Corbyn wrong on Private Rented Housing

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Longer Tenancies:

Labour leader, Jeremy Corbyn, today painted an inaccurate picture of the private rented sector.

During Prime Minister’s Questions he referenced a woman who had lived in her private rented home for ten years who faced having to leave her property. He used it to call for three year tenancies and warned that tenants were living in fear of eviction.

Official statistics however show that private sector tenants have lived in their homes for an average of over four years.

Figures from the Ministry of Justice also show that in the most recent period for which data is available, 62 per cent of all claims to repossess a property by landlords were in the social rented sector, compared to 16 per cent in the private rented sector.

Further figures show that just a tenth of all tenancies in the private rented sector are ended by a landlord or letting agent.

RLA Policy Director, David Smith, commented:

“The figures speak for themselves. The vast majority of tenancies are ended by the tenant, and not the landlord and the very fact that the person quoted in today’s exchanges has lived in their rental home for ten years shows the sector is already providing long term stability.

“Many tenants have a perceived fear of eviction because tenancies will often be on the basis of six or one year periods which are, in the vast majority of cases, renewed. It is disappointing that the Leader of the Opposition has needlessly played to such fears.

“We welcome the Government’s plans to consult on barriers that make it difficult to offer longer tenancies which will provide an important opportunity especially to address the problem of mortgage lenders preventing landlords from offering them.”

The RLA represents over 50,000 private sector residential landlords in England and Wales.

• The English Housing Survey headline report for 2015/16 can be accessed here Page 18 notes: “for private renters the average length of residence was 4.3 years.”
• The Ministry of Justice’s latest statistics on mortgage and landlord repossessions in England and Wales for July to September 2017 are available here Page 5 notes: “The majority (62%) (21,179) of landlord possession claims were social landlord claims, 22%, (7,621) were accelerated claims and 16% (5,372) were private landlord claims.”
• The English Housing Survey Private rented sector report for 2015-16 can be accessed here Page 21 notes: “When asked about their most recent move, most private renters said that their last tenancy ended because they wanted it to (73%). A tenth (11%) said that their landlord or agent ended the tenancy.”

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The lettings market we know will be radically altered over the next five years

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ARLA Propertymark Predictions for 2018

As we approach the new year, there are a number of hurdles on the horizon but scope to remain hopeful. With further interest rate rises expected, Brexit negotiations to overcome and the cost of living escalating

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Recovering Commercial Rent Arrears

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Rent Arrears:

From 6th April 2014, the ancient remedy of distress for rent, available to commercial landlords, will be removed and replaced by CRAR – Commercial Rent Arrears Recovery.

When commercial tenants get into arrears with their rent, the landlord may now use CRAR to recover any overdue rent money.

Here, David Asker, an authorised High Court Enforcement Officer and our Director of Corporate Governance at The Sheriffs’ Office talks about Commercial Property rent arrears and gives some feed-back from a recent Webinar they held.

This article applies primarily to English law. Although tenancy laws are similar in other jurisdictions, there may be significant differences. Always seek professional advice before making or not making important decisions.

With CRAR the landlord does not need to obtain a court order. He may simply instruct a certificated enforcement agent (previously called a certificated bailiff) to enter the premises and take control of goods in order to sell them to recover the rent. It is a very fast and efficient process – the landlord can instruct in the morning and the enforcement agent can attend the same day.

CRAR only applies to rent on leased premises. If the landlord wishes to recover items such as service or maintenance charges under the banner of rent in the lease, he will need to obtain a county court judgment, and have this enforced later if still unpaid.

What is the process?

The landlord instructs the certificated enforcement agent to attend the premises and levy. The agent must show the tenant his/her certificate and leave a memorandum detailing the inventory of what has been seized and the associated authorised fees, charges and expenses.

As with the vast majority of enforcement cases, we find at The Sheriffs Office that the mere attendance of the certificated enforcement agent is enough to persuade the tenant to pay all arrears. It is only on rare occasions that goods are seized.

CRAR – Commercial Rent Arrears Recovery

CRAR replaced the common law remedy of distress for rent when part 3 of the Tribunals, Courts and Enforcement Act 2007 came into force on 6th April 2014.

Can the EA attend on the day that notice is given, and then there are 7 days before removal of assets, or do they get 7 days’ notice, then the EA attends and takes an inventory?

If the landlord wants to use CRAR, he must give the tenant 7 days’ notice of enforcement after the rent becomes overdue. The rent must still be unpaid at the time the notice is served, as well as immediately before any goods are seized. Once notice has been served, the tenant may apply to court for a set aside or delay of execution. The notice must be served, either by post, hand, fax and electronic communications such as email. The landlord can tell sub tenants to pay him their rent directly, but must give them at least 14 days’ notice.

Can court action be taken for accrued rent arrears after common law re-entry using forfeiture?

Yes, outstanding amounts that are due can still be claimed and this might include rent due or charges for dilapidations and covering associated repair works. However, you will need to know where the tenant has moved and it is worth checking that there are sufficient assets before starting court action.

