What is a Section 20 Notice ?

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There are two instances of section 20 notices in property in England:

(1) is the notice served in relation to early shorthold tenancies under the Housing Act 1988, and the other,

(2) refers to section 20 of the Landlord and Tenant Act 1985, as amended by the Commonhold and Leasehold Reform Act (CLRA) 2002, which involves leasehold property and consultation with leaseholders on major works.

Housing Act 1988 – Shorthold Tenancies

Prior to 28 February 1997 shorthold tenancies were not automatic (the default tenancy) as they have been for residential tenancies since the amendment brought in by the Housing Act 1996, (effective February 1997) but had to be created by informing the tenant by a prescribed form statutory notice – the section 20 notice.

A landlord wishing to create an assured shorthold tenancy was required to serve a notice under s20 of the Housing Act 1988 before the tenancy was entered into.

If the notice was not properly served (i.e. before the agreement was signed) the tenancy could not be an assured shorthold. In default it became an ordinary assured tenancy which gives the tenant security of tenure. Landlords in this position therefore could not use the not fault, s21 eviction process.

There cannot be many tenancies around dating from pre February 1997 which needed a s20 notice serving at the time, but where they do exist, landlords are unable to evict these tenants unless they can prove a s20 notice was properly served prior to the tenancy. Landlords or agents at the time would normally get the tenant to sign a statement to this effect.

Since 28 February 1997 it has not been necessary to serve a s20 notice for the tenancy to be an assured shorthold tenancy (AST).

Many mistakes were made in respect of s20 notices and many lawyers have since paid for their holidays by challenging them in possession claims.

The most common problem with this was the inability of the landlord or agent to prove that the s20 notice was served prior to the grant of the tenancy, but also in some cases the notice was not in the prescribed form.

Section 20 of the 1988 Act required the notice to be in the prescribed form stipulated in the Assured Tenancies and Agricultural Occupancies (Forms) Regulations 1988 (as amended). The relevant form was Form No.7

Landlord and Tenant Act 1985 – consultation with leaseholders on major works

Section 20 (s20) is a clause in the Landlord and Tenant Act 1985 which is intended to protect leaseholders from paying unnecessarily large sums for work carried out to their building. In effect it says that a leaseholder’s contribution to the cost of works will be capped if the landlord or their managing agent fails to follow a set consultation process.

Section 20 of the Landlord & Tenant Act 1985 (as amended by the Commonhold & Leasehold Reform Act 2002) sets out a three-stage consultation process which must be followed when carrying out qualifying works to a building where the contribution from any one lessee exceeds £250, or a qualifying long-term agreement where the contribution from any one lessee exceeds £100 in one financial year.

Stage One – s20

For qualifying works, under Section 20 managing agents / freeholders must serve a “Notice of Intention to Carry Out Works” on all lessees.

This Notice must generally describe the proposed works, state the reasons for considering the proposed works, and invite leaseholders to make written observations within 30 days.

It is a requirement that a correspondence address for these observations be stated within the s20 notice. The Notice of Intention offers lessees the opportunity to provide the name of a contractor from whom the landlord, managing agents or Resident’s Management Committee (RMC) can try to obtain estimates for the proposed works.

Stage Two – s20

At the expiration of the 30 day consultation period, at least two estimates should be obtained: one of these estimates must be from a person completely independent of the landlord, the managing agent or the RMC.

If nominations were made within the consultation period, then estimates should have been obtained from at least one of these nominations. The landlord/agent/RMC must then provide a “Statement of Estimates” which will set out the details of estimates that have been obtained and a summary of observations received within the consultation period.

All estimates obtained must be made available for inspection by the lessees, including estimates obtained from nominated contractors.

A “Notice to Accompany the Statement of Estimates” must also be served in conjunction with the Statement of Estimates, which sets out the hours involved, and a place where details of the estimates may be inspected, again inviting lessees to make written observations on the estimates within 30 days, and specifying the address to which those observations should be sent.

Stage Three – s20

If, at the expiration of the consultation period, the chosen contractor did not provide the lowest estimate, then a “Notice of Reasons” must be served upon all lessees.

