You’re in Charge…

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You are now the Prime Minister/President/Absolute Monarch/Dictator of the United Kingdom…

Your task is to restore the nation’s finances, to create sound economic foundations, and to ultimately break the current self-defeating cycle of:

reduced tax yields ->

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Heavy fines levied by Brent Council for illegal subletting

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PRS Civil Penalties:

The first £8,000 civil penalty* was issued to rogue landlords involved in illegal subletting and they are prosecuted with fines of almost £27,000

The Council states that “A property company with assets in the Virgin Islands has paid a £8,000 civil penalty to Brent Council after two tenants illegally sublet one of its houses.”

This is the first civil penalty fine to be issued by the Council following new powers voted in by their cabinet in September.

The eight-bedroom semi-detached house in Willesden Green was exposed after a neighbour complained to the Fire Brigade about overcrowding, and Council officers found it was being used as an unlicensed HMO.

The team of enforcement officers raided the property and found two head tenants, Adam Trantu and Liliana Caragheorghe, and the landlord in breach of the house in multiple occupation (HMO) management and licensing regulations.

The boyfriend and girlfriend head tenants, who were not living in the house, had been illegally placing tenants inside the property at a rate of more than £3,400 a month over a two year period.

Adam Trantu and Liliana Caragheorghe were fined £12,000 at Willesden Magistrates Court on 28 November despite failing to attend the court hearing. The couple, who were tried in their absence, were also each ordered to pay costs of £1,200 and a surcharge of £170 after being found guilty by the District Judge of profiting from chronic overcrowding.

Cllr Harbi Farah, Cabinet Member for Housing and Welfare Reform, said:

“Illegal subletters are a growing problem and we will see to it that their greed fails to prosper in Brent. A prosecution like this drives them out of the market because they no longer qualify to hold a property licence. Civil penalties are another way of bringing the message home to landlords who think that it won’t cost them to turn a blind eye or ignore licensing laws.”

Following recently enacted legislation, landlords who rent out substandard accommodation in can face civil penalty charges of up to £30,000.

Brent Council said that if you are a landlord who lets out shared accommodation, you can apply for a licence online at www.brent.gov.uk/prslicensing or report a rogue landlord anonymously at www.brent.gov.uk/reportaproperty

*Using powers granted under the Housing and Planning Act 2016 local councils can use a range of new measures available to them in relation to their dealings with rogue landlords. These include civil penalties, rent repayments orders, banning orders and the introduction of a database of rogue landlords and letting agents. This should mean swift justice as an alternative to long drawn out court proceedings.

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Landlords welcome Universal Credit changes, but…

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Universal Credit:

Changes to Universal Credit introduced by the Chancellor in his latest budget have given landlords more confidence to rent to claimants, but they think Government should do more to meet their concerns.

The Residential Landlords’ Association has carried out Research through its research lab, PEARL, and found that 36 per cent of private landlords have gained in confidence to rent to tenants on benefits resulting from the changes announced in the Budget, but more is needed say the RLA.

Almost three-quarters of landlords (73%) are still wary of letting to subsidised tenants, the main reason being that they cannot recover money when the tenants get into arrears, and when they fail to pass on money they receive for rent to their landlord.

The RLA is calling for action to ensure landlords can reclaim rent arrears built by Universal Credit claimants who move out of their property as present there is no mechanism to do this.

The RLA is specifically looking for a means of landlords claiming back arrears and also for private landlords to be treated the same as social landlords by allowing them access to basic information routinely available to those in the social rented sector, such as whether a tenant is receiving Universal Credit. Landlords need this information to properly assess risk and enable them to work with tenants and set-up suitable rent payment schedules.

The RLA’s Vice Chair, Chris Town, said:

“Ministers have clearly been listening to concerns and we welcome their reforms to Universal Credit which have given landlords more confidence in the system.

“That said, there are still problems around rent arrears and recent tax hikes mean that landlords are less able to cope with difficulties in collecting rents.

“Without further reforms we cannot say ‘job done’ on Universal Credit.”

