LEGAL UPDATE: Court delivers blow to landlords hoping for respite from high licensing fines

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Legal wrangle in court is bad news for two landlords – and many like them – who believe that fines handed down by tribunals are unfairly high given the minor transgressions involved.

Landlords hoping that councils can be challenged when they issue fines for non-compliance with licensing rules have been dealt a blow following an Upper Tribunal ruling.

The case was
heard after the London Borough of Waltham Forest issued penalties under its selective
licensing scheme to two landlords – Mr Marshall and Mr Ustek – of £5,000 and
£12,000 respectively for failure to register properties.

When they
both appealed the high fines, the First Tier Tribunal (FTT) reduced them.

But Waltham Forest then appealed and now the Upper Tribunal has ruled that the FTT must give “special” and “considerable” weight to the local authority’s decision – and also reinstated the original fines.

Six bands

Waltham Council has six bands of fines under
its licensing scheme, depending on the severity of a breach and other factors.

According to Judge Cooke, “The FTT is not the
place to challenge the policy about financial penalties.” The judge said when
determining an appeal, it must “start from the policy” and could only depart
from this under case-specific circumstances. Judge Cooke added that the
housing tribunal should give a local authority’s decision weight, given that it
was democratically elected and accountable.

Lawyers who represented the council say councils,
landlords and tribunals now have their first helpful yardstick to measure the
reasonableness of future penalties.

Waltham
Forest’s head of selective licensing and regulation, David Beach, says: “We
felt there wasn’t real guidance there about how the tribunal was supposed to
approach such appeals, and on the level of respect or how much regard they
should have to give to a council’s lawfully adopted policies for setting the
penalties.”

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EXCLUSIVE: ‘Yes, build-to-rent WILL change the private rental market’

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Senior industry figure tells LandlordZONE the sector will revolutionise how properties are rented, help consolidate the market and usher in a new era of tech.

Lesley Roberts, who is a partner at property
management giant Allsop’s growing build-to-rent
division with some 7,000 properties under management in the UK, tells
LandlordZone that she believes the rental market will eventually go the way of
the travel sector.

Where once every street corner had a travel agent,
many people now book their holidays online either direct or through large
aggregator sites, and build-to-rent is part of a trend that will see the same
thing happen to private renting.

“However, some traditional landlords also see
build to rent as a threat but remember that comparisons between their stock and
build-to-rent properties are not ‘apples for apples’,” she says.

“Build-to-rent apartments can be more expensive
than the traditional market but in some cases, you get a lot more for your
money such as utilities bills included in the rent, resident amenities, high
quality finishes and better transport links,” she says.

Consolidation

Roberts says she believes the coming years will
also see a landlord consolidation within the private rental market, a trend
that is also being accelerated by smaller landlords being eased out of the
market by the government’s tax changes and regulatory onslaught.

“I think this has forced many landlords to
think about their investment returns and look for other places to put their
money, and of course they can invest in build-to-rent through a REIT, or
through their existing pension fund provider, many of whom are investing
heavily in the sector,” she says.

The other big change that build to rent will
bring to the market is to alter how landlords find tenants.

These big operators are keen to separate their
properties out from the blur of rental properties on Rightmove, for example,
and lettings apps such as Movebubble and services such as HomeView, which is a
TripAdvisor-style service for tenants, are beginning to change how properties
are let and managed, Roberts says.

“Portals like Rightmove are a bit of a blunt
tool when there are nuances within the market,” says Roberts. “The industry is
definitely looking at alternative ways to get properties to the market.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: ‘Yes, build-to-rent WILL change the private rental market’ | LandlordZONE.

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BREAKING: Southwark is first council in UK to set up its own tenants’ union

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The London borough is to splash out £100,000 on setting up the new organisation, the first of its kind launched by a UK council.

Earlier this week councillors at Southwark council voted in favour
of the initiative, which aims to lobby for better
standards and take action against rogue landlords in the borough where it’s
estimated that one-third of homes are now privately rented.

Labour councillor James McAsh, who pushed for the
scheme, told the council assembly that a “crisis of greed” had left residents
in the private rented sector at the mercy of rent hikes and poor-quality
properties.

He says: “We have to deal with the homes in our borough that are
under the control of unscrupulous landlords – and the pain caused by ratcheting
up rents and landlords turning up announced.

“Those scoundrels think they can get away with it because they’re
accountable to no one, but today that changes.”

Councillor McAsh said the new union was a “rebalancing of power”
and a way to support tenants to defend their own rights and interests.

