Keep yourself up to date at the next Virtual National pin Meeting

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It is so important at the moment to keep up to date with the Property Market. On Wednesday 3rd August at 6 pm, the property investors network will be running their Virtual August National pin Meeting.

There are three amazing speakers

View Full Article: Keep yourself up to date at the next Virtual National pin Meeting

Cost of EPC improvements exceed landlord pain thresholds

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There is a gulf between the amount that landlords are willing to pay to meet proposed new EPC requirements and what it is actually likely to cost.

A survey of landlords carried out on behalf of Paragon Bank has found that 77% of landlords are willing to spend up to £3,000 to upgrade each property they own to EPC C in order to meet new regulations proposed by the Government

View Full Article: Cost of EPC improvements exceed landlord pain thresholds

Opinion: the case of an uncashed cheque raises many important questions

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With the recent publication of the Government’s policy paper, “A Fairer Private Rented Sector” here comes more uncertainty for landlords when it comes to the unfortunate situation where a landlord needs to evict a tenant. A recent legal eviction case, in my view, raises some issues that need answers.

Gul v Bilal (2021)

The case of Gul v Bilal involved a tenant eviction, issues around tenancy deposit protection, the section 8 and section 21 processes, and the non-cashing of a presented check.

Should a landlord fail to protect a tenancy deposit in one of the approved schemes, within the 30 days allowed, then not only is the landlord subject to a penalty of up the three times that deposit, and on the renewal of that tenancy, he or she cannot serve a valid section 21 notice.

One get-out-of-jail-free card with this is that according to the legislation, a valid section 21 notice can be served, providing the deposit monies are returned to the tenant in full before a section 21 notice is served.

Gul v Bilal (2021) is a county court case, so cannot be taken as binding on other cases, but to my mind it does raise some interesting and vital issues, especially given that landlords may no longer be able to use the section 21 eviction process if the proposed changes become law, which looks likely.

The case revolved primarily around the question of whether landlord Mr Gul’s action of presenting Mr Bilal with a cheque amounted to returning the deposit, when in fact Mr Bilal said he never accepted it and never presented it to his bank.

If the action of presenting the cheque made the money available to the tenant, could this not be deemed to be legally returning the deposit? If so, following this action the landlord would be in a position to serve a valid section 21 notice, if not then he wouldn’t. This was the question facing the court.

The run-up to the dispute

The background to the case was that Mr Bilal was behind with his rent payments. Mr Gul served Mr Bilal with a Housing Act 1988 section 8 notice citing grounds 8, 10 and 11 (common grounds used for rent arrears). Unlike a section 21 notice – where the landlord does not have to state grounds (reasons) for eviction, and usually leads to an eviction without the need for a court hearing, section 8 always requires a hearing.

Grounds 8, 10 and 11 of Schedule 2 of the Housing Act 1988 are mandatory grounds. This means that the judge does not have discretion as to whether or not to grant possession, providing the grounds are met.

Unfortunately for Mr Gul, the tenant in his determination to avoid eviction came up with a couple of tactics that would help him do that: Mr Bilal counter-claimed against Mr Gul citing disrepair in the property, and also non-protection of the deposit, for which penalties would be due.

I’m not saying that there was no justification for what Mr Bilal was doing, just my observation that in many such cases counter-claims are actions sometimes used to delay or prevent an eviction.

Covid arrived and intervened in the hearing process, but in February 2021 the case was reactivated and notice was served for a directions hearing to take place. This is where the court gives instructions to the parties as to how they are to proceed and prepare their case.

However, just before the directions hearing Mr Gul presumably had second thoughts, and here I surmise, realising that taking the section 8 route for rent arrears, and subsequently receiving a counter claim against himself, he would probably have been better using the no-fault section 21 route.

There was however a major obstacle preventing section 21. That was the deposit that he had taken and not protected. He needed to use his get-out-of-jail-free card before service of the section 21 notice and that was to return the deposit in full, which by the way he had done by way of a cheque given by hand at the property to Mr Bilal in January 2020, when he served the original section 8 notice.

He decided to serve a section 21 notice, and waited for two months (the notice period) which expired just before the court hearing. Mr Gull then applied to have the court rely on the section 21 notice, which would mean he could bay-pass the section 8 proceedings.

A question of when payment is made

The question the judge had to decide was, could the landlord rely on his presenting a cheque, which was not cashed? Could it be accepted as having legally returned the deposit to the tenant, and so allowing the section 21 – the mandatory possession proceedings – to succeed?

Unfortunately for Mr Gul, the judge didn’t think so. The tenant argued that although he had been given the cheque he did not accept it, he did not accept the return of his deposit, and the landlord agreed that it had not been cashed.

