Obtaining Possession And a Need-to-Know Update

Transcription

1 Obtaining Possession And a Need-to-Know Update

2 Breach During the Term Section 8: 17 grounds 8 mandatory and 9 discretionary Ground number 8 for rent arrears need 2 months of arrears Aim: 2 months at service of notice and at date of hearing Notice period: varies but 2 weeks for rent arrears

3 Possession Proceedings Can be issued on paper or online Hearing date: 4 7 weeks 10 minute hearing Problem areas: (1) possible tenant counterclaim / disrepair (2) tenant pays some of the arrears

4 Other Breaches During the Term Subletting Airbnb Keeping pets Anti-social behaviour

5 Section 21 Accelerated Possession Procedure No fault way of bringing tenancy to an end. Landlord must have done a number of things and served a number of documents Energy Performance Certificate Gas Safety Certificate How to Rent booklet: the Checklist for Renting in England Registered the deposit Served the Prescribed Information

6 Selective Licensing Area Property may have to be licensed by a local authority Landlord must not have been served with an Improvement Notice Notice period 2 months

7 Proceedings Detailed set of proceedings Paper only Court administration poor If a tenant responds will be a hearing If no response possession order in 14 days (usually)

8 Eviction Two Options (1) County Court Bailiff (2) High Court Enforcement Officer (HCEO) County Court - cheaper High Court more expensive but is it quicker? Issues with HCEO

9 Legal Updates

10 Deposits Section 214 Housing Act 2004 fine of between 1-3 months deposit Okadigbo v Chan (2014) 1 month Khuja v Chowdhury (2015) 2 months Dishonest landlord / deposit taken 3 months (?)

11 Gas Safety Certificates Caridon Property v Shooltz (2018) Tenant served with gas safety certificate 11 months after tenancy began Section 21 Notice declared invalid

12 The Future

13 Conservatives 3 year term with either landlord or tenant free to break after initial 6 months Tenant has option to break at any time after initial 6 months by giving 2 months notice in writing Landlords would have grounds to recover possession during the term similar to existing system Rents could only increase once per year

14 Labour Secure Homes for All 3 year tenancies to be the norm Inflation cap on rent rises Letting agent fees for tenants to be banned New legal minimum standards to ensure properties are fit for human habitation

15 Scotland - Private Housing (Tenancies) (Scotland) Act 2016

16 Scotland Applies to all tenancies after 1 December 2017 All landlords must be registered on Scottish Landlord Register Section 21 procedure abolished First Tier Tribunal will adjudicate on all issues concerning residential tenancies Standardised agreements, notices and notes for tenants Deposit no more that 2 months rent

17 Rent Landlord must give tenant at least 3 months notice to increase rent If tenant disagrees, rent officer decides the amount of increase If landlord or tenant is unhappy appeal to the Tribunal Whole process could take 6 months

18 Rent Pressure Zone Local Council can apply to the Scottish Government to have that area designated as a rent pressure zone If granted a cap is set Cap: will be at least CPI and then a % on top Cap can last up to 5 years and applies only to existing tenants

19 Notice to Leave Tenant : 28 days Landlord: depends how long tenant has lived in property and grounds being used to evict 28 days: where tenant has lived in property up to 6 months 28 days: where landlord is relying on serious grounds 84 days: if landlord is relying on any other grounds

20 Grounds for Eviction 8 mandatory grounds 8 discretionary grounds 2 grounds which can be mandatory or discretionary

21 Rent Arrears Mandatory or discretionary Critical number 3 months arrears at date of notice If tenant still owes at least 1 month at date of hearing, Tribunal must make eviction order If tenant is less than 1 month in arrears, Tribunal has discretion Issue: Tribunal can take into account delays in receiving benefits

22 Summary Both main parties are heading towards the Scottish model More tenant friendly The rent arrears eviction process is likely to be longer Difficulties with tenants who are breaching other terms of their tenancies

23 Energy Performance Certificates 10 Years on.

24 Residential EPCs Page 1

25 Residential EPCs Page 2

26 Residential EPCs Page 3

27 Residential EPCs Page 4

28 MEES (Minimum Energy Efficiency Standards)

29 MEES (Minimum Energy Efficiency Standards) The MEES regulations form part of the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 and are a requirement of the Energy Act From 1st April 2018, landlords of relevant domestic private rented properties may not grant a tenancy to new or existing tenants if their property has an EPC rating of Band F or G

30 MEES (Minimum Energy Efficiency Standards) From 1st April 2020, landlords must not continue to let a relevant domestic property, which is already let, if that property has an EPC rating of Band F or G.

