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Spring is around the corner, and this will probably be the most welcome Spring in recent history. Hopefully we are going to return to unrestricted socializing and celebrating in the very near future.
This is the time of year when we begin to notice the world outside our homes and in particular gardens/grounds and the general condition of the area in which we live.
Take Time to Look After the Outside of Your Property
Too often we spend a lot of money refurbishing/redecorating the interiors of our rented properties and forget that very few people will actually see the inside but there is no limit to the number of people who will see and judge the property from the outside and this matters. It matters because we are not only investing in properties, we are investing in communities. We should aim for our properties to enhance the area not drag it down; otherwise an area can soon go on a downward spiral and properties in that area begin to lose value – which is the exact opposite of what we want as investors.
- We should enforce terms in Tenancy Agreements which state that tenants are responsible for: gardens especially controlling weeds, hedges and shrubs, keeping the outside of the property clear of rubbish, putting out bins for collection especially not allowing them to overflow or prop open to encourage rodents, and, keeping windows clean.
- We should book in contractors to do any works needed for which we are responsible and take advantage of the wonderful mild weather. This includes repairs to walls and fences and cleaning of guttering and drains, don’t wait until these things cause problems.
- If our properties blend in with the others around it we are less likely to get complaints from neighbours about small issues. We have the right to expect neighbours to treat our tenants with the same respect that they would treat an owner occupier – for some reason many home owners think that tenants have less/different rights than they have and I have explained many times to neighbours that tenants have the right to have visitors who have the right to park in an unrestricted area if their car has road tax. There are some neighbours who we cannot please, and we just have to accept that and hope that they do not drive tenants away.
Some Important Updates to Section 21
I was helping a landlord to remove a tenant who owes 7 months’ rent. The landlord has already used an eviction specialist to send a letter to the Guarantor asking for the outstanding rent but when the Guarantor ignored the letter, he didn’t want to pay for what he thought was a simple process (Section 21) which he would do himself. He asked me to help him complete the Form N5B The form to request a court order based on the service of a valid Section 21 Notice because at the expiry of the S21 the tenant did not move out and now the landlord needed a court order to enforce it.
This landlord had completed the form in the past, but it has changed. That change became an issue for this landlord who it turned out had served an invalid S21.
The N5B asks for the date on which the landlord gave the qualifying documents to the tenant. Many landlords have not given these to their tenants at the time that they should have, but until now they had got away with giving them before serving a section 21.
The qualifying documents are:
- Gas Safety Certificate – The Gas Safety (Installation and Use) Regulations 1998 (legislation.gov.uk)
- Deposit Protection Certificate – Housing Act 2004 (legislation.gov.uk)
- Energy Performance Certificate (EPC) – Domestic private rented property: minimum energy efficiency standard – landlord guidance – GOV.UK (www.gov.uk)
- How to Rent Guide produced by the Government – How to rent: the checklist for renting in England – GOV.UK (www.gov.uk)
- Licence if the properties is licensable – Housing Act 2004 (legislation.gov.uk)
Last summer the N5B disappeared from the .Gov website and was missing for some time. When it reappeared, I expected to see the Electric Safety Certificate (EICR) join the list of qualifying documents because it has been a legal requirement for all rented properties to have this certification since April 1st 2021. In fact, this didn’t happen and still hasn’t happened for some reason. I fully expect it to happen in the near future when it might be required retrospectively – No that doesn’t happen in England – Oh yes it does, and it did as I will explain in a moment. For now, PLEASE make sure to give all new tenants a copy of the EICR and also give one to existing tenants, even long-term tenants and make certain to save evidence that you have done that. When this document becomes a qualifying document, it may be too late to give it to your tenants just before serving a Section 21 if needed.
