Court of Appeal Rule in Favour of Landlords on Gas Safety Certificate Case

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The Court of Appeal has today sided with private landlords in a case which threatened the way they could repossess properties.

The case of Trecarrell v Rouncefield centred on the relationship between Section 21 notices and gas safety certificates.

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Base Rate held but QE increased by £100 billion

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The Bank of England Monetary Policy Committee (MPC) voted unanimously to hold the base rate at 0.1%. However, they also voted 8 to 1 in favour of increasing Quantitative Easing measures by purchasing an additional £100 billion of government stock taking the total level of asset purchases to £745 billion.

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15% of tenants are in rent arrears but a third are trying to clear their debt

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A third of tenants who are in rent arrears have begun paying back what they owe, latest data from the sector shows.

And among renters only 15% are behind in their rent although platform PayProp says four in five letting agencies it deals with have seen the number of tenants in arrears grow since March – a problem expected to worsen over the coming weeks as Covid-19 continues to affect their finances.

Its new report, using payment data from UK thousands of letting agencies, shows that while more landlords are facing rent arrears, about one-third of agencies actually saw debts reduce as tenants began repaying what they owed.

“After an initial surge in March when Covid-19 started to spread rapidly across the UK, heightened levels of rent arrears could persist for many months to come, despite many tenants settling some of their debt,” says Neil Cobbold, chief sales officer at PayProp.

“Measures like the furlough scheme and Universal Credit increases have helped tenants to continue paying their rent, but payments are still less predictable than usual, and the furlough scheme is almost at an end.” 

Rent arrears

It suggests that if letting agencies keep good records, they can help landlords stay on top of rent arrears, allowing them to see how much is owed and by which tenants, as well as to create payment plans. “Keeping a record of all conversations and agreements made with tenants will also reduce the chances of payment disputes occurring later on,” Cobbold explains. 

And with the evictions process put on hold for a further two months, he adds that landlords will need to consider their options carefully as there’s no guarantee that the Government won’t extend it further.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – 15% of tenants are in rent arrears but a third are trying to clear their debt | LandlordZONE.

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Why are more DIY landlords looking to use agents on full management?

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These are turbulent times for both landlords and agents: Covid-19 has thrown an unprecedented curve-ball into what was already an increasingly complex environment in the UK lettings market, making more landlords consider full management.

The ever increasing workload and legal complexity of letting out property as a DIY landlord, along with a narrowing of profit margins, is encouraging landlords to either think about selling up, or else off-load the pressure of managing onto someone else – a professional letting management service.

Looking at the positives; tenant demand continues apace, with most lettings being achieved very quickly. With some landlords taking the decision to sell-up, this will only serve to exacerbate the shortage of rental accommodation and it will therefore sustain continued tenant demand and increase market rents. In fact from a contrarian investment viewpoint, when things a looking their most gloomy, and investors are selling-up, now could be the optimum time to be thinking about investing in property rentals bargains for a long-term result.

Most of the new legislation, in my view, such as the suggested abolition of section 21, will make little difference to the way the market works, or to the average tenant’s experience, if anything it could make it worse; it will simply create more work and expertise to make it work. For example landlords and agents will be far more stringent with their selection processes. At the end of the day, rental accommodation is still desperately needed, landlords are still needed to supply it, and there’s still a great opportunity for buy-to-let.

Choosing a letting agent

Engaging an experienced and competent letting agency can make the landlord’s life much easier, but the opposite applies if you engage a bad agent. Once you’ve signed a full management contract with an agent (as opposed to a let-only contract) you could be stuck with them for the duration of the tenant’s stay, so a lot of care is needed when selecting your agent.

You should do careful research before choosing an agency that is well-established and with a track-record of successfully managing private rented accommodation. Ask around locally, request to speak to existing long-term clients to make sure they are happy with the service, check online reviews and make sure they are members of at lease one of the main professional associations.

These associations should be preferably ARLA Propertymark, the National Approved Lettings Scheme’ (NALS), the ‘Ombudsman Services’ scheme, the UK Association of Letting Agents (UKALA) and the National Residential Landlords Association (NRLA). The must by also have in place client money protection (CMP) insurance and a Property Redress Scheme. Look for evidence of these on the company paperwork and websites and its a good idea to check current membership with the scheme providers.

Make sure you are happy with the terms of their contract before signing, check for dubious clauses and if necessary have a solicitor look over it; don’t be afraid to negotiate on management fees, though driving down the fees too low could be counter productive – you get what you pay for.

What are the advantage of using a good agent?

A good letting agent should market your property proactively, they often already have enqiurers on their books, and they will quickly find you the right tenants for the property. They will make sure your property meets all the current letting and safety regulations, and they will handle all the necessary checks and letting documentation to make sure you are covered, should things go wrong with the tenancy.

For a standard full management fee of around 15% of the rental income, which could be lower depending on your negotiations and the number of properties you sign up with, and your importance to the agency, rent will be collected on your behalf, and all communications with the tenant/s taken care of – in fact as a landlord you may never meet the tenants if you don’t want to.

The agent will be geared up to deal with the day-to-day management issues, you will have a set spending limit so they don’t have to bother you with minor emergency repair issues, and they will have a regular programme of inspections in the calendar.

This type of arrangement with 24/7 cover is going to be particularly useful if you live a long distance from your properties, if you work away from home a lot of if you go on holiday – invariably problems with tenancies always occur at the least opportune times, so in this way you are covered for every eventuality.

