Pilakoutas v. Schofield, Sheffield County Court, 22 May 2009

 Here Professor Pitakoutas was a landlord by purchase of a house in multiple occupation.  The tenant, Ms Schofield, had originally  a tenancy of flat 5, which she had rented in 1993.  The landlord had, very properly served a section 20 notice on her, which was required at that time.  However some time before February 1997 (when the requirement for s20 notices ceased) Ms Schofield moved to flat 8, because it was a nicer flat.  No section 20 notice was served on her before she did this. 

Professor Pitakoutas assumed that she was an assured shorthold tenant, served a s21 notice, and issued proceedings for eviction.  His case was that after she moved flats she had entered into a new tenancy of ‘the same or substantially the same premises’.  And that her tenancy therefore remained an AST.

The Judge however disagreed.  He found that flat 8 was a distinct and separate dwelling.  As no s20 notice had been served it could not be an AST and therefore section 21 could not be used.  The claim for possession was dismissed.

One of my cases – involving a room change in a shared house

This fits in with a case I ran a few years ago.  Like Professor Pitakoutas, my clients were landlords of a shared house where tenants rented individual rooms.  One of the tenants had moved from a small room to a large room without my clients consent.  They reluctantly agreed to sign a monthly periodic tenancy and then (as he was a bit of a troublemaker) immediately served a section 21 notice on him.  I was then instructed to issue proceedings.

Happily this all took place after 1997 so we did not have the problem of the section 20 notice.  However due to the efficiency of yours truly in getting the case to court quickly, we came unexpectedly across the problem of  the rule against making an order for possession under s21 within the first six months of the tenancy (s21 (5)).

Because the tenant was living in the same house, somehow this point had passed us by.  However it did not escape the eagle eye of the Judge who set the case down for hearing.

Fortunately however the six month period  expired just within the six week period a Judge is allowed to suspend an order for possession, so we were able to evict the tenant.  But it was a good thing we did not have an earlier hearing date. 

So if you have a tenant do the same thing to you – remember that the effect of the tenant changing rooms is that it is a completely new tenancy.  So the Judge cannot order possession until after the tenant has been in possesison of the new flat/room for six months.  And if it is an old tenancy, you will have problems if no section 20 notice was served on the tenant before he moved into his new room. 

Have you had any cases involving tenants moving to another room in a shared house.  What problems did you encounter?  Was an order for possession made?

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As reported on this blog previously, landlords and landlords organisations were extremely unhappy at the changes which were brought in to the planning laws on 6 April this year by the last government.

Suspected to have been introduced largely because of problems in one minister’s constituency with ’studentification’, Labour’s new rules provided a blanket obligation on all landlords of new HMOs to obtain planning permission.

Labour’s changes were brought about by introducing a new C4 planning class which covered all HMOs of up to six people, bringing the definition of HMO for the purposes of planning in line with those used in the Housing Act 2004. However this was strongly criticised as being unnecessarily bureaucratic. Although some areas do have major problems with ’studentification’, these areas are comparatively few.

The net result, many feared, would be to reduce cheap accommodation for sharers in areas which needed it, as landlords would be deterred by the extra administration and expense. It would also place a huge burden on local authorities having to deal with the extra planning.

The solution proposed by the new government is to leave the new planning class, but allow landlords to rent properties as HMOs in most areas without having to apply for planning permission. In areas where there is a need to control HMO development, local authorities will be able require planning applications for changes of use.

The announcement on the CLG website states

This will enable high concentrations of HMOs to be controlled where local authorities decide there is a problem, but will prevent landlords across the country being driven from the rental market by high costs and red tape.

It is estimated that as many as 8,500 planning applications could be submitted each year if every landlord looking to turn their property into a HMO is first required to seek permission – instead, councils will be able to focus their efforts in particular neighbourhoods where HMOs present a problem, while landlords of HMOs in other areas will not be tied up in red tape.

The proposed changes will not be introduced until 1 October. It is hoped that in the meantime Local Authorities will go easy with landlords and not pursue them for planning applications in areas where this is not going to be required post 1 October.

This is day 10 of my 31 days of tips on tenancy agreements series. To see the rest of the series click here

Describing the property correctly in the tenancy agreement

This sounds obvious but you need to be careful. If you get a court order for possession, you do not want the bailiffs to evict the people living next door!  Put the full address, including the post code, and be careful to get the spelling right.

Then you need to think about what the tenancy includes.  Many properties, particularly flats, will have a designated parking area.  This can usefully be included in the description of the property.  Also if there is a garage included.

Or is something is being excluded from the tenancy?  For example are you are retaining a room our outhouse for your own use?  Sometimes landlords keep a room for storage, or rent out the garage separately, to someone else.  If so, you should mention this on the tenancy, otherwise you could be in difficulties.  Note that if you retain a room for your own use, you should also provide in the terms and conditions for arrangements for access.

Sometimes a property will be subject to a right of way.  For example in some parts of the country, back gardens are bisected by a footpath to other properties.  Again, it is best to mention this in the tenancy agreement, so there can be no argument.

In the Landlord Law tenancy agreements we have a special section for this sort of thing.

Shared houses and HMO’s in the tenancy agreement

If you are letting out rooms in a shared house, make sure that the rooms are identifiable.  Usually people either give them a number, or describe their location in the house (‘attic  bedroom’, ‘ground floor rear bedroom’, etc).  Once you have done this, it is best not to change them.  For example if, due to a room name change, it looks to the benefit office as if you are claiming twice for the same room, they will stop making payments.

You might also want to specify what rooms tenants can use.  Or areas they do not have access to.  If these things are written in the tenancy agreement, it saves arguments later.