Back to the changes on the N5B
There is a case where the landlord did give the tenants the Gas safety certificate which covered the property at the time that he served the Section 21 BUT the tenants challenged the validity of the S21 on the basis that they had not been given the gas safety certificate before they moved in as the gas safety regulations require. The judgement in this case (Trecarrell House v Rouncefield) was a relief to landlords because it was decided that, even where the landlord had failed to give the certificate before the tenancy began, all was not lost so long as they gave it to the tenant, with proof, before serving a section 21. To be honest I was surprised by this ruling because it does go against the gas safety regulations which are there to protect tenants from delinquent landlords. This being the case why then has the N5B changed to require the date that every gas safety certificate was given to the tenant INCLUDING THE ONE BEFORE THEY MOVED IN and that a copy of each one covering the whole tenancy is attached to the form N5B and submitted to the court?
Although this is in line with the Gas Safety Regulation it is “retrospective” regulation because we now have to provide a copy of every gas safety certificate carried out during the tenancy, and the one before it began, and most of us will not have those copies because the regulations also only require us to keep the last two years copies! There will be some landlords, I am one, who cleared out their backlog of documents when disposing of information which is protected by General Data Protection Regulation (GDPR) here.
I am relieved to say that I always attach the documents to emails and therefore I only need to access those original emails to show full details including proof that they were given to the tenant. Unfortunately, the landlord who I am helping, had given them in hard copy to the tenant and had no copies nor evidence. Fortunately, this tenant only moved in last spring and therefore the landlord only needed the one before the tenant moved in and any that became due since. So, what went wrong?
The landlord had advertised the tenancy to begin on 7th of the month. The tenants waited until the referencing etc came back clear and asked if they could move in on 1st of the month but agree to the last few snags to be completed. Have you guessed? The gas safety inspection was carried out on 6th and since the property had been empty having refurbishments the pervious certificate had expired, therefore there wasn’t a certificate to cover the first week of the tenancy and none was given to the tenant. Now he was two months down with an invalid section 21 and needed to begin the eviction process through the Section 8 route.
The tenants have not paid their rent, do not respond to correspondence, nor does the guarantor and the landlord must now serve a section 8 on rent arrears and wait until it gets into court, hoping that the backlog is moving and ask for possession of the property, rent arrears and costs. By the time this happens it will have been a long, expensive, and stressful year for the landlord made worse by him being accommodating when the tenants needed to move in a week early.
Learn this lesson – do not allow tenants to occupy or even move belongings into your property until it is fully legally compliant, and you have provided them with all the qualifying documents.
Let’s remember there is nothing to stop a small change in legislation to require qualifying documents to be served before a Section 8 when they remove the section 21 which will probably happen this year or next. It’s important to be compliant with the legislation and regulation for each of the qualifying documents and based on the changes to N5B I would strongly suggest saving all certification on the cloud until 12 months after a tenancy ends at the very least also proof of when it was given to the tenant.
For Landlords who Let Properties in Wales
From 15th July 2022 the Renting Homes (Wales) Act 2016 is changing, original Act here:
Renting Homes (Wales) Act 2016 (legislation.gov.uk)
CHANGES HERE:
Landlords: housing law is changing (Renting Homes) | GOV.WALES
- Tenants and licensees are called ‘contract-holders’ under the Act. Contract-holders will have an ‘occupation contract’ (which replaces tenancy and licence arrangements)
- There will be a default contract for the private rented sector (PRS), but can be by local authorities and RSLs in certain circumstances (for example a ‘Supported standard contract’ within supported accommodation)
There are four types of terms that can feature in occupation contracts:
- Key matters: The names of the parties and address of the property. These must be inserted in every contract.
- Fundamental Terms: Cover the most important aspects of the contract, including the possession procedures and the landlord’s obligations regarding repair.
- Supplementary Terms: Deal with the more practical, day to day matters applying to the occupation contract, for example, the requirement for a contract-holder to notify the landlord if the property is going to be empty for four weeks or more.
- Additional Terms: Addresses any other specifically agreed matters, for example a term which relates to the keeping of pets. Any additional terms must be fair, as required by the Consumer Rights Act 2015.
