It’s a renters market, is the “tail wagging the Commercial Landlord’s dog?”

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Rent paid in Arrears:

Given the toughest
trading conditions in living memory on Britain’s high streets – in
fact the trading conditions in retail are probably unprecedented –
tenants, at least those with a reasonable chance of surviving the
online onslaught, are beginning to “flex their muscles.”

It’s a tenant’s
market, where to some extent, lease terms permitting, they can
dictate conditions to their landlords, some of whom are struggling
themselves.

Intu, the leading shopping centre owners, for example, have just announced the possibility of a £1bn cash call on their shareholders. The debt-laden company, owners of shopping centres including the Trafford Centre in Manchester and Lakeside, among others, has announce it is in serious discussions with its major shareholders. These include The Peel Group, and recent investors including the Hong Kong-based Link Real Estate Investment Trust.

As retailers go into
administration, CVAs, and close down, others are rationalising their
estates by closing unprofitable locations. Property values and market
rents meantime are falling, given the mounting vacant spaces
appearing on the high street.

Whilst many stores
are over-rented (paying above the current market rent), due to the
long-term nature of business leases, some locations are tied-in for
some time and therefore their tenants are looking for other ways to
protect their cash-flows.

One way of doing
this, as WHSmith is attempting, is to agree with their landlords to
accept rents in arrears, as opposed to the time old industry practice
of quarterly rents in advance. The successful national stationery
chain is reported (Sunday Times 9^th February) to be
asking landlords to make the switch from advance to arrears.

There’ no law that
states rents must be paid either way, it’s purely a matter of
convention, and indeed residential rents are almost always paid
monthly in advance. How rents are paid – monthly, quarterly,
advance or arrears – is a matter for negotiation between landlords
and tenant; its contractual not a statutory requirement. In normal
circumstances when there is competition for rentals between tenants,
as is currently the case with residential, it’s a way for the
tenant to quickly secure a tenancy.

But not so in
retail; it’s not normal circumstances. So unless the property is in
a highly desirable location, commercial landlords may be coerced into
agreeing more tenant friendly terms: lower rents, monthly payments
instead of quarterly, short leases, or as in WHSmiths case, payments
in arrears. These demands will undoubtedly put landlords themselves
under more financial pressure.

According to the
Sunday Times, WHSmith already pays rent in arrears on several
large high street stores, and secured rent cuts averaging 35% on
leases renewed last year. Given the continuing tough trading
conditions and the shrinkage of many retailers estates, competitors
are likely to follow suit with cash saving demands on landlords.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – It’s a renters market, is the “tail wagging the Commercial Landlord’s dog?” | LandlordZONE.

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RLA responds to South Tyneside licensing proposals

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The RLA has opposed plans to introduce a selective licensing scheme in South Tyneside. South Tyneside Council wants to implement the scheme for all private rented properties in the wards of Beacon and Bents, Simonside and Rekendyke ward and the Westoe ward. The Council say the purpose of the scheme is to improve the management […]

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Today in politics: PRS and the ‘Blue Wall’ and Universal Credit

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We examine new research showing PRS rents are substantially lower in ‘Blue Wall’ constituencies and Labour concerns about ‘one-week shortfall’ under Universal Credit.  The PRS and the Blue Wall The Resolution Foundation has published a report on ‘Blue Wall’ constituencies, those traditionally Labour seats that fell to the Conservatives at the 2019 General Election.  It reports:  […]

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BREAKING: Welsh government drops notice period bombshell on landlords

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An amendment to the looming Renting Homes (Wales) Act will, if passed by the Welsh Assembly, triple the notice period a tenant must be given to six months.

The Welsh Assembly has
dropped a bombshell on the country’s landlords after housing minister Julie
James yesterday introduced proposed legislation that will extend the minimum
notice period from two to six months.

She wants tenants to be given
much more time to get ready to leave a property after a landlord has decided to
take repossession via a ‘no fault’ Section 21 eviction, particularly if they
have children in a local school, are in ill health or want to find a property
to rent nearby.

The changes are understood to
also be a gesture to campaigning groups such as Shelter, which has been running
a campaign in Wales to have ‘no fault’ evictions banned as they are due to be
in England.

