Or, ‘It wasn’t me, it was the bailiff’.

Choudhury v Garcia [2013] EWHC 3283 (QB) (June 2013) [Not on Bailii. We have transcript]

A rather unusual unlawful eviction case, this, involving as it does breaches  of Court of Appeal stays of warrant, and High Court appeals of judgment and damages where both parties were in person.

Mr G was the tenant of Mr C, since 2007, or 2008 in a ground floor room. In late 2009, Mr C apparently decided he wanted the room back. At this point, trouble began in the back garden. As the first instance judge found:

“Panels of the fence were removed. The neighbours started to bring rubbish and junk and garden debris into the garden, making it look unsightly and in particular blocking the light from his windows into his room, and at one stage, plainly from the photographs I have seen, a whole wardrobe was put in front of the glass window. Bits of cars, cushions, blanket, old bits of metal, old bits of chairs, cardboard, bird muck-splattered chairs, are all there to be seen from the photographs, and his landlord did nothing to stop it or help clear it. He plainly wanted Mr Garcia to leave.”

In June 2010, Mr C began possession proceedings, apparently on the ground that he was a resident landlord. Mr G denied that this was the case. However a possession order was made on that basis, with eviction due on 4 October 2011. Mr G appealed firstly to a CJ, the, when this was refused in August 2011, Mr G sought permission to appeal to the Court of Appeal. A stay was ordered, provided Mr G obtain a transcript, which he did. Permission on the papers was refused on 25 February 2012. Thereafter:

Two days prior to the decision of the single judge of the Court of Appeal, Mr Choudhury obtained a second appointment to evict Mr Garcia on 20 March 2012. However, the order of the Court of Appeal provided that:
“A stay of execution is in place that will remain in case the applicant wishes to exercise his right to renew his application. I am not encouraging him to do so as in my view it has no prospect of success. However, he must observe strictly the time limits for doing so.”

Mr G did indeed renew his application within 7 days. But Mr C did absolutely nothing to stop the eviction by Court bailiffs on 20 March 2012, and indeed it took place, when Mr G was not at home. On 23 March, Mr G applied to be re-instated and an order was duly made that Mr C should re-instate him and not interfere with his occupation without lawful court order.

Mr C did not do so. On 16 April 2012, Mr G applied for Mr C’s committal for failing to obey the order of 23 March, together with claims for unlawful eviction, and harassment by Mr C and the neighbours.

On 20 May, the Court of Appeal refused Mr G permission to appeal and removed the stay, ending Mr G’s right to stay in the property.

In July 2012, there was the hearing of Mr G’s committal application and claims for unlawful eviction and harassment. Mr C did not attend. The First instance Judge refused to make a committal order, or other sanction, instead finding that damages would be adequate to show court orders should not be ignored.

In the unlawful eviction action, the judge ordered Mr Choudhury to pay the following damages: special damages in the sum of £2,203; general damages in the sum of £7,000; exemplary damages in the sum of £5,000, and damages for harassment in the sum of £1,800. The judge found the landlord and the two neighbours to be equally responsible for the harassment and gave judgment against the three of them for that head of damages in the sum of £1,800.

Mr C sought to appeal both the finding of unlawful eviction and the specific damages awards. Mr C was refused permission to appeal the special damages and finding of unlawful eviction, the after being unsurprising as his argument was that he didn’t know there was a stay. This was clearly all kinds of hopeless on the facts, and the Court of Appeal refused to give permission to challenge the first instance findings of fact. Mr C was given permission to appeal on the amounts of the other damages. Mr G’s response actually argued for an increased damages award.

The basis taken on damages by the Judge below was as follows (worth quoting in full):

25. The approach [...] in relation to general damages is set out in paragraph 36 of his judgment. He did not disagree with Mr Garcia, that the cases tended to give a range of values, by the week, for general inconvenience, as somewhere between £150 and £250 per day. However, whilst acknowledging that Mr Garcia was entitled to adopt the course he did, this resulted in him managing, “to string out the process of his eviction for two and a half years.” In these circumstances, Mr Garcia has, to an extent, brought this a little bit on his own shoulders. In those circumstances, the judge considered that a figure of £100 per day would be the right figure for 70 days, which comes to £7,000 for general damages.
26. As for exemplary damages, Mr Choudhury knew, at the very latest, on 23 March 2012, when the judge told him about the stay in the Court of Appeal, yet he chose to ignore the order. He has not provided a justification for doing so, albeit it may well be as the judge knew that his wife was unwell. In those circumstances, the judge awarded exemplary damages in the sum of £5,000.
27. For harassment up to eviction, Mr Garcia had to live for the best part of two and a half years, about 120 weeks, with rubbish in his garden. Adopting, “a pretty broad approach,” the judge asked himself:
“What rent should have been paid or would have been paid by somebody taking a property with a garden in that sort of state? Or, to put it another way, what reduction in rent should I allow because of these defects?”
The judge concluded that a £15 reduction would be an appropriate award for that harassment of 120 weeks, which makes £1,800.

Mr C argued that the general damages were too high where no ‘critical injury’ was suffered, as:

Further, this sum is incorrect because it includes compensation for non- attendance at exams that Mr Garcia himself was sure he would pass, whereas there is no proof whatsoever that he would have attended or that if he had attended that he would have passed the exams. Mr Choudhury considers that as Mr Garcia is the author of his own misfortune, the amount of £100 per day for 70 days is very unfair. Finally, he says that he believes that Mr Garcia should have taken measures to prevent the bailiff from evicting him.

On exemplary damages, Mr C argued that

an award of damages should not have been made in this case. He says that his actions were not malicious, violent, or fraudulent. He emphasises that he did not evict Mr Garcia, but the court bailiff did.

And lastly, on the harassment award, Mr C argued that it was nothing to do with him, but was a neighbour dispute.

Mr G argued that general damages should be increased to £14,000 and exemplary damage to £7,000 because, well, they should be. Also Mr C had not been given permission to appeal against the finding of harassment, just the damages.

Supperstone J, who I suspect reads neither Legal Action nor NL, had a bit of a problem with the law on unlawful eviction damages:

35. No authorities have been referred to in the judgment of Judge Powles, or in the decisions on permission to appeal, as to the appropriate level of damages in a case of this kind. Mr Garcia referred to two short summaries of cases which, in my view, turned very much (as indeed each case does) on their own facts. McGregor on Damages (18th edition 2009), notes at paragraph 34-063 that an exemplary award has been frequently combined with the aggravated damages and even the general damages in one global figure. It is then impossible to allocate as between the various elements of the award.
36. Whilst quite substantial damages are not unknown for unlawful eviction (see Mehta v Royal Bank of Scotland [1999] 3 EGLR 153), often the awards made in County Courts are for comparatively small sums and ill-reported.

Given that it was ‘plain’ that Mr G should have an award of both general and exemplary damages, based on the first instance findings of fact and considering the awards made, there was no basis to find that the first instance judge erred in law.

There was also no basis to find that the award for harassment for the 120 weeks at £15 per week should be interfered with. Mr C’s appeal dismissed and likewise Mr G’s cross appeal, if such it was, for an increased award.

Comment

A difficult call for Supperstone J in the absence of representation and regard to case law which is fairly well established at County Court and higher court level. But the firs instance Judge’s decision on general damages is in line with the usual figures.

The exemplary damages, on the other hand, are a mystery. As ever, exemplary damages are intended to be measure by the profit achieved (or intended to be achieved) through avoiding a legal duty. Usually in these cases, they reflect the cost of possession proceedings. (Eg Walsh v Shuangyan. Manchester County Court 14/01/2010 here). Was there a not unfamiliar confusion between exemplary and aggravated damages? No separate award for aggravated damages, which might seem to merited, and exemplary damages are not a ‘penalty’ for breaching a court order per se.

Then there is the harassment award. Since when has harassment been calculated in terms of notional reduction of rent? Granted the first instance Judge described this as broad brush, but a loss of amenity/loss of enjoyment of property approach is surely not appropriate to a personal, targeted statutory tort like harassment.

All in all, not helpful. While the damages in such cases will always be heavily fact dependent, the rational for the wards should be clear and, hopefully, consistent.

However, it is a clear reminder that evicting someoe while a warrant is stayed by the Court let alone a higher court, can be a fraught and ultimately costly business.

In other bedroom tax news, the DWP has issued a Circular to Local Authorities on The Housing Benefit and Universal Credit (Size Criteria) (Miscellaneous Amendments) Regulations 2013 – the new regulations implementing the Gorry judgment on LHA and housing benefit assessments involving disabled children unable to share a bedroom by reason of their disability. The new regulations are in force from 4 December 2013, some time after the Minister got a thorough telling off on the failure to introduce regulations in R (MA & Ors).

The circular is here.… Read the full post

Spencer v Taylor [2013] EWCA Civ 1600

This case was flagged recently on the Arden Chambers eflash service. This flash gave some bare bones details and led to much debate on the internal NL email discussion list. However, we now have the vital transcript and so we can give a proper report.

[Update 11/12/13 - Judgment now on Bailii ]

Facts
S granted an Assured Shorthold Tenancy under the terms of the Housing Act 1988 to T on 6 February 2006, a Monday. It was for a fixed terms of 6 months with rent payable weekly. Thus the first day of each period was a Monday and the last day was a Sunday. At the end of the fixed term a periodic tenancy arose by way of s of that Act and so it would also have been a weekly periodic tenancy running from a Monday to a Sunday. In October 2011 a notice under s21 of the Act was served giving an expiry date of 1 January 2012 (which was a Saturday) and also including, as an alternative, the usual saving provision of the type approved by the Court of Appeal in Lower Street Properties v Jones [1996] 28 HLR 877. In this case it read:

“Or (b) at the end of your period of tenancy which will end next after the expiration of two months from the service upon you of this notice.”

