Council is determined to use new laws on slum landlords

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Rogue Landlords:

Wakefield Council has put out a strong warning to “slum” landlords in the town that it will take a tough stance with the implementation of its new powers.

Landlords who are found to be letting out sub-standard properties are being warned by the council that they will definitely face prosecution under the tough new stance being taken.

The council’s cabinet has agreed that rogue landlords will be prosecuted, and the council will use its powers to fine up to the £30,000 limit for each offence if landlords fail to repair, properly manage, or don’t improve their properties when required to do so.

Council leader Peter Box has said:

“We need to make it abundantly clear that these are not just words on paper, we’re going to enforce this.

“If anyone is exploiting tenants we will be on their case – we want this to be meaningful in terms of enforcement.”

The new powers come as a result of the passing of the Housing and Planning Act 2016 which includes a package of measures to help councils tackle rogue landlords in the private rented sector (PRS).

These include allowing local authorities to apply for a banning order to prevent a particular landlord or letting agent from continuing to operate where they have committed certain serious housing offences.

It will create a national database of rogue landlords and letting agents, which will be maintained by local authorities.

As well as heavy fines for various offences, it will allow tenants or local authorities to apply for a rent repayment order where a landlord has committed certain offences (for example continuing to operate while subject to a banning order or ignoring an improvement notice). If successful the tenant (or the authority if the tenant was receiving universal credit) may be repaid up to a maximum of 12 months’ rent.

Given the ability to pursue landlords more vigorously, Wakefiled Council has committed itself to protecting tenants and reducing inequalities of housing conditions in the borough, and to reduce the hazards in homes that can cause ill health, such as dampness, cold, fire, and poor bathrooms and kitchens.

Non-payment of fines will be enforced through the county courts, says the Council.

Wakefield Council’s cabinet member for economic growth and regeneration, Councillor Denise Jeffery, has said:

“We have some great landlords in the district, but we have an awful lot that are letting anything happen.

“We are not building houses anymore and Wakefield District Housing is struggling so people are turning to private accommodation and some homes are just not up to standard.

“People come to us who are in despair, one person came to me and said they were having to live upstairs in their rented house because the downstairs was just not fit for purpose.

“It’s really important that we move forward to take a stand and say ‘we will not put up with this anymore’.”

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Leasehold system is very much alive despite the Government’s measures

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In light of the Government’s crackdown of ‘unfair and abusive practices within the leasehold system’, online housing agents Sellhousefast.uk decided to investigate the sales of leasehold properties in England and Wales.

Sellhousefast.uk analysed data from the Land Registry and found that the leasehold system is very much alive in both England and Wales.

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Is Section 24 going to end student summer discounts?

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An issue which has been bothering me is that when national rent figures are worked out by various organisations, what do they do about student rents? As landlords know, students often pay half rents over the summer. However, since the Government launched its war on landlords

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New BTL mortgage applications down by 80pc

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Buy-to-Let Mortgages:

The amount of new investment by small-scale landlords using buy-to-let (BTL) mortgages has fallen drastically in the past two years, that’s according to the Intermediary Mortgage Lenders Association (IMLA).

New investment in BTL has fallen by around £20bn in two years, representing 80% of the small-scale BTL mortgage market. This is due to a combination of higher taxes, tighter tax and mortgage rules, and a swathe of other regulations bearing down on private landlords.

In contrast to this, the country’s largest listed residential landlord has followed through on its stated intentions to enter the emerging build-to-rent sector in a big way. Grainger announced in January 2016 that it was to invest £850 million in the private rented sector (PRS).

With the prospect of ever growing demand for rented accommodation from young people, those struggling to afford a deposit, and the growth of an older generation renting, plus a rapidly growing population, confidence in the BTL market is still very strong.

In the last two years reforms by government have had an intentional dampening effect on the traditional BTL market. This hits those landlords most who were looking to expand an existing portfolio. Stamp duty increases, the phased removal of mortgage interest relief, and more recently the Prudential Regulation Authority’s (Bank of England) stricter lending criteria have all taken their toll.

