LATEST: Landlord makes national headlines after adding parking to his portfolio

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A Birmingham landlord is hoping to cash in on local parking problems by turning the driveway of his rental property into a big car park.

Akeel Ahmed made national headlines after he spent £20,000 tarmacking the land and marking out bays for 20 cars, undercutting charges at Heartlands Hospital.

For £5, drivers drop the cash through his letterbox and can park all day, which is less than the £10.20 demanded by the hospital opposite, for a 24-hour stay.

Motorists have been dumping cars on pavements and even in the middle of mini-roundabouts in a bid to avoid hospital car park fees.

The former plumber, who lets out the property at the junction of Alston Road and Bordesley Green East, decided to make the drastic decision when a visitor asked if he could park on the drive and gave him £5 for his trouble.

Nursing profits

Ahmed said his main customers are nurses, some of whom can’t get permits to park at the hospital. He is now eyeing the school run market and offers drop-off and pick-up slots on weekdays for £2.

“I get four or five cars a day, some days I get none,” he said. “Weekends I can get none. If all 20 bays are full, it will be £100 a day but at the moment it’s more like £10.”

He added that everyone who had approached him believed it was a brilliant idea – although there’s no mention of what his tenants think. “It’s going to be worth it,” said Ahmed. “I’m making the area nicer as it was very overgrown. I contacted the council and they saw it as a positive.”

Picture credit: BPM Media.

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Rent-to-Rent boss banned after scamming investors out of £6.7m via ‘Ponzi’ scheme

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The boss of a guaranteed rent business has been handed an 11-year ban for scamming £6.7 million from investors.

Sam Eustace, 36, from Sutton, was director of Kingsman Property Ltd, which promised landlords guaranteed rent and offered annual returns of 30% to those investing money into the HMO sector.

An Insolvency Service investigation found that between October 2016 and March 2019, it paid out more than £3 million to investors, but that this was funded by money received from new investors rather than any actual return on investment, which is similar to a Ponzi scheme.

The company, set up in October 2015 originally as Samuel James Ltd, changed its name to Kingsman Property Ltd in May 2017.

Company accounts showed the business was insolvent as early as June 2017, with debts totalling nearly £700,000 but its deficit grew exponentially and it owed nearly £5 million when it eventually went into liquidation in August 2019.

‘Successful entrepreneur’

Kingsman Property’s Facebook page declares that it is, “led by a successful entrepreneur who combines his love of property with financial acumen…who is honest and trustworthy”.

Despite this, Eustace paid himself dividends from the company between November 2017 and June 2019 amounting to nearly £400,000.

The disqualification prevents him from directly, or indirectly, becoming involved in the promotion, formation or management of a company, without the permission of the court.

Martin Gitner, chief investigator at The Insolvency Service, says: “Sam Eustace knew he was taking people’s hard-earned savings as part of a scam and has left countless people out of pocket.

“The Insolvency Service will not hesitate to investigate and use its powers against those who engage in this kind of fraud.”

Read more stories about rent-to-rent.

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End of lease repairs – What do landlords need to know?

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The end of a tenancy can be a stressful time for landlords, faced with a range of repairs before they can relet the property.

“Dilapidations” is the term generally used to refer to the process a landlord needs to follow to recover any loss they may have suffered as a result of the tenant’s failure to return the property at the end of the lease, having reinstated any items of damage or disrepair in accordance with the repairing standard imposed on them under the terms of the lease.

Tenants often fail to realise the importance of the wording of their lease and exactly what obligation they have accepted regarding the state of the premises to be returned to the landlord. They will be well aware of costs involved such as rent, business rates, utility bills, any service charge and their own fit-out costs, but it is easy to overlook a potential dilapidations liability.

At the end of the lease, especially if their business has been struggling, this cost is likely to be furthest from their minds. However, it is very much a legal commitment they cannot easily avoid when the landlord enforces the terms of the lease, a contract is a contract, agreed to at the start by both parties, so the exact wording of the lease is very important.