The Law So Far
Section 21 reads, as far as is material to this case:

(1) Without prejudice to any right of the landlord under an assured shorthold tenancy to recover possession of the dwelling house let on the tenancy in accordance with chapter one above, on or after the coming to an end of an assured shorthold tenancy which was a fixed term tenancy a court shall make an order for the possession of the dwelling house if it is satisfied ‑

(a) that the assured shorthold tenancy has come to an end and no further assured tenancy, whether shorthold or not, is for the time being in existence other than an assured shorthold periodic tenancy, whether statutory or not and ‑
(b) the landlord, or in the case of joint landlords at least one of them, has given to the tenant not less than two months notice in writing stating that he requires possession of the dwelling house.

(2) A notice under paragraph (b) of sub‑section (1) above may be given before or on the day on which the tenancy comes to an end and that sub‑section shall have effect notwithstanding that on the coming to an end of the fixed term tenancy a statutory periodic tenancy arises.

(3) Where a court makes an order for possession of a dwelling house by virtue of sub‑section 1 above, any statutory periodic tenancy which has arisen on the coming to an end of the assured shorthold tenancy shall end without further notice and regardless of the period in accordance with section 5(1A).

(4) Without prejudice to any such right as is referred to in sub‑section 1 above, a court shall make an order for possession of a dwelling house let on an assured shorthold tenancy which is a periodic tenancy if the court is satisfied ‑

(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, and ‑
(b) that the date specified in the notice under paragraph (a) above is not earlier than the earliest day on which, apart from section 5(1) above, the tenancy could be brought to an end by a notice to quit given by the landlord on the same date as the notice under paragraph (a) above.

In general most commentators (including me) have taken the view that s21(2) is a deciding factor and controls which flavour of notice is to be served under the section. If the notice is being given before or on the day on which a fixed term tenancy ends then a notice complying with s21(1)(b) is appropriate. If the notice is served during a periodic tenancy then a notice complying with s21(4)(a) is appropriate. A s21(1)(b) notice must simply give two calendar months notice while a notice under s21(4)(a) must give two months notice and must expire at the end of a relevant period and must not give less notice that a common law notice to quit.

On that reading of the law the notice in this case should have been seeking to comply with s21(4)(a) as it was served during a periodic tenancy. Further in giving its date of expiry as a Saturday that element of the notice was defective.

A New View
The case came before the Court of Appeal and LJ Lewison gave the leading judgement with which LJ Macfarlane and the President of the QBD agreed without comment.

Surprisingly, LJ Lewison did not simply turn to the second component of the notice, the saving provision and rule the notice as valid on that basis, which he could easily have done.

Instead LJ Lewison embarked on a careful reading of the section. I am going to take this out of order a little as I think the conclusions reached are more useful in this way.
Starting with a view of s21(2), what we have always all seen as a compulsion which prohibits a landlord from using s21(1)(b) once the fixed term has expired was read very differently by the Court. In fact s21(2) was described as permissive rather than as proscriptive. S21(2) states that an s21(1)(b) notice “may be given before or on the day on which the tenancy comes to an end” (emphasis mine). It does not say that such a notice must be given or can only be given but rather that it may be given. LJ Lewison therefore read this as suggestive as opposed to requiring an outcome.

If s21(2) allows an s21(1)(b) notice to be given in a periodic tenancy then does the wording of s21(1) allow for the same conclusion? LJ Lewison felt that it did. S21(1)(a) merely requires that the fixed term of any AST has ended and that no further fixed term has come into existence. S21(1)(b) simply requires that two months notice has been given. Nothing in s21(1) specifies that the notice is only applicable to a fixed term tenancy or cannot be given during a periodic tenancy.

Therefore LJ Lewison rules that the s21 notice was valid as the expiry date of 1 January 2012 on the notice was more than two months from the date of service and under s21(1)(b) this is all that was required.

Different Dates
At this point the notice was valid and the appeal was lost for the tenant. However Lewison LJ went on to review the position under s21(4)(a) in the light of the tenant’s argument that the notice was defective because it essentially gave more than one date, 1 January 2012 and the date calculated under the saving provision. Lewison LJ dismissed this argument. He held that if one date is clearly primary and the other is seen as a fall-back then the position is clear to a reasonable reader of a notice. Additionally, it was clear from the notes on the back of the notice that the 1 January date was wrong and so a reasonable reader would see that this first date was incorrect and so turn automatically to the other.

Comment
This case is a bit of a shocker in that it overturns a common belief structure. In summary the position is now that if a tenancy has at some stage had a fixed term then a notice which complies with s21(1)(b) will always be an acceptable means of termination, whether it is being served during a fixed or periodic part of the tenancy. Accordingly, a notice under s21(4)(a) is only for tenancies that were periodic from the outset and have always been so. This means that for the majority of tenancies in England & Wales the s21(4)(a) notice is now irrelevant as almost all of them have at some stage been operating under a fixed term. This also means that for these tenancies cases such as Church Commissioners v Meya, Macdonald v Fernandez, and Lower St Properties v Jones are also all irrelevant as they all deal with aspects of s21(4)(a) notices.

It is also worth noting that Lewison LJ did not bother with a review of the legislative history and what was intended. This was a surprise as it seems almost incredible that this outcome was what the legislation intended. In fact, the entire structure of the Housing Act 1988 has been built around trying to keep the tenancies similar to the common law position. Hence the use of the s21(4)(a) notice and its linking with a notice to quit. Breaking this undermines that intent. I also find it hard to accept a reading of any Act that sets out a piece of legislation as optional in nature.

Finally, it will of course be a great relief to landlords and agents as the vagaries of s21(4)(a) have defeated a great many possession cases over the years.

Watson v Simpson Croydon County Court 4 October 2012

Not a stunningly important appeal to a Circuit Judge, this one, but a useful case to be able to wave around on costs.

Ms Simpson was a private AST tenant of Mr Watson, whose tenancy had become a statutory periodic one. Mr Watson apparently wanted her out. He served what was described as notice to quit, then began possession proceedings. He did not serve any s.21 Notice (of any sort, vide Spencer v Taylor). The Particulars of Claim were on form N119. There were no particulars of any rent arrears, or other breach, nor was there a claim for use and occupation charges.

Unsurprisingly, the District Judge dismissed the possession claim. However, the Order stated ‘no order as to costs’.

Ms S was apparently represented and legally aided. It appears this was a factor. It also appears that the DJ may have heard and taken into account the history between Ms S and Mr W.

Ms S appealed. HHJ Ellis held that when departing from the usual costs order under CPR 44.2, ‘the conduct’ of the parties meant litigation conduct, not the conduct of the relationship of landlord and tenant as a whole. Further, following Governing Body of JFS [2009] 1 WLR 2353, how a party was funded was irrelevant to determining the inter partes costs order.

Our thanks to December 2013 Legal Action’s ‘Recent Developments in Housing Law’ for alerting us to this case.

If a tenant on a statutory periodic tenancy stops living in the property, but the tenancy is not ended, who is liable for the Council Tax?

CT v Horsham District Council (HB) [2013] UKUT 617 (AAC)

This was an appeal to the Upper Tribunal from the benefits First Tier Tribunal. It was actually an appeal on Council tax Benefit eligibility, but has considerable significance for Council tax liability of (non-resident) tenants.

The Claimant had been an assured shorthold tenant since 1997. By at least February 2008, the tenancy had become a statutory periodic tenancy (probably back in 1997/8 as there do not appear to have been any ‘renewal’ tenancies.) She did not live in the property from August 2008, but the tenancy was not ended until February 2010.

The issue was the period between August 2008 and Feb 2010 when an alleged overpayment of CTB had taken place.

At the UT, the Council argued that th Claimant was ‘the owner’ of the property for the purposes of s.6 Local Government Finance Act 1992 even if not resident:

the interest which the Claimant had under her periodic tenancy was a “material interest”, as it had originally been granted for a term of six months or more. In that case there appears to have been an initial grant of an assured tenancy for a term of six months, followed by a periodic assured tenancy arising under the 1988 Act, followed when the tenant ceased to reside in the property by a periodic tenancy which was not an assured tenancy. The Tribunal held, contrary to the council’s contention in that case, that the periodic tenancies were “a continuation of the original agreement and not three separate and different agreements and it therefore followed that the tenant had a material interest …”

This was in reliance on a Valuation Tribunal decision in Oyston v Leeds City Council (27 July 2011) [Which I think is this one]

However, the Upper Tribunal preferred the argument in found in a summary of MacAttram v London Borough of Camden [2012] EWHC 1033 (I have seen a transcript of judgment in this case, but it doesn’t seem to be generally available and the UT hadn’t seen it).

That case, which also concerned council tax liability, dealt with a contractual tenancy for LB Camden for a period of 3 years, after which Camden continued to use the property to house homeless appliance and continued to pay rent, on a monthly basis, as was originally required under the lease. The High Court accepted that a new monthly periodic tenancy had arisen at the expiry of the fixed term of the contract (though why not a tenancy at will is not clear, but of no relevance).

Section 6 of the Local Government Finance Act 1992 provides for liability for council tax to fall on the first applicable person on the following list:

(2)A person falls within this subsection in relation to any chargeable dwelling and any day if, on that day–
(a)he is a resident of the dwelling and has a freehold interest in the whole or any part of it;
(b)he is such a resident and has a leasehold interest in the whole or any part of the dwelling which is not inferior to another such interest held by another such resident;
(c)he is both such a resident and a statutory or secure or introductory tenant of the whole or any part of the dwelling;
(d)he is such a resident and has a contractual licence to occupy the whole or any part of the dwelling;
(e)he is such a resident; or.
(f)he is the owner of the dwelling.

So, if there is no person resident, liability falls on ‘the owner’.