Consumer Rights Act 2015 (legislation.gov.uk)
This is the real concern for landlords:
Where a ‘no fault’ notice is issued, the minimum notice period that must be given is 6 months.
A landlord will not be able to give such a notice until 6 months after the contract starts.
In a nutshell, landlords who let in Wales need to plan ahead, well ahead, if you need the property back, because it will be ONE YEAR before you can even serve notice unless the tenant has given you grounds.
I’m not totally sure what this means:
A joint contract-holder will be able to leave a contract without ending the contract entirely.
I hope that it doesn’t mean that one of joint tenants can walk away leaving the remaining tenants in contract. If it does, this hasn’t been thought through, because the remaining tenants would be liable for any utility bills between less of them, presumably the landlord would be able to choose a replacement and impose it on the group….. this is not good news for tenants other than the ones who want to leave!
Abandonment
You are able to repossess an abandoned property without needing a court order, after serving a four-week warning notice and carrying out investigations to satisfy yourself the property is abandoned.
This is good news for landlords. We have been waiting for over 5 years now for legislation to deal with Abandonment to be enacted in England. Those letting in Wales will be pleased to know this
Housing and Planning Act 2016 (legislation.gov.uk)
Changes to Council tax for ‘holiday lets’
From 1st April 2024 a property used for short term, in England, will be assessed for Council Tax rather than Business Rates until it meets certain criteria. This is to stop property owners claiming small business exemption from council tax
Gove closes tax loophole on second homes – GOV.UK (www.gov.uk)
More good news as a result of a case which went to Appeal
This was a ruling which has been eagerly awaited and fortunately went in favour of landlords.
Northwood Solihull vs Cooke/Fearn
Northwood Solihull Ltd v Fearn & Cooke [2020] EWHC 3538 (QB) – Lamb Chambers
This is important because so many landlords now operate their rentals via a limited company. The problem is that a limited company is not a person and has regulations of its own that we need to consider this is covered under Section 44 of the Companies Act 2006
Companies Act 2006 (legislation.gov.uk)
This covers how documents related to a legal transaction must be signed/executed:
(2)A document is validly executed by a company if it is signed on behalf of the company—
(a)by two authorised signatories, or
(b)by a director of the company in the presence of a witness who attests the signature
In the above case these are the facts:
- The tenant was in 8 weeks rent arrears
- The Landlord Served a Section 8 Notice under Ground 8 of the Housing Act 1988 (legislation.gov.uk)
- The Notice was signed by an employee of the Managing Agent (a limited company) who managed the property
- The tenant defended the Section 8 on the grounds that the Notice should have been signed under section 44 Companies Act 2006 as detailed above
Yes, that was of concern, but to make matters much worse the tenant claimed not only that the notice was invalid, he also claimed a penalty because the Deposit Protection Certificate was also allegedly wrongly signed because when one Director signed it there should have been a witness. This could have given rise to a penalty of up to 3 times the amount of the deposit, which is what the tenant claimed and invalidated the section 21.
Housing Act 2004 (legislation.gov.uk)
The ruling was:
The requirement for a corporate landlord to execute a document only applies where the relevant statutory provision requires the landlord and only the landlord to sign. As a section 8 notice may be signed by the landlord or an agent, there is no requirement for execution.
The confirmatory certificate was (at the relevant time) required to be signed by the landlord or the letting agent and consequently the trial judge was correct to hold that it was valid.
The law changed on 26 March 2015 to enable an agent to sign the deposit protection certificate on behalf of a landlord. Best check if you are a limited company and you have deposits held before that date.
If you are a landlord or agent set up as a limited company it is important to understand that some documents must be signed in a particular way. Read Section 44 here Companies Act 2006 (legislation.gov.uk)
If you are considering serving a Section 21 on a tenant in England or Wales please read this first:
Evicting tenants (England and Wales): Section 21 and Section 8 notices – GOV.UK (www.gov.uk)
And this so that you do not waste two months only to find that you cannot find the qualifying documents:
N5 – Claim form for possession of property (publishing.service.gov.uk)
