Issuu on Google+

RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

RESIDENTIAL LANDLORD

“… We are to the landlord what the RAC is to the motorist …”

The magazine provided by The Guild of Residential Landlords CONTENTS

1

3-7

News

8 - 11

Landlord Obligations

12 - 21

Tenancies (General)

22 -23

Houses in Multiple Occupation

24 - 27

Local Housing Allowance / Housing Benefit

28 - 30

Long Leaseholders / Freeholders

31 - 36

Local Authority including homelessness


2


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

News (From Various On-line Sources)

HSE SELECTS CAPITA AS ITS PREFERRED PARTNER TO OPERATE A NEW GAS INSTALLER REGISTRATION SCHEME

• The Capita Group Plc (Capita) has been selected by the Health and Safety Executive (HSE) as the preferred partner to operate a • new gas installer registration scheme in Great Britain. The contract is expected to be valued at approximately £14 million per annum for a term of at least five years. Detailed • contract negotiations are now underway. The new gas installer registration scheme, which will replace the current CORGI registration scheme,

3

will deliver a renewed focus on gas safety. Its sole purpose will be to carry out gas installer registration, inspection and raise awareness of gas safety • a transparent, open and issues amongst gas consultative approach consumers. Around 250 CORGI employees are a commitment to working expected to TUPE transfer • with other industry bodies. to the new scheme. Operation of the scheme is due to start on 1 April 2009. Paul Pindar, Chief The new gas registration Executive of Capita scheme will deliver: commented: "Capita is delighted to have the high levels of gas safety opportunity to create a new, highly targeted and effective awareness amongst registration scheme that will consumers aligned to a significantly reduce the powerful new gas safety administration and cost brand burden on registered rapid and dramatic installers. We are pleased to be able to support HSE in improvement in levels of their pursuit of continuing to service satisfaction for improve gas safety and consumers, installers, HSE customer satisfaction. We will and other stakeholders also work in close a re-energised, risk- collaboration with other focused, effective and industry bodies to improve standards and raise efficient inspection force consumer awareness of gas a commitment to focusing safety." exclusively on delivering the scheme free from other commercial distractions


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

News (continued...) Landlady sued by rapist for clearing flat 'ruined' Published Date: 08 September 2008 A landlady told last night how she faces financial ruin after a serial rapist successfully sued her for clearing his flat following his arrest.

Hailsham, near Eastbourne, East Sussex, after repeatedly failing to contact Cope and discovered a letter from his solicitor, whom she contacted.

Last night she said she She said she was not told faced financial ruin after the the nature of the offence judge awarded Cope £750 in Cope was at that stage damages and ordered her to alleged to have committed but return his goods, including was left in no doubt of the CDs and books, to his wife seriousness of it. within 14 days.

A judge ruled Melody Goymer acted unlawfully by Mrs Goymer, who lives in removing Thomas Cope's possessions from the property Pevensey Bay, near before he had been convicted Eastbourne, decided to clear Cope's possessions from the of his latest offence. flat and placed them into The 60-year-old storage two weeks' later. grandmother gained access Cope, a 55-year-old to the two-bedroom flat in former debt collector, was jailed for life at Hove Crown Court last year after being Authors Note: convicted of raping a 19-yearold woman in 2006. It has been long established that a tenant remains a tenant even when in prison because there is an intention to return and the home (not the prison) is still their main or principle home.

Cope – who had been living alone in the flat – was first jailed for rape for four years in 1976, and he has further convictions for rape, attempted rape and indecent assault. To Mrs Goymer's disbelief, she was told last year that she was being sued by Cope in a publicly-funded case while he was serving his latest prison sentence. A judge, sitting at Eastbourne County Court last week, ruled that Mrs Goymer

4

had unlawfully terminated Cope's tenancy by failing to seek a court order for possession of the flat.

But she said she also faces paying her legal costs of £5,000 as well as Cope's, estimated to be up to £13,000. Owing to the state in which Cope left the flat, Mrs Goymer said she will also have to spend thousands of pounds renovating and redecorating. Mrs Goymer, who rents two properties in the Eastbourne area, said: "I'm absolutely furious. We are astonished, upset and feeling a sense of plain disbelief. We just can't manage to find that sort of money."


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

We are pleased to announce that we are now able to supply EPC's anywhere in England or Wales. A discount is available for members of the Guild of Residential Landlords. For full information on the requirements of Energy Performance Certificates for landlords from 1 October 2008 please visit www.epc4landlords.net Cost £58.00+VAT (£68.15 inc. VAT) Members of the Guild £68.00+VAT (79.90 inc. VAT) Non-Members of the Guild The EPCs shall be produced according to the following Service Levels: The company we use aim to provide the following service and time-scale when reasonably possible. • • • • •

The Supplier to make first contact attempt with the homeowner within 4 hours of receipt of instruction; The Supplier to contact the homeowner 8 times within 4 working days to book a site visit appointment; The Supplier to notify the Client if appointment has not been confirmed after 4 working days; The Supplier to secure an appointment date within 5 Working Days of receipt of the instruction except where prevented by the homeowner; The Supplier will deliver the RRN to the Client by 17:00 on the working day following the site visit appointment.

As we are the suppliers client, we will pass on any notifications to you as promptly as possible. How to order To order n EPC, please visit www.all4landlords.com

5


RESIDENTIAL LANDLORD FEBRUARY / MARCH 2008

News (continued...) of the most effective measures in improving a property's energy performance.

Landlords lead the way on energy efficiency

With new Energy Performance Certificate laws for the rental sector less than four weeks away, landlords have shown that they are ahead of the game when it comes to improving the energy performance of rental property. Research by Paragon Mortgages reveals that the majority of landlords have made improvements to a residential investment property since purchase to help improve its energy efficiency. Over half (56%) of landlords have installed a new boiler into a rental property since purchase, while 62% have installed double glazing. Meanwhile, a third have laid insulation to prevent heat escaping from the roof of a property - one

6

From 1 October 2008, landlords offering property for rent will be legally required to provide tenants with an EPC. Failure to comply with the legislation will result in a £200 fine and the landlord being unable to market the property until they obtain the certificate. Despite the high number of landlords installing energy efficient measures, only 12% are aware of the Landlord Energy Savings Allowance. This allows landlords to offset the cost of installing energy saving measures, including loft, cavity wall and floor insulation, against income tax, up to a value of £1,500. John Heron, Paragon Mortgages managing director, says: ‘Landlords are committed to improving the standards of private rented accommodation and since 1995 there has been a marked improvement in the standard of private rented sector stock due to increased investment from residential property investors. ‘Every landlord wishing to market a property for let will require an EPC, so it is likely that the rating of their property will add to the factors that a potential tenant will consider. Lower fuel and energy costs are important, particularly given the rising cost of energy, so a property with a high energy efficiency rating is likely to be a winner.' Heron adds: ‘Landlords should be aware of the financial assistance available to them to improve the energy performance of their properties. The Government has highlighted reducing domestic energy as a key target, so


RESIDENTIAL LANDLORD FEBRUARY / MARCH 2008

News (continued...) landlords need to take advantage of the financial help that it is offering.' However, Paragon's research shows that while landlords are undertaking major work to improve a property's performance, they could also introduce minor measures to lift a property's energy efficiency. For example, only 33% have installed energy saving light bulbs and 18% have purchased energy efficient electrical appliances, despite the relative low cost of both measures.

‘Every landlord wishing to market a property for let will require an EPC, so it is likely that the rating of their property will add to the factors that a potential tenant will consider. Lower fuel and energy costs are important, particularly given the rising cost of energy, so a property with a high energy efficiency rating is likely to be a winner.'

7


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Landlord Obligations When is landlord liable to pay council tax?

* Care homes and hostels * Religious communities

* Houses in multiple The question of council tax and who is liable can often occupation arise. Many local authorities * Second homes with will attempt to claim the domestic servants landlord is always liable * Ministers of religion whatever the situation but * School boarding what is the position? accommodation For this article, it is assumed that your tenancy agreement contains a provision that the tenant is liable to pay for the council tax. Owner always liable An owner is always liable for the following properties regardless of what it might say in the tenancy agreement (because statute overrules contract)

* Accommodation occupied by asylum seekers Houses in multiple occupation For this article we only need concentrate on Houses in Multiple Occupation

* It was originally constructed or subsequently adapted, for occupation by more than one household; or

* each person who lives You must never confuse in it is either: the definition of a house in multiple occupation contained * a tenant or licensee in the Housing Act 2004 with able to occupy only part of the the council tax provisions. dwelling; or The two are completely different. * a licensee liable to pay rent or a licence fee on only part of the dwelling For council tax purposes, the definition of an [The Council Tax (Liability HMO is as follows: of Owners) Regulations 1992] A dwelling is classed as a house in multiple occupation if:

8

You must never confuse the definition of a house in multiple occupation contained in the Housing Act 2004 with the council tax provisions. The two are completely different.