Does forfeiture still apply where the commercial lease is not written i.e. a company occupies without a written lease?

There needs to be a clause to permit forfeiture within the lease. If there is no written lease in place, you will need to take legal advice to see what options are available.

On control of goods how do you keep the costs down when the goods value is less than the cost of the seizure?

If possible, it is worth checking to see what goods are in place, as if the value of goods is lower than the cost of taking control, then of course it would not be a sound financial decision to move forward with the enforcement and be out of pocket.

Has CRAR resulted in more tenants doing a runner with goods as opposed to the old bailiff laws where goods could be distrained upon entry without notice?

When the tenant is in business premises, them “doing a runner” is unlikely, but if the tenant does abscond, then they would have been likely to do so anyway, with or without the seven-day notice.

You forfeit the lease, take control of the property, can you then take control of goods left on site by the tenant before they remove them?

If you have a County Court judgement (CCJ) for non-rent, for example service charges, and have instructed us to enforce under a writ of control, then we may take control of goods left behind to sell to satisfy the debt. If this is not the case, and they are simply goods left behind, then a tort notice is given under the Torts (Interference with Goods) Act 1977.

The goods still remain the property of the tenant (referred to as the bailor) and the landlord (referred to as an involuntary bailee) has an obligation to take care of the goods and make reasonable attempts to trace the tenant to return the goods.

Under S12 of the Torts Act, if the bailor breaks an arrangement to take delivery of the goods, or the landlord/bailee is unable to trace the former tenant/bailor, then the bailee is permitted to sell the goods, provided he gives notice and has taken reasonable steps to trace the bailor.

Who will be responsible for business rates, following forfeiture and/or peaceable re-entry?

The landlord becomes responsible for business rates.

If service charges and insurance charges are defined as ‘rent’ under the lease can these be recovered?

Only rent, VAT and interest can be recovered under CRAR. For service charges and insurance, you will need to obtain a County Court judgement, which can then be enforced under a writ of control.

David Asker is an authorised High Court Enforcement Officer and our Director of Corporate Governance for The Sheriffs’ Office – https://thesheriffsoffice.com

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You’re in Charge…

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You are now the Prime Minister/President/Absolute Monarch/Dictator of the United Kingdom…

Your task is to restore the nation’s finances, to create sound economic foundations, and to ultimately break the current self-defeating cycle of:

reduced tax yields ->

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Heavy fines levied by Brent Council for illegal subletting

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PRS Civil Penalties:

The first £8,000 civil penalty* was issued to rogue landlords involved in illegal subletting and they are prosecuted with fines of almost £27,000

The Council states that “A property company with assets in the Virgin Islands has paid a £8,000 civil penalty to Brent Council after two tenants illegally sublet one of its houses.”

This is the first civil penalty fine to be issued by the Council following new powers voted in by their cabinet in September.

The eight-bedroom semi-detached house in Willesden Green was exposed after a neighbour complained to the Fire Brigade about overcrowding, and Council officers found it was being used as an unlicensed HMO.

The team of enforcement officers raided the property and found two head tenants, Adam Trantu and Liliana Caragheorghe, and the landlord in breach of the house in multiple occupation (HMO) management and licensing regulations.

The boyfriend and girlfriend head tenants, who were not living in the house, had been illegally placing tenants inside the property at a rate of more than £3,400 a month over a two year period.

Adam Trantu and Liliana Caragheorghe were fined £12,000 at Willesden Magistrates Court on 28 November despite failing to attend the court hearing. The couple, who were tried in their absence, were also each ordered to pay costs of £1,200 and a surcharge of £170 after being found guilty by the District Judge of profiting from chronic overcrowding.

Cllr Harbi Farah, Cabinet Member for Housing and Welfare Reform, said:

“Illegal subletters are a growing problem and we will see to it that their greed fails to prosper in Brent. A prosecution like this drives them out of the market because they no longer qualify to hold a property licence. Civil penalties are another way of bringing the message home to landlords who think that it won’t cost them to turn a blind eye or ignore licensing laws.”

Following recently enacted legislation, landlords who rent out substandard accommodation in can face civil penalty charges of up to £30,000.

Brent Council said that if you are a landlord who lets out shared accommodation, you can apply for a licence online at www.brent.gov.uk/prslicensing or report a rogue landlord anonymously at www.brent.gov.uk/reportaproperty

*Using powers granted under the Housing and Planning Act 2016 local councils can use a range of new measures available to them in relation to their dealings with rogue landlords. These include civil penalties, rent repayments orders, banning orders and the introduction of a database of rogue landlords and letting agents. This should mean swift justice as an alternative to long drawn out court proceedings.

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Landlords welcome Universal Credit changes, but…

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Universal Credit:

Changes to Universal Credit introduced by the Chancellor in his latest budget have given landlords more confidence to rent to claimants, but they think Government should do more to meet their concerns.

The Residential Landlords’ Association has carried out Research through its research lab, PEARL, and found that 36 per cent of private landlords have gained in confidence to rent to tenants on benefits resulting from the changes announced in the Budget, but more is needed say the RLA.