Welsh Ministers are already
bringing in significant changes to the rental sector with the introduction of
the Renting Homes (Wales) Act which replaces the
secure tenancy and assured tenancy regimes which currently operate under the
Housing Act 1985 and Housing Act 1988 respectively.

The act has already been
passed in the Assembly but is not due to be enacted until later this year. This
amendment introduced yesterday is a modification of the act and will now be
debated by Assembly Members.

At the moment, Welsh
landlords must wait until six months have passed before they can serve notice
through a ‘no fault’ eviction but, if they have planned ahead and served an
unused Section 21 notice at the start of the tenancy, then evict a tenant.

If
the amendment is passed, a letting agent or landlord wishing to evict a tenant
via a no-fault notice will have to wait until six months has passed from the
beginning of the tenancy, serve notice and then wait for a further six months.

Read the official explanatory
note for the amendment in full.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: Welsh government drops notice period bombshell on landlords | LandlordZONE.

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Rats thriving due to mild UK winters-top tips for landlords

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Rats are thriving across the UK, the British Pest Control Association is warning, with milder winters to blame for the increase. The trade body has developed a new toolkit for landlords on what can be done to help prevent problems with rats. Here, we have put together some resources for landlords about what to do […]

The post Rats thriving due to mild UK winters-top tips for landlords appeared first on RLA Campaigns and News Centre.

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LATEST: Mystery continues to surround government’s flagship rogue landlord database

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Government response to parliamentary written question reveals ministers still have no idea how many people are on it.

The government has admitted
that it has no idea how many people are listed within its much-heralded rogue
landlord database even though it has recently consulted on widening its remit.

Launched during Spring 2018,
the database has been a source of embarrassment for Ministers despite promises
that it would help councils share information on the estimated 10,500 rogue
landlords operating within the private rental market.

In August 2019 personal
finance website This Is Money discovered that just 12 landlords had been added
to the database during its 16 month life after making a Freedom of Information
request to the Ministry of Housing, Communities and Local Government.

Last year Housing Secretary
Robert Jenrick revealed that the list, which remains closed to public scrutiny,
will soon be opened up to tenants to check prospective landlords.

A consultation on the
proposals ended in October last year and a decision is pending.

In an attempt to move things
along, Conservative MP for Christchurch Christopher Chope yesterday tabled a
question to Jenrick asking “how many landlords in England are registered on the Government’s
rogue  database; and what his estimate is of the number of rogue landlords
who are not yet registered”?

Jenrick enlisted
his housing minister Esther Mcvey to answer the query, who said it would not be
possible to answer it “within the usual time period” and that an “answer is
being prepared and will be provided as soon as it is available”.

As LandlordZONE reported last week, the Mayor of
London’s office has had more success making its rogue database public and, we
revealed, has fined landlords £4.5
million since it was established.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Mystery continues to surround government’s flagship rogue landlord database | LandlordZONE.

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Exclusive: Furious landlords condemn Leicestershire council’s green light for huge Selective Licensing scheme

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Oadby and Wigston Bor­ough Coun­cil says its new scheme will include 90 streets and rake in £504,000 to fund the scheme.

Landlords in Leicestershire are
calling on their local council to rethink a major new selective licensing
scheme.

Despite concerns from property owners in the town, Oadby
and Wigston Bor­ough Coun­cil has given the green light to a scheme covering 90
streets in the South Wigston area, with the aim of improving private rental
accommodation where almost one in three privately rented properties fails to
meet the decent home standard.

However,
the Leicester Landlords Association has told LandlordZONE that the scheme will
just be a money-making exercise which won’t tackle the real cause of the area’s
high crime rate and anti-social behaviour.

“The
council doesn’t have enough people employed to implement the scheme properly so
they’ll make money, but things will just get worse,” says chairman Tony Bhaur.

“Some
landlords don’t realise when criminals have taken over their properties and
turned them into HMOs, which is when there are more problems.”

The
association believes a compulsory accreditation scheme would be more effective,
with a thorough survey of who lives in each rented property to flush out any
problems along with rogue landlords.

With 600 chargeable properties in the area, the new
scheme has the potential to generate £504,000 a year through the £590 licence.

Tony
Cawthorne, regulatory services manager for the council, estimates that 85% of
landlords will sign up – with time being allocated for officers to track down
and prosecute those that don’t.

“This
will give us more powers – it will be a way for good landlords to help us root
out the bad and the rogue landlords,” he says.