This class clearly includes typical bedsit type accommodation in particular where each room is let individually as opposed to one


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Landlord Obligations (continued...) joint tenancy for the entire house. In England and Wales this class can include a dwelling occupied by only one person if the above conditions are met, so long as the dwelling was originally constructed, or subsequently adapted, for occupation by multiple households. A property subsequently converted into self contained flats does not apply because they are classed as separate dwellings. (In theory though a flat could be an HMO if the rooms are individually let)

Same as above except 5 tenants on individual tenancies per room Y The hierarchy of liability Where the owner is not always liable as detailed above, liability is determined by a 'hierarchy of liability' set out in section 6 Local Government Finance Act 1992. The below table shows this hierarchy and you must start at the top and work down the table. As soon as a description is reached which applies to the dwelling in question, that person is the liable person [s6(2)].

Because a house can be an HMO if it has been "adapted" for occupation by multiple households, there could be borderline cases where for example a landlord Hierarchy of liability in adds a bedroom and a England and Wales bathroom. Is this adaptation for an additional household, or is it for the better convenience * he is a resident of the dwelling and has a freehold of a single family? interest in the whole or any part of it; Examples of HMO and * he is such a resident liability and has a leasehold interest Description Owner [including an assured Liable (y/n) shorthold tenancy] in the 5 bedroomed house whole or any originally constructed for one part of the dwelling family and not been altered which is not inferior to another since original construction. 5 such interest tenants sharing house on one held by another such joint tenancy N resident;

9

Because of this hierarchy an owner who is not resident is at the bottom of the table and is therefore last to be liable (except when an owner is always liable as detailed above). Because a normal tenant is number two from the top, then they will always be liable before the landlord can be

* he is both such a resident and a statutory or, secure or introductory tenant of the whole or any part of the dwelling; * he is such a resident and has a contractual licence to occupy the whole or any part of the dwelling; * he is such a resident; or * he is the owner of the dwelling. Because of this hierarchy an owner who is not resident is at the bottom of the table and is therefore last to be liable (except when an owner is always liable as detailed above). Because a normal tenant is number two from the top, then they will always be liable before the landlord can be.


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Landlord Obligations (continued...) Note: no one has to pay the tax unless a bill has been sent out with her/his name on it unless (in Scotland) s/he is jointly liable with someone who has been billed. If the name of a liable person cannot be established after reasonable enquiries have been made, the bill may be addressed to 'The Council Tax Payer. There are various situations when a dwelling is exempt from being liable to council tax. This should not be confused with certain occupiers being entitled to a discount.

Exempt Dwellings Vacant and unoccupied dwellings The term 'vacant' refers to a dwelling which is both:

unfurnished' if there are insufficient furnishings to enable someone to live in the dwelling. However, the quantity of furniture present in the dwelling, in relation to its size, should be the determining factor, ignoring anything other than 'furniture' -i.e., appliances, fitted wardrobes, TV, DVD and carpets. Thus, a studio flat with a table, two chairs, a sofa and a bed (plus a cooker, washer/drier TV and HiFi) would be substantially furnished, but the same goods in a four bedroom house would not. [pg. 46/47 Council Tax Handbook CPAG 6th edition]. The legislation defines an 'unoccupied dwelling' as one in which no one lives and an 'occupied dwelling' as one in which at least one person lives. [The Council Tax (Exempt Dwellings) Order 1992].

* unoccupied; and * substantially unfurnished [The Council Tax (Exempt Dwellings) Order 1992]

Vacant dwellings requiring or undergoing major repairs or alterations

A dwelling may be exempt for a maximum of 12 The legislation contains no months if it: definition of 'substantially unfurnished'. In practice many local authorities regard a * is vacant (i.e., dwelling as 'substantially unoccupied and substantially

10

unfurnished) and requires, or is undergoing, major repair works to make it habitable; or * is undergoing structural alteration which has not been substantially completed; or * has undergone major repair work to render it habitable, but has remained continuously vacant since completion for less than six months; or * has undergone structural alteration, but has remained continuously vacant for less than six months since the alteration was completed. The vacant dwelling remains exempt for as long as it requires the major repair work or for as long as the works or alteration takes, subject to the 12 month limit. Major repair works are not defined in the legislation apart from the fact that they include

The legislation defines an 'unoccupied dwelling' as one in which no one lives and an 'occupied dwelling' as one in which at least one person lives. [The Council Tax (Exempt Dwellings) Order 1992].


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Landlord Obligations (continued...) Vacant Dwelling

* a student's spouse or dependant who is not a British A vacant citizen and who is prevented dwelling (one that is by the terms of her/his leave to enter or remain in the UK form working or claiming benefits; or unoccupied structural repair works; nor is and substantially unfurnished) the phrase 'substantially is exempt for up to six completed' defined. months. This exemption applies both to new and From personal experience previously occupied dwellings. Any one period of though, the test is strict. The not more than six weeks word major is probably the best word to emphasise. Even during which the dwelling is occupied is disregarded when a property having new deciding if the dwelling has kitchen, new bathroom and been vacant. gas central heating is not covered by the exemption because a person is still able Dwelling wholly to occupy the dwelling whilst occupied by students or these works are being carried 'relevant persons' out and these are not 'structural repairs' which must be included. (For example in To be exempt under this your own home you could heading the dwelling must be install a new kitchen or central either: heating whilst living there. Rented property is no * occupied by one or more different as far as council tax residents, all of whom are rules matter). 'relevant persons' (see below) If general improvements are being carried out, you would probably be better relying on the general six month exemption (see later).

11

* a student disregarded for discount purposes; or

* occupied only by one or more 'relevant persons' as term-time accommodation. A relevant person is:

* a school or college leaver who is disregarded for discount purposes. * If the dwelling has more than one resident, they all need to meet the qualifying conditions for the exemption to apply. Example Three students rent a house as joint tenants. It is exempt from council tax. The exemption ends when one of the students is dismissed from his course and, therefore, no longer qualifies for a status discount. The three joint tenants are now jointly liable for the council tax on the dwelling. There are three residents, but two of them are disregarded for the purpose of a discount. The bill should be reduced by 25 per cent because there is only one adult resident who is not disregarded.


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Tenancies (General) Succession of Rent Act Statutory / Protected tenancies Tenants who have protection under the Rent Act 1977 are very well protected and there are extremely rare occasions when a landlord is able to seek possession. In addition, the rents on this type of tenancy are heavily controlled and generally no where near to market values.

tenancy. The Housing Act 1988 made changes to succession rights, which though still provide spouses or members of the family rights of succession, they are not always quite so severe. Surviving spouse or civil partner

The surviving spouse, or surviving civil partner, (if any) of the original tenant, if residing in the dwelling-house immediately before the death of the original tenant, shall after the death be the statutory tenant if and so long as he or she occupies the dwelling-house as his or her It was the case that members of the tenants family residence. could "succeed" to the In summary therefore, if a spouse or civil partner was living with the original tenant immediately before the original tenant dies, then they are entitled to succeed the tenancy with all the protection of the Rent Act.

A person who was living with the original tenant as his or her wife or husband shall be treated as the spouse of the original tenant A person who was living with the original tenant as if they were civil partners shall be treated as the civil partner of the original tenant. If, immediately after the death of the original tenant, there is, more than one

12

person who fulfils the conditions above, only one of them as may be decided by agreement or, in default of agreement, by the county court shall be treated (according to whether that one of them is of the opposite sex to, or of the same sex as, the original tenant) as the surviving spouse or the surviving civil partner. In summary therefore, if a spouse or civil partner was living with the original tenant immediately before the original tenant dies, then they are entitled to succeed the tenancy with all the protection of the Rent Act. [para 2, Part 1, Sch 1, Rent Act 1977] Members of the original tenants family (not spouse or civil partner) Where a person who was a member of the original tenant's family was residing with him in the dwelling-house at the time of and for the period of 2 years immediately before his death, that person or if there is more than one such person such one of them as may be decided by


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Tenancies (General) (Continued...) agreement, or in default of agreement by the county court, shall be entitled to an assured tenancy of the dwelling-house by succession. Notice how this is different to a surviving spouse or civil partner. Any succession no longer becomes protected by the Rent Act 1977 but the tenancy becomes an assured tenancy under the Housing Act 1988.

The grounds for possession under the Housing Act 1988 also apply (rent arrears, breach of tenancy etc.) In summary, where a member of the original tenants family is residing with the tenant at the time of death and 2 years previously, they will succeed to become an assured tenancy with no rent control but a landlord will still need grounds for possession and is unable to serve a section 21 notice.

