Here are a few things they may be keeping quiet about

1. They do not have any relevant qualifications.

The letting agent industry is unregulated. There is nothing to stop any Tom, Dick or Harry setting up shop with little experience. Many do.

This is why you should ALWAYS look for an agent which is regulated by ARLA, RICS, NALS or at the very least the Property Ombudsman.

2. They are spending your money

Letting agents hold thousands and thousands of pounds of other people’s money. As there is no regulation for the industry, they can keep this where they like. Sometimes it is just put in the firms general bank account along with their own money (or more likely, overdraft) and spent on their own expenses.

This is why (again) you need to use an agent regulated by ARLA or RICS or one which has signed up to Safe Agent.

3. They have not referenced your tenant properly

Finding a good tenant is one of the main reasons why people go to an agent. However, I have had cases where I have been instructed to evict a tenant for rent arrears and we (ie the landlord and I) find out that the initial referencing was unsatisfactory. Many landlords have also complained about this to me.

The problem is exacerbated by the fact that many agents refuse to provide details of any of the referencing material to the landlord, claiming that they are not allowed to under the Data Protection Act. I wrote about this here.

4. They are getting kickbacks from repairmen used for your property repairs

Not all agents do this of course, but it is not unknown for agents to have cosy relationships with tradesman, with the hapless landlord being charged over the odds.

5. They are encouraging your tenants to leave at the end of the term so they can charge you for finding a new one

I wrote about this here. Again reputable agents wouldn’t dream of doing this, but apparently it does happen.

All of this is totally against the principles of agency law. Under agency law the agent has a ‘duty of good faith’ to deal with his principal (in this case the landlord) fairly and not put his own interests first.

Good agents will do this as a matter of course. Others however, won’t. Which category does YOUR agent come into?

(NB  Do you really need to use an agent?  >>  Click here to find out)

They start paying rent late

This is a sign that your tenants are struggling. Sometimes it can lead to total overwhelm, at which time they may just stop paying rent altogether, wait to be evicted, and hope that they will be re-housed by the local authority.

Sometimes you may be able to help them and save the situation, if you step in and offer some support. For example by suggesting they take in a lodger perhaps (if they have a spare room).

They start making complaints

There are two possibilities here. One is that they are ‘making up’ excuses not to pay rent. A sort of advance justification.

However bear in mind that they may be right, and the thing they are complaining about may be something you are supposed to deal with. In which case they may have a legal right to withhold rent  and get it done themselves.

They refuse to speak to you

This is really bad news. If the rent stops being paid and your tenant is still being evasive, you need to move as swiftly as possible towards eviction. Otherwise you could lose a lot of money in unpaid rent.

Do you have any bad signs you can share?

Note that landlords with tenants failing to pay rent can find help with my Rent Arrears Action Plan.

Warning sign picture by Bryan Alexander

Things to watch out for with company lets

Firstly, lets to companies are not assured shorthold tenancies (ASTs).
The reason for this is that the act which set up the protective code which governs ASTs, the Housing Act 1988, specifically states that its provisions apply only to ‘individuals’ i.e. not to artificial beings such as companies.

Companies are businesses (so the argument goes) and do not need the protection that the act gives.

What this means is that ‘company lets’ (as they are called) are governed by the underlying ‘common law‘, the legal rules which regulated tenancies before the Rent Act and Housing Acts came along to change them.

The main practical effect of this is that:

• you should not use the standard AST agreements found in shops and on the internet, but a tenancy agreement designed for company lets (we provide one at Landlord Law)
• You don’t use section 8 or 21 possession notices. The correct form of notice is an old style Notice to Quit
• The procedure and paperwork for evicting tenants is different

Then you need to consider why these people want to rent via a company let.
There are a number of reasons. For example:

• It may be tax related.
• It may be so that they can provide accommodation for a number of staff and directors on a short term basis.
• Or it could be to provide accommodation for an employee or director who would not pass normal referencing.

You should therefore be careful with company lets. Although they can be lucrative, bear in mind that you do not really have any control over who the company places in the property once let (technically you can take steps to repossess for breach of contract but practically this is difficult to do during the fixed term, for anything other than rent arrears).

You therefore need to take steps to protect your position, before the property is let.

I would suggest :

• Doing a search against the company at Companies House. If your property is an expensive one, consider buying a more detailed report and (in particular) checking the last few years’ accounts
• Taking a guarantee from at least one director, preferably two
• Checking carefully the references of the guarantors and getting credit checks done
• Asking for details of the person(s) who will be living in the property and checking them also
• Either letting for no longer than six months at a time, or ensuring that (for longer lets, eg a year) the tenancy agreement has a break clause.

You should also take a tenant/damage deposit. The good news here is that as this is not an AST you do not need to protect it in a tenancy deposit scheme, as the tenancy deposit regulations only apply to ASTs.

