Laws and yet more laws
We’ve had a few years now to get our heads around the raft of enforcement laws that government have been ushering in.
The licensing and property standards issues attached to the Housing Act 2004 as well as deposit protection regulations covered by the same Act, the various time-bombs on section 21 notices, created by the Deregulation Act 2015 and the Housing and Planning Act 2016, including the strengthening of Rent Repayment Orders.
Spoilt for choice
Having spent most of my working life dealing with the meagre offerings of the Protection from Eviction Act 1977 I suddenly feel spoilt for choice but like Charlie in the Chocolate Factory, I’m starting to get a bit nauseous.
I have never seen a time in rogue landlord history when enforcement types like me have had so many weapons in our arsenal but whilst all this stuff might seem a gift to enforcement types, unlike Ronseal these new laws don’t always “Do what it says on the tin” and for two main reasons:-
- The first reason I’m not going to labour, simply because I have done before and it seems bleedin’ obvious – staffing levels. The job of policing the private rented sector is down to the local authorities and due to austerity cuts, there is simply not enough officers in a post to do the various jobs.
- Reason number two is not something I have seen mentioned much before but I’m going for it here, as one of the oldest hands in the business at 29 years, having got the T-shirt the hat and the matching underpants. The fact that the laws are written by educated people, from privileged middle-class backgrounds who take an academic approach to the subject, based on some spurious, middle England idea of the “Landlord on the Clapham omnibus” . This is a mile away from the 21 st century scammer.
There is so much money to be made from the private rented sector that the rogue end of the market is being dominated by organised criminal activity. These people don’t give a toss about laws or criminal records or notions of fair play. They know they can evade capture by simply exploiting loopholes in legislation and the fact that the enforcing authorities, the councils, don’t have the resources to cope even when offences are evident.
No Prosecutions
In a recent article on Property Industry Eye, it was revealed that despite bringing in a law to prevent agents from assisting with client money laundering there hasn’t been a single prosecution under the Act.
A district Police organised crime unit recently approached Safer Renting because they became aware that whenever they are raiding brothels or properties where people trafficking is going on, that there is nearly always a local letting agent involved and they don’t know how to deal with that.
This is a world away from mundane matters like not serving the How to Rent Booklet or just not being a member of a redress scheme. I use all the seminal housing law books every single day of my working life but you can see this simplistic approach reflected in the text and examples.
They help me easily identify the relevant laws and case law sure enough but I never find answers on what to do about applying for an injunction where the perpetrator is hiding behind five different names, ten companies that swap directors several times a year and different spelling versions of the aliases they are using in different contexts. Which is pretty much standard practice.
I am currently trying to spirit through a Rent Repayment Order for a tenant as fast as I can before the letting agent responsible for the breaches, dissolves the company, leaving no liability, in the full knowledge that they will crop up under a different name a few weeks down the line.
If they haven’t already.
Is there hope?
You get little glimmers that the draughtsmen of laws might have a little sense of what goes on to subvert them. I was impressed when I read section 27 of the Housing and Planning Act 2016 which deals with landlords or agents under banning orders from transferring the property to:-
- A person associated with the landlord,
- A business partner of the landlord,
- A person associated with a business partner of the landlord,
- A business partner of a person associated with the landlord,
- A body corporate of which the landlord or a person mentioned in paragraph (a) to (d) is an officer,
- A body corporate in which the landlord has a shareholding or other financial interest, or
- In a case where the landlord is a body corporate, any body corporate that has an officer in common with
the landlord.
Which is exactly the kind of thing the criminal scammer would do.
Not watertight I grant you and they will find ways to get around it but the fact that someone sat in a room and thought of these possibilities gives me heart.
My plea to the people who come up with these laws is this. Instead of focussing solely on age-old legal principles and what a decent person would do, consider each section from the perspective of how people would look to subvert that bit of it and then also consider the practicalities of enforcement.
The Reality
Rogue landlords can commit a variety of offences in plain sight but still be entitled to receive housing benefit, simply because the offences they commit aren’t covered in the housing benefit regulations. So why not just add to those regulations?
We have recently seen a very handy amendment to Rent Repayment Orders for tenants, where they can be used for a wider range of offences than just failing to licence a property and without the council having to prosecute first. So why not continue that theme?
There are Interim Management Orders, allowing the council to take over management control and therefore rental income, for 12 months – but this is only for licensing breaches. Why can’t we have IMOs for harassment, illegal eviction, and unfair trading, by way of the aliases and fake companies I wrote about above, where neither tenant nor enforcement officer can even tell who the landlord or agent actually is?
None of these changes would affect normal landlords and agents, just the criminal ones.
Don’t give us more laws, just give us more practical tools. And when considering new regulations don’t just sit in a room and swap academic viewpoints based on Marquis of Queensbury rules. Talk to enforcement officers who deal with this stuff day in day out or hell, even a reformed rogue landlord or agent to explain how they would get around something.