An assured tenancy still gives the tenant protection (because it is not an assured [para 3, part 1, sch 1, Rent shorthold tenancy so no Act 1977] section 21 2 months notice can be given) but the rent has Succession after other no control and therefore the successors rent can be increased by using a section 13 notice to a market rent. Provisions also apply where there has been previous successions. As a general rule, any succession after the original tenant and the death of the successor occurs after the commencement of the Housing Act 1988, they will become an assured tenant. Requirement of occupation

13

In summary, where a member of the original tenants family is residing with the tenant at the time of death and 2 years previously, they will succeed to become an assured tenancy with no rent control but a landlord will still need grounds for possession and is unable to serve a section 21 notice.

Cases on the Rent Act 1977 do not come up so often these days. Under that Act a person with protection starts out, under the contractual tenancy, as a "protected tenant". If the landlord wishes to recover possession the landlord must determine the protected tenancy by a notice to quit (assuming that it is a periodic tenancy). This then gives rise to a statutory tenancy. The landlord will only be entitled to possession if he can prove a ground for possession. However, the statutory tenancy only continues for so long as the tenant occupies the property "as [her] residence": in effect, as her home (s2(1)(a) of the Rent Act 1977). Whether or not the tenant has continued to occupy the property as her


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

14

Tenancies (General) (Continued...) residence has been described as "a jury question to be determined by applying ordinary common sense" (Beck v Scholz [1953] 1 QB 570, Evershed MR at 575).

statutory tenant. The judge said this:

"In my judgment, the correct answer to [the preliminary issue] which is, as the cases make clear, essentially a jury question or In this case the defendant one of fact and degree -and in was in fact a statutory tenant this case I consider it to be by succession but the same essentially one of degree - is principles apply. The landlord that Miss Stephens has not contended that she had ceased to occupy No. 6 as ceased to occupy the dwelling her home. It has been her as her home and so had home all her life. Although her ceased to be a statutory new arrangements have tenant. reduced the importance of No. 6 to her as a place to resort to, her connection with The tenant contended that it is still sufficiently great that the behaviour of a new she still occupies No. 6 as her neighbour had been so home, or as her residence." upsetting that she was "driven out". Thereafter she spent a considerable amount of time The landlord's appeal to at a friend's house some five the CA was dismissed. The to ten minutes' walk away. judge rightly directed himself She took her meals there, that the issue raised the took baths there and washed question of fact or degree her clothes there. However, which required to be the judge found that the approached in a dwelling was still her home commonsense way. Adopting and that she was merely a that approach, he then guest at the friend's house. proceeded to address the She continued to sleep in her issue carefully and home two or three nights a conscientiously. week, and visited the property Stephens v Kerr [2006] daily. He therefore found that EWCA Civ 187 she still had a sufficient connection to the property and continued to be the

Section 21 notices

The word "on", "at" or "after" in a section 21(4)(a) notice? Believe it or not, there has been a couple of cases that have reached the court of appeal deciding whether when drafting a section 21(4) (a) notice (the 2 months notice served during a periodic tenancy) the words "on", "at" or "after" should be used when referring to the expiry date. The word "after" Section 21(4)(a) Housing Act 1988 reads: (4) Without prejudice to any such right as is referred to in subsection (1) above, a court shall make an order for possession of a dwellinghouse let on an assured shorthold tenancy which is a periodic tenancy if the court is satisfied—


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

15

Tenancies (General) (Continued...) (a) that the landlord or, in the case of joint landlords, at least one of them has given to the tenant a notice in writing stating that, after a date specified in the notice, being the last day of a period of the tenancy and not earlier than two months after the date the notice was given, possession of the dwelling-house is required by virtue of this section;

substantially to the same effect..." [Hale LJ at paras 22 & 23] The word "at"

Does the word "at" mean the same as "after"? This was the situation that had to be decided in Notting Hill Housing Trust v Roomus [2006] EWCA Civ 407.

Does the word "at" mean the same as "after"? This was the situation that had to be decided in Notting Hill Housing Trust v Roomus [2006] EWCA Civ 407.

"The sole issue is whether Clearly the statue requires this is a valid notice. Mr Panton submits that the the word "after". This was confirmed in McDonald v notice is invalid because it Fernandez [2003] EWCA Civ contains the phrase "at the end of the period of your 1219. tenancy" instead of "after the end of the period of your ".. the statute requires the tenancy". The point may notice to specify a date which seem to involve hair- splitting, is the last date of the period. but unless the notice complies The statute does not require with the requirements the landlord to specify a date of section 21(4) it is on which he requires invalid. The form of notice possession. This is not a was in a standard form notice to quit. The landlord apparently used by the will not get possession claimant at the time. I without the tenants consent unless he goes to court. That understand that the standard is why the statute requires the Oyez form currently in use states: "I require possession landlord to state that possession is required after a after [the date] ‌". date specified in the notice, being the last day of a period I come, therefore, to the of the tenancy. This is not a short question that arises on case where the legislation this appeal: do the words "at permits a form to be the end of the period of your

tenancy" mean the same as "after the end of the period of your tenancy"? The judge held that they do. I agree with him. The phrase "at the end of the period of your tenancy" clearly does not mean the same as "on the last day of the period of your tenancy". The period of the tenancy does not come to an end until midnight on the last day of that period. As Nourse LJ said in Mannai Investment Company v Eagle Star Assurance Company [1995] 1 WLR 1508, 1530H the last moment of time on one day is not the same as the first moment of time on the next: "The two moments of time, albeit separated by an immeasurable stroke of midnight, have always been treated as separate". Thus


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Tenancies (General) (Continued...) immediately before midnight on the last day, the period of the tenancy has not yet ended. As soon as midnight on the last day strikes, the period has ended. In my judgment, the phrase "at the end of the tenancy" means "after the end of the tenancy". It does not refer to the split second in time when the tenancy comes to an end. It is a normal use of language in a temporal context to use the phrase "at the end of" to mean "after the end of". Thus a request to an audience that they should remove all their belongings "at the end of the concert" is not asking the audience to do something at the split second when the last note is played. It is asking them to do something after the end of the concert. Similarly, to say that the soldiers came home "at the end of the war" means that they came home after the war had ended or after the end of the war. It does not mean that they came home at the split second when the enemy surrendered. The word "on"

As shown in the two cases above, the word "on" must never be used and the notice will be invalid if used.

Unfair Contract Terms

Governors of the Peabody Trust v Reeve Chancery Division, Mr Moss QC, sitting as a deputy High Court judge June 2, 2008 Sections 102(1) and 103, Housing Act 1985, provide for the variation of the terms of a secure tenancy in one of three ways and “not otherwise”. One such way is by unilateral variation by the landlord, subject to requirements of notice. In R (Kilby) v Basildon DC [2007] EWCA Civ 479; [2007] HLR 39, it was held that an authority cannot contract out of the provisions of s.103; to do so would fetter their ability to discharge their duty under s.21, 1985 Act, to manage their housing stock effectively. The Unfair Terms in Consumer Contracts

16

Regulations 1999, make provision to protect consumers against unfair terms in contracts concluded between them and a seller or supplier. The Regulations apply to contracts relating to land, including tenancy agreements: R (Khatun) v Newham LBC [2004] EWCA Civ 55; [2005] Q.B. 37; [2004] H.L.R. 29; Where a term in a contract is an “unfair term,” it is not binding on the tenant (reg.8); a term is unfair if it was not individually negotiated, is contrary to the requirements of good faith and it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the tenant (reg. 5). By reg.7(2), if there is doubt about the meaning of a written term, the interpretation which is the most favourable to the consumer is to prevail. The claimant was a registered social landlord with approximately 10,000 tenants, most of whom were assured tenants. Clause 5 of the standard terms of tenancy made provision for alteration of the agreement: “(a) With the exception of any changes in rent this agreement may only be altered by the agreement in writing of both the tenant and the trust.


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

17

Tenancies (General) (Continued...) “(b) The terms of this agreement may be varied by the trust by a notice of variation served on the tenant and the provisions of section 103 of the Housing Act 1985 shall apply to this agreement as if this tenancy were a secure tenancy…”. The claimant proposed to alter the terms of the tenancy to make provision for the recovery of service charges. Issues arose as to whether clause 5 permitted the claimant unilaterally to vary the agreement using the s. 103 procedure and, if such a right did exist, whether clause 5(b) was an unfair term such that it was not binding on the tenants.

unrealistic to assume that a tenant would have understood the impact of that clause and that, as there was ambiguity between clause 5(a) and 5(b), clause 5(a) was to be preferred because it was more favourable to the tenant (reg.7, 1999 Regulations). It was also argued that clause 5 (b) was an unfair contract term (within reg.5, 1999 Regulations) and therefore was not binding on the tenants.