It is probably also worth mentioning that if in a shared house, a tenant moves from on room to another, that is a new tenancy and needs a new tenancy agreement.

Do you have any comments on this section?  If you rent out rooms in a shared house, do you name them or number them? What other matters could be included with the description of a property?

Tomorrow I will discussing matters relating to rent.

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This is day 5 of my 31 days of tips on tenancy agreements series. To see the rest of the series click here

Are you renting out a room in a shared house or the whole property?

There are two ways you can rent out a property where more than one person or household will be living there:

• You can get all the occupiers to sign the same tenancy agreement as ‘joint tenants’, or
• You can let out the rooms on individual contracts with shared used of the common parts of the property.

Which tenancy type should you use?

Tenancy agreements with joint tenants

This is the most common arrangement. The tenants will all be ‘joint tenants’ and will have what is called ‘joint and several liability’. This means that they are all liable both ‘jointly’ or together, and individually.

So if four tenants, Matthew, Mark, Luke and John all share a flat as joint tenants, if they fall into arrears of rent, then the landlord can sue them all. Even though they may each have agreed to pay a quarter of the rent each, and it is just Luke who has not paid.

So far as the landlord is concerned, it does not matter who is responsible for the arrears. Legally they are *all* responsible, and he can claim the money from each or all of them. Collectively the tenants are ‘the tenant’, and are all in it together. This is why a landlord cannot evict just one of joint tenants (no matter how much his co-tenants would like this!) – he can only evict them all or none of them.

There are a number of advantages for landlords with the standard joint tenant agreement. The joint and several liability is a plus of course. Also, as the whole house is let, the landlord can require the tenants to have the utilities put into their own name, which will mean that he will not be responsible if they fail to pay.

Where the joint and several agreement falls down is when one of the joint tenants wants to leave and a new person is found to take his place. Here either a new tenancy agreement needs to be signed, or the outgoing tenant remains liable for the rent and any damage to the property, even though he is not living there any more.

The joint and several tenancy agreement is best for couples and families (where both partners will sign the agreement), and groups of people sharing, who are friends and who expect to be living at the property for the same length of time. For example a group of students renting a house for an academic year.

They are less satisfactory where people are moving out and moving in at different times. Here the room in a shared house is best.

Tenancy agreements for rooms in a shared house

Here each tenant will have his own tenancy agreement, which will be for exclusive use of his own room (or rooms) and shared use of the rest of the property.

It means that there are no problems if one tenant has to move out before the others. The other tenants are unaffected (other than by the prospect of having a new person living in the house). However this type of arrangement is less popular than the joint tenant arrangement. There are a number of disadvantages for the landlord, mainly that:

• they do not get the benefit of joint and several liability – when one of the tenants moved out there is no rent for that room until a new tenant is signed up, and

• it is highly unlikely that any of the tenants will want to take over responsibility for the utilities (as they will not have any control over who lives in the house) so the landlord will have to remain named on the accounts.

However there are a few advantages, namely that

• the tenants will not be able to keep the landlord out of the common areas in the same way that they can if they are renting the whole property, and
• that the landlord may get more rent from letting individual rooms than from renting the property out as a whole.

Whichever option you choose however, it is important that you use the right type of tenancy agreement. A standard AST document is not suitable for letting out a room in a shared house, and specific tenancy agreements for these are less common. Although they are all available on the Landlord Law site!

Tenancy agreements and HMOs

Finally, note that whether or not a property is an HMO, does not depend on the type of tenancy agreement used.  A property is an HMO if it falls within the definition as set out in the Housing Act 2004.  So do not worry about using the ‘room in a shared house’ type agreement because you think that by using this you will be creating an HMO.  It shouldn’t make any difference.

Do you have any comments on this section? Are there any advantages or disadvantages of renting out individual rooms which I have missed? Have you experienced any problems through using the wrong type of agreement by mistake?

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Tomorrow we will look at issues relating to the parties to the agreement

As announced earlier this year (and reported by me here) the government has now changed the planning rules to require all HMO properties to get planning permission.  These new rules came into force yesterday (6 April 2010).  This brings the definition of HMO for the purposes of planning into line with those used in the Housing Act 2004.

The new rules do not, we are told, apply to existing HMO properties.  However, in future all properties with three or more unrelated people sharing, will require planning consent.

I am not a planning lawyer, so am not really qualified to comment on the details of the legislation.  This has been reported elsewhere, for example on the PainSmith solicitors blog.   There is also a guide on the Guild of Residential Landlords blog and you can find out more about the planning process generally from a helpful web-site planning-applications.co.uk.

However most of the reports I have read say that this will have a massive impact, that many landlords will withdraw altogether from providing HMO style accommodation (which will now include common situations such as three nurses sharing a flat), and that people who traditionally share accommodation with others, such as students, recent immigrants and young professionals, will find it increasingly hard to find somewhere to live.

Councils may also find it difficult to deal with the extra work involved.  Indeed it is reported that even without the impact of this,  legislation is being enforced inconsistently across the country by Local Authorities.  Steve Sims who runs a web-site called Property Investment Expert has written about this, and also claims to have found evidence from a CLG document about a secret database on landlords:

Also revealed is information about a confidential database maintained by an unnamed London council that rates shared housing owners as “good, bad or average” landlords – and landlords have no right of redress or access to what the database says about them.

No doubt a freedom of information request will bring forth more information.

It will be interesting to see however, whether these regulations, rushed through in haste just before an election, really will help the ’studentification’ problems (which are apparently quite severe in some locations), or whether it will just result in less affordable HMO accommodation being  available for people on limited means.