Sections 5 and 6 provide:

(5)In this Part, unless the context otherwise requires–
‘owner’, in relation to any dwelling, means the person as regards whom the following conditions are fulfilled–
(a)he has a material interest in the whole or any part of the dwelling; and.
(b)at least part of the dwelling or, as the case may be, of the part concerned is not subject to a material interest inferior to his interest;
…
(6)In this section– …
‘material interest’ means a freehold interest or a leasehold interest which was granted for a term of six months or more.”

Thus for the ‘owner’ to avoid liability, there has to be someone with an inferior material interest to be classed as the ‘owner’. But a material interest has to be effectively a tenancy with a term of 6 months or more.

A monthly periodic, the High Court held, was not a material interest. Therefore Camden were not liable for the council tax for the period after its contractual term. Further the periodic tenancy was a new tenancy and not a ‘continuation’ of the original contractual term:

The whole premise of the inference of a periodic tenancy which arises after expiry of a fixed term by virtue of the payment and acceptance of rent is that by their conduct the parties are taken to have agreed to enter into a tenancy. Although the relationship of landlord and tenant continues, the agreement between them is not one of continuation of a previous fixed term that has expired, rather it is the commencement of a new and different term of years, a monthly periodic tenancy. Although that tenancy is on the same terms and conditions as the previous lease, that again is based on an inference from the party’s conduct. Those previous terms only apply insofar as they are not inconsistent with the terms of the new and different tenancy, namely the monthly periodic tenancy.

(This is in relation to a contractual tenancy, so not on the wording of Housing Act 1988, as in Superstrike)

The principle in Gandy v Jubber (1865) 9 B & S 15, that a yearly periodic tenancy “becomes an entire lease certain for the years past and also for the year so entered on, and that it is not a reletting at the commencement of the third and subsequent years”, did not apply as s.6 of the 1992 Act specified a lease ‘granted’ for more than 6 months, not one granted on a monthly basis that cumulatively became a lease for longer than 6 months.

Thus the High Court in MacAttram. As mentioned above, the Upper Tribunal apparently did not have these details, or the transcript of MacAttram. In fact it isn’t clear whether the UT had appreciated that MacAttram did not concern an assured shorthold tenancy. But given Superstrike, it is unarguable that a statutory periodic is not a new periodic tenancy of less than 6 months.

So, the Upper tribunal held that the tenant is not liable for Council Tax as ‘owner’ if they are on a statutory periodic tenancy (or any tenancy of a term of less than 6 months) and are non-resident. The liability will fall on the next ‘owner’ up the chain with a material interest and a longer than 6 month term. usually, the landlord.

The Claimant in this case was found not to have received an excess of CTB. Unfortunately, that was because she had no council tax liability and should have received no CTB at all.

As far as I can see, this should also apply to any secure or assured social tenant on a weekly or monthly periodic tenancy. Once they are no longer resident, even if the tenancy continues (as a contractual tenancy or otherwise) they are not liable for Council Tax, but the landlord is.

Busy day for bits of news.

On the bedroom tax, Lord Freud announced in a House of Lords debate today that amending regulations to remove the 1996 claim exemption will be produced in March, though they haven’t got definite parliamentary time yet. (Not got a permanent Hansard link yet)

Lord Freud:

My Lords, I can tell the noble Lord that the numbers involved in this anomaly are small and the amounts are modest. We have put guidance out to local authorities and we intend to regularise the matter through regulations in March.

I have received another bedroom tax First Tier Tribunal appeal decision, from Liverpool. This is a successful appeal on the issue of room size, with two rooms held to be too small to be used as a bedroom and under-occupancy being the ‘flip side’ of overcrowding, such that the Housing Act 1985 rooms size provisions were relevant. Details and copy of the decision on the FTT decision page under Liverpool.

I have also heard of an FTT decision on the Zambrano eligibility regulations. (For a quick history on the Zambrano cases and regs, see here). Intriguingly, this was apparently a successful appeal on the basis that the regulations were incompatible with EU law.  More or this when I get it.

In an odd announcement, reported by the RLA, the Association of Independent Inventory Clerks (no, me neither) have released a report on private sector landlords failing to carry out urgent repairs, well, urgently. According to the report,

34 per cent of private tenants have faced a home emergency in the past 12 months; only one in three were dealt with on the same day while almost a quarter took more than a week to resolve.

The AIIC provided a helpful list of timeframes for urgent works.

• Landlords and agents have a duty of care to advise tenants on the correct course of action while contractors are organised, such as turning off gas taps, water stop cocks or main electricity supplies, to ensure that any problem does not cause danger to life and property.

• Any gas or major electrical fault is classed as urgent and should be attended to within 24 hours or less. This also applies when heating or hot water is affected, especially during cold weather.

• Water leaks – within 24 hours

• Cookers – within 48 hours

• Other broken appliances – washing machines, dish washers etc should be attended to within 72 hours.

• Communication is key and the landlord or agent should keep the tenant informed of the action taken to solve the problem that has been reported.

Unsurprisingly, this has not gone down well with commenters at ‘Letting Agent Today’.

I’ve been watching the slow motion catastrophe that is ‘Rent 2 Rent’ [sic] for a while, as have other NL writers. Despite the high profile collapse of the poster boy and cheerleader, Unidaplace, last autumn, owing many thousands (and the simultaneous vanishing of the boss, Daniel Burton, until tracked down by Channel 4 news), there are still plenty of people entering into these arrangements.

Why? Well, the promise to the property owner/landlord is of a fixed reliable rent for an extended period, and not having to do things like deal with tenants, managing agents and the like. In fact, they can just sit back and let the reliable rent roll in. The Rent 2 Rent (R2R) ‘tenant’ gets to sub-let the property, probably subdividing rooms and/or turning living rooms into bedrooms, stuffing in more tenants on a room only letting, and pocketing the difference. And the tenants get… well, an expensive room.

So, landlord win, R2R win, and sub-tenants… done over, but who cares? No.

The reason lawyers are not fun at parties is that we tend to spend a lot of our days thinking about what happens if things go wrong. And in the R2R set up, things can and almost certainly will go very, very wrong indeed. This is the first of a couple of posts on exactly how much of a mess can be created by laziness, stupidity and greed.

The agreement

What sort of agreement does the owner/landlord have with the R2R party? I have heard of all sorts of variants: Commercial leases for 2, 5 or even 10 years (the latter being an interest that must be registered with the Land Registry, just as a reminder); ‘agency agreements’ which somehow give the ‘agents’ a remarkably free hand; specific ‘rent to rent’ tenancy agreements; and even ‘assured short hold tenancy agreements’. One example that crossed my desk the other day used a pro forma ‘company let’ tenancy agreement. (I was advising a freeholder and advised there was a breach of lease by the flat owner who had let to the R2R).

Terms of these agreements likewise vary. Some offer a full repairing lease, others, like the ‘shorthold tenancy agreements’ are silent on such issues, or put the repairing obligation on to the property owner. Some are silent on sub-letting, others provide for the R2R tenant to give ‘licences’ to occupiers, some do actually provide for sub-letting to tenants.

Clearly, the terms of the agreement are crucial. But the evidence is that landlords are signing up to any old thing, usually ‘drafted’ (or downloaded, or borrowed from somewhere else) by the R2R party.

For reasons which will no doubt be obvious to any housing lawyer, but may need some explaining for property owners, tenants and, most definitely the R2R set ups themselves, any form of agreement that is not a commercial lease is going to be a disaster.

The R2R party most certainly can’t have an assured short hold tenancy, as they may well be a company, but will most certainly not be resident. The simple fact that a non-resident company can’t possibly have an AST hasn’t stopped one imaginative R2R company trying to sue the property owner for not protecting the deposit with a deposit scheme. They lost, eventually.

An agency agreement would leave the property owner liable for everything, from unprotected deposits to repair liabilities, with a direct legal relationship with the tenants, but having ceded all control over appointment of tenants, numbers of tenants, rent levels etc. to the R2R ‘manager’.

A company let is very unlikely to provide for the kind of subletting that takes place in R2R and will probably leave the property owner liable for repairs.

In addition, any agreement that provides for the R2R tent to give ‘licences’ to occupiers is not worth the paper it is written on. Unidaplace were an example and I have seen others. As the occupiers will almost certainly have a particular room of their own, for a periodic rent, the occupiers will have a tenancy, either an assured short hold, or, if not their primary residence, a contractual tenancy. But whatever it is, it will not be a licence. Any R2R set up telling property owners and ‘tenants’ that it gives licences is legally illiterate and just plain wrong. Unlawful eviction claims await.

Property Owner liability

Depending on the nature of the agreement, the property owner could well still be liable for everything from unprotected deposits through repairs, to eviction proceedings. However, even assuming that the agreement is half decently drafted, the owner is not going to escape some liabilities.

There are plenty of examples of property owners discovering that their property has been sub-divided, without their knowledge, and large numbers of tenants installed by the R2R tenant. There is a serious risk of the property becoming an unlicensed HMO, under either statutory or local schemes.  This would prevent the R2R intermediate from using s.21 notices, of course, but may also leave the property owner open to prosecution.
S.72 Housing Act 2004 provides:

72 Offences in relation to licensing of HMOs
(1) A person commits an offence if he is a person having control of or managing an HMO which is required to be licensed under this Part (see section 61(1)) but is not so licensed.

[...]

Note that it is not ‘the landlord’ specified in (1), and it is not unknown for Councils to follow the rent when finding who to prosecute, the property owner still getting rent arising from the unlicensed HMO. If the R2R company has disappeared, then the owner is the easier target. For a fine up to £20,000.

Ending things

Which brings us on to what happens if the R2R company fails in its obligations, or disappears, or goes into liquidation, none of which is unknown.

Presuming that the R2R company had some form of tenancy, then the sub-tenants remain. Their tenancies are still perfectly good against the R2R landlord. And they will still be obliged to pay that R2R landlord the contractual rent (although if there is an unlicensed HMO involved, things might be different). The sub-tenants may well find that unprotected deposits have disappeared, repairs aren’t done and the property owner starts hassling them.