Estimate the cost

If the repairing clause and dilapidations clause are clear from the outset this allows the tenant to make an informed estimate of their liability during and at the end of the lease. This is a complex exercise and some factors which will enter into that equation are:

Here, Oliver Maxwell, senior associate and solicitor specialising in commercial landlord and tenant disputes at Nelsons, provides helpful guidance for landlords and explains key options that a   landlord may be able to take if repairs are beyond the realms of reasonable.

The subject of repairs between landlords and tenants is a complex one says Mr Maxwell, with key factors to consider on both sides. At the end of a tenant’s lease, the landlord may find the care taken by the tenant of their property does not meet expectations. 

This means that disputes may arise inflicting both time and costs onto the landlord, not to mention the possibility of an extended void period when the property remain empty.

While there are no fixed obligations in these circumstances says Mr Maxwell, there are a number of things to bear in mind:  

A tenant’s legal obligation around property condition within a commercial lease varies depending on what the lease says and whether the standard of repair is linked to a schedule of condition at the start of the term. For example, it may be the tenant is obligated to keep the premises in ‘no worse condition’ than the condition set out within the schedule or, where there is no schedule, a general obligation to keep the premises ‘in repair’.

However, an obligation to keep ‘in repair’ and an obligation to keep ‘in good condition’ mean different things – as does an obligation to ‘decorate’ and/or ‘redecorate’, usually at the end and on certain anniversaries of the term, he says.

Conditions in the lease

The definition of what is being demised, or transferred, under the lease will also be important when it comes to ascertaining what the tenant’s obligations are. For example, an ‘eggshell’ lease is usually limited to the interior wall and floor coverings only and does not include any ‘structural’ elements of the building. The tenant, therefore, will not usually be obligated to repair any part of the structure. 

Conversely, where the demise includes the structural elements of the building, there will often – but not always – be an obligation for the tenant to repair such structures. These are often referred to as ‘full repairing leases’. At the end of the term, the landlord will commission a terminal schedule of dilapidations to tell the tenant what, in their view, the tenant needs to do to comply with their repair, and ‘yielding up’, obligations. Breach of these obligations can ultimately lead to a claim for damages based on breach of contract, such as breach of the terms of the tenant’s lease.

How is a ‘good’ standard of repair defined?

The word ‘repair’ is often accompanied by other adjectives or phrases. But the courts have consistently stated that these adjectives make little to no difference to the obligation in question, provided it discloses an intention to repair. ‘Good’ repair, ‘tenantable’ repair, ‘substantial’ repair, and ‘sufficient’ repair are a few examples, and the permutations are potentially limitless.

That being said, all these modifications mean the same thing and it is generally accepted the tenant should undertake any work where – in addition to the age, character and locality of the property – it would make it fit for occupation by an incoming tenant on the same terms as the existing tenant.

Landlord options

If repairs are not to a standard the landlord requires, again much will depend upon the specific terms of the lease. This is what governs the relationship between the parties, but there are some commercial leases that include a Jervis v Harris, or ‘self-help’, clause. 

These clauses allow a landlord to serve notice on the tenant, setting out the repairs required and giving a timescale for them to be completed. Once the notice has expired, the landlord may enter the property to carry out the requisite repairs and recover any costs of doing so from the tenant as a debt.

Aside from a Jervis v Harris clause, a tenant’s breach of repairing obligations may allow a right to forfeit the lease and/or claim damages.

However, caution must be exercised when attempting to forfeit and/or seek damages where the tenant can claim the protection of the Leasehold Property (Repairs) Act 1938 (LPR). The LPR Act will be engaged when the lease is granted for a term in excess of seven years and has three or more years remaining. 

Where the LPR applies, the landlord must first serve notice under Section 146 of the Law of Property Act 1925 (LPA) to identify the breach(es) that have taken place, for example a breach of the repairing agreement, and give the tenant a reasonable amount of time to remedy them. The notice, however, must contain a statement, ‘in characters no less conspicuous than those in any part of the notice’ that the tenant may claim the benefit of the LPR Act. If the tenant then serves a ‘counter-notice’, the landlord must apply to the court for permission before forfeiting or claiming damages.