This means that the landlord/agent/RMC must state the reasons for awarding the contract where they do not opt for the lowest estimate.

The nomination is open to a test of reasonableness by the Leasehold Valuation Tribunal (LVT) under Section 19 of the 1985 Landlord & Tenant Act.

Where it can be shown that the consultation procedure is not followed correctly, and the landlord/agent/RMC is successfully challenged at the LVT, then the maximum amount recoverable from lessees under the service charge is £250 for major works and £100 for long-term agreements.

For more information on Section 20 lease matters see these guides:

– The Association of Residential Managing Agents (ARMA) – Advice Note Section 20 Consultation and Major Works – a guide to the S.20 consultation process for major works and long term agreements.

– The Leashold Advisory Service – What is the Section 20 consultation process for major works?

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Derelict pub converted into a flat, modern HMO and commercial unit

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In this case study, learn how long term Shawbrook Bank customer HMO Property Investments Ltd used finance to transform a derelict pub into a thriving new mixed use property in Lincoln, with Shawbrook Broker and Property118 Partner Brooklands Commercial Finance acting as intermediary.

If you are considering a refurb, development or commercial project it is definitely worth watching  the video below to see how one of our favourite banks helped the clients with Bridging facilities and then switching straight to a term mortgage.

If you require assistance with any type of property finance from Buy to Let mortgages, commercial mortgages, Development finance and Refurbs to Bridging finance for investors and developers please complete the contact form below and we will be pleased to get our team at Brooklands Commercial finance to help.

jQuery(document).bind(‘gform_post_render’, function(event, formId, currentPage){if(formId == 209) {} } );jQuery(document).bind(‘gform_post_conditional_logic’, function(event, formId, fields, isInit){} ); jQuery(document).ready(function(){jQuery(document).trigger(‘gform_post_render’, [209, 1]) } );

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Advice – Tenants subletting on AirBnB

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It appears I had a tenant subletting my property for bed and breakfast on AirBnB.

I recently had a battle to evict a tenant that ran the duration right up until bailiff attendance. The property was let through a letting agent. The story was that the guy was splitting from his wife and leaving the marital home (owned) and needed a place fairly local. He rented a 4 bed from me so that his children would be able to stay over. The guy produced bank statements showing 70+k in his account as he was a self-employed tree surgeon and his books didn’t reflect his earnings accurately. All other references checked out.

I got a bit uncomfortable during the stage when negotiating the initial AST rent, he seemed quite aggressive. I got even more worried when he failed to attend the agent’s office to collect the keys but made some excuse and asked if he could collect them from us after hours. A car with 4 Chinese people turned up on our doorstep at gone 8.30 pm asking for the keys. On calling the letting agent on his mobile he explained it away as his wife collecting the keys for him.

Later, after the initial 12 months the agent broached the matter of a rent review which was met with fierce resistance, so advised the agent I wasn’t comfortable with his general attitude and to serve a S21. The minute this was done he phoned the branch manager and was arguing aggressively; during that conversation he completely changed tac. He immediately revealed his knowledge about eviction procedure and told the agent he wasn’t moving out without bailiffs. No further rent was received from then on, it turned out he had never changed the bills into his name, he was switched to a key meter 3 months before final eviction but had never topped up (later found the electric bypassed), socket faces removed and extension leads hard-wired in etc. etc.

The long and the short is that he owed far more than the deposit covered in arrears, costs and damages. Fortunately I had rent guarantee insurance to mitigate the arrears but am having to go through Small Claims Court for the rest.

After bringing the property back up to standard, we secured a new tenant and the property is let once again.

Tonight we received a message from the tenant stating that someone had turned up on the doorstep claiming to have booked bed and breakfast and got very grumpy when turned away, claiming that he had stayed there before.

With this knowledge I Googled bed and breakfast in Basingstoke; AirBnB popped up, so I zoomed in on the map and low and behold there was a room advertised for £27 a night right where my property would be. The description made note that the address had changed. There was even mention of the tenant in the feedback comments, so I opened up the cached pages and there it was, my property address was actually mentioned in the advert. From reading the comments it appears that the pair of them are doing this across a number of properties in the south and London.