But the property owner can do nothing about ending those sub-tenancies directly, even if the R2R tenant has stopped paying rent to them.

The only way for the property owner to lawfully end the sub-tenancies is to end R2R tenancy. A possession order and warrant against the R2R tenant would also be effective against the sub-tenants.

But depending on the terms of that tenancy, that might be easier said than done. What are the relevant provisions in the agreement that would enable termination, or allegation of breach?

The proceedings will not be as simple as s.21 notice and accelerated possession claim. Forfeiture for breach of commercial lease has a very different and complex set of procedures.

Even if the owner manages to successfully serve proceedings, they might also find the sub-tenants applying to be joined to the proceedings, seeking an order that their sub-tenancies become the direct tenancies of the landlord, or other order.

In short, a mess.

Can it work?

I’ve seen some suggestions that R2R can work because ‘housing associations and councils do it’ via commercial leases of private sector properties. Of course the real difference is not so much the legal agreement (although heaven knows that helps) but the clear financial security and stability of Councils and (most) RSLs. Even if the agreement is well prepared, if the R2R party is an asset-less limited company then there is little that the property owner, or indeed the sub-tenants, can do when it collapses, disappears or reneges on the contractual terms. They can fold up their tents and vanish.

But that is not to say that there aren’t significant problems when Councils and RSLs lease private properties in this manner. For example, where there are repair problems with the building, both the Council/RSL and the property owner may end up facing disrepair and nuisance claims. (And I’ve run such cases and seen each try to claim that the other was responsible under their lease).

Can it work? Maybe. Assuming everybody does everything properly. But private sector R2R  from a lawyer’s perspective looks like a disaster waiting to happen, even with a ‘proper’ agreement between owner at R2R.

The sub-tenants are inevitably going to have to pay a higher rent for less space, get fobbed off about repairs, possibly see their deposit vanish, and are at the relative mercy of the kind of people who think that calling it a ‘licence’ actually means anything in the circumstances.

The property owner risks ending up with no rent, sitting sub-tenants, a property that has been ‘altered’ and maybe facing a prosecution for an unlicensed HMO. (And just possibly an R2R tenant making a farcical claim for an unprotected deposit!)

I’d say the R2R company faces risks, from HMO prosecutions, through disrepair claims, to unprotected deposit claims and unlawful eviction proceedings. But somehow, the kind of people who seem to be going into offering R2R don’t seem the type to be averse to simply liquidating the company and wandering away.

A couple of bits and pieces.

The DWP has issued a circular in the wake of the Court of Appeal judgment in MA & Ors, R (on the application of) v The Secretary of State for Work and Pensions [2014] EWCA Civ 13 (Our report coming soon, honest).  The Circular, U2/2014, contains what is effectively an admission that it is only the increased DHP funding that is keeping the bedroom tax from being unjustified discrimination:

The Court of Appeal also noted that the DHP scheme was different from the one considered by the Court in Burnip as the fund had been increased, the guidance had been altered and the Secretary of State had pledged to keep it under review.

The DWPs position on maintaining DHP funding levels would appear to be pretty circumscribed. In order to win the challenges, it has placed itself in a position from which there is no easy exit.

In addition, the circular encourages councils to use the MA judgment to appeal any FTT decisions based on Article 14 disability discrimination. At 7:

Local authorities (LA) should ensure that this decision is quoted when appealing against adverse First-tier Tribunal decisions that raise similar issues. Annex A provides details of the individual cases in this appeal where an under-occupancy reduction has been applied in line with the legislation. The Court of Appeal has confirmed that these decisions are lawful.

In MA, in both the High Court and the Court of Appeal, the DWP position was:

the Secretary of State has made it clear that he does not admit the alleged details in any of the cases: in the event of a successful challenge in these proceedings, it would be for the local authorities concerned to consider each claimant’s application for HB and assess the particular facts of the case as part of that process.

However, the Annex to the Circular contains the specific disabilities and circumstances of the claimants in MA, stated as fact. If MA does go to the Supreme Court, it would appear that the DWP can be taken to have admitted the details of the claimants’ circumstances. The Annex also makes grim reading, as the DWP is using these circumstances as evidence of the kinds of situation in which the bedroom tax should apply – for example:

[JC] lives with her husband in a two bedroom flat. He is her full-time carer. She has spina bifida, hydrocephalus, is doubly incontinent, is unable to weight bear, and has recurring pressure sores. She needs a special hospital-type bed in her bedroom with an electronic pressure mattress, specially designed to fit a single hospital bed. She has to sleep in a fixed position. She requires specialist in-bed toileting equipment, medical sheets and incontinence pads. She and her husband cannot share a bed. There is no space for an additional bed in the room.

Of course, councils are told:

LAs retain the responsibility for deciding whether, in cases where a claimant faces a shortfall in their rent, a DHP is appropriate and for what period. The judgement does not imply that all disabled people should be awarded a DHP, but LAs can consider the particular needs of disabled claimants in assessing applications.

Tangentially linked, through housing benefit being involved, is this story of dubious goings on in London.

On Friday 7 March, Channel 4 news ran an item on one of the largest ‘guaranteed rent’ (aka Rent 2 rent) set ups in London, London Housing Solutions and its murky relation with Local Housing Solutions which has seen one firm apparently take over from the other, but with some £400,000 of rent received from tenants going missing. We were scathing about Rent 2 Rent here and this story does nothing to encourage confidence in this form of sub-letting. Both the tenants and the property owners were done over badly. It appears that Local Housing Solutions are approaching those property owners left without payment by London Housing Solutions and offering to take over the contracts, without, of course, any payment of the past missing rent. (I have a walk on appearance at the end of the piece).

We don’t often publicise events here, but given that this one involves at least couple of the NL team, we are damn well going to.

Housing Law:
The Welsh Devolution Effect
1st May 2014

Cardiff Law School, Museum Avenue, Cardiff, CF10 3AX

A one day conference run by the University of Bristol Law School, Anthony Gold, and Arden Chambers examining the two major housing Bills in Wales, the Housing (Wales) Bill and the Renting Homes (Wales) Bill.

The Welsh Government is carrying through a substantial legislative programme reforming all aspects of housing and tenancy rights and responsibilities. These significant changes will ultimately lead to an effective separation of Wales from England in housing and tenancy law. This conference brings together leading housing and landlord & tenant lawyers with some of the architects of the new legislation to offer a review of the planned changes and the future of Welsh housing law.

Speakers

1. Ceri Breeze, Welsh Government: ‘Overview of housing bills and trajectory’

2. David Smith, Anthony Gold: ‘Private rented sector: Regulation’

3. Giles Peaker, Anthony Gold: ‘Homelessness: Welsh Amendments’

4. Stephanie Smith, Arden Chambers: ‘Gypsies and Travellers: The Housing (Wales) Bill’

5. Martin Partington CBE QC, Arden Chambers: ‘Renting Homes’

6. David Cowan, University of Bristol Law School/Arden Chambers, and Simon White, Welsh Government: ‘Knotty questions for Renting Homes in Wales’

The programme and booking form can be downloaded here. [doc]

Costs £50. 6 CPD points for solicitors and Bar.

Hope to see some of you there.

2013 was a difficult year for claimant disrepair. Changes in legal aid funding have made it all but impossible to pursue a disrepair claim under legal aid alone, as funding is only available for an order to carry out repairs to where there is serious risk to health or well being of the tenant or other occupiers, and not for further repairs or the damages claim (although full funding remains for a counterclaim to a possession claim, which can be brought after the possession order).

For those carrying out disrepair claims under Conditional Fee Agreements, success fees ceased being recoverable from the Defendant, as did ATE premiums, but, despite the Jackson proposals for QOCS, the Claimant remained at risk of costs. Both success fee and ATE premium (if any found) now come from the Claimant’s damages award.

In this situation, while disrepair claims can certainly still be run, it is perhaps more important than ever for both claimant and defendant to be aware of the Courts’ assessment of quantum on disrepair cases.

So, here are some of the few recent-ish cases to have reached trial or reported settlement. Cases pre and post date the Simmons v Castle 10% uplift in general damages (for all claims where damages awarded after 1 April 2013, save for those funded on a CFA signed before 1 April 2013).

There is still a remarkable variation in the different Courts’ approaches to quantum, from a ‘broad brush’ or ‘global’ view, to a notional percentage of rent as per English Churches v Shine.

We noted Clark v Affinity Sutton Homes Ltd (Barnet County Court 4 April 2014), a few days ago.  The following County Court cases are from Beatrice Prevatt’s Housing Repairs Update Legal Action Dec 2013/Jan 2014 (available here):

Price v City and Town Group Central London County Court, 12 August 2011

A Rent Act protected tenancy. Water ingress and draughty windows since November 2000. Some limited repairs between 2006-2010. Claim issued in 2006. Order for extensive roof repairs in April 2010.

Defended on basis that property was old, 19th Century, and defects not major. Defence rejected. The age of the property did not mean that it should not be wind and water tight. Defects not de minimis. Defendant’s approach was dismissive and full repairs had taken more than a decade Defendant liable from end of December 2000.

Damages of 30% of rent overall, taking into account that the problems had diminished over the period. Average rent of £3,816 per year, giving general damages for the 112 months Dec 2000 to April 2010 of £10,685.

Southwark LBC v Munu &Munu Mayors and City of London County Court 16 May 2012

Disrepair counterclaim. A number of defects dismissed as not amounting to disrepair in law.  Also found tenants had been undo-operative and refused access. Found disrepair for:

Loose wash hand basin, with no cold water supply functioning. Ill fitting and draughty windows in two bedrooms. Ill fitted panels and kick boards following kitchen installation. Non-functioning bathroom extractor fan. Disconnected flush pipe to one WC.  Damages of £1250 awarded. (Period and proportion of rent unknown).