The scheme starts on 5th May 2020.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Exclusive: Furious landlords condemn Leicestershire council’s green light for huge Selective Licensing scheme | LandlordZONE.

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Landlords accused of misleading tenants over energy switching

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A survey of 1,800 tenants found that 13% had been told wrongly by their landlord or letting agent that they couldn’t switch utility providers.

More than one in 10 private renters have been wrongly told that
they’re not allowed to switch energy provider, costing them an average of £316
a year.

The research,from auto-switching energy service
Migrate, found that despite paying the energy bill, 13% – more than 200,000
households – had been told by their landlord or letting agent that they weren’t
allowed to switch provider.

Migrate says it’s likely that the perceived hassle or past bad
experiences are making some landlords prefer that all their tenants stay with
the same provider.

“It’s
understandable that some landlords may get frustrated with renters switching
suppliers before leaving the property, leaving them to do to the legwork after
they have moved out – especially if you have a larger rental portfolio,” says
Migrate CEO George Chalmers.

“That
said, we think helping tenants understand their rights to switch could be a
positive opportunity for communication between landlords and their tenants,
which could help build better relationships and longer tenancies.” 

The survey of 1,800 bill-paying UK renters also uncovered a huge
amount of misunderstanding among private tenants in relation to energy bills as
53% didn’t think they could switch.

Adds Chalmers: “Despite what some tenants have
been told, if a tenant is responsible for the utility bill, and pays their
energy supplier directly for their energy, they have the right to switch to a
provider of their choosing, regardless of whether the landlord has a ‘preferred
supplier’.” 

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlords accused of misleading tenants over energy switching | LandlordZONE.

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What happens when a company goes into administration?

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Insolvency:

In any dealings in
business you want to ensure that you are dealing with businesses that
are basically solvent, whether this is a contractor you have engaged
to do work, a customer you supply goods or services to, or as
landlord or tenant.

It is always prudent to do due diligence checks on the party you intend to enter into a business arrangement with, as well as ongoing checks occasionally while the arrangement continues, for example while a business tenancy is ongoing.

Companies House now supplies free and quite comprehensive information regarding a company’s officers, reporting and accounts, but this information is invariably several months out of date.

Nevertheless, a pattern of behaviour and financial performance can usually be discerned by comparing several years’ worth of the online accounting reports. Alternatively, using one of the specialist credit reference agencies to check-out the company could be very worthwhile.

If the worst should happen and the commercial landlord appoints debt collectors or High Court Enforcement Officers then one remedy open to them is to seize a debtor’s goods. This often stops them trading and usually brings things to a head quickly – speed is usually of the essence and gives creditor first movers an advantage.

When a company goes into administration it has entered a legal process (under the Insolvency Act 1986) which aims to rescue or sell the business as a going concern if at all possible.

After a licensed
insolvency practitioner has been appointed either by the directors, a
creditor or a court the administration process, it puts in place a
statutory moratorium. This gives the company a ‘breathing space’
freeing it from its creditors’ enforcement actions while
restructuring takes place to rescue the company as a going concern
wherever possible.

If the business
cannot be saved, the administrator will seek to minimise creditors’
losses, perhaps by allowing it to continue to trade for a period
while seeking a sale of the business, or its assets piecemeal. For
example: goodwill, trademarks, patents, equipment, the customer
database, software

content or websites
may have value and there may be a ready market, so the proceeds can
be returned to the creditors.

Pre-Pack
Administration

The main value in a
company is often its good name (goodwill) or the company’s brand,
which, when a company enters into administration will quickly
dissolve into thin air, or be highly diminished and reduce the
chances of a sale. The practice of pre-packaged administration has
evolved to combat this.

So, before going
into full administration, and where potential purchasers for a
business and its assets can be found, or where a part of the business
can be sold or closed down, the a sale of all or part of the
company’s business and assets can be negotiated.

Purchasers may be
directors, shareholders, others connected with the insolvent company
or outside purchasers, or it may be possible for the company to
simply be slimmed down and continue to trade on a reduced scale.

Landlords often come
up against administrators when an insolvent tenant company owes them
money, rent arrears, service charges etc.

