LAW: Landlord escapes £15,000 bill after tribunal’s ‘surprising’ decision

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Three tenants have only been awarded 20% of a rent repayment order application after a tribunal went easy on their forgetful landlord.

Lawrence Hoo admitted he had not renewed an additional HMO licence for the property in St Marks Grove, Easton, Bristol, but had applied as soon as he was told.

The council renewed his licence without any additional conditions attached and didn’t take any further action against him.

The First Tier Property Tribunal was told that the licence expired just as the Covid pandemic began – in May 2020 – and wasn’t renewed until March 2022.

Surprising

Hoo’s solicitor suggested that this was a case where the amount awarded should be 0% but not more than 15-20%.

In a surprising result, the tribunal agreed and decided that the tenants should only be awarded £3,000, despite claiming £15,000, as they had paid £450 a month rent from April 2020 to May 2021.

The tribunal ruled: “We are satisfied that there are no aggravating factors in respect of the offence.

“Mr Hoo had previously held a licence and upon renewal it was renewed promptly by the council without any significant new conditions attached and certainly without any works being required.

Further we note the licence did expire shortly after the country was affected by the Covid pandemic which significantly affected all of our daily lives throughout 2020.”

The tenants were also awarded £300 in costs.

Read the decision in full

View Full Article: LAW: Landlord escapes £15,000 bill after tribunal’s ‘surprising’ decision

Letting agents report ‘perfect storm’ facing them and their landlords

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Letting agents are worried about landlords selling up, new legislation, rising costs and an upsurge of abuse across the sector.

A Properymark survey found that most feared landlords quitting because agents can no-longer afford to let property (80%), the impact of new laws (66%), rising costs (55%) and abuse from tenants (33%). The body says that it is aware anecdotally that abuse cases have been on the rise over the last year.

In its annual review of 2022 and outlook for 2023, agents reported that the biggest opportunity for their businesses was the chance to expand their portfolios as they encouraged more landlords to turn to full management and take over the properties of competitors who hadn’t survived the economic downturn.

Their biggest concerns for landlords in the year ahead were the impact of incoming legislation (80%), diminishing yields (44%) and issues with damp, condensation, and mould (35%).

Landlords’ biggest opportunity was seen as the potential for increasing yields (57%) – but only certain investors.

Rising costs

Those with buy-to-let financing and fixed-terms coming to an end this year would see their costs increase significantly due to rising interest rates, but those without mortgages on their let property should see yields rise as house prices drop and rents rise.

This would herald a chance for further portfolio investment.

Agents’ fears for tenants include rising utility costs (78%), closely followed by a lack of available properties (74%) and rising rents (68%).

CEO Nathan Emerson (pictured) says: “Demand for rental property has grown by 57% since 2018, when Propertymark records began. At the same time, there was no growth in the size of the private rented sector to house these tenants.”

View Full Article: Letting agents report ‘perfect storm’ facing them and their landlords

House prices to fall by 10 per cent this year says bank boss…

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Speaking at Davos, the Swiss ski resort where the World Economic Forum holds its annual meeting, Lloyd’s bank CEO Charlie Nunn said that the UK house price fall will be limited.

His views are bolstered by recent numbers on the progress of the UK economy which managed a second month of growth for the final quarter in November 2022. The latest figures are a mild indication that the economy may have dodged a bullet, suggesting a recession could be avoided, challenging some economists to reconsider their previous forecasts for the year ahead.

Economic output in the UK rose by 0.1 per cent in November. This followed a 0.5 per cent gain in October, a trend that makes a final quarter economic contraction unlikely. This, positive news comes in the face of average household energy bills having risen by over than 25 per cent to £2,500 since September.

Mr Nunn said that he expects UK house prices to fall 8-10% this year. His views run counter to the Bank of England’s previous forecasts of the coming longest recession on record.

Mini budget shock

The U.K. property sector came to a shuddering halt following the Truss/Kwarteng “mini budget” last September and has been sluggish since, as the Bank of England continued to aggressively hike interest rates to attack the double-digit inflation figures.

