Ask three months rolling rent in advance?

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After the tenant fee ban, can landlords now ask for three months rolling rent in advance rather than normal one month in advance?

This is not the case where the tenant pays rent every 3 months, but is that the tenant pays three months rent at the start of the tenancy and then keeps paying monthly rent for each month going forward.

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WARNING: ‘Landlords who assume letting agents are responsible for compliance do so at their peril’

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Scores of landlords risk a hefty fine or even a lettings ban as many wrongly assume estate agents are keeping their properties compliant. 

Research by online letting firm Apropos finds that many don’t realise that they are solely liable for any compliance issues, and it reports that some have uncovered ongoing serious safety problems when changing agents.

CEO David Alexander says although it’s natural for landlords to assume that an agent will keep up-to-date with regulations, there are many agents who don’t fully comply, leave issues for months or even years, and don’t explain the situation or a landlord’s liability.

He says: “We’ve found examples such as a failure to modernise electrics and obtain the appropriate EICR certification, black mould and damp in a property in breach of the housing health and safety rating system which the previous agents had failed to tell the landlord about, and a property which had no smoke detectors – the previous agent had explained that the tenants would put those in.”

He adds: “All of these breaches of regulations highlight a very sloppy, and illegal, approach to letting which risks the health of the tenant and places the landlord in a position where they could be fined and, in the worst cases, banned from letting.”

John Stewart, deputy policy director for the National Residential Landlords Association, tells LandlordZONE that it’s recently seen an increase in local authorities taking action against both agents and landlords where obligations haven’t been met.

He says: “It is vital that landlords understand precisely what their legal oblations are, even where they have contracted with a third party to discharge their duties.

“Using a management or letting agent doesn’t provide protection to landlords from liability for breaches of regulations.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – WARNING: ‘Landlords who assume letting agents are responsible for compliance do so at their peril’ | LandlordZONE.

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Landlord Action wins gong at new property industry awards

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Landlord Action has won Best Legal Landlord Services of 2020 during the inaugural Property Reporter Awards pipping rivals Legal for Landlords and RKB Solicitors to the post.

The awards saw some 1,000 applications and nominations from both inside and outside of the property sector, championing the efforts and achievements of UK property professionals and recognising excellence within the industry.

The awards ceremony was an unusual one due to Covid; the results were announced via a live Twitter feed, on which video messages of support from sponsors and a selection of judges feedback was shared alongside the winners.

“It’s great to be recognised by esteemed judges that Landlord Action is the best in class but also because being a regulated firm of solicitors is so important in this ever-changing world of property possession in the courts,” says Shamplina (pictured, top).

“Landlords will need us more than ever due to Covid, and we will use our expertise to help landlords and agents in difficult times.

“I can’t believe we have been doing this for 20 years.  Thanks for the Property Reporter for putting on these online awards; a great innovation.

“Lastly we are recruiting, so any paralegals and solicitors with experience of landlord and tenants, feel free to contact us.”

Shamplina was also a finalist for the Best Spokesperson of 2020, where he was up against both Andrew Montlake and Kate Faulkner, who won. The awards were sponsored by the NRLA.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlord Action wins gong at new property industry awards | LandlordZONE.

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Travelodge CVA results in landlord defections

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The move follows a successful exchange of contracts before Travelodge’s CVA break clause deadline on 18 November 2020.

Hotel operator Travelodge drew the ire of many of its landlords back in June when it announced its second CVA (Company Voluntary Arrangement) in 8 years.

The CVA was passed by creditors on the 19th of June, which resulted in the top slicing of £144m from Travelodge’s rent bill, and with some of its landlords receiving no rent until 2022.

It was the final straw for some of Travelodge’s landlords; they were minded to enter into discussions with alternative operators. With the backing of private equity investors these alternative operators were willing to take on new leases with Travelodge landlords.

The result was a Travelodge Owners Action Group – a coalition of Travelodge landlords, representing more than 400 hotels. It launched AGO Hotels, a new platform that will see the budget hotelier replaced with French hotel chain Accor and its Ibis hotel brand.

AGO Hotels is a hotel group describing itself as offering a “landlord friendly platform”, an innovate hybrid risk and reward sharing lease structure. This arrangement gives landlords exposure to the operating company through an income share and capital stake.

The offer from AGO to the Travelodge owners was a new 25-year fully repairing and insuring lease, index-linked at 50% of the original Travelodge rent. Owners would in addition receive a 50% share of the operation’s EBITDA and annual dividends from the 49% equity stake in AGO (share weighted according to rent payment).

It has now been confirmed that AGO Hotels has secured at least nine hotel leases from Travelodge following a successful exchange of contracts.