It was held that clause 5(b) was not enforceable against the tenants. Although a right of unilateral variation would be useful to an RSL, and would avoid any risk of their housing stock becoming difficult or impossible to The claimant submitted, manage, that risk was a risk relying on Kilby, that without a which Parliament had chosen unilateral method of variation to allow RSLs to run by their tenancies would be excluding them from the become impossible to statutory power of variation manage. It was submitted in under s.103, 1985 Act. The the alternative that the decision in Kilby did not assist tenants had agreed to the claimant as, although unilateral variation under reference was made to clause 5(b) when signing the housing stock becoming tenancy agreement. The impossible to manage, that defendant responded that reference was in the context Kilby was applicable only to of a local authority which had secure tenancies and was a duty to manage their justified by the existence of housing stock effectively the duty of local authorities to under s.21, 1985 Act; no such manage their housing stock duty was imposed on RSLs. under s.21, 1985 Act, which Nor had the tenants accepted power did not extend to RSLs. unilateral variation by signing As to the tenants’ acceptance the tenancy agreement of clause 5(b), it was containing clause 5(b); submitted that it was clauses 5(a) and (b) were

directly contradictory and, applying reg.7, 1999 Regulations, the correct construction was one which favoured the tenant and required agreement to any variation. In any event, even if clause 5 (b) did confer a right on the claimant unilaterally to vary the terms, the clause would have been unfair for the purposes of reg.5, 1999 Regulations, because it had not been individually negotiated and, contrary to the requirement of good faith, caused a significant imbalance in the rights and obligations of the parties to the detriment of the tenant. Accordingly, clause 5(b) would not have been binding by operation of reg.8, 1999 Regulations. Secure tenancies; termination; surrender; tolerated trespass; rent arrears Merton LBC v Jones [2008] EWCA Civ 660 Arden , Wall and Wilson L.JJ.

In 2002, the defendant was granted a secure tenancy of a flat by the authority. He fell into arrears and, in January 2005, an order for possession


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

18

Tenancies (General) (Continued...) was made requiring him to give up possession on February 11, 2005 , enforcement of which order was to be suspended on terms as to payment of the arrears and the current rent. As a consequence of that order, the defendant became a tolerated trespasser on February 11. Arrears continued to accrue.

belongings to be removed from the flat. In May 2006, the authority commenced fresh proceedings for possession, pleaded on the basis that the defendant remained a secure tenant. On June 5, 2006 , he was granted a secure tenancy by another London borough and, on June 6, notified the authority that he was no longer in possession of his flat.

June 6, 2006 ).

The Court of Appeal allowed an appeal. It was established law that a former tenant who remains in possession after the end of a tenancy ceases to be liable to make payments in respect of his occupation from the date on which he gives possession (Southport Tramways Co v Gandy [1897] 2 QB 66). In June 2005, the There was no justification for defendant was shot in his flat At the possession imposing a requirement that by masked intruders. He left hearing, both parties agreed the liability of a tolerated the flat and decided not to that the earlier possession trespasser to make such return, informing the authority order meant that the payments should continue not later the same month. He did defendant was a tolerated only until he gave possession not, however, remove his trespasser and that there was but also until he notified his belongings or formally no need for the court to make landlord that he had done so. surrender the flat. an order for possession as The defendant had given up the authority were entitled to possession of the flat in In October 2005, he request a warrant and enforce November 2006 when his requested a transfer to the existing order. The only belongings were removed accommodation in another issue remaining was the from it and he was London borough. He was told extent of the defendant’s accordingly only liable to that this was not possible until liability for mesne profits make payments until that the arrears were cleared. On during his period as a date. October 5, his father paid the tolerated trespasser. Before arrears and the following day the judge, it was argued on the authority recommended behalf of the defendant that the defendant for a he was only obliged to pay management transfer. On the mesne profits until the date on Lewisham LBC v Malcolm same day, the authority which he gave up possession, [2007] UKHL 43 formally acknowledged that which was said to be - at the the defendant was no longer latest - November 2005. The in occupation of the flat but authority successfully also informed him that he argued that it was not only Disability remained liable to pay “rent” necessary for the defendant and advised him not to to have given up Discrimination terminate his “tenancy”. He possession but also for him did not pay the rent. to notify the authority that Act he had done so, and that he In November 2005, remained liable for mesne the defendant arranged for his profits until that date (i.e.


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

19

Tenancies (General) (Continued...) Lords Bingham of Cornhill, Scott of Foscote, Baroness Hale of Richmond and Lords Brown of Eatonunder-Haywood and Neuberger of Abbotsbury

with schizophrenia. Between then and 1990, he was admitted to hospital on numerous occasions. From 1990, his condition stabilised on medication.

proceedings shortly thereafter. At that time, the authority had no knowledge of the defendant’s condition.

The defendant defended those proceedings In 2002, the defendant on the basis that they was granted a new secure comprised discrimination By s.22(3) of the Disability tenancy by the authority. In contrary to s.22(3)(c), 1995 Discrimination Act 1995: March of that year, he applied Act, because his decision to to exercise the right to buy sublet the flat related to his “(3) It is unlawful for a person under Pt 5, Housing Act 1985. schizophrenia, of which managing any premises to The authority acknowledged evidence was given that it discriminate against a his entitlement to the right but involved susceptibility to disabled person occupying the conveyance was delayed distortions of thinking. those premiseswhile the defendant sought a mortgage. At first instance, the county … court judge made a In 2003, the possession order. She held (c) by evicting the disabled defendant’s medication was that the 1995 Act was person, or subjecting him to changed. His manner and irrelevant because the any other detriment.” behaviour deteriorated. In defendant had lost security of May 2004, before the right to tenure. She also held that, in “Discrimination” is defined in buy application had been any event, the reason for s.24: determined, the defendant evicting the defendant was his advertised the property for subletting of the flat, which “(1) For the purposes of s.22, rent. In June 2004, he sublet reason did not relate to his a person (‘A’) discriminates the flat and ceased to occupy disability because the against a disabled person ifit. He had not obtained the subletting resulted from a authority’s permission to do planned decision rather than (a) for a reason which relates so. an irrational act caused by his to the disabled person’s illness. disability, he treats him less In June 2004, the favourably than he treats or defendant asked the authority The Court of Appeal allowed would treat others to whom to complete the right to buy. an appeal ([2007] EWCA Civ that reason does not or would Before completion, the 763; [2008] Ch 129; [2008] not apply; and authority became aware that H.L.R. 14; It was held that s. the defendant was not 22(3), 1995 Act, makes a (b) he cannot show that the occupying the property as his discriminatory act unlawful; treatment in question is only or principal home and there was no exception for a justified.” that, therefore, he had ceased case where the tenant has to be a secure tenant. They lost security of tenure through In 1985, the defendant - a refused to complete, served subletting. The judge had also secure tenant of the claimant notice to quit in August 2004, been wrong to find that the authority - was diagnosed and commenced possession subletting did not relate to the


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

20

Tenancies (General) (Continued...) defendant’s disability: the requirement in s.24, 1995 Act, that the reason for the discrimination relate to the defendant’s disability meant that there had to be a relationship between the subletting and the defendant’s schizophrenia; it was not, however, necessary for the defendant’s schizophrenia to be the actual cause of the subletting. The evidence of the defendant’s condition was sufficient to establish the relevant relationship. The majority of the Court of Appeal (Arden, Longmore, LJJ) considered the authority’s lack of knowledge of the defendant’s condition at the time of the notice to quit to be irrelevant; Toulson LJ considered that knowledge was needed, but it was sufficient that the authority knew of it by the time of the proceedings.

reason for the possession proceedings - did not “relate” to the defendant’s disability. Lord Brown, Baroness Hale, and Lord Neuberger held that the Court of Appeal had not been entitled to go behind the judge’s finding of fact on this issue. Lords Bingham and Scott held that the authority’s reason for seeking possession was a housing management decision in which there was no evidence that the defendant’s disability played any part. It was also unanimously held that it is necessary for a defendant to show that the alleged discriminator either knew or ought to have known of the disability.