As delegates from across the world and many economic sectors converged for several days of talks and meetings to address urgent global issues, Mr Nunn gave reassurance to the UK property sector that a price drop may be limited.

The pressure that British housing felt as the impact of former prime minister Liz Truss’ disastrous “mini-budget” resulted in 40% of all mortgage products on offer in the UK being withdrawn due to concerns over the rapidly rising interest rates.

Since then the Bank of England has continued to chase up interest rates in a priority policy to drive down inflation – from 0.1 per cent early last year to 3.5 per cent in December – and more hikes on the way after predicting that the country was entering its longest recession on record.

Inflation was recorded at 10.7% last November, and the Bank has hiked rates on nine consecutive policy meetings occasions to lift its main rate from 0.1% to 3.5%. Now more increases are expected over the coming months in 2023.

More evidence of stability

A new report this week from Rightmove would suggest that prices may well be stabilising as it states that asking prices for UK homes were rising slightly in January, that’s the first positive sign of a floor for the first time in two months.

Lloyds CEO Mr Nuun said:

“Our base case for 2023 is we will have a recession — a mild recession — GDP of about -0.1% this year, unemployment staying strong and that’s more because of the constraints on the supply side, interest rates about 4% and a recovery coming into 2023.

“The other challenge a lot of our customers are focused on is house prices and we do see house prices softening about 8-10% this year.”

Living standards under pressure

The Office for Budget Responsibility (OBR) the independent government agency has forecast that UK households face their biggest fall in living standards on record.

This one statistic has major implications for renters when it comes to the pressure they are under to maintain rent payments.

But as the Mr Nunn, who is head of the largest retail and commercial financial services group in the UK., said, as he sees it, there’s two different stories here!

“First of all, there is a relatively small but really important group of customers with mortgages… who are going to struggle to make ends meet in the cost of living. That’s about 1% of customers we can see in the U. and we really need to focus on supporting them,” he goes on…

“We’re seeing a much larger set of customers having to adapt their spending and adapt to both higher costs of living and higher mortgage spend, but there still is real resilience in businesses, in households and in individuals at the higher income levels in the UK and strong spending we’re seeing going through.”

UK economy – a near miss with recession?

If Mr Nunn’s forecasts are correct, and not everyone would agree, but if correct the outlook for property prices could be brighter than generally thought.

The November growth figure of a 0.2% expansion in the services sector is encouraging but manufacturing saw negative production growth in the same month, partially offset by a positive contribution from mining and quarrying, that’s according to Office for National Statistics figures.

But plenty of headwinds still remain. The previous consensus in the financial markets that GDP would fall by around -0.3% for November, placing the economy on course for entry into a recession during the final quarter, shows the unpredictability of these times.

View Full Article: House prices to fall by 10 per cent this year says bank boss…

How to sell your property at full price in a falling market

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If you are looking to SELL some of your properties this year, or if you are looking to BUY property this year, then you need to watch this brand new video.

As you know many landlords are looking to exit the property market and sell some

View Full Article: How to sell your property at full price in a falling market

More people than ever before are looking to rent a home

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Propertymark has revealed its concerns and opportunities for landlords, buyers, tenants, sellers and investors in 2023.

And its annual report highlights that more people than ever before are looking for a home in the private rented sector.

There’s also a prediction of a return to a buyer’s market by the end of the year.

View Full Article: More people than ever before are looking to rent a home

HMRC defends mortgage tax relief cuts as ‘fair’ in petition response

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A petition urging the reversal of the controversial Section 24 tax changes for landlords has received a written response from the government after reaching some 28,000 signatures.

Simon Foster’s e-petition now needs to reach 100,000 signatures to win a debate in parliament. The Midlands-based property investor wants the government to reinstate the ability of landlords to set the full amount of mortgage interest against rental income before tax is calculated. Announced by George Osborne in 2015, the tax relief was replaced by a basic rate reduction from their income tax liability for their finance costs of 20%.

Foster explains that as a small, well-established private landlord, he is now struggling to make any money from letting properties. “Unless the ability to offset mortgage interest against rental income is reinstated, I will – like many – be forced to sell my properties,” he adds. “This could reduce the number of properties available on the private rental market.”