Although Southwark Council is still short on detail about how the
union will be run, the cash will be available in
the next financial year. It will be one of a few renters’ unions already
established in the UK, including the London Renters Union, Tenants Union UK and
Acorn.

These aim to defend the interests and quality of life of tenants and
renters, and redress what they see as an imbalance of power between landlords
and tenants.

The
borough runs two property licensing schemes and wants to introduce a ‘gold
standard’ register of landlords to recognise and publicly list those who are
best in class.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: Southwark is first council in UK to set up its own tenants’ union | LandlordZONE.

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Landlord interview: ‘Extra costs of selective licensing are pushing up rents and forcing landlords out’

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Leading Nottingham landlord Mick Roberts tells LandlordZONE about the unintended consequences of licensing in his home city.

A leading Nottingham landlord wants councils
around the UK to understand how private rental market licensing is achieving
the opposite of what the schemes usually set out to achieve.

Mick Roberts, who runs Advance
Properties and its large portfolio of properties across
the city (including 36 within its licensing scheme), says the unintended
consequences include pushing up rents and making it more difficult for tenants
to find property to live in.

“The rental market used to be well supplied,
but I’ve heard about 20 good, credit-checked, working tenants queuing up for
properties that come on to the market, which wasn’t the case before the
licensing system came into force,” says Roberts.

Nottingham began its schemes in August 2018. They
include huge swathes of its central and inner zones, which are covered by both
a selective licensing and large/small HMO regulations too.

Rent rises

“The rents have shot up massively here in
Nottingham and it’s now one of the most expensive cities in the region,” says
Roberts.

“I believe this is because the licensing system
is helping reduce the levels of stock available as well as pushing up costs
massively for landlords, both of which are putting upward pressures on rents.”

He says the extra costs include the expense of
licensing each property which is £480 per property for accredited landlords,
and £780 for those who aren’t, as well as the upgrades that the council then
asks for after inspecting a property, which often costs a lot more.

“It’s a mad system because I’ve got tenants who
have been with me for nearly 20 years without any problems and suddenly the
council is all over me to improve the properties after an inspection,” says
Roberts.

“And it’s not joined up – one side of the
council is clamping down on landlords and forcing them out of the market, but
their housing colleagues pick up the bill when tenants become homeless.

“I’ve had to evict tenants who, before
licensing, I would have deemed to be marginal but not worth evicting, however
the extra costs brought in by licensing have forced my hand.”

Roberts says he believes the city council is
punishing good landlords like him but failing to catch the truly rogue
operators.

“The licensing system is sucking money out of
the system – I used to replace six bathrooms or kitchens every year, but I
can’t afford to do that now, so the good stock is getting worse,” he says.

“They’re
punishing everyone to get at the minority of bad landlords – I know one
landlord who was fined £2,000 for each of his six properties because he had not
applied or a licence, but when they visited the properties they were in good
order and the tenants were happy. Where’s the sense in that.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlord interview: ‘Extra costs of selective licensing are pushing up rents and forcing landlords out’ | LandlordZONE.

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LATEST: Number of London landlords fined over past 12 months drops by a third Teaser

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Pressure group Generation Rent claims its research shows councils are struggling to identify rogue landlords and calls for government to give tenants greater powers to report unlicenced properties.

Landlord
prosecutions have fallen in the capital during the last 12 months, with 292
fines handed out compared with 433 in the previous year.

The Greater London Authority’s Rogue Landlord and Agent
Checker showed landlords paid fines totalling
£1.04 million in the year to 26^th February, down on the £1.66 million paid in 2018.

These fines were issued by 17 of the 32
London boroughs, with Camden the most prolific council for taking action
against criminal landlords, handing out more than £750,000 in fines.

During the past year, Newham, Brent, Tower Hamlets and
Waltham Forest saw fines fall by more than half, while Westminster, Hounslow
and Haringey have more than doubled theirs.

But pressure
group Generation Rent is not happy, calling on the next Mayor of London to step
up the fight against criminal landlords by letting tenants check online if
their home needs and has a licence.

It believes an
estimated 130,000 private rented homes in London don’t have the right licence
and says that in 130 of the 292 cases last year, tenants would have been
entitled to reclaim up to 12 months’ rent through a Rent Repayment Order
because their landlord had failed to either obtain a licence or make improvements
to the property.

Dan Wilson
Craw, director of Generation Rent, says: “Despite squalid conditions facing
many of London’s renters, councils have a very mixed record on bringing the
landlords responsible to justice.

“The next
Mayor of London could turn this around by making it easier for renters to use
Rent Repayment Orders against criminal landlords.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Number of London landlords fined over past 12 months drops by a third Teaser | LandlordZONE.