What should I do? Involve the Housing Officer at the Council? Is there legal action that I can take? Is Police intervention required? Should I involve Inland Revenue? Is there any action I can take via Small Claims Court?

Any advice would be greatly appreciated.

Thank you
André

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LSE call on Chancellor to reform Stamp duty

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The London School of Economics and the VATT Institute for Economic have produced a research paper predicting the level of home moving would increase by 27% if the Stamp duty levy was completely abolished.

The research indicates current levels of stamp duty are making the housing crisis worse by cause a bottleneck in the market with pensioners being deterred form downsizing by the costs and stalling families from purchasing larger homes.

The Chancellor Philip Hammond is reportedly under pressure from his own Cabinet to reform Stamp Duty to kick start the market, which is also a major contributor to the wider economy. It is thought from a previous reform that if you halved the tax then income to the treasury would actually increase.

Co-author of the report, Professor Christian Hilber, said: “The key message of our paper is that stamp duty hampers mobility significantly.

“If you are a young family and you have an additional child, you’ll need an additional room, but the stamp duty is discouraging this kind of move because of the additional cost and lack of available homes to move into.

“In a nutshell, the stamp duty discourages the elderly from downsizing and young expanding families from moving to more adequate larger housing.”

Former chancellor, Lord Lawson of Blaby, told the Telegraph: “The present levels of stamp duty are clearly counterproductive, in terms of housing policy and revenue alike, and need to be reduced. For what it’s worth, when I was Chancellor, I halved the rate of stamp duty on house sales, and the revenue increased.”

HM Treasury replied saying: “Almost 90% of people want to own a home, but only 63% do. We reformed property taxes including stamp duty to help more people get onto the property ladder.

“In addition, we are helping people, including young families, to buy their first homes through policies such as Help to Buy and the Lifetime ISA, and the recent £2.3bn Housing Infrastructure Fund which will free up over 100,000 properties in high demand areas.”

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Are you properly alarmed?

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Smoke and Carbon Monoxide Alarm Regulations:

From 1 October 2015, the law changed regarding smoke and carbon monoxide (CO) detectors and you may need reminding of the regulations as they now stand.

From that date, landlords in England are required to have fitted smoke detectors (alarms) on each storey of a rental property. CO detectors are also required in rooms where solid fuel appliances (e.g. those containing an open fire or log-burning stove) are installed.

Although not a legal requirement in the case of gas appliances, the Department of Communities and Local Government (DCLG) has said that it would expect and encourage reputable landlords to ensure that working CO alarms are installed. Landlords with properties in England must now fit these devices and not wait for the start of a new tenancy. Heat detectors designed for kitchens cannot be a substitute for smoke alarms.

Since 1 June 1992 Approved Document B (Fire Safety), which supports the Building Regulations (England and Wales) 2010, has required all new build properties to have hard- wired smoke alarms on at least each storey of the property. However, until now there was no requirement to have smoke alarms in older and non-licensed dwellings.

New requirements

At least one smoke alarm must be installed on each storey of a rental property used as living accommodation, and a CO alarm in any room containing solid fuel appliances that is used as living accommodation. After that, the landlord must make sure the alarms are in working order at the start of each new tenancy. Note: in the DCLG’s view, for the purpose of these regulations, a mezzanine floor would not be considered a storey.

In general, smoke alarms should be fixed to the ceiling in a circulation space, i.e. a hall or a landing, and CO alarms should be positioned at head height, either on a wall or shelf, approximately 1‒3m away from a potential source.

The immediate landlord (or someone acting on their behalf) must test the alarms on the first day of a new tenancy, ideally with the tenant/s present. Tenants should be advised to take responsibility for their own safety and test all alarms regularly to make sure they are in working order; testing monthly is generally considered an appropriate frequency.

The first day of the tenancy is the date stipulated in the agreement, even where the tenant decides to actually move into the property on a later date. A new tenancy is one commencing after the 1 October 2015, not a continuation of an existing tenancy before that date.