Universal Credit and Rented Housing

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Divorce and GGT outside of the 12 month exemption

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My ex-wife and I are in the final stages of an amicable divorce. I am keeping the main residence, which we jointly owned together, and I am in the process of buying her out. I have already given her half of the money which she is due.

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What’s the process for creating a deed of trust to transfer rental income to spouse ?

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As a married couple we own a house which we have been renting out for the last 18months . As I am receiving an occupational pension and state pension that put me in the 40% tax band I wish to transfer the benefit of this property to my wife.

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Does a Periodic Tenancy mean a new tenancy every month?

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Periodic Tenancy:

Under English law, once a fixed period tenancy comes to an end it is automatically replaced with a periodic one, based on the rent payment period (commonly monthly), unless the original tenancy is terminated. With an Assured Shorthold Tenancy (AST) termination would be if the tenant leaves at the end of the term, or is served a 2 months’ notice by the landlord effective at the end of the term.

The periodic tenancy rolls on indefinitely if the parties wish it to, though interestingly, a determination in a test case (Superstrike Ltd v Marino Rodrigues 2013)¹, contrary to what many in the industry believed at the time, a statutory periodic tenancy is a new and distinct tenancy, not a continuation of the tenant’s previous status.

On this basis a tenant sought to argue that a periodic tenancy is a new tenancy EVERY month. In Walcott v Jones & Jones November 2017, a county court appeal, the tenant argued that a tenancy which had started prior to the introduction of new rules (1^st October 2015) the landlord had not complied with them before serving his s21 notice, and therefore the notice was invalid.

Tenancies commencing before the change date and up to 1^st October next year (2018) do not have to comply with these new rules brought in under the Deregulation Act 2015 (s21A and s21B of Housing Act 1988) – meaning the landlord must provide the tenant with a gas safety certificate (if applicable), an EPC and the DCLG “How to Rent Guide” before a valid s21 notice can be served.

Clearly, if the plaintiffs could establish that the tenancy renewed each time then it could be argued the landlord did not comply, and that was the decision of the county court.

However, according to a note on the case on Giles Peaker’s Nearly Legal Blog, Ms W being the landlord of the Joneses, it was accepted for the purposes of the appeal that the new rules only apply to a tenancy that commenced on or after 1 October 2015 and until October 2018, including any “renewal tenancies”. The plaintiffs’ argument went that as the grant of tenancy was a monthly period from the start, (there was no written agreement), each month represented a new grant.

The appeal judge, Judge Hand QC, held that the grant of a periodic tenancy meant that if notice was not given in accordance with the agreement the tenancy would continue after the original term. Whether this was considered as an extension of the original term or a ‘deemed re-grant’ did not matter, as for the purposes of Housing Act 1988 (as amended), neither amounted to a ‘grant’ of a tenancy. Parliament did not intend a ‘grant’ in such circumstances. The county court judge had erred in law and the appeal was allowed.

A similar point arose recently in Leeds City Council v Broadley 2016 ² concerning council tax liability, where it was acknowledged that a periodic tenancy was a singular tenancy, as per the Law of Property Act 1925. In that case the court of appeal held that a tenancy grant for a year or six months, and thereafter a month to month periodic tenancy, was indeed a single tenancy.

The conclusion to all this is that a periodic tenancy it does not result in a new tenancy each period – it is in fact a single ongoing tenancy, from period to period. But, as per Superstrike, a statutory periodic tenancy that arises at the end of an AST fixed term, is a new tenancy, not a ‘renewal’ tenancy.

Superstrike Ltd v Marino Rodrigues 2013

Leeds City Council v Broadley 2016

Deregulation Act 2015

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Private rented sector value climbs to £1.4trn, but growth slows as two-speed market emerges

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The seventh edition of the Kent Reliance Buy to Let Britain report has been launched. The report provides an update on the growing size and value of the private rental sector in Great Britain, and details the returns landlords are seeing across the sector all analysed by region.

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It’s only going to get worse

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Benefit Tenants:

Paul Shamplina of Landlord Action continues his popular TV series of Nightmare Tenants, Slum Landlords. The series, on Channel 5, makes especially interesting viewing for landlords, and will be appearing again soon.