Legal action

Parties involved in a dispute will always be expected to comply with any relevant pre-action protocol under the Civil Procedure Rules before embarking on legal proceedings. In this context, this would involve the landlord writing to the tenant to set out the case and the legal basis of any prospective claim.

Other than in proceedings for forfeiture, where the landlord must be very careful not to do any act that may ‘waive’ their right to forfeit, such conduct will be expected and could be interpreted as a ‘threat’ of legal proceedings.

As to ‘when’ such a threat should be made, it is beneficial for those involved in commercial leases to maintain an open discourse, which can help prevent grievances from escalating into a legal forum. Parties should speak to each other to try and reach an amicable solution. However, if one party is not engaging, it is not at all inappropriate for the other party to assert their legal rights via their lawyers.

Conclusions

Dilapidations disputes are often complex and high value. As such, it’s well worth seeking good legal advice before either side commits to a commercial lease, so that each party understands their respective rights and obligations

Nelsons – https://www.nelsonslaw.co.uk/landlord-tenant-issues/ – was established in 1983 and provides support to businesses, individuals and families with their legal and investment needs. 

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GONG FISHING: Property awards for HMO landlords announced to reward best in class

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A new property awards has launched that aims to celebrate good landlords in the previously neglected HMO sector.

The HMO Awards is dedicated to highlighting good practice and will hand out gongs to HMO agents, operators and investors at a ceremony with a difference that aims to reward success, share learnings and help the industry grow.

Organised by HMO property management system COHO, which helps tenants find quality house-shares, and HMO Magazine, the event – on 30^th September – includes an afternoon of TED-style talks and networking followed by an awards dinner and after-party.

Helen Turner (pictured), COHO co-founder, says HMOs are becoming the rental of choice, particularly for younger people, while co-living is also increasingly popular.

“This is about great customer service and recognising the needs of tenants,” she tells LandlordZONE – but it’s not just about having a higher property spec or a luxurious living environment.

“The proposition becomes more attractive if there’s a better relationship between landlords and tenants, who look after their properties better as a result,” she says.

HMOs can get a bad press, but there is a new breed of landlord who are professionalising the sector, Turner explains, and these awards aim to recognise this, as well as provide a platform for more collaboration between them. “HMOs are on the rise. We need to celebrate, learn, and grow together as an industry serving millions of people,” she adds.

A private Facebook group for the awards has already attracted 850 people in just a few days and the organisers hope it will become an annual event. Anyone interested can sign up at https://hmoawards.com/ to be updated on information about the awards categories, partnership and early-bird tickets.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – GONG FISHING: Property awards for HMO landlords announced to reward best in class | LandlordZONE.

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Updating RICS guidence for lenders to assist borrowers affected by Cladding issues

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In a joint statement with UK Finance and the Building Societies Association (BSA), RICS has issued new guidance to lenders to clarify the current lending position for properties with fire safety issues in blocks of flats over 11 meters. Click here

The statement indicates Providing the mortgage application meets all the lender’s other policy and regulatory requirements

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Commercial rent – what to charge?

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Hi, I’m stumped! I have looked at various websites and all give weird and wonderful formulae that are confusing contradictory and I am going around in circles.

All I want to know is how to assess what the current market rental rate is for shops on a particular high street

I know it is based on the exact location and the amount of floor space available in the property but all I really need is a ballpark figure.

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Can I buy the freehold to my flats?

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Hi, I own 8 flats in a block which is all of the flats in the block.

I have been told I can buy the freehold because I own more than 50% of the individual flats.

However

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Solicitors failing to pass on Service Charges?

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I purchase my property nearly a year ago now and my solicitor’s company is refusing to pass on the Service Charges which I had paid to them for the management company as part of the completion.