The new budget hotel operator says it’s “all systems AGO”: nine Travelodge hotels are to switch to AGO Hotels before the CVA break deadline under its ‘landlord-friendly platform’. Launched in July it incorporates the hybrid lease structure which is designed to deliver stable asset values and cash flow.

AGO Hotels was launched in July 2020 as a landlord-friendly platform in partnership with Accor, the leading global hospitality group. Accor will act as operator for the hotels under its ibis budget brand and AGO will fund rebranding costs.

AGO Hotels was co-founded by Viv Watts and Lionel Benjamin to offer landlords this innovative hybrid lease structure. It is designed to provide a combination of guaranteed fixed rent plus profit participation, delivering stable asset values and cash flow.

By combining the benefits of institutional leases and operational participation, the AGO Hotels platform offers: a 25-year FRI lease from AGO Hotels; an equity stake in AGO Hotels for incoming landlords, and; profit participation calculated on the basis of each hotel’s EBITDA.

A spokesperson from AGO Hotels said,

“The first nine hotels to switch to the AGO Hotels platform is a real milestone, marking the culmination of a long journey to provide landlords with an alternative lease structure to safeguard their interests and the value of their investments.

“The platform has very significant expansion potential by offering the best of both worlds – institutional leases and operational participation.

“AGO Hotels is in discussions with owners of individual hotels and portfolios who stand to benefit from our disruptive business model, enjoying downside protection and upside participation.

Philip Lassman, VP Development, Accor Northern Europe said,

“Accor is pleased to be a founding partner of AGO Hotels which has now secured nine new hotel sites. AGO is an innovative model for the UK with strong potential for the ibis budget brand”.

CVA backfires on Travelodge

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Travelodge CVA results in landlord defections | LandlordZONE.

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Do more to help tenants and landlords, cross-sector coalition tells Ministers

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The UK’s leading organisations representing landlords, lenders, letting agents and tenants have written to The Times to demand government action to support both renters and landlords, including interest free loans for tenant to clear their rent arrears.

Their comments follow Chancellor’s Rishi Sunak’s spending review yesterday, in which he warned that the economic impact of Covid was ‘only just beginning’.

The senior members of each organisation that have signed the letter include people who are at often at loggerheads over other issues such as evictions or rent caps. But the seriousness of the situation has drawn them together.  

These are: Ben Beadle (pictured left, National Residential Landlords Association); Alistair Cromwell (Citizens Advice); Timothy Douglas (ARLA Propertymark); Joanna Elson OBE (Money Advice Trust); Lord Bird MBE, (pictured, below Big Issue); Phil Andrew (StepChange) and Paul Wootton (Nationwide Building Society).

The letters says: “Hundreds of thousands of people who rent their homes face an uncertain future due to the economic impact of coronavirus. “Many are worried about the risk of losing their homes because of rent arrears arising through no fault of their own.

“Whilst many private landlords and letting agents have done what they can to support affected tenants, the overwhelming majority of landlords are individuals – many renting out just one property, often as a pension – and are unable to continue to subsidise struggling tenants indefinitely.

“As the financial fallout continues, we need to sustain tenancies wherever possible.

“The best way to ensure this happens is to make sure that tenants are able to pay their rent, which is why the UK Government must now come forward with a package to provide financial support to reduce these arrears.

“This should include boosting emergency funding to councils for grants to support those in receipt of benefits, and interest-free, government-guaranteed hardship loans for tenants, similar to the schemes developed in Wales and Scotland.

“We call on Ministers to act swiftly to provide tenants and landlords with the security and stability they need during the current public health crisis.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Do more to help tenants and landlords, cross-sector coalition tells Ministers | LandlordZONE.

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Compliance Conundrum when tenant won’t leave?

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We purchased a converted property at auction 15 years ago. One flat was occupied with a tenant on an AST, and a low rent. The property was barely habitable then, and we assumed the tenant would move on, and we could refurbish.

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Student HMO ‘war’ re-ignites in Belfast as students flout Covid rules

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Police in Belfast have dispersed up to 200 young people illegally gathered in the HMO hotspot of Holyland, an area which Northern Ireland’s landlord leader recently told families to leave if they don’t like the partying antics of undergraduate neighbours.

Social media videos show large groups of youngsters gathered and singing loudly in Agincourt Avenue at 2am with little social distancing.

Two people were arrested and six Covid notices were issued at a house party after police were verbally abused and attacked with bottles.

Speaking on BBC Radio Ulster’s breakfast programme in September, Robert Greer, chair of the Landlords Association of Northern Ireland, told listeners “the handful of families who live in this area must be tolerant of student culture” but that “most of us faced with that would move somewhere else and we don’t understand why they don’t do that”.

Greer told the programme that his organisation didn’t like the problems caused by students but that low rents meant places like Holyland would always have large student populations.