HM Treasury response

HM Treasury has now added its response to his points. It says: “The Government recognises that the private rented sector plays an important role in the UK housing market and economy.

“However, the Government also has a responsibility to make sure that the income tax system is fair. Under the old system, residential landlords got relief on their finance costs (including mortgage interest payments) at their marginal rate of income tax, which meant that higher rate taxpayers got a more generous tax relief than those on lower incomes.

“To address this, and make sure that all residential landlords are treated the same by the income tax system, the Government phased in a set of reforms to restrict finance cost relief to the equivalent of the basic rate of income tax.

“The reforms mean that all residential landlords will now receive the same amount of relief. It also reduces the disparity in income tax treatment between homeowners and landlords.

“To be clear, these reforms do not mean that tax relief on mortgage interest has been abolished. Landlords are still able to claim an income tax reduction equivalent to basic rate tax relief on the finance costs of their rental property. Residential landlords also continue to be able to claim relief at their marginal rate of income tax on the day-to-day costs incurred in letting out a property, such as letting agent fees and replacing furniture.”

Readers can sign the petition here.

View Full Article: HMRC defends mortgage tax relief cuts as ‘fair’ in petition response

House prices and buyer activity continue to fall

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There has been a further weakening in the property market with sales, instructions to sell and prices all declining in the RICS Residential Market Survey for October.

The organisation says that this downward trend could last over the coming months.

View Full Article: House prices and buyer activity continue to fall

WATCH: Four essential steps landlords must take in 2023

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TV star and evictions specialist Paul Shamplina recently joined forces with industry figure David Coughlin during a webinar to help landlords identify the key steps to achieve the highest profits from their portfolios this year.

Coughlin is co-founder of the National Association of Property Buyers and director/founder of both National Residential and the Landlord Sales Agency.

The pair boiled down these steps into four bullet points for those attending the LandlordZONE webinar, which was held earlier this month.

The four key takeaways

1. Interest rates versus rents – are investors losing money or are they taking steps to be profitable? Learn exactly what you need to do to increase rents quickly without distressing tenants.

2.  Incorporation and Section 24 taxes – over 90% of landlords have not incorporated and with interest rates rising, they will be taxed to the high-heavens. Landlords need to incorporate and they can do this in six weeks via Property118. Find out how this saves both S24 tax and tens of thousands in Capital Gains Tax.

3. Why it’s crucial that landlords use specialists when selling tenanted properties and portfolios, and how Landlord Sales Agency can help landlords get the best price, quickest sale and fastest completions with win-win deals for tenants.

4. Find out why the most successful landlords are following the advice of experts such as David Coughlin, Paul Shamplina and established trusted companies like Property118. And why they’re on the side of landlords to ensure you’re covered with the best solutions and best priced sales to deliver you the results you need.

Watch the webinar for free in full here.

View Full Article: WATCH: Four essential steps landlords must take in 2023

Legal notes: serving notice when there is no current gas safety certificate

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When a tenant refuses the Gas Safe engineer access to a property to carry out gas safety checks the landlord is presented with a really difficult problem.

Tenants denying access for things like safety checks, repairs and maintenance or regular inspections is not unheard off, in fact it occurs frequently, and it is one of the many hazards of being a landlord. But, failing to have a gas or electrical safety record carries a penalty of up to £30,000 and possibly even more for not having both.

To some extent the law protects tenants in that they are entitled to what’s termed “quiet enjoyment” which in practice means giving them the space to enjoy the property as their own and not interfering with their lives or in any way harassing them. Tenant harassment is in fact a criminal offence controlled under the Protection from Eviction Act 1977. Landlords need to be careful about getting into a situation where they could be accused of harassment.

Rights and method of entry

However, the landlord does have rights too, though it can be a bit confusing. It’s an irony that in English (and Welsh) tenancy laws as they stand, on the one hand landlords are under a statutory duty to maintain a rental property in a safe condition, with services in working order, on the other hand they have no automatic right of access.