The sale required an indemnity policy (as the vendor had laid wooden floors in the property which breached the lease)

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Huge landlord fine halved after agent blames Covid for management mistakes

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A landlord father and son who neglected to licence an HMO have had a £24,000 fine reduced by half after their managing agent took the blame.

Jason Raja Sivam and Ponniah Sivam were taken to court by four tenants who lived in the house in Kingsleigh Close (pictured), Brentford, between July 2018 and July 2021.

Their HMO needed a licence from August 2020 when the London borough of Hounslow introduced its additional licensing scheme.

Under rent repayment order (RRO) rules, managing agent Sutherland Estates cannot be held liable, but the firm readily accepted it had failed in its responsibility to ensure the property was licensed, admitting it was unaware of the scheme.

Furloughed

Shehnaz Khan, from Sutherland Estates, told a First Tier Property Tribunal that when the first Covid-19 lockdown was imposed, staff were furloughed and its priorities were to ensure urgent repairs were arranged and that tenants were able to pay their rents.

The family business in West Ealing also helped tenants apply for universal credit.

The judge said the two landlords had played no part in the proceedings, which did not commend them to the tribunal.

“They have apparently adopted the attitude that they had appointed the firm to manage the property and that the current application had nothing to do with them,” he said.

“There has been no acceptance on their behalf of their responsibility to ensure that their property is licenced. Ignorance of the law is no excuse.”

However, despite this, because they had arranged for Sutherland Estates to manage the property, the judge decided to make a substantial reduction in the RRO, which meant they were only fined £12,342, along with £300 costs.

Read the decision in full.

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Have tenants or their pets damaged your property? Tell Ministers about it here

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A campaign has been launched to find out the true cost of damage caused to rental properties by tenants including their pets and children.

Organised by AdvoCATS founder Jennifer Berezai but supported jointly by LandlordZONE, the National Residential Landlords Association and Propertymark, the campaign is asking buy-to-let investors and letting agents across the UK to complete a short survey to help inform policy-making in Whitehall.

Bereza (pictured)i, who has been lobbying key players within the PRS says she has been told ministers are aware of her organisation’s effort to provide a true picture of damage caused to properties during tenancies across the UK.

The purpose of the research is to provide accurate data of the type of damage caused in rental accommodation by adults, children and pets, as well as the cost to landlords and method of recovery. 

The results will be presented to Eddie Hughes, the Minister for Rough Sleeping & Housing, at the Department for Levelling Up Housing & Communities by AdvoCATS later this Spring, to further enhance their Heads for Tails’ report and proposals to amend the Tenant Fees Act 2019 and making renting with pets easier for both parties, thus avoiding the devastating impact of “no pets” clauses.

Berezai says: “We know that fear and cost of pet damage is one of the main barriers to landlords accepting pets, and this survey will give a better understanding of the reality of those fears, and how they compare to other causes and costs of damage.

“These questions haven’t been asked before, and the answers will give us a unique insight into landlords’ experiences.”

Chris Norris, Policy Director for the NRLA, adds: “We understand the importance that pets have for many renters, especially those wanting companionship.

“However, the system at present does not allow the true heightened risk of pets to be reflected in deposits.
“We encourage landlords to complete this survey as we work to ensure there is sufficient confidence to rent to tenants with pets.”

Take the survey, which is just 12 questions, here.

Timothy Douglas, Head of Policy and Campaigns at Propertymark says: “Many renters are pet owners, but due to the Tenants Fees Act which caps security deposits, letting agents and their landlords are no longer able to fully mitigate the additional risks associated when letting their property to tenants with pets.

“We hope that the responses collected from this survey will strengthen our calls for changes to current rules and that the UK Government will explore options that incentivise landlords to rent to more people with pets.”

AdvoCATS was set up in 2018 to offer a free support and advice service to both landlords and tenants, and assist pet owners who experience difficulty finding rental accommodation. Its approach is also endorsed by 35 organisations including most recently, the Pet Food Manufacturers Association, Proptech-PR and ProtectaPet.

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