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The Property Ombudsman reminds landlords about “No DSS” ads…

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Housing Benefit:

The Property
Ombudsman (TPO) has put out a reminder to its member agents, and this
would include landlords, of their legal obligations not to
discriminate by stating “No DSS” tenants in their advertisements.

This follows a
couple of victories for tenants who have both won out-of-court
settlements against letting agents posting these “No DSS”
ads. The Property Ombudsman has stated its intention to “consider
obtaining Assured Advice and strengthening its Codes of Practice in
the next update to clearly prohibit ‘No DSS’ clauses in rental
advertisements.”

Tenants Amanda
Staples and Emma Loffler both won out-of-court settlements against
“No DSS” letting agents on the grounds of indirect
discrimination.

For the record, as
neither of these cases went to court we have no definitive ruling on
this as yet, but given the general direction of consumer protection
and the discrimination laws, it is very likely that such an outcome
would be supported in law and that before long such a ruling will be
obtained.

TPO says that under
clause 1e and 1f of The Property Ombudsman’s Code of Practice for
Residential Letting Agents, agents (and landlord) are reminded that
they must:

1e – treat
consumers equally regardless of their race, religion or belief, sex,
sexual orientation, gender recognition, disability, pregnancy or
maternity, or nationality. Unlawful discrimination includes giving
less favourable treatment because someone is perceived to have one of
these personal characteristics or because they are associated with a
person with such a characteristic.

1f – take special
care when dealing with consumers who might be disadvantaged because
of factors such as their age, infirmity, lack of knowledge, lack of
linguistic or numeracy ability, economic circumstances, bereavement
or do not speak English as a first language.

The TPO says that in
2019 it handled 881 complaints relating to agent’s general
obligations, specifically relating to these two clauses – 1e and 1f
of the Codes of Practice for Residential Letting Agents.

Whilst not
specifically related to the “No DSS” cases, TPO says the
complaints figure “highlights that approximately 17% of all
complaints last year were linked to some form of discrimination. For
the avoidance of doubt, economic circumstances include tenants who
are in receipt of benefits.”

TPO’s Katrine
Sporle says:

“Whilst rental
properties are investments for landlords, they are homes for tenants.
To be excluded from a significant portion of the homes available
simply because you are in receipt of Housing Benefits cannot be
considered as treating consumers equally.

“Tenants’
perceptions that they have been unfairly discriminated against
underpin the significant number of the complaints received. TPO
agrees that adverts which discriminate against would-be tenants in
receipt of Housing Benefit should end. Making sure no one is
excluded from applying for the home of their choice will go some way
to reducing these complaints.”

A complicating
factors which TPO says it is aware of is that in certain
circumstances mortgage lenders and/or insurance providers have terms
in their agreements which specifically exclude tenants in receipt of
Housing Benefit.

In these cases TPO
says that agents / landlords should evidence that fact, and provide
an explanation as to why prospective tenants, on an individual basis,
are being refused.

The Property
Ombudsman (TPO) scheme offers an independent and impartial dispute
resolution service to consumers who have been unable to resolve their
disputes with a registered agent. The scheme was established in 1990.
The Ombudsman can provide redress to place the consumer back in the
position they were before the complaint arose, achieving a full and
final settlement of the dispute and all claims made by either party.
Where appropriate, the Ombudsman can make compensatory awards in
individual cases up to a maximum of £25,000 for actual and
quantifiable loss and/or for aggravation, distress and/or
inconvenience caused by the actions of a registered agent.

TPO website at www.tpos.co.uk

The Cambs mum who was ‘refused a house because she was on benefits’

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Today in politics: Enforcement action, LHA, UC and more

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Today we examine a new report on enforcement levels in London – showing big inconsistencies between boroughs. We also look at questions to the government on LHA rates and homelessness, a new report on Universal Credit, government plans for a heat and building strategy and BEIS calls for ‘Dragon’s Den-style public pitching. Half London councils […]

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Annual house price growth at 2.8%

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The Latest Halifax house price index report for February is indicating prices in February were 2.8% higher than in the same month a year earlier with the average house price of now £240,677 nationally.

On a monthly basis

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Can directors charge interest on loans offered to Ltd co?

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As a director of a Limited company can I charge interest on loans offered to my company and what is the allowable interest Permitted by HMRC?

Many thanks. Malcolm

Editors Note: From HMRC >> https://www.gov.uk/directors-loans/you-lend-your-company-money

If you lend your company money: Your company does not pay Corporation Tax on money you lend it.

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