Also repeated backsurges of sewage due to defective external drain over period of 18 months, ‘a significant and very unpleasant intervention to home’. Damages of £2000.

Special damages of £3000 and an award of £500 to each of the three children. (I can’t see on what basis the award to the children was made, whether the backsurges were treated as disrepair or as nuisance, there doesn’t seem to be a basis for these awards).

Dr Malik v Brohler Bow County Court 25 October 2012

Counterclaim for disrepair on an assured short hold tenancy. The possession claim under s.21 was dismissed on failure to protect the deposit.

Court found notice of disrepair from December 2007. Significant dampness to two bedrooms for 6 years, making the rooms very cold. One bedroom unusable. The other bedroom had draughty windows. Cause of damp was a defective conservatory. Also gaps between the brickwork and the sliding doors of the conservatory. 4 years of a leak from WC into kitchen, leading to collapse of kitchen ceiling.

A squirrel had died in the space above the kitchen ceiling. Following repairs to the ceiling, the workman had left a gap in the ceiling through which maggots, then the squirrel’s corpse fell.

The electricity supply had been installed incorrectly, leading to 3 days without electricity, electric shocks and a concern for safety of tenant’s children. Re-wiring was not carried out for 6 months, during which time unsafe extension leads had to be used.

Damages of 40% of rent for final 6 months and 28% of rent for preceding 3 years 4 months (reduced from 30% rather than calculate what would have been a reasonable period for the landlord to have carried out repairs). Total general damages £15,322.66

Ngoma v Dhillon Birmingham County Court 6 December 2010

Assured shorthold tenancy of two storey, three bed house, from February 2006 to February 2012. Rent £550 per month.

Penetrating dampness to front and rear bedrooms causing mould growth, from perished brickwork and mortar. Broken seal to double glazing in front bedroom. Rising damp to front living room. Some damp to rear living room. Damp and mould in kitchen aggravated by leaks from bathroom above. Leaks from seals around bath and taps. Leak from kitchen sink into unit. Structural cracks. Incomplete drainage work from November 2010 leading to foul odour in the garden.

General damages assessed at 70% of rent for the full period. £27,720, with interest of £1,663.20. Total: £29,383.20

Hammersmith & Fulham LBC v Millani-Kalkhorani Willesden County Court 14 January 2013

Counterclaim to rent arrears possession proceedings. Tenancy began May 2005.

Missing banisters, defective windows and defective front door throughout.

From May 2005, blockage in drain from bathroom meant sink and toilet did not drain. Toilet leaked through kitchen ceiling light below making electrics short circuit. Toilet renewed in December 2006, but blockage remained. Toilet began leaking again in late 2007, with further blockages and electricity problems in 2008. Toilet replaced again in January 2009.

From 2010 further problems with toilet, the water supply and the boiler. New boiler installed in June 2010 but not functioning for a month. Other repairs poorly carried out or to poor standard.

Damages assessed on a ‘broad brush approach’. £2500 per year for 3.5 years from mid 2005 to December 2008. £750 for 2009, as there was disrepair, even if no further complaints from T. £1000 per year for 2010, 2011 and 2012. Total £12,500.

Olinski v Islington LBC Lambeth County Court January 2013

This was a long leaseholder case, with Islington as the freeholder. The claimant’s lease started in 2002. (As a reminder, leasehold claims have a 12 year limitation period. The measure for damages is the notional open market rent obtainable for a private tenancy of the property – Earle v Charalambous though beware the approach of the TCC in Hunt & Ors v Optima (Cambridge) Ltd & Ors)

There was serious subsidence caused by tree roots. The front bay window and rear extension were pulling away from the main structure and the side of the rear extension was bowed. The partition wall to the bedroom was warped. In 2003 the pillars of the main entrance moved and had to be propped up.

There was scaffolding up for nearly 10 years. The claimant was in temporary accommodation in a two bed flat from 2006 to 2012.

The claim settled for £18,044. General damages of £15,544 for a period of 8 years and 4 months, including 6 in temporary accommodation. £2500 special damages. A re-inspection by a structural engineer after 6 months and any further works required were agreed. The Council were to indemnify the claimant against the cost of any further works arising from subsidence for a period of 15 years, and would not charge the excess on any further works carried out under insurance to the claimant.

Asghar v Barnet LBC and Minoan Investments Limited Central London County Court 23 January 2013

This was a non-secure tenancy of a one bed flat provided to the Claimant by Barnet, who had lease the property from the freeholder. Minoan.

There was rising and penetrating damp from March 2007 until the Claimant was rehoused in August 201o.

The Council defended on the basis that it had no record of complaints. However the file disclosed was found to be plainly incomplete and the lack of any note of complaint did not mean that none had been made. The period of claim was found to be from March 2007 to October 2009 when the Claimant was found to have refused a reasonable offer of accommodation.had suffered ahed

General damages for the disrepair at 35% of rent of £386.04 per week, totalling £16,745.82 for 130 weeks.

The Claimant also brought a claim for psychiatric injury, on the basis that the depression and panic disorder from which he historically had suffered had been triggered by the disrepair. The Court found that the conditions were the main but not sole cause of the claimant’s condition. Damages were discounted by 20% to take the other causes not account. The case fell into the moderate JSB bracket (though without a prognosis). General damages of £10,000, reduced to £8,000. Total damages £24,745.82.

The Council’s part 20 claim against the freeholder was upheld to the full extent of the claimant’s damages award, despite the freeholder receiving a lower rent of £650-£720 pcm. There was no failure to mitigate by the Council as there was nothing in its lease then permitted it to carry out the structural works of repair.

Vaughan v MLs Properties Limited Edmonton County Court 23 May 2013

Assured shorthold tenancy of a two bed first floor flat in a block, beginning June 2009. Rent of £975 per month.

From November 2009 defective gas central heating. Dampness and water penetration to most rooms, exacerbating condensation and mould, defective plaster and problems with the electric installation.

Following works by the landlord’ contractors, defective double glazed windows in one bedroom and living room, and defective tiling in bathroom and WC.

Uneven floorboards with exposed nails and an unsafe fire escape from the start of the tenancy.

From September 2012, building works and scaffolding for the erection of a new storey immediately above, resulting in holed plaster, interference with quiet enjoyment and use of common parts. Communal garden overgrown and filed with debris from works, access pathway cracked and uneven.

At trial, the Judge decided that the landlord had breached an earlier debarring order and was debarred from defending on liability. The hearing proceeded on assessment of quantum, with the tenant’s evidence accepted wholly.

Damages: At about 30% of rent for 3.5 years, plus Simmons v Castle uplift giving general damages of £14,437.50. Special damages of £865. The claim limit of £15,000 was raised by the Court.

Read v Notting Hill Housing Trust Bow County Court 13 June 2013

Assured shorthold tenancy of two bed ground floor flat. Rent £289 per week.

A few months after moving in, the tenant reported that rats were getting into the property, also reported to the Council EHO. The entrance was through holes in the floorboards. There was also rising damp and a boiler which produced hot water only intermittently. The tenant was offered alternative accommodation about a year after reporting the rat problem. One child had gone to the grandmother because of the rat problem.

General damages based on the reasonable period for repairs to the floorboards being 28 days. On a ‘broad brush basis’ rat ingress was the worst problem. This case was on all fours with Dadd v Christian Action (Enfield) HA (1994) Legal Action 18, except that in this case the rats entered the flat. Damages at 80% of rent for the period 28 days after notification to a reasonable offer of accommodation being made to the tenant, 60 weeks, amounting to £13,872. For a further prior after the reasonable offer to termination of tenancy, damages at 20% of rent – amounting to £953. Total general damages £14,825

Special damages of £1000. Interest on damages £940. Less a set off for minor property damage of £150.

Claimant had beaten both her offers under Part 36, so a further 10% of damages £1,661 and Part 36 interest of £130 awarded.

Overall total £18,406

Aden v Birmingham City Council Birmingham County Court 3 July 2013

Secure tenancy of 3 bed house. Average rent £89 per week (£4,641 per year) Starting October 2006

Holed and defective plasterwork from start of tenancy until letter of claim.

Intermittent rainwater penetration into one bedroom (3 or 4 times a year in heavy rain)

Water penetration from bathroom into adjacent kitchen for 22 months

6 months leaking pipe in kitchen

Boiler breaking down once each winter and taking 1- to 14 days to repair.

Uneven, loose and defective flooring from start of tenancy

Defective extractor fan, perished window board and defective seals in bathroom. Other minor defects.

HHK McKenna did not make an order for specific performance, on the landlord’s assurance it would carry out the works in the claimant’s expert’s schedule.  He held that the extractor fan was part of the structure, so fell under s.11(1)(a), distinguishing the Circuit Judge’s decision noted  in O’Neill v Sandwell MBC [2007] EWHC 2004 (QB) (18/12/2007). On notice, the Claimant’s evidence was accepted and the reliability of the Council’s records was criticised.

On damages, using a ‘broad brush approach’, a six year period of loss, with some periods worse than others and some problems intermittent. About 38% of rent, being £1750 per year. Total £10,500. The Simmons v Castle uplift applied £1050, giving general damages of £11,550.

Special damages of £2100 (100% of claimed) and interest. Total £13,850.

Maloku v Southwark LBC Lambeth County Court September 2013

Secure tenancy of a studio flat. rent of £100 per week. Claim from mid 2008.

Dampness to walls and chimney breast of living room, with crumbling plaster. Damp spread to kitchen and hallway with further plaster damage. Repairs carried out in July 2011, but dampness returned in the same areas. Further repairs in February 2012.

Claimant and her daughter had lived with her mother between late 2010 and mid 2012 to avoid damp conditions.

Additional personal injury claim for the Claimant and for the Claimant’s daughter, based on expert evidence that the claimant had a history of asthma which had ceased to be troublesome. Damp, cold and mould had lead to a recurrence of her condition while resident at the property. The Claimant’s daughter suffered respiratory infections while in the property, with various A&E and hospital attendances, on the balance of probabilities these were caused by the conditions in the property ad there was no evidence of long term effects.