Large groups of youngsters have gathered in the area since the academic year started in September.

Renewed calls

It’s led to renewed calls for a re-examination of student housing in the city and prompted councillors at Belfast City Council’s licensing committee to write to Stormont’s department for communities, requesting an urgent meeting about HMO legislation which they argue has led to anti-social behaviour.

Green Councillor Brian Smyth believes it is ineffective and adds: “HMO legislation is incredibly complex.

It feels that the legislation is firmly in the hands of landlords. While I accept there are many decent landlords, there are rogue landlords out there, and as a council we are hamstrung. Long-term residents are being hammered.”

Advice – student tenancies and Covid.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Student HMO ‘war’ re-ignites in Belfast as students flout Covid rules | LandlordZONE.

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Flat owner not paying for agreed roof works?

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We look after a block of flats where roof works have been carried out. Each flat owner acknowledged the work should be done and now it has been completed 7 of the owners have paid their share but one says he can’t afford to pay the shared costs due to Lockdown.

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Legal Case: HMO licences and the purchase of an HMO

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It involved a claim by a tenant who had applied for a Rent Repayment Order (RRO) in relation to his two-year occupation within an HMO.

Mr Taylor the tenant and appellant had taken a tenancy at the property from the 1^st of July 2016, leaving on the 14^th of August 2018. At the time other tenants occupied and the premises and the landlord was covered by a valid HMO licence.

The valid HMO licence was issued in 2016 and this was due to expire in 2021. The respondent in this case was the new landlord who had taken over the property during the period of the tenancy, sometime around October 2016.

The new landlord did not apply for a new HMO licence until 12 May 2017 and a new licence was not issued until the 6th September 2018, after Mr Taylor, the tenant, and the appellant in this case, had left.

In November 2018 Mr Taylor applied to the First Tier Tribunal (FTT) for a Rent Repayment Order RRO on the basis that the respondent had committed an offence by not having a licence in place during the period of his tenancy.

Any person who manages, or who has control of a property used as an HMO must by law obtain a licence from the Local Housing Authority (‘LHA’) under under section 72(1) of the Housing Act 2004. It is a criminal offence not have a licence in place and failure to do so can result in a fine of up to £30,000, as well as being made the subject of an RRO, which requires a repayment to the tenant of up to 12 months’ rent.

Mr Taylor presumably being savvy with the law spotted his opportunity to get a 12-month rent-free stay at the property by receiving a refund.

The first point to make here is that this case confirms that such an HMO Licence is personal to the landlord and non-transferable on the sale of the property. It means that if the property is sold, the new owner cannot rely on an existing licence to satisfy the licensing requirements and must therefore apply to the local authority for a new licence.

But the FTT in this case declined to make the award of an RRO to Mr Taylor. Although the new landlord had not applied for a new HMO licence immediately, due to a misunderstanding on the landlord’s part that an HMO Licence does not run with the land, so the new owner did not get another licence. The FTT decided that the landlord was in breach.

However, the FTT took the view that while the respondent landlord held no licence, the existing licence from the previous owner remained in force until such time it was revoked. It seems the Housing Act 2004 has no provision for a licence to terminate automatically, and without a decision from the local authority, other than on the death of the licence holder under section 68(7), it remained in force.

The conclusion of the FTT was that an HMO licence in these circumstances continues unless and until the LHA decides otherwise and therefore the FTT did not have the power to make a RRO. It dismissed the application.

Mr Taylor being a persistent type appealed the decision to The Upper Tier Tribunal (Lands Chamber) (UTT).

The UTT disagreed with the FTT, finding that it remains the law that where a property is sold and the new owner takes over management and control, the new owner (landlord) is required to apply for a new licence. Stating in judgement the UTT says:

“The previous licence cannot be transferred to the new owner and is of no assistance, whether or not expressly revoked, because the new owner does not have a licence.”

The UTT alluded to the temporary exemption created under section 68(7) of the 2004 Act, which is where the licence ceases to be in force in the event of death of the licence holder. Section 68(8) goes on to say that for the following three months the house is to be treated as if it had the benefit of a temporary exemption notice. But the Tribunal confirmed that a new owner must take steps to comply with the law by immediately applying for a new licence, and found for Mr Taylor.

This case demonstrates and confirms the personal nature of an HMO licence (being tied to the person of the landlord and not the property). It also demonstrates the importance of applying for a new licence on the purchase of an existing HMO.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Legal Case: HMO licences and the purchase of an HMO | LandlordZONE.

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Chancellor cuts housing support

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The NRLA has criticised the Chancellor, Rishi Sunak, for cutting the amount tenants relying on benefits will be able to claim to pay their rent.

According to a report by the Office for Budget Responsibility published alongside the Spending Review today the Local Housing Allowance will be frozen in cash terms from next year.

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