In cases where tenants refuse access for alarm fitting or testing, the landlord should write to them, with a copy to the local authority, explaining that it is a legal requirement to install the alarms and that it is for their own safety.

The regulations do not stipulate the type of alarms (such as hard wired or battery powered) to be installed. Landlords should make an informed decision and choose the best alarms for their properties and tenants, but it is recommended that 10-year guarantee lithium battery or hard-wired alarms are installed in pre-1 June 1992 properties.

The regulations will apply to any tenancy, lease or licence (not lodgers living with a landlord and family) of residential premises in England, that gives somebody the right to occupy all or part of the premises as their only or main residence, in return for rent. There are some exemptions, such as for long leaseholds and social housing landlords.

Documentary evidence

Landlords and/or their managing agents should ensure that they have documentary evidence that the alarms are tested and in working order on the first day of a tenancy, for example, by the tenant signing a copy of an inventory. Failure to comply with these regulations would mean the local housing authority can levy a civil penalty charge of up to £5,000 on the landlord, but there is a right of appeal.

Landlords and managing agents are encouraged to ensure tenants’ safety and provide documentary evidence of this by carrying out basic risk assessments covering fire, gas, electrical, Legionella and general safety inside and outside the property between each tenancy.

Regulations vary throughout the UK and there is some overlap. This is a brief summary:

Wales: The new regulations do not apply here, but similar rules are expected soon. Currently, properties in Wales built post-1992 must be fitted with mains-powered, interlinked smoke detectors/alarms, but landlords are advised to provide at least battery-operated alarms in older properties. Houses in multiple occupation (HMOs) are required to have hard-wired alarms fitted.

In England and Wales there is also a duty under the Part J of the 2010 Building Regulations for England and Wales to have CO alarms fitted when a solid fuel heating system is installed – Building Regulations 2010 – Combustion Appliances

Scotland: The mandatory fitting of CO alarms in private rented property became law on 14 May 2014 under the Housing Scotland Act 2014 (http://bit.ly/VPf2dJ). Besides existing gas safety regulations, the act prescribes that there must be “satisfactory provision for giving warning if CO is present in a concentration hazardous to health”.

This means that it is now mandatory for private landlords to install CO detectors in every space containing a ‘fixed combustion appliance’ (excluding those used solely for cooking) and where a flue passes through high-risk accommodation, such as a bedroom or main living room.

On 1 December 2015, new regulations came into force regarding the provision of long-life CO alarms in privately rented housing. This addition to the Housing (Scotland) Act is an amendment to the existing Repairing Standard that firmly shifts the duty of care regarding the provision and replacement of CO detectors to landlords. The legislation applies to all landlords in Scotland renting out property with fixed combustion appliances of any kind, with the exception of those used exclusively for cooking.

Fire safety (smoke alarms) revised guidance in Scotland www.prhpscotland.gov.uk makes it mandatory that one fire and smoke detector alarm is fitted:

• in the room most frequently used by the occupant(s) for general daytime living purposes
• in every circulation space (halls and landings)
• on each floor of a building
• in every kitchen.

All alarms must be integrated.

Northern Ireland: Technical Document L of the Building Regulations in Northern Ireland states: “Where any combustion appliance is installed, reasonable provision must be made to detect and give warning of the presence of CO gas at levels harmful to people. The authority for this is that landlords of private rental properties (that are not HMOs) are required, within reason, to ensure that the property they let is ‘safe and would not cause injury or death to humans or pets’.” Landlords must therefore be able to prove due diligence in a court of law should a fire occur at the property.

The Northern Ireland Fire and Rescue Service (NIFRS) recommend that the standards of fire safety in private rental properties should be at least equivalent to the current fire safety standards expected in a modern domestic property. Therefore, landlords renting a private property should at least provide working smoke alarms (preferably interconnected) on each level of the property and detection in the principal habitable room, considered to be the main living room, and a heat detector and fire blanket in the kitchen area.

Guidance concerning smoke and CO alarms is available from the NIFRS at: www.nifrs.org/fire-safety/community-information-bulletins

The Smoke and Carbon Monoxide Alarm (England) Regulations 2015

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Are you properly alarmed? | LandlordZONE.

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