Criminal offences & reasonableness

840 Arden , Dyson and Wall L.JJ.

The defendant – a 61-year old woman – was the assured tenant of a flat in a sheltered housing scheme owned by the claimant housing association. In September 2005, the association wrote to her warning her that they had received complaints that she had a steady stream of visitors to the flat and allegations that she was The majority of the Committee involved in drug dealing. held that the comparison to In September 2005, be made under s.24(1)(a) was between (i) the defendant and the police executed a search warrant at the flat. During the (ii) a tenant who had sublet search, the claimant was The court applied Clark v and who was not disabled. found in possession of 7.5 Novacold Ltd [1999] 2 All E.R. The defendant had been grammes of cocaine and a 977, CA, to conclude that the treated in the same way that quantity of cannabis. She was comparison required by s.24 the authority would have prosecuted for possession of (1)(a), 1995 Act, was between treated any tenant who had a class A drug with intent to the treatment of the defendant unlawfully sublet with the supply, possession of and the treatment of a consequence that there had cannabis and money hypothetical tenant who had been no discrimination. laundering. She pleaded not unlawfully sublet: on that Baroness Hale preferred the basis, the authority had Court of Appeal’s construction guilty to the class A offences on the limited basis that she discriminated against the of s.24(1)(a). had been asked to hold the defendant. The authority drugs for her son and had appealed. intended to return them to him; she pleaded guilty to The House of Lords North Devon Homes Ltd v possession of cannabis; she unanimously held that the Batchelor [2008] EWCA Civ was convicted of money subletting - which was the


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

21

Tenancies (General) (Continued...) warning sent to the defendant in September 2005; and, (iii) the defendant had not stated that she would not use cannabis in the future. The appeal was dismissed. The judge was not making a general statement about possession on the basis of cannabis use; he was stating his view that on the facts of the case that he did not regard that conviction as being sufficiently serious to justify an order for possession. That conclusion laundering. She was possession because the was open to him. The written sentenced to 18-months defendant’s guilty plea had warning letter referred to imprisonment for the class A been limited in its scope and allegations of nuisance and money laundering the offence was “at the lower behaviour which the judge offences but received no end of the scale” of had found not proved and the separate penalty for the possession with intent to judge was therefore correct possession of cannabis. supply. He also held that it not to take it into account would not be reasonable to when determining The association order possession on the basis reasonableness. Even if the commenced proceedings for of the cannabis because to defendant had promised not possession on grounds 10 punish tenants for smoking to smoke cannabis in the (rent arrears), 12 (breach of cannabis would cause the future, that would not affect the terms of her tenancy), 14 court inevitably to be the judge’s decision as he (a) (nuisance and annoyance) swamped with possession had found – and been entitled and 14(b) (conviction of an claims. to find – that smoking arrestable offence in the cannabis could not justify an property). At trial, the judge The association order for possession against adjourned the hearing in appealed to the Court of the claimant in any event. relation to rent arrears. He Appeal on the grounds that dismissed the claim under ground 14(a) on the basis that (i) when considering the there was insufficient question of reasonableness, evidence of nuisance to make the judge had adopted a out the ground. As to ground stance that was too lenient on 14(b), the judge found that the cannabis use; ground was made out but held that it was not (ii) the judge had failed to take reasonable to order into account the written


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Houses in Multiple Occupation Cardiff Prosecutes Landlord for HMO Licence Failure The Council has carried out the first prosecution of a Cardiff landlord for not licensing a House in Multiple Occupation. On 7 April 2008, Zaccariah Ahad Chowdhury of Cyncoed was convicted in Cardiff Magistrates Court of failing to obtain the necessary licence. He was fined £2,500 and ordered to pay £275 legal costs. Mr Chowdhury was given all the necessary application

22

forms in January 2007 but failed to submit an application, despite several reminders, until March 2008, at which time the application was still unsatisfactory and incomplete. Mr Chowdhury now faces the prospect, following conviction, that his tenants might apply to the Residential Property Tribunal for a rent repayment order. If granted, they may reclaim up to a year’s rent.

Mr Chowdhury now faces the prospect, following conviction, that his tenants might apply to the Residential Property Tribunal for a rent repayment order. If granted, they may reclaim up to a year’s rent.

Mr Chowdhury was prosecuted under HMO licensing powers introduced in June 2006. Houses in Multiple Occupation are houses


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Houses in Multiple Occupation (continued...) occupied by persons who do not form a single household, usually privately rented shared houses and bedsits. Mandatory licensing applies to those HMOs that have 3 storeys and 5 or more occupants. All landlords who let these types of properties should by now have obtained a licence. The Service Manager for the Licensing Team, Steve Tudball, explains: “HMO Licensing has been up and running now for nearly 2 years. We are dealing with about 500 applications, and have awarded 350 licenses,

A “person having control” of an HMO or the “person managing” an unlicensed HMO for which a licence is required commits an offence.

23

but we believe that there are a lot of landlords who haven’t yet come forward. This prosecution shows our intention to use the powers we have in order to ensure full compliance with licensing rules”.

The maximum fine for failure to obtain a licence is £20,000 and a rent repayment order, which may be made by the Residential Property Tribunal following conviction in the magistrates’ court, could see you repaying £12,000 or more in rent. By way of contrast, The Government carried out a the HMO licensing fee is national publicity campaign currently £410 and lasts for 5 before licensing went live, and years. the Council has followed this up with regular publicity The HMO licensing team in through various media, Private Sector Housing can including a newsletter to be contacted by telephone on 3,500 landlords and all Cardiff Cardiff 029 2087 3576 or by Letting agents. However, the email at Council will now start a get privatesectorhousing@cardiff. tough policy in order to gov.uk ensure that properties do not fall through the net. If you are in any doubt about whether HMO licensing Steve Tudball has the applies to your property, following advice to landlords please telephone to discuss in Cardiff: or go to www.cardiff.gov.uk>living>housin “The Council has until now g>rented been content to carry out accommodation>Housing Act publicity and to encourage 2004 applications from landlords, but that approach is now coming to an end. There will be a short amnesty for those landlords out there who want to get in touch with us, but we will soon start a new phase of proactive working where we will target properties based on the information held by the Council. Where landlords have clearly avoided their licensing responsibilities they may be prosecuted.”


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Local Housing Allowance / Housing Benefit

Income-related Benefits (Subsidy to Authorities) (Amendment) (No.2) Order 2008 (S.I. 2008/695) Made: March 10, 2008 - In force from: April 1, 2008

Housing benefit is awarded either by way of rent rebate where the rent is payable to the local authority administering housing benefit - or rent allowance, when the rent is not so payable. The Income-Related Benefits (Subsidy to Authorities) Order 1998 (S.I. 1998 No.562) makes provision for the payment of subsidies to authorities which administer housing benefit and council tax benefit. Subsidy is paid to reimburse an authority both for the actual benefit that they pay, and towards the administration costs involved in processing and maintaining claims.

authority increase their average weekly rent above a limit set by the Secretary of State (in Wales, the National Assembly), they will only receive subsidy on rebates on rent up to that limit. This Order specifies new rent limits in relation to authorities in both England and Wales .

Rent Repayment Orders (Supplementary Provisions) ( Wales ) Regulations 2008 (SI 2008/254) Made: February 6, 2008 - In force from: March 4, 2008

Housing Act 2004 makes provision for the mandatory licensing of houses in multiple occupation (Pt 2) and selective licensing of other residential accommodation (Pt 3). Where the landlord fails properly to register the property under either scheme, The 1998 Order imposes the occupier or the local limitations on the amount of authority may apply to the subsidy available in relation to residential property tribunal rent rebates: where an for a rent repayment order (s. 73 and s.96). If made, the order requires the landlord to it must make a rent repay any periodic payments repayment order requiring in respect of occupation to repayment of an amount the occupier or, if the equal to the total amount occupier was in receipt of of housing benefit paid. housing benefit, to the local authority (to the limit of the benefit).

24

The Income-Related Benefits (Subsidy to Authorities) Order 1998 (S.I. 1998 No.562) makes provision for the payment of subsidies to authorities which administer housing benefit and council tax benefit

By s.74(2) and s.97(2), where an authority apply to the RTP and the RTP is satisfied (i) that the landlord has been convicted of an offence because the property is not licensed, and (ii) that housing benefit was paid in connection with occupation of all or part of the property, it must make a rent repayment order requiring repayment of an amount equal to the total amount of housing benefit paid. These Regulations make further provision in relation to rent repayment orders. Regulation 2 permits an authority who suspect that an overpayment of housing


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Local Housing Allowance / Housing Benefit (Continued...) benefit has been made to amend an application so as to claim repayment only of the amount that was lawfully due to the occupier, rather than the amount actually paid.. (The overpayments themselves are recoverable under the Housing Benefit Regulations 2006 and the Housing Benefit (Persons who have obtained the qualifying age for state pension credit) Regulations 2006). Regulation 3 provides that a local authority may apply any amount recovered under a rent repayment order to one of a number of specified costs and expenses:

(e) making an interim or final management order; and, (f) the execution of works to the property. Any amount recovered which is not used for one of the specified purposes must be paid into the Welsh Consolidated Fund.

Regulation 37 is amended to provide that royalties, copyright payments and payments under the Public Lending Rights Scheme are to be treated as earnings

Social Security (Miscellaneous Amendments) Regulations 2008 (SI 2008/698) Made: March 11, 2008 - In force from: March 17, 2008

(a) making the application; (b) registration of any legal Housing benefit is an incomecharge due as a consequence related benefit, entitlement to of an order; which is determined by, inter alia, calculation of income and (c) dealing with an application capital. Part 6, Housing for licensing of the property; Benefit Regulations 2006 (SI 2006/213) makes detailed (d) prosecution of the provision for the calculation of landlord; income and capital. Regulation 37 details the earnings of self-employed Any amount recovered persons to be taken into which is not used for one account when calculating of the specified purposes income. Schedule 5 must be paid into the prescribes certain sums that Welsh Consolidated Fund. are to be disregarded when calculating income other than earnings.