The ruling

The judge agreed with the tenant that the deposit amount had not been returned, and the section 21 notice was therefore invalid. The court dismissed the application to use section 21 and directed that the claim proceed based on section 8 (rent arrears grounds) and to deal with the counterclaim. Costs for the direction hearing were awarded against the landlord because the judge argued the landlord’s section 21 application was last minute, which did not even consider the tenant’s claim, defence and counterclaim.

In making the decision the district judge had to rely on previous judgements that determined that (1) a section 21 notice would be valid only if served after a returned deposit had actually been received, (2) that a cheque would have to be accepted by the tenant to represent payment, and (3) if accepted, the cheque would have to clear, but if it did clear the deposit return date would be when the cheque was given and accepted.

So, in the Gul v Balal case these requirements had not been met in full. The District Judge therefore refused to allow the S21 notice to be relied upon and the original claim and counter-claim were directed for trial.

A similar case with a different outcome

The case of Andy Coltrane v Janice Day (2003) involved a section 8 rent arrears eviction where the tenant had given the landlord a cheque on the morning of the possession claim hearing.

In order to meet the mandatory possession grounds for section 8, the landlord needed to show that the tenant was two months in arrears – on the day of the hearing. Here again, the question the court had to decide was whether the cheque was to be deemed to have been paid when the landlord received it (on the morning of the trial) or whether the landlord would have to present the cheque at his or her the bank before the arrears were to be deemed paid in full.

At a hearing in September 2002 the tenant handed to the landlord a cheque for the full amount of the rent arrears. The landlord accepted the cheque and it was subsequently met when presented. The judge decided that the rent was unpaid on the day of the hearing and made out an order for possession. The tenant appealed.

The appeal outcome in Coltrane v Day

The appeal court determined in Coltrane v Day that delivery of a cheque was a “conditional” payment and if the cheque was subsequently cleared by the bank, and met in full, this was then deemed payment from the date of delivery.

This principle, the appeal court said, applied to ground 8. If the cheque cleared, the debt was deemed to have been paid when the cheque had been given.

So, the cheque had been delivered to the landlord just before the hearing and had been accepted by him. Further, he had been bound by his contract to accept as he had done with previous rent payments, and therefore the cheque had to be treated as payment of the arrears in full at the date of delivery, providing that it subsequently cleared through the bank.

The appeal court said that district judge at the first trial could have adjourned the claim to see whether the cheque cleared. The appeal court ruled that the judge had been wrong to make out a possession order. It was therefore set aside.

Lessons learned and issues arising

It is clearly unwise to rely on repaying a deposit by cheque before serving a section 21 notice unless it has been accepted, and preferably cleared through the bank.

Rent will not be deemed to be in arrears under the section 8 mandatory possession proceedings if a cheque for the arrears is given at the date of the hearing, accepted by the landlord and subsequently clears through the bank.

An interesting question would be, and I don’t know the answer, what if Mr Gul had repaid Mr Balal’s deposit through a back transfer directly into the tenant’s bank account?

Some general questions about section 8

In the light of the possible changes in the Government’s policy paper, “A Fairer Private Rented Sector” section 8 will be the only route available to landlords – effectively, if the suggested changes become law, and that’s far from settled, the assured shorthold tenancy (AST) will no longer exist, tenancies will be periodic from day one and effectively assured tenancies (AT).

This will certainly redress the balance of power from the landlord to the tenant and some would argue, tips the scales the other way – the tenant has full security of tenure. The Government has said that section 8 will be amended, adding more grounds and giving landlords more certainty, but it’s hard to see how this will be made to work in practice given the adversarial system of the courts – there will be no ground for possession equivalent to section 21.

Gul v Bilal raises an important issue to my mind: tenants can easily use tactics that, even in the worst cases of breach of contract, for example rent arrears, anti-social behaviour and damage to the property, certainly under the present regime, prevent or cause lengthy delays to eviction.

Filing a counter-claim is one major example of a delaying tactic. It is not easy for a landlord to disprove breach of contract for defects in the property. The hearing is usually adjured for a future hearing, perhaps 6 months down the line, pending expert reports, while all the time rent is not being paid and further hearing necessary – the process can drag on inexorably.

Further hearings mean more and more expense and if the landlord loses, he or she is paying the tenant’s legal costs. If the tenant has a barrister at public expense then he or she is unconcerned about the costs, but the landlord is really up against it, and the legal costs will certainly rack up.

Will the new system prevent these last minute payment of rent tactics, right up to the day of the court hearing, when the landlord has committed time and expense to get the case to court? Will the tenant then go on to get into arrears again, only to repeat the same process?