Claim settled for £17,000 for the Claimant, inducing £700 special damages, and £3,000 for the daughter.

Voysey v Ellas Croydon County Court 20 September 2013

Assured shorthold tenancy. Rent of £1050 per month. Claimant living there with adult daughter and son, so registered as blind.

Defective boiler for period of 3 and a half months. No heating or hot water (Claimant had to fill bath with saucepans of boiling water).

Minor but persistent leak to conservatory for 29 months

Defective drainage in bathroom for 24 months.

Landlord was notified of condemned boiler by British Gas and local council but refused to repair, claiming lack of funds.

After contested trial, award of general damages of £1250 for the 3.5 months lack of heating and hot water, £3000 for the 29 months of leak to the conservatory, £500 for two years of faulty drainage to bathroom. Total £4750.

No mention of Simmons v Castle uplift or a percentage rent assessment.

Comment

The overall message seems to be that the courts are still, in general, disposed to take a ‘broad brush’ approach, rarely (but sometimes) carrying out a detailed breakdown of quantum by issue, severity and duration in terms of percentage of rent. That said, it is also clear that the rent is borne in mind as a measure. There is also the odd award of ‘£500 for the children’ which doesn’t seem to have a basis.

It is worth noting that there is  some variation in quantum for similar issues, as a percentage of rent, though not at the extremes that have been seen in the past, there is an increasing convergence on the level of awards. That said, it seems that if you must be a tenant suffering disrepair, Birmingham is quite a good place to be suffering it.

But there is another theme, which is that landlords relying on the deficiencies of their own records to argue lack of notice, seem to be getting short shrift. ‘If it isn’t in our records, it didn’t happen’ is not flying as a defence on notice.

The extractor fan issue in Aden v Birmingham is interesting. I have encountered argument on this and no doubt will come up again.

The answer appears to be when it is only for access!

Bristol City Council v Digs (Bristol) Ltd [2014] EWHC 869 (Admin)

We first reported on this case briefly as a decision of the Bristol Magistrates Court. It has now been appealed by way of case stated and so the High Court has produced a definitive view.

The facts, briefly, were that Digs owns a series of properties in Bristol which are predominantly let to students. This property is a five storey property which is divided into two two storey maisonettes. The fifth storey is the basement which is not used and forms now part of this case. The case actually concerns the upper maisonette which occupies the second and third storeys. This maisonette is reached by way of a lobby shared with the lower maisonette which is on the ground floor. That lobby has two private doors on it. One opens onto the lower maisonette and the other opens onto a private staircase which climbs to the upper maisonette by way of a small mezzanine on the first floor landing.

Accordingly, Bristol’s case was the the upper maisonettes comprised of four storeys. The two actual habitable parts of the maisonette and the mezzanine and ground floor which formed part of the private staircase entrance. Digs of course disagreed and said that the maisonette was only two storeys and the stair and mezzanine were nothing more than an access arrangement. As the upper maisonette is occupied by five students if the property was deemed to comprise four storeys it would be an HMO subject to mandatory licensing. If it was only two storeys it should not be so licensable.

The issue primarily came down to interpretation of part of Article 3(3) of the Licensing of Houses in Multiple Occupation (Prescribed Descriptions) (England) Order 2006. Parts e and f of that Article help define what might be classed as a storey for the purposes of HMO licensing. They state that storeys should be counted for licensing purposes where they are:

(e) any mezzanine floor not used solely as a means of access between two adjoining floors if –
(i) it is used wholly or mainly as living accommodation;
(ii) it is being used in connection with, and as an integral part of, the HMO; and
(f) any other storey that is used wholly or partly as living accommodation or in connection with, and as an integral part of, the HMO.

Therefore Bristol’s argument was essentially that the stairwell, being private to the maisonette and its sole means of access were storeys being used either wholly or partly as living accommodation or alternatively as an integral part of the HMO. Additionally the mezzanine was being used in the same manner.

I am not going to drag you through the various discussions of what was intended by the legislation. A couple of key points are sufficient. First, there is no definition in the legislation of storey along with a number of other key phrases. This is a glaring omission, especially given that the DCLG consultation that led to the Order states that it will be important to make clear what is meant by a storey! Second, there is a tension between the principle against doubtful penalisation which states that a penalty should not be applied where the underlying legislation lacks certainty and the public policy objective of protecting tenants. Thirdly, “storey” should be given its ordinary English meaning and not have an artificial meaning imposed on it. Finally, the mandatory definition of licensing which was intended to capture the most serious HMOs would inevitably capture some properties which probably did not really need licensing and would equally not capture some properties which should be licensed.

Therefore the stairs and mezzanine were not storeys in an ordinary English sense. It was telling that Bristol had accepted that if the stairwell was not expressly demised to the upper maisonette they would have not argued at all that the stairs were storeys for this purpose. Additionally, living accommodation does not normally include stairs and lobbies. They are access ways that serve that accommodation but they are not a part of it. There may be circumstances in which a stair or lobby is part of the living accommodation if it is larger and includes a desk or some other useable feature. That was not the case here, despite the fact that the students occasionally left some of their possession in that space.

Looking at the mezzanine, it was clear that it was merely access here and did not form a storey to be counted. It fell to be discounted by the language of article 3(3)(e). In that sense, it was the same as the stairs and it would be perverse if the mezzanine was discounted but the stairs were to be included. Interestingly the Court held that there could be a mezzanine which was more than merely access but which did not pass the higher threshold of being part of the living accommodation. He did not elaborate much on this point bit it seems that a storage cupboard on a mezzanine which would make it more than an access might still fall short of use as living accommodation.

Accordingly, the original reasoning of the magistrates court was right. Appeal dismissed.

A series of tweets gathered under the hashtag #LDNlandlord today (Thursday 15 May) offered an insight (if one were needed) into the state of the London private rental market. For the housing lawyer, it was also a opportunity to play claim/offence bingo.

So, under disrepair…

#ldnlandlord refused to fix roof leak which caused serious, illness-causing mould problem, then charged us £250 for end-of-lease cleaning…

— Jo (@jostimpson) May 15, 2014

#ldnlandlord … upon requesting receipt for said £250 cleaning, they admitted the cleaning never happened and new tenants already moved in.

— Jo (@jostimpson) May 15, 2014

Pipes in our wall flooded downstairs, Agent blamed us for overfilling bath, put sealant round SINK PEDESTAL to fix it, nice one #LDNlandlord

— MsAnthropia (@MsAnthropia) May 15, 2014

@Londonist our ceilings leaked during a storm & our #ldnlandlord told us to expect that during heavy rain. Apparently it’s perfectly normal

— Sim Rollison (@iamSim) May 15, 2014

@Londonist severe damp and mould with rotting/rotted windows – “Just paint over it & shut the curtains!” #ldnlandlord

— Emma Pentland (@emmapentland) May 15, 2014

Our ceiling collapsed after leaking for over a year. Landlord still refused to fix faulty plumbing. Yes, it happened again… #ldnlandlord

— Hannah Roberson (@hroberson61) May 15, 2014

#ldnlandlord Pal’s had no hot water/heating for 3months, landlord lives in S.Africa. They’ve stopped paying rent to get his attn. Still no!

— Laura Green (@LauraMagsGreen) May 15, 2014

@Londonist told that problems with damp were caused by us cooking without lids on saucepans #ldnlandlord

— Jimmy Grimm (@RoyaleMacDuff) May 15, 2014

@jenerator @Londonist Try 6 weeks over Dec-Jan including a flooded bedroom x2 as a result of DIY attempt to fix the boiler #ldnlandlord

— Kat Lloyd (@katlloyd8) May 15, 2014

@Londonist Storms blew window out of the casement leaving a hole in the wall. Still not been fixed, but rent going up anyway #ldnlandlord

— John Brazier (@brazier_john) May 15, 2014

Or perhaps deposit problems?

@Londonist One #ldnlandlord of mine withheld our deposit as he inspected the flat 3 weeks after we left and found dust…

— Allie (@alliesolskjaer) May 15, 2014

@Londonist Same landlord then offered to mow lawn at tenancy end, tramped grass thru house then charged us for it from depost #ldnlandlord

— M G Spencer (@wisemikes) May 15, 2014

@Londonist Landlady outraged when asked to insure our deposit, claiming we should trust her bc “she’s a born-again Christian!!” #ldnlandlord

— Caro G (@C_A_R_O_caro) May 15, 2014

@Londonist Our #ldnlandlord accused of us trapping a dog in a room so we’d have to pay for new carpets. We didn’t have a dog.

— Becky Mumby-Croft (@B_Mumbles) May 15, 2014

#ldnlandlord Paid rent on time, yet received letters advising unpaid mortgage, repossession due. Lost deposit & digs in 2 weeks flat.

— Liz Mitchell (@saxylizbeth) May 15, 2014

.@Londonist Letting agents released our deposit w/o our agreement to landlady, who spent it. #ldnlandlord

— Siobhan (@wigglymittens) May 15, 2014

Breach of quiet enjoyment?

@Londonist Landlord said I wasn’t allowed guests of any kind, but his daughter would use the house when she liked #random #Ldnlandlord

— Matt [travelgeek] (@travelgeekuk) May 15, 2014

@Londonist Our landlord would turn up unannounced & let himself in. A houseguest once woke to a strange man standing over him! #Ldnlandlord

— btgolder (@btgolder) May 15, 2014

My #ldnlandlord wldn’t accept DD, insisted on checks. She came by monthly to collect from cupboard in flat. No notice, until I demanded 24h!