Regulation 37 is amended to provide that royalties, copyright payments and payments under the Public Lending Rights Scheme are to be treated as earnings. Schedule 5 is amended so as to provide a disregard (i) where an applicant for housing benefit has been the carer of a child and the child has reached 18, but still lives with the applicant, and (ii) the child continues to receive payments from a local authority under s.23C, Children Act 1989, which payments he passes in whole or in part to the applicant.

Further minor These Regulations amendments to the 2006 amend the 2006 Regulations. Regulations are also made.

25


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

26

Local Housing Allowance / Housing Benefit (Continued...) require additional financial Under section 69, Child assistance to meet housing Support, Pensions and costs: see the Discretionary Social Security Act 2000, Financial Assistance the Secretary of State Regulations 2001 (SI may make regulations 2001/1167). Authorities have conferring power on R (Gargett) v Lambeth LBC discretion whether or not to local authorities to make [2008] EWHC 663 (Admin) award a DHP in any given discretionary housing case, and as to the amount of payments (“DHP”) to Sir George Newman the payment and the period persons entitled to for which it is paid: reg.2(2). housing benefit The amount of any DHP is, however, subject to Under section 69, Child prescribed limitations: in Support, Pensions and Social particular, where the need for Security Act 2000, the financial assistance arises in Secretary of State may make consequence of liability to pay regulations conferring power rent, the amount of the DHP on local authorities to make may not exceed the amount discretionary housing of that rent: reg.4. defendant authority for a payments (“DHP”) to persons DHP to pay off rent arrears entitled to housing benefit On July 27, 2007 , the which had accrued before she and/or council tax benefit who claimant applied to the was in receipt of housing benefit. The authority decided that they had no power to make a DHP because the arrears had risen during a period when the claimant was not entitled to housing benefit. The claimant issued


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Local Housing Allowance / Housing Benefit (Continued...) proceedings for judicial review. The High Court dismissed the claim. DHPs arising out of rent liability are only available to assist tenants and others on housing benefit to remain in their accommodation by enabling them to make up a shortfall between the contractual rent and their housing benefit payments, e.g. where there are nondependant deductions. A DHP can only be paid where housing benefit or council tax benefit is being paid during the period for which the DHP is sought. The authority therefore had no power to make a payment in respect of rent arrears which had accrued while the tenant was not in receipt of housing benefit.

The authority decided that they had no power to make a DHP because the arrears had risen during a period when the claimant was not entitled to housing benefit.

27

DHPs arising out of rent liability are only available to assist tenants and others on housing benefit to remain in their accommodation by enabling them to make up a shortfall between the contractual rent and their housing benefit payments


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Long Leaseholder / Freeholders

Howard de Walden Estates Ltd v Aggio Earl Cadogan & Cadogan Estates Ltd v 26 Cadogan Square Ltd [2008] UKHL 44 Lords Hoffmann, Scott of Foscote and Walker of Gestingthorpe, Baroness Hale of Richmond and Lord Neuberger of Abbotsbury

In Aggio, the property was a building consisting of five flats. The property was let under a long lease to a headlessee who sublet three of the flats under long leases. The other two flats remained empty. The head-lessee applied for extended leases of the two empty flats.

In 26 Cadogan Square Ltd, the property was a five-storey Part 1, Ch.2, Leasehold building, also held under a Reform, Housing and Urban long lease. Three of the floors Development Act 1993 gives of the building comprised a a long leaseholder of a flat single flat (for the purposes of (referred to as a “qualifying the 1993 Act), which the tenant�) the right to acquire a head-lessee had sublet under new lease for a term expiring an assured shorthold tenancy. 90 years after the term date of The remainder of the building the existing lease. As was sublet as office originally enacted, the 1993 accommodation. The headimposed a residence lessee applied for an condition before the extended lease of the flat. leaseholder could exercise the right. That requirement In each case, the freehold was abolished by the owner of the property denied Commonhold and Leasehold the right on the basis that a Reform Act 2002. head-lessee was not a qualifying tenant for the purposes of the 1993 Act. The head-lessees both successfully applied to the county court for declarations that they were entitled to exercise the right.

In each case, the freehold owner of the property denied the right on the basis that a headlessee was not a qualifying tenant for the purposes of the 1993 Act.

the construction of Pt 1, Ch.2, 1993 Act: (i) whether, on the proper construction of the statutory provisions, a lessee under a lease that includes a flat in a property but also includes other flats or property such as common parts or parking spaces, is a qualifying tenant; and,

(ii) if such a lessee was - on the construction of the Act - a qualifying tenant, whether the practical difficulties of such a construction (such as calculation of service charges The county court decisions were reversed by the Court of or the apportionment of covenants) or policy reasons Appeal ([2007] EWCA Civ 499, [2008] HLR 1); the head- justified a different interpretation. lessees appealed to the House of Lords, which identified two questions as to The House of Lords held that, as a matter of statutory

28


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

29

Long Leaseholder / Freeholders (continued...) language, a lessee under a lease of property which includes a flat is a qualifying tenant of that flat for the purposes of Pt 1, Ch.2, 1993 Act, irrespective of the nature or extent of the other property included in the lease. That conclusion was not affected by policy considerations. Nor did the potential practical difficulties inherent in such a construction justify a different construction.

same terms as he purchased them from the former landlord (s.12B) or - if the conveyance has not been completed - to permit the nominee to take the benefit of the contract for the sale (s.12A).

Part 1, Landlord and Tenant Act 1987, confers on certain tenants the right of first refusal if the landlord, inter alia, sells his reversionary interest in the property. Where a landlord is proposing to sell his interest, he must serve on every tenant in the building an offer notice, affording a majority of them an opportunity to purchase the interest he is proposing to dispose of (s.5). Where the landlord fails to serve such a notice, a nominee of the tenants occupying the property may serve notice on the landlord either to require the purchaser to sell the interest to the nominee on the

In 2004, the claimants commenced proceedings against the defendant to recover ground rent and service charges under the terms of the lease. The defendant resisted those proceedings and counterclaimed for a declaration that the freehold should be conveyed to him and the other long leaseholder in the block on the same terms as the 1992 conveyance. In May 2005, the county court judge granted the claimant a money judgment. As to the counterclaim, as no notice under the 1987 Act had yet been served by the

In 2004, the claimants commenced proceedings against the defendant to recover ground rent and service charges under the terms of the lease

In 1990, the defendant purchased a 199-year lease of a flat in a building. The freehold of the building in which it was situated was owned by Broadway ( Essex ) Ltd. There was only one other flat in the building, occupied Useful case on notices under a similar lease. In being substantially to the January 1992, the freehold same effect was conveyed to the claimant company for £500. No notice Green v Westleigh under Pt 1, 1987 Act, was Properties Ltd [2008] EWHC served. The defendant did not leaseholders, he decided that such a notice was to served 1474 Teare J. become aware of the within three months. conveyance until 2002. On June 10, 2005 , the defendant’s solicitors posted a notice to the claimant’s solicitors. The envelope was addressed to the claimant company but the notice itself was addressed to the claimant’s solicitors. The notice was dated June 10, 2004 and was headed “notice under section 12A of the Housing Act 1987”. It referred to the order of the county court judge and set out the provisions of the Act relating to the right to take a benefit of a contract before conveyance (s.12A). The notice concluded: “We enclose a cheque for £500 on behalf of our client and trust that we will hear from you directly once


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Long Leaseholder / Freeholders (continued...) the transfer of the … freehold to our clients has been effected.” The claimant refused to effect the transfer and the matter was relisted before the circuit judge for determination as to whether the notice was valid and complied with the terms of the order he had previously made. The claimant argued that the notice was invalid because it: (i) was incorrectly dated; (ii) referred to the “Housing Act 1987” rather than the Landlord and Tenant Act 1987; (iii) quoted s.12A of the Act rather than s.12B on which the defendant could rely; (iv) was addressed to the claimant’s solicitor on the face of the notice but to the claimant on the envelope and had therefore not validly been served; and,

purchase the freehold from the landlord under the Landlord and Tenant Act 1987. The appeal was allowed. The purpose of a notice under s.12B, 1987 Act, is to give the landlord notice of the requirement to transfer the freehold to the tenants. Whether a notice achieves that purpose depends on whether it is sufficiently clear and unambiguous so that it would not leave a reasonable recipient in any reasonable doubt as to its purpose. Although the notice had been poorly drafted, the reasonable recipient of the notice would have been in no doubt that the tenants were giving notice to have the freehold conveyed to them.

