get the judicial system on board – often costs of a council taking a landlord to court are greater than the fine.
The Police often wrongly say that harassment is a civil matter. They tend to lack training and awareness. Can take action under S25 of Police And Criminal Evidence, but don’t.
Protection from Eviction Act 1977 – covers any person (including agents) of the landlord (or the landlord themselves) harassing tenants. If actions are likely to interfere with peace and comfort of the tenant then it is illegal. Section 27 of 1988 Housing Act defines harassment also talks about effect of actions on a tenant. Section 40 of the Administration of Justices Act 1970 sets out where reasonable demands for payment of rent move over into harassment – which is where the impact of the actions is calculated to subject the tenant ‘to alarm, distress, or humiliation’.
Civil Law – Breach of Covenant for Quiet Enjoyment
Apparently there’s a book called Quiet Enjoyment – I’ll add that to my reading list.
Quite common – e.g. where works are being carried out in a way which is disruptive to quiet enjoyment. There’s also the Tort of Interference with Goods – e.g. where a tenant’s property is seized in lieu of rent - This has been illegal since 1979. Don’t do it.
- uncooperative tenants
- toothless injunctions – court orders are rarely enforced by courts
- difficulty tracing landlords
- finding solicitors to take on cases
- time and resources for councils
Examples of recent civil damages awards:
- Harassment (£1500-2000)
- Exemplary damages (£2000)
- Aggravated damages (£4000)
Legal aid cuts, law centres, staff cuts in local authorities, and fragmentation of services mean that enforcement and compliance work is far greater than resources.
Remember to think of the effect of your actions!
Would putting a to let board up when a tenant is in arrears and you’re seeking possession be considered harassment? I wouldn’t think so.
Would offering a tenant money to leave violate the protection from eviction act? If it’s likely to interfere with peace and comfort then yes.
How should you pursue rent arrears? Do as much in writing as possible and keep records. Have a good relationship with local Council staff.
Is contacting the guarantor harassment? Not if it’s in legitimate pursuit of money owed. If a bailiff if putting up a sign saying we’re coming round for goods then that would be harassment.
Coffee break – time to get caffeinated!
Final session – Tessa Shepperson on Eviction, then we’re out of here!
Four stages of an eviction:
- Court Claim
Analysis – what type of occupation is it? Is it a license (e.g. a lodger) or a tenancy? Lodgers can be evicted with reasonable notice.
What type of tenancy is it? AST/AT or protected? Has the fixed term ended? When does it end? Do you have the right paperwork (necessary for accelerated procedure). Have you protected the deposit (will affect Section 21 claims and money claims).
What grounds are you using for eviction?
1977 Rent Act set out mandatory (i.e. judge must impose) or discretionary (i.e. granted if certain conditions are met) grounds. Only ever use mandatory grounds.
Don’t use discretionary grounds:
- can result in long and contested legal proceedings
- legal aid is often available
- if tenant is successful then the landlord may be liable for costs
- judge has discretion over date of possession which can often mean long drawn out proceedings
Mandatory grounds are Section 21 and Section 8 (rent arrears). Section 21 ground is normally best.
Suitable alternative accommodation (a discretionary ground) can be used for protected tenancies, but is not easy. If you must use a discretionary ground then this is the best option.
Other questions: Is the tenant receiving housing benefit? If rent arrears are more than 8 weeks then a landlord can apply to the local authority for direct payment, which will stop arrears getting bigger.
Try talking to tenants from the when they first go into arrears before they enter into a spiral. Things you can do to help is change the date rent is due, allow them to take a lodger, or refer them to a good debt counsellor (e.g. CAB).
First stage of eviction is serving a possession notice.
Section 8 notice (mostly rent arrears grounds), which is in a prescribed form – need to quote in full the grounds and give 2 months notice (2 weeks for bad tenant grounds). Need a schedule of rent arrears for court. Section 8 notices last a year. Tenant must be in 2 months (8 weeks) of arrears when the notice is served and the court hearing date.
Section 21 notices – no prescribed form. Lasts as long as the tenancy does. Incorrectly drafted notices are one of the biggest reasons for unsuccessful claims. Doesn’t actually end the tenancy (so landlords can still accept rent), but means the judge has to make the order for possession. Two types of Section 21 notice depending on if it is being served before or after the fixed term – the former needs to be at least two months notice (and not end before the fixed term). The latter is between two or three months notice depending on when in the month it’s served. Always use a saving clause - provides a safety net.
Must be able to prove you have served notice.
Easy to start, but very difficult to stop – a claim for arrears can easily be met by a counter-claim by a tenant, leading to a long court battle. Courts are short of cash – if your paperwork is perfect then it’ll go through quickly, if it isn’t then it can be delayed for months. If you withdraw your claim then the counter-claim might have costs granted.
Takes 6-8 weeks for a possession order. Better procedure because there is less to go wrong. You still need perfect paperwork. Cannot be used for rent arrears.
Fixed date/standard procedure
Tips for court hearings:
- arrive on time
- dress smartly and be polite
- find the usher on arrival and ask them any questions
- write everything down (particuarly the judge’s decision) – important if you want to contest the decision
- take legal advice quickly if you want to appeal
- check over the possession order – may not be transcribed properly. Check dates and grounds.
If tenants refuse to leave then go back to court for another order and get bailiffs. If animals are left at the property then it’s your responsibility!
We’re onto General Question Time
Section 21 – what about where it has been served in month 2 but brought in month 18? The judge won’t like it, but they have to do it. You need to protect the deposit first before you serve it. But you can serve it on day 2 of the tenancy.
How do you claim rent arrears and are using a standard procedure under section 21? The standard procedure form M119 has a box for rent arrears.
(we’ve now hit 4000 words on the live blog!).
Tenancy deposits – do TDS have a fixed set of cleaning rates? No, it’s up to you to prove the cost, whatever they are. Do you take into account the value of property? Yes, we do take that into account.
What happens if a tenant with an AST dies but they lived with a partner not on the agreement? The tenancy will be taken on by the executors of the will. If the fixed term has expired then it passes under succession rules. The partner can inheret the tenancy, but a section 21 notice could be served after.
Graeme Gee steps in to wind up the day (and collect in the badges).