— Nick Kocharhook (@k9) May 15, 2014

Agent would let themselves in unannounced constantly, twice while I was in the shower, once while vomiting with food poisoning #LDNlandlord

— MsAnthropia (@MsAnthropia) May 15, 2014

We’ve now seen two separate tenants whose landlords or family expect to use the flat whenever they’re in town. #ldnlandlord

— Londonist (@Londonist) May 15, 2014

@Londonist was also prone to showing up unexpectedly and ‘hanging out’. not helpful when working at home. #ldnlandlord

— Catriona Boyle (@catrionahelen) May 15, 2014

Derogation from grant? Or even unlawful eviction?

#ldnlandlord sold the flat we were living in, and didn’t tell us until a week before the new buyers were moving in.

— Abbie R Phillips (@AbbieRPhillips) May 15, 2014

@viviciela aaaand one time they turned up unannounced with ppl to view the flat BEFORE telling us it was being sold! #LDNlandlord

— MsAnthropia (@MsAnthropia) May 15, 2014

As a small sample, from a midday on twitter, that is worrying, if unsurprising… Everyone should have a housing lawyer with them at all times.

Masih, R (on the application of) v Yousaf [2014] EWCA Civ 234

When a notice is served under Section 8 Housing Act 1988, how precise does the wording of the ground(s) under which possession will be sought have to be?

In this case, reaching the Court of Appeal via a slightly convoluted route as an appeal  of an order refusing permission to appeal out of time, the issue was the wording used in the s.8 notice setting out Ground 8.

Ms M was the assured shorthold tenant of Mr Y. There were rent arrears, a shortfall between the LHA payable and the rent. Mr Y served a notice under s.8 giving ground 8 as the ground on which possession was sought.

A possession order was indeed made after a hearing which Ms M attended. Ms M then sought to have the order set aside and also to appeal out of time on the basis that the Notice was defective as it “did not comply with section 8.2 of the Housing Act 1988 in that it did not properly specify the ground relied on”.

The Notice said

“Your landlord intends to seek possession on ground(s) 8 in schedule 2 to the Housing Act 1988 as amended by the Housing Act 1996, which read(s): that the tenant owed at least two months’ rent both when the landlord served notice that he wanted possession and still owes two months’ rent at the date of the court hearing.”

And, in the part of the notice where a full explanation of the ground relied on is required, Mr Y put:

“The tenant owes £1,680 which represents three months’ rent.”

The relevant part of Ground 8 (Schedule 2 Housing Act 1988) reads:

“Both at the date of service of the notice under section 8 of this Act relating to the proceedings for possession and at the date of the hearing –
(b) If rent is payable monthly, at least two months’ rent is unpaid. And for the purposes of this ground ‘rent’ means rent lawfully due from the tenant.”

Ms M’s main argument was that the Notice did not include the words “rent means rent lawfully due from the tenant”.

Mountain v Hastings 35 HLR 7 had held that there was no requirement for the words in a s.8 notice to be the same as the statutory wording of the ground, so long at the words used were:

“adequate to achieve the legislative purpose of giving the tenant the information which the provision requires to be given in the notice to enable the tenant to consider what he should do and do that which is in her power to put things right and best protect her against the loss of her home”.

In Mountain v Hastings, the wording used was inadequate as the notice did not include the “requirement that the rent was unpaid at both the date of the service of the notice and the date of the hearing and that “rent” meant rent lawfully due”. That notice referred to ‘rent unpaid’.

Mr Y’s notice did set out the rent unpaid at date of service and date of hearing part, so the only issue was whether it was a requirement for the notice to specify ‘rent lawfully due’ rather than ‘rent owed’ as per the notice.

The Court of Appeal took the view that ‘rent unpaid’ in Mountain was clearly different to ‘rent lawfully due’. “The party served with a notice stating that rent is unpaid would not appreciate that it would be open for him to say that although the rent is indeed unpaid, it was not lawfully due”. But the meaning of’ rent owed’ was a different issue. Did the statutory wording of ‘rent lawfully due’ add anything to the effect of ‘rent owed’?

Ms M argued that ‘rent lawfully due’ did have additional meaning:

A notice merely stating that rent is owed is not sufficient to alert a tenant to the fact that she may have, for example, a counter claim based on the cost of repairs which the landlord should have carried out, which she might claim to set off against the rent. He also pointed out a further example where the landlord had failed to comply with the statutory duty to give the tenant particulars of his address, see section 48 of the Landlord and Tenant Act 1987, which prevents a landlord from recovering rent where he has failed to supply an address in England and Wales at which notices may be served on the landlord by the tenant.

However, the Court of Appeal was unimpressed, finding that ‘owed’ and ‘lawfully due’ had the same effect in alerting the tenant.

In contrast to a statement that rent is unpaid, a statement in a section 8 notice that the rent was owed in my judgment is sufficient notice to enable a recipient to appreciate that it would be an answer to the claim to show that the rent was not lawfully due, thus the recipient of a notice using the word “owe” is aware that he or she must find some basis for showing that the rent is not owed. Thus Miss Masih’s defence of waiver is a defence that the rent is not owed. Miss Masih’s desire to counter claim for repairs is, if she is right that she is able to set it off against the rent, equally a claim that the rent is not owed. Of course if she is wrong about the set-off then it is not an answer whether the notice is phrased with the word “owed” or “lawfully due”. The same can be said of Mr Carrott’s [for Ms M] example based on section 48 of the Landlord and Tenant Act 1987. Although section 48(2) says that rent otherwise “due” shall be treated as not being due, the effect of it not being due is also that it is not owed.

In order for this submission to succeed, it would be necessary to find an example of a case where rent is owed but is not lawfully due. For my part I am unable to think of any such case and none has been suggested to us in argument.

The appeal therefore failed.

But before anyone gets too excited about there being leeway in the wording of s.8 notices, they should note how small the difference in wording was that enabled Mr Y’s notice to be valid – ‘rent owed’ rather than ‘rent unpaid’. It would be all to easy for a form of wording used to fall foul of the requirement set out in Mountain that it fulfil the legislative purpose.

In view of this, and as the Court of Appeal quotes approvingly from Mountain v Hastings:

“It is difficult to think of any good reason why a person given the task of settling a form of notice should choose to use words differently from those in which the Crown has stated in the schedule.”

Quite.

The post Approximate grounds appeared first on Nearly Legal.

Or, why Nigel Farrage doesn’t need to worry about that house-load of Romanians moving next door to him once the Immigration Act 2014 comes into force.

The Immigration Act 2014 received Royal Assent on May 14, 2014 and, as is obviously the case for an immigration act, it contains significant new developments in housing law in Pt.3, Ch.1 (“Access to Services Etc / Residental Tenancies”). The developments are odious and badly thought out, as I’ll try and explain.

Disqualified potential occupiers

Section 21 introduces the concept of the person who is, by virtue of his immigration status, “disqualified” from “occupying premises under a residential tenancy.” A “residential tenancy” is any lease, licence, sub-lease or sub-licence (including an agreement for any such thing) which gives a right of occupation of premises (land, buildings, moveable structure, vehicle or vessel) for residential use (as an only or main residence) and which provides for payment of a rent (whether market or not) (s.37).

The disqualifed persons are:

(a) those who are not “relevant nationals” (i.e. British nationals, EEA nationals or Swiss nationals – ss.21(1),(5)); and,

(b) who do not have a “right to rent” (and you do not have a right to rent if you require leave to enter or remain in the UK but do not have such leave or your right to enter or remain in the UK is subject to a condition prevening you from occupying the premises – ss.21(1),(2)).

Now, on the face of it, this is a pretty broad exclusion. There is then a limited re-inclusion provision (s.21(4)). If you have been granted leave to enter or remain in the UK for a limited period or if you are not a relevant national but have the right to enter or remain in the UK by virtue of an EU law right, then you have a “limited right to rent”.

Affected landlords

A landlord must not authorise a disqualified adult (not child – s.22(1), s.37(1) – so can I grant to a child to get around this issue? Presumably I’d still need to watch for s.22(6), below) to “occupy premises under a residential tenancy agreement”. Authorisation is given if a tenancy agreement is granted to either disqualified adult or if a disqualified adult is named on the agreement (s.22(3),(4)). Further, subject to a “reasonable enquiries” provision (s.22(6)), authorisation is given if an unnamed adult who is disqualified is permitted to occupy the premises (which seems to be a “Nelsonian blindness” provision to stop landlords just ignoring the likely occupiers and might scupper my attempt to avoid this by letting to a child).

A landlord is also taken to authorise an unlawful occupation if a tenancy agreement is granted to someone with a limited right to rent who later becomes disqualified (i.e. their leave to remain in the UK expires) and who remains in occupation after becoming disqualified (s.22(5)). Yes, you read that right, landlords will have to evict people whose immigration status changes. But, helpfully, the Act makes clear that a contravention of this section does not affect the validity of the tenancy agreement itself (so landlords can’t rely on their illegality to circumvent the tenancy – s.22(9); although I confidently predict we’ll see a rash of unlawful evictions in purpoted reliance on this provision).

Penalties

Contravention results in a requirement to pay a penalty of up to £3,000, as the Secretary of State considers appropriate (s.23). There are two excuses (as they are called) open to landlords. The first is to show that they complied with prescribed requirements (yet to be prescribed, presumably there  will be a “checklist” designed to make people prove they are not disqualified). The second is to show that an agent was responsible for the breach (s.24(2)). Similar provisions are made for fining agents (s.25) and for excuses by agents (s.26). A person given such a penalty may give notice of objection to the Secretary of State (s.29 – effectively an internal appeal) and then may appeal (by way of re-hearing) to the county court (s.30).

Codes of practice

The Secretary of State must publish a code of practice, setting out how fines will be calculated and, more generally, the approach of the Secretary of State will take to enforcement (s.32). There must also be a code of practice to help landlords and agents enture they comply with the law without breaking, inter alia, the Equality Act 2010 (s.33).