31 MEES (Minimum Energy Efficiency Standards) MEES Exemptions Under certain circumstances, a landlord may be able to claim exemption from the MEES regulations. In such cases, the exemption must be registered on the National PRS Exemptions Register

32 MEES (Minimum Energy Efficiency Standards) MEES Exemptions The circumstances in which a landlord may be able to claim exemption All the relevant energy efficiency improvements for the property have been completed (or there are none that can be carried out) and the property remains below an EPC band E A recommended measure cannot be wholly financed at no cost to the landlord (this exemption may be subject to change depending on the outcome of the current Government consultation)

33 MEES (Minimum Energy Efficiency Standards) MEES Exemptions Where a certain measure cannot be installed due to its negative impact on the building s fabric/structure (e.g. wall insulation) Third party consent cannot be obtained - this could include planning permission or consent from the tenant or superior landlord Installation of certain measures would reduce the property s market value by >5% - this would need to be evidenced by Chartered Surveyor s Report.

34 MEES (Minimum Energy Efficiency Standards) MEES Exemptions The MEES regulations are currently based on a principle of no cost to the landlord although this point is currently the subject of a Government consultation. Depending on the outcome of the consultation, the landlord may be required to contribute towards the cost of energy efficiency measures, subject to a spending cap. We understand the figure currently being considered is 2,500.

35 MEES (Minimum Energy Efficiency Standards) Penalties for Non-Compliance The Maximum penalties for non-compliance are as follows: letting a sub-standard property for less than 3 months - up to 2,000 letting a sub-standard property for 3 months or more - up to 4,000 registering false or misleading information on the PRS Exemptions Register - up to 1,000 failing to comply with a compliance notice - up to 2,000

36 MEES (Minimum Energy Efficiency Standards) ANY QUESTIONS?

37 Legionella Risk Assessments

38 Legionella Risk Assessments What is Legionella Legionella are bacteria that are common in hot and cold water systems (storage tanks, pipe-work, taps and showers). The bacteria can live in smaller water supply systems used in homes and other residential accommodation as well as factories, hotels, hospitals and museums. Legionnaires disease can cause severe illness and in some extreme cases can even cause death.

39 Legionella Risk Assessments How Do You Catch It? Legionnaires' disease is normally contacted by inhaling small droplets of water, suspended in the air, containing the bacteria. These can be caused from the spray from taps and showers. Certain conditions increase the risk of legionella

40 Legionella Risk Assessments How Do You Catch It? The recent introduction of the Heath and Safety Executive guidelines (HSG274 part2) means that there is now a legal responsibility from Landlords, who provide residential accommodation, to ensure that: The risk of exposure of tenants to Legionella is properly controlled Legionella Risk Assessments are carried out by a competent person. Heavy fines and even imprisonment are able to be imposed Landlords can be prosecuted even if there is an exposure to risk without anyone actually becoming ill or die.

41 Legionella Risk Assessments A competent person must Carry out a risk assessment to identify and assess potential sources of exposure. Introduce a course of action to prevent and control any risk(s) identified. Monitor and periodically review the control measures. Keep records. Instruct a competent person with sufficient authority and knowledge of the installation to help tackle the measures needed to comply with the law.