The courts are overstretched as it is. If every eviction is to have a hearing using section 8, how much delay will there be under the new system? Will the amendments to section 8 adequately deal with the problem of tenants using delaying tactics as above, and running up astronomical costs.

View Full Article: Opinion: the case of an uncashed cheque raises many important questions

European property management platform for portfolio landlords launches in UK

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Proptech firm iDWELL has launched in the UK as it bids to become Europe’s leading digital solution for the property management sector.

The company digitises complex and time-consuming admin work and communication, and offers an integrated maintenance ticketing system along with full email and communication integration, automated workflow, and separate landlord- and tenant-facing apps. 

Founded in Vienna in 2017, iDWELL’s CRM solution and corresponding customer app manages more than 900,000 apartments and the company believes expansion into the UK market is the next logical step for the platform which has the potential to grow internationally.

Big topic

Alex Roth, founder & CEO, says it will offer close support to property managers when transferring over to the product, digitising their processes and making them more efficient in order to save time, resources and money.

“The feedback from our first UK customers and appointments has been excellent, so we are looking forward to supporting more customers to solve their issues and help their business grow,” he explains.

Alex Abbott, leader of iDWELL’s UK team, adds: “iDWELL is an outstanding product and ideal for the UK market where digitisation in the property management market is a big topic. We’re confident that this is exactly the right time to be launching and that iDWELL is now the best property management CRM on the UK market.”

View Full Article: European property management platform for portfolio landlords launches in UK

Looming EPC rules to cause mayhem in the rental market, warns senior figure

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A staggering one-third of landlords plan to quit the sector or do nothing to address energy efficiency failings if and when new EPC regulations kick in.

Research carried out on behalf of Paragon Bank reveals that 21% of landlords would not carry out any necessary works to bring their property up to a band C, and would either sell up or not re-let it, while 12% wouldn’t carry out any works, continuing to let their property until 2025 for new tenancies and 2028 for existing tenancies – the dates currently proposed by the government.

It found 33% would do the works at the minimum cost required to comply, and continue to let the property out.

Paragon’s survey of more than 700 landlords also discovered a gulf in the amount that landlords are willing to pay and what it is actually likely to cost.

Just over three-quarters (77%) would spend up to £3,000 to upgrade each property to an EPC band C, while analysis by the specialist mortgage lender reveals that 78% of landlords would need to spend over this amount.

£10,000 per property

The reality is that, taking into account the government’s proposed cap of £10,000 per property, the average cost to upgrade to a C would be £10,560, says Paragon.

Six in 10 landlords said they would use savings to fund the work, followed by 27% who would increase rent. Almost one in five (19%) would rely on government funding.

Read more about the MEES laws.

Richard Rowntree (main image), Paragon’s mortgage boss, says the sector needs some clear guidance from the government to understand the resulting financial support needed.

He adds: “This means that mortgage lenders have an important part to play in supporting landlords. Without this support, and the full backing of politicians, we may see landlords cut their losses and exit the sector altogether.”

Read more about the challenges of the EPC system.

View Full Article: Looming EPC rules to cause mayhem in the rental market, warns senior figure

Portfolio landlords research by Handelsbanken

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Handelsbanken has conducted new research among a small but niche panel of 120 professional landlords managing a total of 829 properties in the UK on their outlook for the industry, the challenges they faced during the pandemic, the impact of new EPC legislation on their portfolio and their succession plans.

View Full Article: Portfolio landlords research by Handelsbanken

Tenants complain but won’t take action?

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Looking through the thousands of posts on this forum, you quickly get the impression that landlords are wicked scoundrels and tenants complain about them constantly.

It’s the same in my world of block management. Long leaseholders complain about high service charges

View Full Article: Tenants complain but won’t take action?

New rent guarantee service ‘first to eliminate rent arrears and voids for landlords’

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A letting agent is guaranteeing landlords that it can pay out their total rent every month, regardless of void periods and late payments.

London and overseas firm Holland Properties’ new service – Holland Assurance – aims to guarantee a consistent income for investors, even if their tenants miss a payment.

Tenants don’t pay the company up front, but as per a normal letting agreement, it explains. For landlords, there’s no need to wait for tenants to pay, as they receive their income regardless of when payment was made, even when tenants are in arrears.

All property breakdowns get combined into one single statement, once a month, on a chosen day. 

The company also guarantees an increase on the rent for the first year based on a landlord’s current rent, while paying out even if the property is empty, depending on the property, area and current rent.

Financial problems

“Landlords can be assured that in case of any financial problems, their rent is protected by tenant referencing,” according to MD Sheldon Cole, who believes that his is the first property firm offering this kind of guarantee.

