EVICTIONS: Changes to property possession process are needed, says legal expert

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Leading housing lawyer Simon Mullings is working with tenants’ groups on a five-point plan to make the evictions process fairer.

Mullings, co-chair of the Housing Law Practitioners Association (HLPA), says a worryingly low number of tenants facing eviction are not accessing free legal advice when their case is being reviewed by a judge under revised arrangements for possession proceedings.

Although the requirement for landlords to send the court an electronic copy of all the case documents – and confirm that these have been sent to the tenant – at least 14 days before the review is a positive innovation, Mullings suggests that duty advisers should be allowed to proactively contact tenants.

He told a conference organised by HLPA that one benefit of the mediation pilot being used in the process is that legal advice must first be given to a tenant.

Master of the Rolls

His announcement follows a recent Master of the Rolls report into possession hearings for evictions following the Covid court restrictions which warned of decreasing trust in the justice system without good availability of legal advice.

It said possession hearings were deemed unsuitable for remote determination by many, mainly because of the number of vulnerable tenants involved who were unlikely to be able to access the technology needed to take part, or to provide instructions to solicitors where they were represented.

Measures mandated by the pandemic had reduced the availability and accessibility of legal advice, with the impact of reduced advice disproportionately affecting those on low incomes.

It added: “Possession hearings, if conducted remotely, would threaten effective participation and undermine trust in the justice system.”

A working group is now looking into the ‘absurdly complicated’ process of evicting tenants and housing law in general.

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Bailiffs arrive at Last?

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Bailiffs arrive at Last! SO after serving notice for non-payment of rent on 1st November 2019 (Long before Covid-19 was even invented) and after a full year of waiting, a court date was finally set for 18 March 2021, at which the judge ruled for an eviction two weeks later on 1st April 2021 (AND that bailiffs could be called before the 30 June cut-off if necessary).

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TEST CASE: Is a landlord responsible for a rent-to-rent firm’s mistakes?

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This recent case involves a leasehold flat let to a management company that operated without the requisite HMO licence, says Tom Entwistle.

Rent-to-rent, the practice of letting a property to a management company that in turn rents to tenants is a practice that has become increasingly popular.

It takes all of the hassle out of owning rented property for the landlord, offers a guaranteed rent whether the property is occupied out not, and often the property must be returned in the same condition at the end of the arrangement.

That’s the theory, and in practice it works well providing the landlord owner lets to a responsible property management company or local authority.

Unfortunately, the arrangement is fraught with difficulties and arguments between the parties, even when the management company is reasonably responsible – the legalities of the situation can be complex.

Rakusen v Jepsen

In the case of Rakusen v Jepsen (Upper Tribunal) the owners of a leasehold flat moved out and rented it to a property management company. The company let the property to three tenants who occupied individual rooms.

But eventually this turned into four tenants occupying, which meant the letting became a house in multiple occupation (HMO), subject to licencing and all the additional regulations and safety measures that that implies.

When the property management company’s tenancy came to an end, the residents, realising the letting was in breach of the HMO licencing regulations, applied to the First Tier Property Tribunal for a rent repayment order (RRO), not against the property management company but against the landlord owner – the superior landlord.

Test case

This was a test case as to the application of Section 40 Housing and Planning Act 2016 regarding situations where Rent Repayment Orders can be applied to a range of offences and without the requirement of a conviction.

In his defence Mr Rakusen argued that the offence had been committed when the management company was in charge and therefore the award must be made against them.

Rakusen’s defence argued that on the correct construction of Chapter 4 of the Housing and Planning Act, a Rent Repayment Order can only be made against the immediate Landlord to whom the tenant had paid rent and could not be brought against a superior landlord. 

Rakusen’s defence relied on the wording under Section 40(2) which refers to “repay” saying that this could only apply to the landlord who had actually received the rental payments from the tenant.  He also argued that the reference to the “the Landlord” could only be the immediate landlord under the tenancy.

Permission to appeal

However, the tribunal awarded against Mr Rakusen, but granted permission to appeal. The Tribunal was guided by an earlier Upper Tribunal decision in Goldsborough & Anor v CA Property Management Ltd (2019) in which it was determined that an RRO could be made against a superior landlord despite there being no contractual connection between him and the tenants.

Mr Rakusen appealed his case to the Upper Tribunal (UT) but the appeal was dismissed. The UT restated that an order could be made against a superior landlord who has committed an offence (not holding an HMO licence) regardless of the lack of a contractual connection.  

The decision is an important one given the popularity of Rent-to-Rent arrangements where the immediate landlord, being a property company with no repairing obligations, is unlikely to be subject to the requirements of improvement notices or to prosecution for failing to licence.

Landlords should tread very carefully when letting to a management company and only reputable companies with a track record with these lettings should be considered. Tenancy legalities can be very complicated, so the services of a proficient solicitor should be used when drawing up agreements. Often management companies are poor targets for claims if they lack assets as they will simply go into liquidation if a claim is brought.

These tribunal decisions give a useful steer, but the case is now subject to an application to the Court of Appeal.

Read more: ‘My rent-to-rent horror story’.

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LATEST: Lloyds Bank buys first rental properties as it rolls out PRS project

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Lloyds Banking Group is close to buying its first rental properties in a bid to go head-to-head with private landlords.

The UK’s largest mortgage lender has reportedly agreed to acquire a block of flats in Nene Wharf, Peterborough, and could start renting them out as soon as next month.

Lloyds is expected to manage the 50 residential units through a subsidiary called Citra Living.

It first announced plans to enter the sector in March, targeting new and existing housing stock across the UK as it searches for sources of revenue.

The plan – Project Generation – is set to bring in another source of income for Lloyds after it saw profits tumble by 72% to £1.2 billion last year as it battled the economic fallout of the pandemic.

Lloyds aims to take advantage of its low funding costs, strong brand name and knowledge of the housing market to become a major player in the sector, and believes it can offer better quality and more professional services to renters than many existing landlords. 

The move could pave the way for Lloyds to sell other products to prospective tenants, such as insurance or loans for deposits.

The lender has also directly invested in several housing projects with smaller developers in recent years through a partnership with Homes England.

Broadening access

Lloyds says: “As we stated in our full-year results in February, we are committed to broadening access to home ownership and exploring opportunities to increase our support to the UK rental sector.”

It’s not the first financial institution to get into property; Legal & General is a huge housebuilder, leaser and landlord of private rented property, while John Lewis announced plans earlier this year to build a residential property portfolio to offset weakness in its high street stores.

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