If you are careful, as with all tenants, you should, hopefully, have a good letting experience.

After having come up with eleven posts on the subject I feel I have come to the end of the line.

However, but if you know of any potential defences I have overlooked, please do leave a comment.

So it remains for this final post to summarise the information and look to the future.

A summary of the defences

We started with the defence that the tenancy is not an AST and also looked at issues relating to the timing of the issue of proceedings, and proof of service of the notice. However the most common problems occur with the drafting notice, in particular regarding the expiry date.

Good news for landlords is that this problem can easily be overcome by using a saving clause with your notice. In the past some Judges were unhappy about these, but recent cases have shown that the Court of Appeal consider them valid.  So there is no reason not to use them.

The main problem I suppose is that many of the section 21 notice available, particularly those which can be downloaded for free, do not contain a saving clause, making people who use these notices more vulnerable to claims being dismissed.

The other very common reason for claims being rejected is that the claim form has been signed by someone other than the landlord or his solicitor. Usually this is the letting agent. I discuss this, and why it is unacceptable, in post #9.

The two final defences I looked at were those which will arise if the landlord is in breach of certain specific legal obligations.  At present these relate to obtaining a HMO license if the property requires it, and protecting the deposit and serving the prescribed information notice, where a deposit has been taken.

Looking to the future

These last two defences point the way. If further regulations are developed for private landlords it is highly likely that they will be enforced, not by making a failure to comply into a criminal offence, but making it an obstacle to recovery of possession under section 21.

After all, as several reports have shown, criminal penalties are frequently not being enforced. This is largely because of

• The amount of time it takes to prepare a criminal prosecution
• The lack of man power at Local Authorities (who bring most housing related prosecutions) available to do this work, and
• The low level penalties handed out by courts, even if a prosecution is successful, making many people consider that they are not worth the effort

The main problems with the ‘civil remedies’ option for dealing with failure to comply with regulations though, are with difficulties in enforcing them.  As seen with the tenancy deposit penalties in recent years – not the section 21 element but the right of the tenant to claim a penalty payment for non compliance.

Because a penalty which prevents a landlord from recovering possession under section 21 is only going to ‘bite’ if the landlord actually wants to recover possession. Most landlords don’t. So, as with the tenancy deposit regulations, when creating penalties for non compliance, a prohibition against using section 21 when in default is not going to be enough.

I have noticed that this government though seems to favour returning to the criminal penalty option, for example with its plans for dealing with squatters and council tenancy subletting.  Although it is not certain that the enforcement bodies (the police and local authorities) are going to be fully funded to allow them to use these new powers.

No doubt though if extra regulations are enacted for the private rented sector, for example relating to property standards, landlord registration and accreditation, rules prohibiting the use of section 21 on default are likely to be a part of the mix.

The Housing Act 2004 introduced a new definition of houses in multiple occupation and, for the first time, introduced compulsory licensing for some HMOs.

What is an HMO?

According to this page here on the direct.gov site:

Your property is an HMO if you let (or plan to let) to at least three tenants who form more than one household and who share (or will share) toilet, bathroom or kitchen facilities. If so, you may need a licence.

Further down the page, it continues :

You must have a licence if you own a large HMO. A large HMO has:

• three or more storeys
• five or more tenants forming more than one household

Some councils require smaller HMOs or all HMOs in certain areas to have a licence as well. You should contact your local council to see if you need one.

It is an offence not to apply for a licence if your property must have one.

So there you are. Despite this seeming simplicity, the subject of what is or is not an HMO, and (if you are able to work this out) whether it does or whether it does not require licensing, can be exceedingly difficult to work out. Unless of course you live in Oxford where ALL HMO properties will require a license.

OK, you may be saying, but whats all this got to do with a series on possession proceedings?

HMOs and section 21

The point is that if your property ought to be licensed by isn’t, you can’t serve a valid section 21 notice.

Housing Act 2004 S75(1):  No section 21 notice may be given in relation to a shorthold tenancy of a part of an unlicensed HMO so long as it remains such an HMO.

The act defines an unlicensed HMO as an HMO which is required to be licensed but isn’t (makes sense). However you are all right if at the time of service:

• You had put in an application for a license which is still pending, or
• You had a temporary exemption notice

HMO licensing and the court claim form

The new form 5B, which is the form you use when applying for possession using the accelerated procedure is pretty specific – you have to say whether or not the property is an HMO, whether or not it needs licensing, and then if it does, give the name of the local authority which issued the license and its date.

If you are a tenant on the receiving end of a 5B summons, and you are pretty sure that your property is a licensable HMO which is unlicensed, it may be worth following this up. You will need to speak to your Local Authority housing officer about it.

If you are right, it will be good news as not only will you be able to defend the possession claim, you may also be able to apply for a rent repayment order.

I personally am not aware of any possession cases where a claim has been successfully defended on this basis though – do you know of any?