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’.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – TEST CASE: Is a landlord responsible for a rent-to-rent firm’s mistakes? | LandlordZONE.

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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.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Lloyds Bank buys first rental properties as it rolls out PRS project | LandlordZONE.

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Splitting Rental Income for Tax Planning Purposes

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There are several ways to split rental income for tax planning purposes, the two most popular being a Declaration of Trust or one of many form of Partnership.

The concept is to transfer rental profits to a lower rate tax-payer.

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Activists launch campaign to reverse council’s selective licensing plans

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Tenants union Acorn is pushing for a selective licensing scheme in Brighton & Hove, three years after local landlord group iHowz managed to get the Housing Secretary to reject the city’s plans.

Its Landlord Licensing Now! campaign includes a tongue-in-check competition on social media to see whose rented property has the worst mould while it has also organised a rally in Brighton tomorrow (Saturday 19th June).

Activists say they are escalating efforts to collect evidence of poor housing after the city council reported that recent investigations in four wards – Queen’s Park, St. Peter’s and North Laine, Brunswick and Adelaide and Regency – revealed properties were, “overall found to be in a good condition”.

In 2018, iHowz successfully opposed the council’s plans which would have seen 27,000 rental properties covered by the scheme. Local landlords claimed it was unlawful, unnecessary and not justified by the evidence provided, and would almost certainly lead to rent increases for many private sector tenants in Brighton.

Landlord training

The council has promised to continue collecting evidence and working towards being able to apply for a licensing scheme. However, an iHowz spokesman tells LandlordZONE that together with the council, it implemented a landlord training and accreditation scheme which it believes already goes a long way to meet the charter called for by Acorn.

He adds: “Brighton & Hove, like most local authorities, have seen many budget cuts, but we wonder why Acorn have decided that landlords should be singled out to help top up the missing budget. It is an unfortunate fact that any council bringing in blanket licensing will have the unintended consequence that the cost of licencing will be reflected in rents.”

Acorn has been negotiating with the local authority for more than a year on the issue, and is also calling for an ethical landlords charter to be implemented. Branch secretary Ellen Musgrove (pictured) says its members often report serious issues with landlords that don’t get resolved.

She adds: “If the council can’t find the evidence they need they must be doing something wrong. We have tried to work with the Green administration to improve conditions for renters but the many delays make us question their commitment to standing up to bad landlords in this city.”

Councillor Martin Osborne, lead member for the private sector rented housing, says the desire is there but it is stymied by the thresholds the government has set. “While we do not yet have the evidence we need, we are continuing to collect evidence and work towards being able to apply for such a scheme,” he says.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Activists launch campaign to reverse council’s selective licensing plans | LandlordZONE.

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Home Office extends Covid Right to Right rules deadline to end of August

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The government has extended the period during which the existing and more relaxed immigration Right to Rent regulations can be followed by two months.

This is the third extension and reflects the recent proposed delay to the Covid ‘freedom day’ in England by Boris Johnson last week to the 19^th July.

The period during which the Right to Rent temporary adjusted checking processes apply was expected to end on 16^th May but was then extended until 21st June and now 31^st August.

This means until then landlords will still be able to do online video identity checks and accept digital/scanned copies of Right to Rent documentation.

Then, from 1^st September onwards landlords and letting agents will revert to face-to-face and physical document checks as set out in legislation and guidance.

The Home Office says this will ensure both groups will have sufficient notice to put measures in place to enable face-to-face document checks.

“You do not need to carry out retrospective checks on those who had a COVID-19 adjusted check between 30 March 2020 and 31 August 2021,” the Home Office statement says.

“This reflects the length of time the adjusted checks have been in place and supports landlords during this difficult time.

“You will maintain a defence against a civil penalty if the check you have undertaken during this period was done in the prescribed manner or as set out in the COVID-19 adjusted checks guidance.”

Read the full Right to Rent regulations as they currently stand.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Home Office extends Covid Right to Right rules deadline to end of August | LandlordZONE.

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The accounts and management are a joke?

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I have held the lease on my first floor flat for the past 21 years, extending it in 2013. The Freeholder owns and lets out the ground floor flat. I have struggled with the Freeholders approach to managing my Lease.

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New property valuation tech is ‘most accurate’ for buy-to-let – claim

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Entrepreneur Nitin Aggarwal has launched what is claimed to be the most accurate way to value properties online despite hot competition from other providers including Zoopla and Rightmove.

Aggarwal has launched what’s called an Automatic Valuation Model (AVM) platform which claims to be more accurate than the current available digital technology to value property.

The service is part of his Property Deals Insight website and can be used for free for two weeks but thereafter is a paid-for service.

It’s part of a package that ranges from per square metre valuations to the latest off-market deals and analysis, top ROI properties, local area analysis and more.

“Years ago I was amazed to find that there was no standard way of knowing a property’s value, and as I dealt with property at the time, I really needed a 100% solution to cover the knowledge gap,” he says.

“In the end after extensive analysis and development I built a solution.”

Human touch

Aggarwal is part of a sector that is chasing the most accurate AVM and most, including those offered by Zoopla’s data firm Hometrack offer value ranges but only really work on ‘cookie cutter’ properties or if more information is provided by a human.

Property Deals Insight claims to be going the extra mile and says his AVM is ‘more reliable than humans’ when judging a property’s value.

“Property investors will also find it to be an essential tool, a ‘property compass’ giving detailed intel on property yields, index properties by measurement and comparables – functionality that just does not exist elsewhere on the market.”

Read more about online property valuations.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – New property valuation tech is ‘most accurate’ for buy-to-let – claim | LandlordZONE.

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Section 24 Tax Planning

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Solutions for landlords with a Section 24 tax problem.

First though, let’s take a look at what Section 24 tax is and why it’s so unfair.

The following Case Study explains why so many property rental business owners are considering incorporation

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BREAKING: Wales extends period during which landlords must give six months’ notice to evict

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The Welsh government has used its existing emergency Coronavirus powers to extend the period during which landlords must give six months’ notice before beginning evictions proceedings by another three months.

Existing legislation voted in by the Welsh Senedd in March last year was due to expire at the end of this month.

Housing minister Julie James (pictured, above) said in a statement: “The purpose of this alteration is to ensure that during the on-going public emergency, and in the light of the continued uncertainty caused by the emergence of new virus variants, landlords continue to give increased notice to tenants facing eviction from rented properties before landlords can issue proceedings for possession.

“The effect will to be to delay evictions meaning that: fewer people will face eviction into homelessness at a time when local authorities are less able to respond to these situations.”

Ben Beadle Chief Executive, NRLA (pictured) commented: “This announcement reinforces the urgent need for the Welsh Government to take rapid action to address the mounting rent arrears crisis unfolding across Wales.

“The expansion of long notice periods will only worsen this and prolong uncertainty for all involved.

“Landlords in Wales cannot continue to wait an average of 15 months to regain repossession whilst trying to deal with non-payment and anti-social behaviour making lives miserable.

“The Welsh Government must end the emergency pandemic measures as soon as possible if these businesses are to survive.

“A failure to proactively address the rent debt crisis will mean devastating long-term consequences for the individuals concerned and their credit scores – and preclude renters from accessing private sector properties for years to come, placing huge strain on local authorities to house people.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: Wales extends period during which landlords must give six months’ notice to evict | LandlordZONE.

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