“It is a bold and dynamic move that pushes boundaries, but we are confident we can deliver,” he says.

“Our total transparency, openness, and honesty, alongside our service standards has always set us apart from our competition and now we can offer an assurance to our clients as well to make their lives easier.”

Holland Properties adds that the launch comes at a time of scrutiny for usual rental guarantee services, which can see agencies sometimes charge tenants an extra fee that the investor doesn’t see. 

Read more about rent guarantee products.

View Full Article: New rent guarantee service ‘first to eliminate rent arrears and voids for landlords’

Payments on Account: What you need to know

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It’s time to make your next tax payment – Don’t miss the deadline!

It seems like summer is finally here – time for barbeques, picnics, beer gardens – and your next Payment on Account!

31st July 2022 stands as the deadline for taxpayers to pay their second payment on account towards their 22/23 tax bill – some of you may have already received letters about it from HMRC.

What is a payment on account?

The Payment on account system was brought in by the revenue as a way of receiving tax payments from tax payers in advance of their tax return submission and the tax year ending.

It is calculated using the previous year’s tax liability as the estimate for the next year. When you submit your tax return for the last tax year, you are also required to pay 50% of that liability towards the current tax year’s liability. Then come July 31st, you are required to pay another 50% – so by the January deadline, you just need to pay the difference between the payments already made, and the actual liability.

If we take the following as an example:

Tax year 2019/20 was your first year trading.

31 January 2021 – Tax liability for 19/20 is due PLUS Payment on Account 1 (50% of the 19/20 liability, towards the 20/21 liability)

5th April 2021 – End of 20/21 tax year liability is calculated

31st July 2021 – Payment on Account 2 is due (remaining 50% of the 19/20 tax liability)

 31st January 2022 – Balance of 20/21 tax liability is due PLUS Payment on account 1 for the 21/22 tax year.

It sounds pretty complicated, and to be honest it’s not the easiest system to get your head around! So to help you we have added a section on paying your self assessment tax bill to our Ultimate Guide to Self-Assessment Tax Returns. We have even included an easy to follow “how to” video!

Do I have to make payments on account?

This depends on your liability, and other circumstances. If you have a total liability of less than £1000 (not including tax deducted at source, such as PAYE) then you do not need to make payments on account.

If you know that your liability is going to be lower than the previous year then you can request a reduction in your payment on account from HMRC.

How can this system help me?

Although the tax return isnt due to be submitted and balance paid until 31st January, using the 31st July Payment on account date as an aim for submitting your tax return could be a huge benefit.

If you calculate your tax return in July/August – then you will know the balancing payment and next year’s liability 6 months before you are due to pay. This could be a valuable time to sort cash flow, or request reductions in your payment on account, if needed. It can also give you time to make any tax planning decisions for the current tax year. 

Thousands of taxpayers are already starting to submit their 21/22 tax return – but it doesn’t have to be a complicated process – you can calculate your tax liability for FREE using  APARI Simple Self Assessment.

View Full Article: Payments on Account: What you need to know

LATEST: Portfolio landlords to buy more properties as rental demand soars – claim

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Nearly half of landlords with multiple properties plan to expand their portfolio in the next year, bucking the trend of those reportedly looking to sell up.

New research from Handelsbanken reveals that 49% of professional landlords – those owning at least four properties – intend to buy more, while 8% plan to invest in improving the quality of their portfolio.

Despite fears of an economic downturn and the cost of living crisis, only 7% of landlords expect to sell some or all their portfolio, while a third (35%) are keeping their current properties for the next 12 months.

Handelsbanken’s poll of 120 professional landlords finds that many hope to diversify their assets across different sectors and regions, with London seen as the most attractive place to invest (chosen by 53%), followed by the East of England (40%) and the East Midlands (22%).

When it comes to the type of property they have their sights set on, houses come out top (66%), followed by flats (38%), HMOs (34%) and commercial retail (32%). The survey also found that 86% of landlords expect a rise in demand for residential property, with nearly two-thirds (63%) confident that commercial property demand will also increase.

Buoyant

James Sproule (pictured), UK chief economist at Handelsbanken, says: “Landlords are anticipating that a shortage of rental properties will help keep prices buoyant, particularly as working patterns continue to adjust to the post-pandemic world and people seek to move back to big cities, particularly in popular areas such as London, which is also seen to be better placed to ride out the next series of economic challenges and opportunities.

“Landlords went through a tough period following the COVID-19 pandemic, with residential property transactions falling by more than half and business investment contracting. But the sector has survived and is now looking forward.”

View Full Article: LATEST: Portfolio landlords to buy more properties as rental demand soars – claim