42 Thank you for listening Any Questions? Eamonn Evans

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47 Underinsurance 80% of Commercial Properties are Underinsured (Source: The Building Cost Information Service (BCIS))

48 Common causes of underinsurance 1. Using previous insurance details 2. Using market value 3. Out of date valuations 4. Not accounting for improvements or inflation 5. Not allowing for common parts

49 Adequacy of Sums Insured and Limits of Indemnity It is essential that your sums insured and limits of indemnity are sufficient for the risks insured and are reviewed at regular intervals. The sums insured must represent the full value at risk in accordance with the basis of settlement details in the policy. Beware! - If the sums insured fall short of the full value, all claims settlements may be reduced in proportion. This is known as the Condition of Average

50 Application of Average Condition of Average Example Buildings Sum Insured 125,000 True Reinstatement 192,000 Partial Loss 50,000 Sum Insured / True Reinstatement x Loss = 32,500 settlement. A 17,500 shortfall! In the event of a total loss the maximum payable is 125,000. A 67,000 shortfall! There s good news! If you undertake a RICS valuation every 3 years, the condition of average is waived

51 Terrorism Cover I own residential property in the suburbs, it will never happen here. My property will not get blown up!

52 Terrorism Cover Alternatives Broader definition of what constitutes a terrorist act Includes sabotage Worldwide jurisdiction Selection/choice Option of full value basis OR combined PD/BI 1 st loss limit (specific or floating) Generally Nil deductible Short or Long period covers Includes non-damage denial of access Pool Re Narrow/restricted definition Doesn t England, Scotland & Wales Not possible Not possible Must follow underlying Annual only No cover

53 True cost of insurance Not just premium Wide policy wording Specialist advice Claims team to support you when you need it most.

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55 Cheapest? Well Known? Best Reviews? Location? Recommendatio n?

56 Look for a Regulated Agent Landlords and tenants beware - there are agents who may not be compliant with any of the industry rules and regulations. You get what you pay for cheaper may mean less rigorous checks and attention to detail. Examples of un-regulated Agents absconding with client monies and tenant deposits abound. More people renting property has resulted in more letting agents many of whom don't abide by legislation or protect landlord and tenant monies

57 Regulated Agents Agents who are regulated by professional bodies are subject to independent scrutiny. The Association of Residential Letting Agents (ARLA), the Royal Institution of Chartered Surveyors (RICS) and the Tenancy Deposit Scheme (TDS) are designed to protect the consumer. Landlords often ignore these safeguards and are made vulnerable by unscrupulous unregulated agents. Under the Consumer Rights Act 2015 agents must display landlord and tenant fees on their website and in their offices.

58 Market Appraisals Managing client expectations rent Most landlords are guided by their agent, but not all. Some properties are sub-standard compared to the competition and are expected to achieve unrealistic rents. Rental legislation is more complex than ever and keeping abreast of change can be difficult. A few examples of recent legislation includes: q Smoke and Carbon Monoxide Alarm Regulations. q Seeking possession under Section 21 ( now Form 6A) of the Housing Act q The Immigration Act 2016 with Right to Rent obligations. q The Abolition of the 10% fair wear and tear allowance in q Buy to Let landlord taxation changes. Agents should provide evidence of achievable rents, be honest about the property and ensure landlords comply with legal obligations.

59 Market Appraisals Preparing the property for letting Only property with an Energy Performance Certificate (EPC) of Grade E or above can be advertised. Professional photographs will show a property at its best and increases interest on sites like Rightmove. A property must be clean with a well tended garden for any photo session. All relevant certificates such as EPC, Gas Safety Certificate, Electrical Safety Certificate must be available. If a landlord is resident overseas agents must advise them of HMRC tax requirements.

60 Referencing Applicants and Right to Rent Referencing is essential. This will sort the suitable from the unsuitable. q q q q q q Check earnings against the monthly rent. Check for bad debts or 'previous bad history'. Check mandatory Right to Rent to verify eligibility to reside in UK. Check an original item of identification for all adults, make then retain copies securely throughout the tenancy and beyond. For non-eea nationals check time limit to stay then make Right to Rent checks when Visa or Residence Permit nears an end. If no new or renewed residence status is provided, the letting agent can check whether their application is likely to be

61 The Tenancy Agreement Which is why landlords can be at risk of non-compliance and face fines! The tenancy agreement is the most important document. A contract can be made orally but if taking rent and deposits from a tenant, always enter into a written contract. An Assured Shorthold Tenancy for residential properties is a legally binding contract. Updates in 2018 alone include: q q q q The General Data Protection Regulations The How to Rent Guide The Tenancy Deposit Leaflet and prescribed information New clauses relating to the serving of notices

62 The Tenancy Agreement Content There should be a section for individual or special clauses. These cover the landlord s specific requirements such as Ø Ø Ø Ø End of tenancy professional carpet cleaning Special instructions (eg who's responsible for repairing/replacing appliances) Heating oil levels Pets Individual clauses can safeguard both landlord and tenant.