Almost three-quarters of landlords (73%) are still wary of letting to subsidised tenants, the main reason being that they cannot recover money when the tenants get into arrears, and when they fail to pass on money they receive for rent to their landlord.

The RLA is calling for action to ensure landlords can reclaim rent arrears built by Universal Credit claimants who move out of their property as present there is no mechanism to do this.

The RLA is specifically looking for a means of landlords claiming back arrears and also for private landlords to be treated the same as social landlords by allowing them access to basic information routinely available to those in the social rented sector, such as whether a tenant is receiving Universal Credit. Landlords need this information to properly assess risk and enable them to work with tenants and set-up suitable rent payment schedules.

The RLA’s Vice Chair, Chris Town, said:

“Ministers have clearly been listening to concerns and we welcome their reforms to Universal Credit which have given landlords more confidence in the system.

“That said, there are still problems around rent arrears and recent tax hikes mean that landlords are less able to cope with difficulties in collecting rents.

“Without further reforms we cannot say ‘job done’ on Universal Credit.”

Universal Credit and Rented Housing

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Divorce and GGT outside of the 12 month exemption

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My ex-wife and I are in the final stages of an amicable divorce. I am keeping the main residence, which we jointly owned together, and I am in the process of buying her out. I have already given her half of the money which she is due.

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What’s the process for creating a deed of trust to transfer rental income to spouse ?

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As a married couple we own a house which we have been renting out for the last 18months . As I am receiving an occupational pension and state pension that put me in the 40% tax band I wish to transfer the benefit of this property to my wife.

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Does a Periodic Tenancy mean a new tenancy every month?

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Periodic Tenancy:

Under English law, once a fixed period tenancy comes to an end it is automatically replaced with a periodic one, based on the rent payment period (commonly monthly), unless the original tenancy is terminated. With an Assured Shorthold Tenancy (AST) termination would be if the tenant leaves at the end of the term, or is served a 2 months’ notice by the landlord effective at the end of the term.

The periodic tenancy rolls on indefinitely if the parties wish it to, though interestingly, a determination in a test case (Superstrike Ltd v Marino Rodrigues 2013)¹, contrary to what many in the industry believed at the time, a statutory periodic tenancy is a new and distinct tenancy, not a continuation of the tenant’s previous status.

On this basis a tenant sought to argue that a periodic tenancy is a new tenancy EVERY month. In Walcott v Jones & Jones November 2017, a county court appeal, the tenant argued that a tenancy which had started prior to the introduction of new rules (1^st October 2015) the landlord had not complied with them before serving his s21 notice, and therefore the notice was invalid.

Tenancies commencing before the change date and up to 1^st October next year (2018) do not have to comply with these new rules brought in under the Deregulation Act 2015 (s21A and s21B of Housing Act 1988) – meaning the landlord must provide the tenant with a gas safety certificate (if applicable), an EPC and the DCLG “How to Rent Guide” before a valid s21 notice can be served.

Clearly, if the plaintiffs could establish that the tenancy renewed each time then it could be argued the landlord did not comply, and that was the decision of the county court.

However, according to a note on the case on Giles Peaker’s Nearly Legal Blog, Ms W being the landlord of the Joneses, it was accepted for the purposes of the appeal that the new rules only apply to a tenancy that commenced on or after 1 October 2015 and until October 2018, including any “renewal tenancies”. The plaintiffs’ argument went that as the grant of tenancy was a monthly period from the start, (there was no written agreement), each month represented a new grant.

The appeal judge, Judge Hand QC, held that the grant of a periodic tenancy meant that if notice was not given in accordance with the agreement the tenancy would continue after the original term. Whether this was considered as an extension of the original term or a ‘deemed re-grant’ did not matter, as for the purposes of Housing Act 1988 (as amended), neither amounted to a ‘grant’ of a tenancy. Parliament did not intend a ‘grant’ in such circumstances. The county court judge had erred in law and the appeal was allowed.

A similar point arose recently in Leeds City Council v Broadley 2016 ² concerning council tax liability, where it was acknowledged that a periodic tenancy was a singular tenancy, as per the Law of Property Act 1925. In that case the court of appeal held that a tenancy grant for a year or six months, and thereafter a month to month periodic tenancy, was indeed a single tenancy.

The conclusion to all this is that a periodic tenancy it does not result in a new tenancy each period – it is in fact a single ongoing tenancy, from period to period. But, as per Superstrike, a statutory periodic tenancy that arises at the end of an AST fixed term, is a new tenancy, not a ‘renewal’ tenancy.

Superstrike Ltd v Marino Rodrigues 2013

Leeds City Council v Broadley 2016

Deregulation Act 2015

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Private rented sector value climbs to £1.4trn, but growth slows as two-speed market emerges

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The seventh edition of the Kent Reliance Buy to Let Britain report has been launched. The report provides an update on the growing size and value of the private rental sector in Great Britain, and details the returns landlords are seeing across the sector all analysed by region.

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