According to the latest available figures, there are currently 4.5 million people living in the private-rented sector. IMLA warns that if demand continues to rise at its current rate the government’s crackdown on BTL landlords will force average rents up.

Aaron Strutt of mortgage brokers Trinity Specialist Finance told The FT Newspaper that they had seen a falling off of interest from BTL investors, and whereas around 40% of their business was BTL, prior to the changes, this is now nearer 20%.

“We don’t get as many emails as we did asking about buy-to-let,” he had said. “We get a lot more interest from first-time buyers.”

However, it seems as the market has slowed down, lenders have cut their rates on BTL mortgages, with Natwest reducing some fixed BTL mortgage rates by 0.6pc, while other lenders are now offering BTL mortgages to those landlords operating within a limited company.

Before the changes for small-scale landlords, most lenders were looking for rental income to cover 125% of the mortgage payment, assuming a rental yield of 5%, whereas now these figures are more like 145% and 5.5% respectively, on a typical loan-to-value (LTV) of 60%.

For BTL landlords with one, two of even three properties the impact of the changes is not so great, but for those with finance on four or more properties (now classed as portfolio landlords) the refinancing scrutiny is much greater: lenders will expect their whole portfolio to satisfy the new criteria when taking out a new loan or re-mortgage.

However, for those landlords holding their properties in a limited company, or for basic rate taxpayers, there is a modicum of relief as they are only required to cover 125pc of their mortgage payments with rental income.

Basic-rate taxpayers and those without mortgages are hardly affected by the changes. Operating through a limited company structure can be attractive to some as the BTL stamp duty surcharge and the changes to tax relief on mortgage interest does not apply, though anyone considering incorporation should seek advice from qualified tax accountant.

Another strategy to reduce uncertainty, especially in an environment of potential interest rates rises, is to consider longer term fixes. Some landlords are now looking at five year fixed deals, while others are looking at reducing borrowings by selling off some properties, or for example, selling one property in a portfolio of four, meaning they are no longer classed as a “portfolio landlord” for mortgage purposes.

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Cuddly Corbyn wants to give tenants the right to keep pets

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In an effort to win over animal loving votes the Labour party wants to give tenants a default right to keep pets in their rented home.

Landlords can only refuse permission under the 2015 Consumer Rights Act if it is reasonable to do so

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EPC F rating for ‘No Mains Gas’ – is this reason for exemption?

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Is being in a ‘No Mains Gas’ area a valid reason for EPC exemption? We have a rental property which is in an area that has no mains gas so it has LPG fuel instead and got an EPC F rating.

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Serving Gas Certificate at start of Tenancy is Critical

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Notices and Section 21:

A recent case has brought to light the importance of serving certain prescribed information at the very start of an Assured Shorthold Tenancy (AS) – before the tenant enters – following the changes brought about by the Deregulation Act 2015.

This article applies primarily to English law. Although tenancy laws are similar in other jurisdictions, there may be significant differences. Always seek professional advice before making or not making important decisions.

The case Assured Property Services Limited v Ooo, tried at Edmonton County Court on 31 June 2017, involved the late serving of Gas Safety Certificate, and the subsequent serving of a Section 21 notice, which the tenant claimed was invalid.

Up to now the generally accepted advice has been, since the introduction of the Deregulation Act legislation, that these notices can be served late, providing this occurs before serving a section 21 notice. The Ooo case, and a more recent one through a London county court appeal (Caridon Property Ltd v Monty Shooltz, February 2018) would seem to confirm that this is NOT the case.

As the law stands at this time it would seem that landlords MUST serve a gas safety certificate, and most likely the EPC and the “How to Rent” guide at the very start of every new tenancy, before the tenant enters the property, and they must be current on any renewal, otherwise any subsequent s21 notice will be invalid.

What makes this even more of an issue for landlords and agents is that, as it stands, there is no way to mend the situation, as far as we know nothing can be done to make the notices valid in the future once the omission has occurred – landlords in this situation would be left with a section 8 solution if the tenant is in breach of the contract and needs to be evicted, not ideal.