Wise up!
“My plea to the people who come up with these laws is this. Instead of focussing solely on age-old legal principles and what a decent person would do, consider each section from the perspective of how people would look to subvert that bit of it and then also consider the practicalities of enforcement.”
I liked this bit especially Ben. Personally, i’m a bit tired of all the social policy that assumes so much goodwill when it’s clear that a lack of it is why the law needs urgently changing.
You need to be careful though not to treat everyone the same and not to throw the baby out with the bathwater.
The country needs decent landlords and there are a lot of them. They need to be encouraged. Otherwise, people who cannot afford to buy will have nowhere decent to live.
The main reason why we have so many bad and criminal landlords is a lack of proper enforcement. As Ben says, a contributing factor is that enforcement is not properly set up in the legislation.
Criminals are obviously targeting the private rented sector now as a safe place to operate due to this. If there was proper enforcement then they would more than likely go elsewhere.
However, at the moment they just do as they please knowing that the Police are not interested considering it a ‘civil matter’ and that it is difficult for Local Authority housing officers to deal with hardened and professional criminals.
The biggest part of the problem is simply fraud and no housing laws or court procedures, whether they be planning breaches, Housing Act notices or applications for RROs is up to the task of dealing with the incessant fraudulent activities that underpin the actions.
I am currently dealing with a case where an agent has been fined £25,000 for failing to licence. Their response was to file to dissolve the limited company with Companies House before the council could recoup the penalty.
The council have managed to block this for a few months but there wont be enough time for me to get the Rent Repayment Order, convert the tribunal decision into an enforceable money claim and actually recover any monies, presuming the agent even has assets, before they close down, rendering the RRO a hypothetical nicety.
As for Retaliatory Eviction as defined by s33 of the Deregulation Act, it’s a farce. So tightly prescriptive its a chocolate teapot of a law.
If I sound angry here and in my article, I am. I’m sick of spending all week trying to get justice for victims and seeing perpetrators just laugh in their face
“I was impressed when I read section 27 of the Housing and Planning Act 2016 which deals with landlords or agents under banning orders from transferring the property to:-
A person associated with the landlord, etc”
Ben I was depressed when I read the above this is just the usual legal waffle that will have the lawyers seeing pound signs and the criminals laughing all the way to the nearest loophole.
When it reads – A property issued with a banning order will be seized immediately and sold. After deducting costs any money leftover may then be claimed by the owner once they have proved that they bought the property with legally obtained tax paid money. – we might get somewhere.
And I thought I had zero tolerance haha.
I did say that it wasnt watertight but that I was heartened the creators of the law actually showed a bit of cunning.
I dont think normal landlords would have any problem with bringing in stronger and more efficient ways to tackle these people but so much effort is put into making sure that ordinary people wont get caught by the law that to often makes them useless.
I was interviewing a client last week about advancing a rent repayment order, same case as I report above. She was from Lithuania and she talked about how she loved the UK, saying, her words, our “Laws were so kind”
I wonder whether something like the law on credit cards would work, where the card provider has joint liability with whoever supplied the goods if anything goes wrong.
If you made the property owner jointly liable at least you’d have an asset to seize if you can’t enforce against anyone else.
Thomas councils can do proceeds of crime Act work in this area but it isnt always feasible, plus, in rogue landlord world more and more of the problems are with dodgy letting agents, including people trafficking. They dont have assets and if they are limited companies they just dissolve and avoid liabilities
So, you need something like:
– a company cannot be dissolved whilst it has a pending or unfulfilled council action or order against it, and/or
– officers of a company can be pursued for housing breaches even if company has been dissolved.
Yes that would work to an extent for dodgy agents who are a limited company but the immediate get around would be not to incorporate. Trouble is, when you look these companies up on Companies House you see them changing directors and secretaries several times a year. Its like musical chairs.
Also, many agents with high street shops arent even limited companies. The law requires in such instances that the names of the person’s responsible be displayed on the premises, which they either dont do or, as with directorships, keep them constantly changing. Enforcement teams draw up papers to serve on persons responsible only to find when they serve them that they are no longer the right names.
The law allows them to do this.
Personally I would go one stage further and abolish limited liability status altogether, which many have been calling for over the past 150 years. Gilbert & Sullivan even wrote an opera about it.
Why should guilty individuals be able to hide what might in other circumstances be criminal behaviour, behind limited status? Is this even compatible with Article 17 of the Universal Declaration of Human Rights?, “All are equal before the law and are entitled without any discrimination to equal protection of the law”.Why should people be denied justice or redress simply because of limited liability?
It’s going to get a lot more complicated.
Did the anti landlord brigade consider this obvious consequence when they supported George Osborne’s section 24?
https://www.mortgageintroducer.com/big-ticket-landlords-flocking-limited-company-buy-let/
“Two in three (64%) landlords with more than four properties plan to buy using a limited company structure this year”