Paul says, “…a few weeks ago I started filming for the new series of Nightmare Tenants and one of the cases was for my landlord Emmanual in Dagenham where we attended on the eviction.  The landlord was owed £6k by a tenant, who unfortunately ran in to money problems but failed to communicate with the landlord about his current situation (which is very common).

The tenant had taken the tenancy out in his name and came recommended to the landlord from his neighbour, so no referencing was taken out. But, unbeknown to the landlord the tenant moved in his wife and three kids into this flat in Dagenham.

“Now this was the part I see a lot,” said Paul, “and increasingly growing in our sector, the tenant was all packed with his suitcases waiting with his wife and three kids for the bailiff to arrive, so he could receive his documentation to say that he had been evicted, so he could go to the council to try and be rehoused in first off temporary accommodation.”

This is a distressing situation no landlord wants to see children becoming upset because they have been thrown out of their home, but councils are putting this on families and forcing landlords to take legal action until the bailiff stage.

Paul says, “The bailiff confirmed to me, this is happening on an unprecedented scale.  That day by the way he told me he had 12 evictions and two weeks previously he was attacked with a hammer.

“We even reported recently of a case where the Council had allegedly told the tenant to break back into the property that they had just surrender the lease on. They had made themselves intentionally homeless.  So they instructed a locksmith to change the locks.

The previous Housing Minister, twice removed, Brandon Lewis, wrote to all councils in the country to make sure that the “Prevent Homelessness” initiative, under a new Act that came in, says councils have to intervene at 56 days, but clearly they are not doing so.  That means acting after receiving a section 21 notice, and not waiting for a bailiffs eviction date.

The National Landlords Association reported that 49% of tenants who receive a section 21 notice said their local advice centre or local council had told them to ignore it.

This totally contradicts the Government’s brief.

Councils have a duty to rehouse tenants based on a priority, but if a particular council does not have enough temporary or long-term housing to re-house, the easy option is to say: ‘Come back when you are evicted’.  Recently it was reported that there are 52,000 people in temporary accommodation in London and half of those people had to move to another Borough.

One London Borough has 22,000 people on its waiting list.

“Yes the challenges are great,” says Paul, “…with Councils not being able to secure enough properties in its Borough to rent, meaning they have to rely on the private landlords, who are willing to rent out their Buy-to-Let to a benefit tenant.

“With such challenges of rising rents, demand strong from the private tenants, changes in the Benefit System to a hugely controversial Universal Credit – all this is causing rises in evictions, as well as caps to the benefit system.  Landlords are worried because the benefit is not be paid direct to them, and tenants often don’t pass it on as rent.

“Unfortunately, we see more and more landlords at Landlord Action saying they are having to evict a tenant on Section 21 proceedings. This is because they have been advised by the council to ‘stay put’, along with the fact that small landlords are selling up because the figures don’t stack up. It’s a lot harder to rent a property nowadays (with less return), because of rising costs and more regulations, says Paul

“Unfortunately reality kicks in with the economics, and I do see more and more landlords, especially in the London and the South East, who do not want to rent to Benefit Tenants. This is despite the fact that we know that they stay in a property longer and look after it better, wanting it to be a long term home.

“Let’s hope the Local Authorities get the funding from Government they need to build more social housing. In the year up to March 2016 it was only a mere 32,110 compared to 66,600 twelve months prior, a 24 year low.

We hold our breath!

Paul Shamplina of www.landlordaction.co.uk

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It’s only going to get worse!

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So a few weeks ago I started filming for the new series of Nightmare Tenants and one of the cases was for my landlord Emmanual  in Dagenham where we attended on the eviction. 

The landlord was owed £6k by a tenant

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Landlords Business Restructure Spreadsheet

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Property118 Limited has just released a new spreadsheet for landlords and their accountants to download free of charge.

The spreadsheet is incredibly easy to use and produces instant results.

Find out whether it might be possible to restructure your business so that you only pay corporation tax on a significant amount of your future your rental profits

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