Section 11 of the Landlord and Tenant Act 1985 does give landlords a right of access to carry out these obligations, yet the centuries old common law covenant of “quiet enjoyment” and the principle of “exclusive possession” give tenants the right to exclude everyone, including the landlord. These principles conflict but are implied in any tenancy, regardless of whether they are written into the agreement, but ultimately statutory rules trump common law and contracts.

Landlord and Tenant Act 1985 states that a landlord has an obligation to maintain and repair, to quote:

• The structure and exterior of the property (including drains, gutters and external pipes),

• The installations in the property for the supply of water, gas and electricity and for sanitation, and

• The installations in the property for space heating and heating water.

• The landlord, or someone instructed by the landlord, like a plumber or gas engineer, will need access to the property to carry out these repairs.

In addition to access for repairs, the landlord also has a right to view the condition of a property. The landlord, or someone acting as their agent, can gain access to the property at a “reasonable time of the day” but only after giving the tenant a reasonable amount of notice, best in writing.

Landlord-tenant relationships are often a finely balanced love-hate affair which can easily fall over into an acrimonious one. It sometimes takes careful handling and good people skills to keep things running smoothly, so that’s why some landlords prefer to bring in a neutral third party, a professional letting agent to keep the relationship independent and at arms length.

What to do if refused entry?

This situation is not uncommon but very frustrating, especially if you have arranged tradespeople to visit multiple times. The one thing you must not do is try to use any kind of force or coercion, or gain entry with a key, or you could be accused of harassment – a criminal offence.

As you are in breach of the statutory regulations with regard gas safety or electrical safety inspections you should inform your local authority of the situation: it is they who will prosecute, so put your information in writing so they now what’s happening.

You should continue to make every effort to gain access legally, to have the checks carried out, making sure you keep copies of all correspondence including letters, emails and a written diary of phone calls.

Eviction – Section 21 and Section 8 of the Housing Act 1988 as amended

You may decide that enough is enough if the tenant is refusing to cooperate and especially if they are in arrears with their rent, often the two problems go together. So you decide to serve a notice seeking possession

But you are then faced with another problem: you cannot serve a valid Section 21 notice without a current safety certificate in place. So Section 21 is out, and of course, as we know, Section 21 may be out permanently soon when the law is changed.

Section 21 is the no-fault eviction process which means that providing you have met all the pre-conditions (prescribed information), which include having current safety certificates, there is an automatic right to possession, a mandatory rule the judge must comply with, based on paper evidence – no need for a court hearing.

In fact there’s a whole host of prescribed information and conditions you must have complied with to enable you to serve a valid Section 21 notice:

– it’s less than 4 months since the tenancy started, or the fixed term has not ended, unless there’s a clause in the contract which allows you to do this

– the property is categorised as a house in multiple occupation (HMO) and does not have a HMO licence from the council

– the tenancy started after April 2007 and you have not put the tenants’ deposit in a deposit protection scheme

– the tenancy started after October 2015 and you have not used form 6a or a letter with all the same information on it

– the council has served an improvement notice on the property in the last 6 months

the council has served a notice in the last 6 months that says it will do emergency works on the property

– you have not repaid any unlawful fees or deposits that you charged the tenant – read the guidance for landlords on the Tenant Fees Act 2019

– You also cannot use a Section 21 notice if you have not given the tenants copies of:

– you have not provided the tenant with the property’s Energy Performance Certificate (EPC)

– you have not provided the tenant with the government’s ‘How to rent’ guide

– you have not provided the tenant with a current gas safety certificate for the property, if gas is installed

– You must give your tenants the gas safety certificate , the ‘How to rent’ guide and EPC before they moved in.

What about using Section 8

Section 8 on the other hand is an adversarial court hearing process where you must prove your right to possession based on (currently) around 17 grounds or circumstances justifying this. This is likely to be the only way of gaining possession in the future when the new rules are introduced, probably this year, though the Government has said the grounds are to be beefed up and extended, with a slicker and quicker process? We’ll believe that when we see it.