As from June last year letting agents are unable to charge admin fees to tenants, so things like credit checks and referencing and inventory checks must either be absorbed into the standard fee they charge their landlord clients, or an additional fee on top. It’s a good idea to make sure how the agent is going to deal with this and perhaps compare their charging structure with other competing agents, bearing in mind cheapest is not always best.

You want an agent that’s proactive in the way they market their properties, so a quick anonymous test using a telephone equity might be a prudent move before making a decision on an agent, and make sure they are using a range of strategies to proactively market, particularly their on-line presence. You might check their property listings on a property portal like Rightmove or Zoopla to see how they present properties to market, and how successfully they rented out many properties in your area recently.

There are many benefits to using a full management agency and the trade-off between paying the fees and getting your life back can be more than worth it. However, there are some pretty poor agents out there as well as the really professional ones, so you do need to exercise great care; carry out through due diligence before signing a contract.

And remember, it’s not always the big national chains that give the best service, though most of them are very professional, the small local independent with a good reputation can often give you the personal attention and professionalism you desire.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Why are more DIY landlords looking to use agents on full management? | LandlordZONE.

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BREAKING: Court of Appeal backs landlord in key Gas Safety certificate and Section 21 evictions case

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The Court of Appeal has handed down judgement on the contentious Trecarrell House vs Patricia Rouncefield case which seeks to clarify if landlords can serve a Section 21 eviction notice on a tenant when a Gas Safety Certificate has been served after a tenancy has begun, and has backed landlords.

A valid certificate is one of several pieces of paperwork landlords must give tenants before they move into a property in order to enable a later valid Section 21 eviction.

Tenant Patricia Rouncefield has sought to clarify this important point of law after her landlord Trecarrell House attempted to serve a S21 notice on her despite having provided a Gas Safety Certificate after her tenancy began

Three judges, Lord Justices Patten, King and Moylan, have this morning passed judgement in this case following the hearing in January during which evidence was presented from both sides.

Gas safety certificate

Rouncefield’s property had a valid gas certificate both before and during her tenancy but she was not given a copy prior to or when she moved in During February 2017. She was served with a Section 21 notice on 1^st May 2018.

The judges each gave their own commentary on the case but agreed that ’as long as the [Gas Safety certificate] is provided to the tenant prior to service of the section 21, the notice will be valid’.

In the commentary on the decision, the lead judge said: “It is difficult to reconcile this interpretation of the law with legislation which would appear to be aimed at ensuring the safety of tenants.

“Similarly, I find it hard to balance this interpretation with the actual wording of regulation 36(6)(b) of the 1998 Regulations which states that the GSR needs to be given to any new tenant “before that tenant occupies those premises.

“I would agree with Moylan LJ’s characterisation of the majority finding: late service of the GSR for the purposes of 36(6)(b) becomes a mere “procedural requirement” rather than a “substantive sanction”.

Fantastic news

Tim Frome, Head of Legal at Landlord Action, says: “We’ve been waiting with baited breath for this decision from the Court of Appeal and on the face of it the news is fantastic for landlords such that, due to an admin error, they can’t be prevented from serving a Section 21 notice.

“This judgement may be further appealed, but as long as a certificate is served before a S21 notice then that will be sufficient.

“At Landlord Action we have a small percentage of cases where this problem has arisen and our clients will be heaving a huge sigh of relief.”

Read the judgement in full.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: Court of Appeal backs landlord in key Gas Safety certificate and Section 21 evictions case | LandlordZONE.

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EXCLUSIVE: Injunctions are not the answer to anti-social tenants during evictions ban, industry tells minister

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Housing minister Christopher Pincher (pictured, above) has claimed in Parliament that landlords are able to deal with tenants who are behaving anti-socially during the evictions ban with a range of alternative regulatory tools other than evictions.

His comments were in response to MP Clive Betts, Chair of the Housing, Communities and Local Government Committee, who asked what powers landlords ‘have at their disposal to tackle tenants who breach their tenancy agreement as a result of anti-social behaviour’.

Pincher replied that landlords, faced with such problem tenants, should consider using injunctions, closure orders and community protection notices to deal with them.

This raised eyebrows among the landlord community, who are well aware that such measures are expensive, protracted and time-consuming options even when compared to the UK’s evictions processes.

“Whilst the police and councils do have powers to tackle anti-social behaviour, the feedback we are getting from tenants and landlords alike is that this is often too slow and ineffective,” says Chris Norris, Policy Director for the National Residential Landlords Association.

“Such behaviour causes misery for those affected including fellow tenants and neighbours and it is vital that it is not allowed to fester.

“By far the quickest way to deal with it is to evict those who are responsible. We call therefore for the restoration of powers to enable this to happen as a matter of urgency.”

Not practical

Paul Shamplina of Landlord Action says Pincher’s suggestions are ‘not really practical’.

“When the police are called about a breach of the peace within a rented property they will arrest someone if a crime has been involved, but otherwise they will just ‘have words’,” he says.

“The police don’t want to get involved in evicting tenants.”

Shamplina says injunctions are extremely costly and can run into thousands of pounds and that even if landlords get their day in court, they’ve got to persuade the judge that the tenant is a multiple offender.

“Most landlords have small portfolios and don’t want to fork out that kind of money. It’s why the blanket evictions ban needs changing – it protects tenants who are behaving anti-socially and who know they can’t be evicted.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Injunctions are not the answer to anti-social tenants during evictions ban, industry tells minister | LandlordZONE.

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