Section 21 Notices pre-requisites

It is recommended that on the commencement of every tenancy the tenant receives and signs for (proof of service is very important):

1. A current EPC
2. A current Gas safety Certificate
3. The current copy of the government’s “How to Rent” Guide*

As with the deposit protection information (deposit must be protected within 30 days of receipt) it is recommended that these three documents are now made integral with the tenancy agreement, and therefore they are signed for and delivery cannot be refuted.

*Note, There are several versions of the How to Rent Guide, and it’s important that the current version is used – see our archive of editions here: https://www.landlordzone.co.uk/documents 

It is important to note that sending copies of these documents via email is acceptable, providing the tenant has agreed to accept them in this way, supported by a reference in the tenancy agreement, but a full document must be sent, not just a link to a government website. However, it is, as recommended above, preferable to provide hard copies along with the agreement, as it is difficult to get proof of delivery when emailed.

In the recent Caridon Property Ltd v Monty Shooltz (February 2018) case a possession order was refused on the ground that the landlord served an invalid section 21 notice because of the failure to serve a gas safety certificate on the tenants before they moved in.

The landlord had served a gas certificate (11 months late) before serving the s21 notice, but the judge deemed this insufficient to satisfy the rules. On appeal the appeal court judge upheld the original county court judge’s decision.

Note: for tenancies entered into prior to 1st October 2015 and not renewed, these rules do not apply, but they will do for all existing tenancies after 1st October 2018.

Although these current case decisions are not binding right across the country as they are only county court appeals in London, future higher court appeals may make them so. If it is found that the original legislation has implications that Parliament did not foresee or intend, then the Prescribed Information Regulations will need to be amended by MHCLG, and given this bind in which some landlord and agents will find themselves, it would seem to make sense to do so.

The judge in the Monty Shooltz appeal case based his decisions on section 21A Housing Act 1988 (as amended) which states that, (1) A notice under subsection (1) or (4) of section 21 may not be given in relation to an assured shorthold tenancy of a dwelling-house in England at a time when the landlord is in breach of a prescribed requirement.

These prescribed requirements are, as noted above, and partly set-out in the Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015.

These new regulations are then affected by the rules governing the service of gas certificates in the Gas Safety (Installation and Use) Regulations 1998, which by implication must now be strictly observed, that is:

“…a copy of the last record made in respect of each appliance or flue is given to any new tenant of premises to which the record relates before that tenant occupies those premises save that, in respect of a tenant whose right to occupy those premises is for a period not exceeding 28 days, a copy of the record may instead be prominently displayed within those premises.”

See also: Assured shorthold tenancies – valid s21 notices https://www.landlordzone.co.uk/information/assured-shorthold-tenancies-valid-s21-notices

Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 http://www.legislation.gov.uk/uksi/2015/1646/contents/made

Gas Safety (Installation and Use) Regulations 1998 http://www.legislation.gov.uk/uksi/1998/2451/contents/made

With acknowledgements to Tessa Shepperson of landlord Law and Giles Peaker, solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors and his Nearly Legal blog

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Serving Gas Certificate at start of Tenancy is Critical | LandlordZONE.

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Can I rent property pending Prohibition Notice appeal?

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I was told by the council (Fenland District) in North Cambridgeshire that there was a prohibition notice on my property and the tenant has vacated.

However, when I sent workmen to secure the property this was not the case the tenant was still in situ.

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English Riviera – Luxury retirement retreat investment

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Bancourt House is a luxury retirement resort based in the Torquay area of Devon – famously known as the English Riviera, aimed at accommodating both short-term and long-term residents.

The building will be transformed to include 42 luxury studios.

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Consultation feedback halts Selective Licensing!

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Telford and Wrekin council wanted to impose a Selective Licensing scheme for Landlords, but had 900 responses to its consultation resulting in the scheme being dropped.

This is the most feedback the council has ever received to a consultation with a significant backlash to the plans.

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