Where there is a difference between the addressee on the face of a notice and on the envelope in which the notice was posted, the terms of the notice itself are relevant to determine the intended (v) did not specify the addressee. As the notice particulars of the conveyance. referred to the county court hearing and made reference The judge held that to transfer of the freehold, it the notice was defective and was clear that the intended refused to grant the defendant addressee was the claimant. an extension of time to file a valid notice. The defendant appealed to the High Court on the grounds that a reasonable recipient would have understood that the essential purpose of the notice was to

30

The appeal was allowed. The purpose of a notice under s.12B, 1987 Act, is to give the landlord notice of the requirement to transfer the freehold to the tenants. Whether a notice achieves that purpose depends on whether it is sufficiently clear and unambiguous so that it would not leave a reasonable recipient in any reasonable doubt as to its purpose


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

31

Local Authority including homelessness Moran v Manchester CC and Secretary of State for Communities and Local Government

test is now to be found in s. 175, Housing Act 1996.

In R v Ealing LBC, ex p Sidhu (1982) 2 HLR 48, QBD, Richards v Ipswich BC and (decided under s.1, 1977 Act), Secretary of State for the applicant had fled Communities and Local domestic violence and had Government [2008] EWCA gone to live in a women’s Civ 378 refuge. The authority’s decision that she was not Sir Anthony Clarke MR, homeless was overturned by Tuckey and Wilson L.JJ. the High Court, which held that accommodation in a refuge was not “accommodation” for the Under s.1, Housing purposes of s.1, 1977 Act. (Homeless Persons) Act The Homelessness Code of 1977, a person was homeless Guidance issued under 1996 if had no accommodation. Act, s.182, states that “some That provision was types of accommodation, for consolidated into Housing Act example women’s 1985, s.58. Following the refuges...are intended to decision of the House of provide very short-term, Lords in Puhlhofer v. temporary accommodation in Hillingdon LBC [1986] AC a crisis and it should not be 484, (1986) 18 HLR 158, that regarded as reasonable to accommodation meant continue to occupy such whatever could be so accommodation in the described “within the ordinary medium and longer-term” (at meaning of that word in the para.8.34). English language,” the Housing and Planning Act Manchester v Moran 1986 inserted a new s.58(2A) into the 1985 Act to provide Until September 2006, that a person was not to be the appellant lived with her treated as having partner and two children in accommodation unless it was council accommodation. On accommodation that it was September 30, she fled that reasonable for him to accommodation as a result of continue to occupy. The same domestic violence and went to live in women’s refuge. The licence agreement in stated that the refuge was only In mi Proin accumsan intended to be temporary Purus, in consectetuer Proin in sapien. Donec feugiat tempor libero. Fusce urna accommodation but that it magna,neque eget lacus. Maecenas felis nunc, aliquam ac, consequat vitae. could be her home for as

Housing Act 2004, requires a local housing authority, when carrying out a review of housing need under s.8, to assess the accommodation needs of gypsies and travellers residing in their area.

long as she needed it. The licence reserved the right of the refuge to evict the appellant without notice, however, if she was violent or abusive to staff. On October 30, the appellant’s licence was terminated with immediate effect and she was asked to leave as a result of her abuse of staff. The appellant applied to the authority as homeless. The authority determined that the appellant had made herself homeless intentionally from the refuge and that she was therefore not owed the full housing duty under s.193, 1996 Act. That decision was upheld on review: the reviewing officer found that the refuge constituted accommodation that it was reasonable for the appellant to continue to occupy and that the appellant had lost that accommodation through her own deliberate act of being abusive to staff.


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Local Authority including homelessness (continued...) An appeal to the county court was allowed. The Recorder held, applying Sidhu, that although a refuge could was likely to be accommodation for the purposes of Pt 7, there was a strong inference that it would not be reasonable for the appellant to have continued to occupy it.

posed a threat to the health or safety of any other person at the refuge. Later the same month, she applied as homeless to the respondent authority. The authority accepted a duty towards her and discharged their duty to provide her with temporary accommodation pending full discharge by securing that accommodation remained available for her at the refuge.

In November 2006, a permanent offer of accommodation was made In July 2006, the appellant but refused by the appellant fled her home as a result of on the grounds of suitability. domestic violence and moved Subsequently, the appellant into a refuge. The licence was asked to leave the refuge agreement entitled the refuge because of threatening to evict her without notice if behaviour. The authority there were reasonable notified her that they had grounds for believing that she discharged their duty towards Richards v Ipswich BC

Before being evicted, the appellants applied as homeless to the respondent authority under Pt 7, Housing Act 1996, but were found to be homeless intentionally because they had been evicted for rent arrears.

her because she had made herself homeless intentionally from the refuge, which it had been reasonable for her to continue to occupy. The appellant requested a review, asserting that the refuge was not “accommodation” so that she could not be intentionally homeless from it (relying on Sidhu). The review upheld the original finding of intentionality. An appeal to the county court was dismissed.

The authority in Moran and the appellant in Richards appealed to the Court of Appeal. The appeals were joined and the court identified three issues: (i) was the proposition in Sidhu that a woman living in a women’s refuge was homeless because a refuge could not be described as “accommodation” for the

32


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Local Authority including homelessness (continued...) purposes of Pt 7, 1996 Act, correct;

considered reasonable to occupy such accommodation.

(ii) if a refuge was “accommodation”, could it be reasonable for a woman to continue to occupy it;

Where a decisionmaker is considering whether it would be reasonable for a woman to continue to occupy accommodation, the following general matters would fall to be considered:

(iii) on the particular facts, was it reasonable for the authorities to have decided that the appellants could continue to occupy the refuges. It was held that a women’s refuge could be described as accommodation for the purposes of Pt 7, 1996 Act. The decision in Sidhu had been based on considerations of policy that were not relevant after the amendments by the 1986 Act and was inconsistent with both Puhlhofer and R. v. Brent LBC, ex p. Awua [1996] 1 AC 55, (1995) 27 HLR 453, HL, as to what could comprise accommodation for the purposes of the homelessness legislation. Further, it may be reasonable for a woman to continue to occupy accommodation in a refuge. If Parliament intended that it would never be reasonable to continue to occupy such accommodation, statutory provision could have been made to that effect. Nor had the Secretary of State exercised her powers under 1996 Act, s.177(3)(a) to order that it was not to be

33

Permission to claim judicial review was refused by the High Court. The claimant appealed that decision to the Court of Appeal, which granted permission but (hearing the claim itself) dismissed the claim

(a) the size, type and quality of the accommodation made available, including the extent of shared facilities; (b) the terms of the agreement by which it is made available; (c) affordability; (d) the appropriateness of the location; (e) the extent of facilities for children; (f) its appropriateness for the applicant and her children (if any); (g) the length of time for which the applicant has already occupied it;

be considered by virtue of the fact that the accommodation is a refuge: (a) the nature of the refuge; (b) the scale of support which the refuge intends to provide; (c) the length of the period for which the refuge expects her to remain in occupation of it; (d) the length of the period for which women generally occupy it; (e) the extent to which, during her occupation, the refuge has been full;

(h) the state of the applicant’s physical and emotional health (f) any evidence that the while in occupation of it; and woman’s occupation may (i) the length of time for which, have prevented the refuge unless accepted as homeless, from offering accommodation she might expect to continue to another victim of domestic violence in an emergency; to occupy it. The following particular matters should also

(g) the extent to which any conditions of the licence


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

34

Local Authority including homelessness (continued...) agreement make it reasonable or otherwise for her, in light of the length of her occupation to date, to continue to occupy it; and, (h) the extent of her need, and of her ability to accept, such physical and emotional support as the refuge may offer to her.

with that right by a public authority except in accordance with the law and so far as is necessary in a democratic society (Art.8.2). Accordingly, any interference has to be both lawful and proportionate.

In 1998, Birmingham CC granted the applicant and his wife a joint secure tenancy of On the facts, although a three-bedroom house. In neither authority had 2001, their marriage broke considered the matters down. The wife left the family outlined, if they had done so home with their two children. they could only reasonably She obtained a nonhave concluded that it would molestation order against the have been reasonable for applicant and an ouster order both appellants to continue to requiring him to leave the occupy the refuges. The house. The wife then moved Secretary of State should back into the house but reconsider para.8.34 of the moved out again when the Homelessness Code of applicant tried to force his Guidance. way in. She applied to the authority for re-housing on the grounds of domestic violence. In August 2001, she returned the keys to the house to the authority with a note saying that she was giving up the McCann v United Kingdom tenancy. The Council provided her with alternative Application No. 19009/04 accommodation and treated the house as empty. They did Fourth Section, European not, however, follow their Court of Human Rights domestic violence policy which required a tenant May 13, 2008 fleeing such violence to sign a notice to quit. Nor did they follow the term of their Article 8 of the European allocations policy which Convention on Human Rights required them to take action provides, inter alia, that to recover property occupied everyone has the right to by perpetrators of domestic respect for his home (Art.8.1). violence (including by means There may be no interference of the discretionary Ground

On the facts, although neither authority had considered the matters outlined, if they had done so they could only reasonably have concluded that it would have been reasonable for both appellants to continue to occupy the refuges. The Secretary of State should reconsider para.8.34 of the Homelessness Code of Guidance.