63 The Inventory A detailed and comprehensive inventory at the start of every tenancy will minimise end of tenancy disputes and deposit returns. Knowing they've signed a new Inventory will remind tenants to leave the property as they found it. The inventory should: q q q Be clear and include descriptions, age and condition of fixtures, fittings and furnishings Include photographs and meter readings. State the cleanliness of the property and fixtures.

64 Tenancy Deposit If a tenancy started after 06 th April 2007 the tenant s deposit must be protected in a Government backed scheme. There are three schemes to choose from which are: Ø Ø Ø Tenancy Deposit Scheme (TDS) My Deposits Deposit Protection Scheme (DPS)

65 Tenant deposits and Landlord responsibilities When a deposit is paid the landlord/agent must provide the tenant with: Ø Ø Ø Ø Ø Ø Ø Ø Ø Ø The address of the rented property. How much has been paid. How the deposit is protected. Name details of the tenancy deposit protection scheme and its dispute resolution service. Their or their agent s name and contact details. The name and contact details of any third party who has paid the deposit. How to apply to get the deposit back. What to do if you cannot get hold of the landlord at the end of the tenancy. What to do if there is a dispute over the deposit. An Assured Shorthold Tenancy Agreement will contain most of the information.

66 Problems with Tenants Sometimes, tenants may be carrying out illegal activities in the property. These may include: Ø Ø Ø Ø Ø Drug dealing from the premises. Growing cannabis. Sub-letting the property Converting the accommodation to bedsits for income. Immoral activities. Good agents are experienced and know what to look for when undertaking property visits so appropriate action can be taken.

67 Tenant Fees Ban and Deposits In April 2019 Tenant Fee Ban Legislation is predicted to be introduced. How will the legislation affect deposits? The new legislation does not prevent a landlord (or their agent) from taking tenancy deposits. A tenancy deposit will need to be protected in an approved deposit scheme. When the legislation comes into effect deposits are likely to be capped to the equivalent of 6 week s rent. The landlord cannot charge more deposit but potentially could increase the rent to cover exigencies (pets etc). New legislation allows for a holding deposit of one weeks' rent.

68 Disrepair in the Private Rented Sector If a landlord doesn't try to fix a disrepair that's reported in writing by a tenant, then the tenant may apply to the local authority to take action. If the local authority finds a hazard under the Housing Health and Safety Rating System (HHSRS), constituting a risk, they may serve an Improvement Notice on the landlord. If the tenant has written to the landlord reporting disrepair issues the landlord can't serve a Section 21 Notice to regain possession. The same applies if the local authority has served an Improvement Notice on the landlord.

69 Monitor and address disrepair before it's too late! Good agents: q q q q q Work closely with tenants so that any disrepair is investigated and appropriate action taken. Ensure there is no risk to the landlord if a tenant feels they are not addressing the disrepair and reports it to the local authority. Landlords must continue to actively try and resolve any disrepair - even if the tenant is not paying their rent. An Agent can keep the tenant on side while having the landlord and their clients' best interests at heart. If tenants feel the problem is being addressed and the agent is keeping them updated, they are less likely to contact the local authority.

70 Selective Licensing Local authorities can introduce selective licensing to properties in their area. Local authorities can designate an area for licensing if a proportion of properties are causing problems to the neighbourhood. These can include anti social behaviour. Local authorities require the landlord or agent apply and pay a regionally variable fee for the licence. Local authorities can determine whether a landlord or agent is a fit and proper person. Some local authorities in Kent have introduced selective licensing. Regular checks should be carried out to ensure no new selective licensing areas have been introduced.

71 If you use a Regulated agent you'll be in safe hands apavey@caxtons.com

72 Misled by unscrupulous letting agents? We can help!