What to do when
your debtor enters administration

David Asker, Director of The Sheriffs Office writes:

“The starting
point for enforcement is not good for creditors, but the
administrator does not have the power to turn back time. If you have
instructed a High Court Enforcement Officer (HCEO) and are
mid-enforcement, i.e. you have a controlled goods agreement which is
not the subject of fixed charges, then the moratorium acts to protect
you, i.e. the administrator cannot ignore your enforcement.
Similarly, if you have taken control of goods, then you must hold
them pending confirmation from the administration that they may be
disposed of.”

The strength of your
position is very specific to your case writes Mr Asker.

“If the
administrator has a desperate need for the goods you have taken
control of or the debt secured is materially less than the value of
the goods, then the administrator will come up with a strategy to
ensure you are paid.”

More often that not the goods are just not worth anything like as much when sold second hand as they cost originally, particularly when auctioned off. In this scenario, the administrator is likely to either allow the enforcement to continue, leaving you with an unsecured claim in administration in respect of any balance remaining from the sale, or they will value the items and suggest they be sold by the administrator. When the goods are sold, an agreed sum would be paid to the creditor via the HCEO.

“I have always
found it best to consider the law as it relates to Insolvency as
being continually in flux. The certainties of life that we all crave
just cannot exist long-term in an area of the law where so much pain
can be metered out!”, says Mr Asker.

Conclusions

The appointment of
an administrator is designed to protect the position of creditors and
to stop individual creditors taking matters into their own hands,
thereby destroying value which, if better handled would benefit all
creditors. By its nature, it is a process which is very case specific
and claimants in the midst of enforcement are advised to seek legal
advice before finalising their strategies, says Mr Asker.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – What happens when a company goes into administration? | LandlordZONE.

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“I’m the landlord, I can do what I want, when I want”

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I recently read the shocking
story about Mr Valentine-Brown who was murdered by his landlady, her
partner and two accomplices when they decided they would take the eviction
process into their own hands.  Although
an extreme case, this story serves to highlight just how quickly problems can
escalate when emotions are running high and landlords take an unlawful route to
eviction.

You would be amazed how many landlords I
have spoken to over the years who do not understand why they cannot simply turn
up and take back possession of their property when a tenant falls into arrears.
There is often an attitude of “I’m the landlord, it’s my property, I can do
what I want.” Wrong.

A good friend of mine is a police officer
and she recently told me that there has been a marked increase in calls, across
the London borough where she operates, relating to landlord and tenant
disputes. However, these are civil matters and police will not intervene unless
there is a breach of peace.

In a recent case, a tenant who had rented a property for five years, but
suddenly fallen into two weeks rent arrears, returned to the property to find
his landlord throwing his belonging out on the street with no warning or any
prior discussion about terminating the tenancy.

It amazes me that in this day and age some landlords are still unaware of their legal responsibilities in letting out a property. Regardless of whether a tenant has fallen into arrears, no landlord has the right to unlawfully enter an occupied property and remove a tenant’s belongings or change the locks.

An illegal eviction can be punishable with a fine of up to £20,000 and possible jail time, too. If a landlord wishes to evict a tenant, they should never, under any circumstances, take matters into their own hands. Always wait for the judgement of the courts.

So, what should a landlord do?

MAKE CONTACT – If you have a reason to evict your tenant, such as rent arrears, always try to make contact first to see if you can reach a resolution. Sometimes tenants default through no fault of their own and communication can help to solve the problem before it is taken any further.

COMMUNICATION
TRAIL – Always
keep a record of communication between you and your tenant, and if you have a
phone call to discuss any issues, such as late payments or anti-social
behaviour, follow this up in writing via letter or email. This could be used as
evidence at court.

AVOID
‘LANDLORD RAGE’ – Never be tempted to harass the tenant in an attempt to resolve the
matter. The penalties for harassment are severe and can result in heavy fines,
so always seek professional advice and stick to the correct procedures.

INSTRUCT LEGAL PROFESSIONALS – Landlords or letting agents can draw up and serve the notice themselves but if this is not something you have done before, it is advised to instruct legal professionals who specialise in eviction and who are regulated by the Solicitors Regulation Authority. Even the slightest error in the details of the notice can cause a court to throw a case out, meaning the whole process would have to start again which is costly both in time and financially. If you are unsure about your rights, landlords can call Landlord Action’s free advice line for help on

Landlord Action

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – “I’m the landlord, I can do what I want, when I want” | LandlordZONE.

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