2A, Sch.2, Housing Act 1985, applicable in cases of domestic violence). In November 2001, the applicant returned to the house. In January 2002, he applied to the authority for a mutual exchange with another tenant of the authority because the house was larger than he required. His relationship with his wife improved and she supported that application. The authority realised that the house was no longer empty and that the applicant and his wife remained secure tenants of it. An officer visited the wife and asked her to sign a notice to quit, thereby terminating the secure tenancy. She was not advised as to the effect of the notice to quit and a week later she wrote to the authority asking to withdraw it. The authority told the applicant that the tenancy had come to an end and that he had to


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

35

Local Authority including homelessness (continued...) leave; they also decided that, as a consequence of the allegations of domestic violence, the applicant would not be granted a new tenancy of the house.

his eviction an unjustified violation of his Art.8 rights because the authority had given no consideration to those rights when asking the applicant’s wife to serve notice to quit and, in In October 2002, the authority procuring the notice, they had brought possession by-passed the statutory proceedings against the procedure for evicting secure applicant in the county court. tenants. Reliance was placed The county court judge on Connors v UK [2004] dismissed the claim on the H.L.R. 52, ECHR, , HV ground that a possession REF??, for the proposition order would interfere with the that eviction should be defendant’s right to respect attended by procedural for the home under Art.8.1 safeguards, including an and that the interference was independent assessment of not justified under Art.8.2. An the reasons for the eviction. In appeal by the authority to the response, the UK government Court of Appeal was relied on the decision in Kay v adjourned pending the Lambeth LBC [2006] UKHL outcome of the House of 10; [2006] 2 A.C. 465; [2006] Lords decision in Qazi v. H.L.R. 22, HV REF??, in Harrow LBC [2003] UKHL 43; which it had been held that: [2004] 1 AC 983; [2003] HLR 75, HV REF??. Following that “[I]f the requirements of the decision, the authority’s law have been established appeal was allowed: [2003] and the right to possession is EWCA Civ 1783; [2004] unqualified, the only situations H.L.R. 27. The applicant then in which it would be open to applied for judicial review of the court to refrain from the authority’s decision to proceeding to summary procure a notice to quit from judgment and making the his wife and to issue possession order are these: possession proceedings. In (a) if a seriously arguable September 2004, that claim point is raised that the law was dismissed. The applicant which enables the court to was evicted in March 2005. make the possession order is incompatible with Art.8, the The applicant applied to the county court in the exercise of European Court of Human its jurisdiction under the Rights alleging violation of, Human Rights Act 1998 inter alia, Art. 8. In support, it should deal with the argument was submitted that the in one of two ways: (i) by manner in which the notice to giving effect to the law, so far quit was obtained rendered as is possible for it to do so

n October 2002, the authority brought possession proceedings against the applicant in the county court. The county court judge dismissed the claim on the ground that a possession order would interfere with the defendant’s right to respect for the home under Art.8.

under s.3, 1998 Act, in a way that is compatible with Art.8, or (ii) by adjourning the proceedings to enable the incompatibility issue to be dealt with in the High Court; (b) if the defendant wishes to challenge the decision of a public authority to recover possession as an improper exercise of their powers at common law on the ground that it was a decision which no reasonable person would consider justifiable, he should be permitted to do this provided again that the point is seriously arguable.” (Per Lord Hope at [110], with which paragraph the other members of the majority expressly agreed). The minority, however, had held (per Lord Bingham at [28-29]) that: “Compliance with domestic property law is a necessary excepting condition but not a


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

Local Authority including homelessness (continued...) sufficient one, since the other conditions must also be met, notably that the interference must answer a pressing social need and be proportionate to the legitimate aim which it is sought to achieve. This must now be recognised as the correct principle. ... “It necessarily follows, in my judgment, that where a public authority seeks to evict a person from premises (which may be land where a traveller has pitched his caravan) which he occupies as his home, that person must be given a fair opportunity to contend that the excepting conditions in article 8(2) have not been met on the facts of his case. ...”. The European Court approved concessions made by the UK government that (i) the house continued to be the applicant’s home notwithstanding that he had no right under domestic law to continue in occupation and, (ii) the effect of the notice to quit together with the possession proceedings was to interfere with the applicant’s right to respect for his home. The court also accepted that the eviction had been in accordance with the law and pursued the legitimate aim of protecting the rights and freedoms of the authority to regain possession of the property and ensuring that the statutory scheme for provision of housing was

36

properly applied. The question was whether the interference was proportionate and thus necessary in a democratic society. The Court held that any person at risk of losing his home should in principle be able to have the proportionality of the measure determined by an independent tribunal, notwithstanding that, under domestic law, his right of occupation had come to an end. Under the summary possession procedure available to the authority where one joint tenant serves notice to quit, the applicant was dispossessed of his home without any possibility of having the proportionality of the measure determined by an independent tribunal. Accordingly - applying Connors - the eviction had not been attended by the necessary procedural safeguards. Those procedural safeguards were not met by the possibility of the applicant applying for judicial review of the decision to procure a notice to quit as such proceedings do not provide an opportunity for the court to examine “sensitive factual issues” necessary for assessing whether the loss of the home was proportionate to the legitimate aim pursued. In substance, the decision endorsed the minority conclusion in Kay.

“It necessarily follows, in my judgment, that where a public authority seeks to evict a person from premises (which may be land where a traveller has pitched his caravan) which he occupies as his home, that person must be given a fair opportunity to contend that the excepting conditions in article 8(2) have not been met on the facts of his case. ...”.

The European Court did not accept that the grant of the right to the applicant to raise an issue under Art.8 would have serious consequences for domestic law; applying the minority view in Kay, it was said that it would be only in very exceptional cases that an applicant would succeed in raising an arguable case which would require a court to examine the issue; in the great majority of cases, an order for possession could continue to be made in summary proceedings.


37

RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008


RESIDENTIAL LANDLORD SEPTEMBER / OCTOBER 2008

PROPERTY INSURANCE EXCLUSIVELY FOR MEMBERS OF THE GUILD OF RESIDENTIAL LANDLORDS The Guild of Residential Landlords 14 Devonshire Place Harrogate HG1 4AA 0845 370 0107 www.all4landlords.com guild@all4landlords.com

What are the benefits?

What next?

Underwritten by Zurich Insurance Extremely competitive premiums for residential and commercial property portfolios Depending on total portfolio, normal rates are as follows: Portfolio £3m+

£1.03 per thousand

Portfolio £1m+

£1.05 per thousand

For more information on the insurance facility please contact the following: Elaine Perry Account handler Tel: 0161 935 2901 eperry@heathlambert.com

Portfolio less £1m £1.20 per thousand £1.75 per thousand standard commercial property rate Malicious damage by tenant included No cover restrictions on unoccupied properties Definition of buildings includes landlords contents Includes loss of rent and alternative accommodation cover Includes employers and property owners liability cover (£10m and £5m respectively)

Heath Lambert Real Estate Riverside Cloister House New Bailey Street Manchester M3 5AG Tel: 0161 935 2935 Fax: 0161 839 2839 www.heathlambert.com

COMPARISON TABLE The details are accurate to the best of the authors knowledge and belief and were taken from all appropriate websites on 17 April 2007. The insurance quote was based on the same property, same circumstances etc. Policies differ slightly so you should check policy documents for a full accurate comparison (although from the research carried out, the Guild policy contained all similar details plus extra benefits) Cost of buildings insurance on normal 3 storey house let to students, £100,000 rebuild, £250.00 excess. Inc. IPT. Usual liability, malicious damage etc. (postcode was HG1 but with Guild policy postcodes make no difference)

38

Guild of Residential Landlords £120.00 if total portfolio under £1m £105.00 if total portfolio £1m+

NLA £150.97 (£500.00 excess)

RLA £181.44

NFRL (formerly SPLA) £148.00 (based on £1.48 per thousand on website info)

£103.00 if total portfolio £3m+,

The Guild of Residential Landlords are an Introducer Appointed Representative of Heath Lambert Limited, an insurance intermediary authorised and regulated by the Financial Services Authority. Heath Lambert Limited is bound by its rules in the conduct of its general insurance mediation activities. Details of Heath Lambert Limited’s authorisation (registration number 312030) can be checked by visiting the FSA’s Register which can be found on the website http://www.fsa.gov.uk/register or by contacting the FSA on 0845 606 1234. Please note that as an Introducer Appointed Representative of Heath Lambert Limited The Guild of Residential Landlords can only refer your name and contact details to Heath Lambert Limited. We are not able to give you advice on any general insurance products or the Heath Lambert Limited services.


Residential Landlord Sept Oct 2009