The point is, can you use Section 8 when your tenant is in arrears and there’s no Gas Safety Certificate or Electrical Installation Condition Reports (EICR) or any of the other acquirements such as the EPC in place, deposit protected, “How to Rent Guide” served etc? Fortunately the answer is, yes you can!

Using Section 8 for eviction

The Section 8 notice, using the rent arrears ground 8 (serious rent arrears), is not reliant on the prescribed information but there must be two months of rent arrears before notice can be served.

However, tenants have sometimes argued in court that their landlord has failed to provide a healthy and safe house, for which they put in a damages claim, or alternatively they may pay off all or some of the arrears at the hearing, and these bring the arrears below two months – result, no possession order and back to square one.

Grounds for possession using section 8 are listed in Schedule 2 of the Housing Act1988

To circumvent this, arrears claims usually cite also ground 10 (some rent arrears) and ground 11 (persistent delay in paying rent). These discretionary grounds, along with ground 12 (breach of tenancy), which in this case would be refusing entry for a valid reason, may just swing it?

These are mitigating circumstances which may be enough to persuade the judge to issue a possession order. But the onus is on you, the landlord, or your legal representative, to prove, if it can be proved, why your tenant is in breach.

The Government advises that:

Section 8 notices are only valid if they are completed and issued correctly. Landlords will also need to use the most up-to date form which can be found at GOV.UK, assured tenancy forms (form 3). A Section 8 eviction notice is really the final step in the process.

Before a Section 8 is issued, landlords should send tenants regular reminders of the reasons why they’re breaking tenancy rules. It’s recommended that these reminders be sent on a weekly basis. Landlords should also clearly set out what the breach of rules are. If the issue is rent, it’s a good idea for landlords to include the amount of rent owed.

Section 8 notices also need to be given to the tenant in a certain way – this may be specified in the tenancy agreement and can include: Handing the notice to the tenant. Delivering the notice by post. Putting the notice through the letterbox.

Documentary evidence

Courts and judges do not deal in hearsay. Verbal evidence, where it’s the landlord’s word against the tenant for example, is never enough. Conclusive evidence is needed and that means documentation, even if this is just contemporaneous notes made in your tenancy diary, recording what was said in phone calls and when it was said.

As stated above, courts like to see that landlords have made every effort to resolve disputes before a court hearing is necessary, and to make sure the tenant/s know exactly why they are being taken to court. So it’s a good idea to inform the tenant that the safety rules exist for a reason and that they are likely to be evicted if it does go to court, and that you have ample evidence to prove the breach.

View Full Article: Legal notes: serving notice when there is no current gas safety certificate

LICENSING: Landlord fails to appeal £2,500 fine for unlicenced HMO

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A Haringey landlord has failed in his attempt to have a £2,500 fine thrown out by a First Tier Property Tribunal.

The landlord, who the council won’t name, was fined by Haringey private sector housing team for letting an unlicensed three-storey HMO in Hornsey Park Road to seven unrelated tenants.

Inspectors ruled that the property also posed a high risk to the tenants as it didn’t have adequate fire protection or a detection system.

Kitchen facilities provided were insufficient for the total number of tenants under Haringey’s HMO licensing scheme, which has been running since May 2019.

It requires landlords who let properties to three or more unrelated tenants living together who share a bathroom or toilet facilities as well as a kitchen to get a license.

Protect residents

Councillor Dana Carlin (pictured, below), cabinet member for housing services, private renters and planning, says its scheme is there to protect residents and ensure they are living in homes that are safe, well managed, of good quality and most of all, compliant.

“As shown by this case, those who do not comply with their obligations will face tough consequences,” she adds.

“The health and safety of residents is of utmost importance, and we will do everything we can to fight for renters’ rights and to strengthen the quality of Haringey’s private rented sector.”

Last November, Haringey got the green light from the government, for its five-year selective licensing scheme in 14 of its 19 wards in a bid to improve housing conditions and support the council’s ambition to tackle inequality.

Picture: Google Streetview

View Full Article: LICENSING: Landlord fails to appeal £2,500 fine for unlicenced HMO