Exceptions

Schedule 3 has a list of agreements which are not caught by this provision. They include social housing provided under Pt.2, 1985 Act (secure etc tenancies), Pts. 6 and 7, Housing Act 1996 (allocations and homelessness). Interestingly, I can’t see an exception for housing associations. Care homes, hospitals, hospices and other healthcare releated accomodation is also excluded as are hostels and refuges and accomodation provided under the Immigration and Asylum Act 1999. For reasons I cannot fathom, mobile homes under the Mobile Homes Act 1983 are excluded. Tied accomodation and student accomodation are excluded as are long leases (since even this government wouldn’t ban immigrants from living in flats that they own; how would the London-based Russians manage?).

Thoughts

Landlords and agents find it hard enough to comply with the Tenancy Deposit rules. Do we really think they’ll be able to manage to follow all this? By way of example, you can have a “limited right to rent” if you’re a Zambrano carer. I doubt you’d find any landlord who knows what a Zambrano carer is, let alone how to identify one. And how on earth is the landlord supposed to know when they cease to be a Zambrano carer (and, hence, have to evict them otherwise the landlord is in breach of these provisions; if s.21, HA 1988 is available, that might not be a problem, but suppose it is during a fixed term? What Ground in Sch.2, HA 1988 will apply?). There will be outright discrimination against “foreigners”, partly through ignorance and partly through an abundance of caution. As Diane Abbott MP said at the second reading:

The effect of the Bill will be that when people such as my son and the children of some of my colleagues go to see a flat, they will be told that the flat is taken. Landlords will not want to take the chance of letting to someone who “might be” an illegal immigrant. I do not believe Ministers understand how it feels to knock on a door and be told, blatantly wrongly, that the flat or room is taken. That is what will happen as a consequence of the Bill.

If you’re a UKIP-supporting bigot you might think this sort of thing is fine. I, however, do not. This is a law which will lead to lots of lucrative work for lawyers (since eligibility law is very complicated) and misery for landlords and potential tenants. Well done to all concerned.

The post The UKIP-ification of law appeared first on Nearly Legal.

Some of you, those in London at least, might have noticed Boris Johnson announce a new, and completely voluntary, no compulsion here, landlord accreditation scheme. The idea being that tenants, desperate to find somewhere in the middle of the worst accommodation shortage in London for many, many years, will choose to avoid a ‘non-Boris’ landlord. This is of dubious worth, but no matter, what concerns us here is what followed that announcement. Bear with me, because it is worth it in the end.

At the next London Assembly Questions to Boris session, Andrew Dismore, Labour Assembly member for Barnet and Camden (oh yes, Barnet), wanted to ask Boris about the conduct of a particular landlord in his constituency.

Footage of him putting the question is on the Broken Barnet blog, but the detail is as follows. Italics are the substance of AD’s extended question.

The landlord in question has 15 properties in his and his wife’s name and 4 via a company [S&H Housing Ltd- NL]. Mr Dismore had spoken to seven of the tenants, 6 of whom were on housing benefit (LHA). 

The ‘Zoopla’ suggested rents for the properties were between £989 to £1186 per month. Maximum LHA for the properties was £1300 to £1560, (3 to 4 bed). The rents actually charged (to BME tenants) were close to or over the LHA rate, not the market rate, at £1350 to £1846.

So far, so standard. A private landlord artificially inflating rents to profit from LHA rates where they exceed actual market rents, profiting hugely from public funds. Distasteful, and inflating the housing benefit bill, but not unlawful. But there is more.

The assured short hold tenancy agreements seen by AD were for a 12 months term and “permitted rent increases of any amount at any time during the tenancy” – Shelter were quoted by AD as responding “we would almost certainly classify this as an unfair term and probably illegal”. 

Well, Shelter were holding back a bit. It is definitely an unfair term and definitely unlawful. There are statutory mechanisms by which rent can be raised in the course of an AST, or a clear, fixed rent review mechanism in the tenancy agreement.  Can’t be lawfully done otherwise.

One of the tenants, a tenant of the landlord for 12 years, said that the living room had been partitioned with a flimsy partition to create a ‘fourth bedroom’. The landlord showed up at her door unannounced late at night asking her to sign a new tenancy agreement. She was only shown the last page, with the place for her signature. The most recent agreement had the ‘witness’ signature pre-signed, though she never saw the witness. The landlord often turned up without notice to discuss rent payments at other times. As the rent had been increased over LHA rates for a 4 bed (and despite the local market rent being some £800 per month lower), the landlord allegedly told the tenant about DHPs and said he would make arrangements for her to go to Barnet Council to ask for DHP.

LHA was cut due to the benefit cap. DHP made up the cut, temporarily. Allegedly the landlord later informally accepted the reduced LHA amount as the rent, but insisted upon the outstanding arrears arising from the cap.

So, we have the dodgy  but widespread ‘sub division’ of properties to create an extra bedroom, regardless of habitability. We have attempt to pressure a signature on a new tenancy without time for it to be read. We have, at the least, breach of quiet enjoyment in turning up without notice, let alone late in the evening. We have ‘pre-signed’ witnesses – not that a witness is actually required to a 12 month AST at all, but if you are going to sign as a witness, you have to, well, witness the thing you are signing as a witness to. And then we have to attempt to squeeze still more out of public funds via DHP. Some of these are breaches of tenancy agreement, some might possibly amount to harassment, some are simply distastefully exploitative. And suborning a fake witness signature, thus forging a witnessed document? Hmmm.

When DHP stopped, the landlord then allegedly used those arrears as grounds for possession, also allegedly deducting the equivalent of the stopped DHP from the deposit on the tenant’s eviction.

Would, AD finally asks, such a landlord meet Boris’s London Rental Standard?

No, of course not, replies Boris. Sounds a terrible case and as if the landlord has broken the law, or committed misrepresentation of the terms of the lease. Boris would be happy to help vindicate the rights of that tenant. Concealing element of the tenancy agreement when trying to get the tenant to sign, it seemed to Boris, would be prima facie illegal.

And then, albeit with all the panache of an end of pier conjurer, a lifetime of unfulfillingly pulling rabbits from dingy hats behind him and only a cold bed in a seaside B&B to look forward to, Mr Dismore performs the reveal. Who was this landlord, and who the pre-signed witness?

The landlord was Councillor Hugh Rayner, the new (as of 2 June) Tory Mayor of Barnet.

And the missing witness? Tory Councillor John Hart. Mr Hart we can leave here as being someone who either doesn’t understand the meaning of the word ‘witness’, and thus should never be allowed to sign anything ever again as a witness, or someone who is willing to ignore the meaning of the word ‘witness’ for a mate, and thus should never be allowed to sign anything ever again as a witness.

Mayor Rayner, on the other hand, he of the unlawful tenancy agreement clauses allowing for unlawful rent increases, and of the unlawful breach of quiet enjoyment type unannounced visits, deserves a little more attention. Here he is, radiating dignity on his first council meeting as Mayor.

Mayor Rayner (not demanding an unlawful tenancy agreement is signed at this point, but still the unacceptable face of London landlords).

Mayor Rayner did respond about the allegations to a local paper, the (deep breath) Hendon & Finchley, Barnet & Potters Bar, Edgware & Mill Hill Times.  Well, I say respond, more like confess.

He claims to have removed the clause about raising rent earlier this year as he now “appreciates they are non-enforceable”, but not could answer when the change took place.

And he no longer asks witnesses to pre-sign contracts – he admitted he admitted it was done on various occasions to “save time and trouble” but now appreciates it is incorrect.

He added that rent renewals or discussions about arrears are dealt with at the tenants home, and where possible, an appointment is made.

But when asked whether he felt 10pm was an unreasonable time to visit a tenant, he replied: “If they say it’s inconvenient for them, I go away. I take the tenants judgement.

“No pressure is applied.

“Efforts are made to have an English speaker available to translate – often the tenants children.”

He, could not, however, elaborate on the age of the children and said he does not feel this to be inappropriate.

He added: “With regards to charging above market rates, when letting to housing benefit funded tenants, our rents have been in line with the prevailing local housing allowance rates.”

So, not only a confession to an unlawful rent increase clause and ‘pre-signed’ witness signatures, but also a confession to turning up at tenants’ properties without notice (‘where possible an appointment is made’). He then adds in relying on the tenants’ children to translate a legal document where the tenant does not speak or read english adequately. To be fair, sometimes the children may be over 18, but somehow I doubt this is ‘often’ the case. And then of course the rents are in line with (the very top rate of) LHA rather than the market rent for such properties per se.

As even a cursory glance at the DCLG’s shiny new helpful ‘tenancy checklist‘ leaflet would have informed Mayor Rayner, he is really a little bit of a rogue landlord, letting down the Government and, as the DWP keep telling us about the HB bill, letting the taxpayer down, terribly.

And to add insult to injury for Boris:

Cllr Rayner said he “never thought it was necessary” to join the accreditation board but that he would look into it based on our story.

Well, no Mayor Rayner. It isn’t necessary. And Boris has made sure it still isn’t, though I’m fairly sure he won’t be very pleased with you right now. On the other hand, not actually doing unlawful things like turning up without notice and having unlawful tenancy agreement clauses is necessary, down to it being the law.

So, that is Mayor Rayner, a experienced landlord of over 12 years, who controls some 19 properties, yet who only realised ‘earlier this year’ that his tenancy agreements were unlawful, and who still doesn’t realise that he cannot turn up at the tenants’ property without notice without breaching the tenants’ rights to quiet enjoyment. A councillor, and Mayor, who suborned false witness signatures from another councillor, because ‘it saved time and trouble’. And a landlord who relies on the tenant’s children to translate legal documents, because this is not ‘inappropriate’. Onto the naughty step he goes.

As something of a rogue landlord and LHA exploiter, and one who clearly had no interest in or even knowledge of Boris’s great London Rental accreditation scheme, I suspect Mayor Rayner has just lost friends in the Mayoralty.  Oh how quick is the arc of a political career…

[Update. 13/06/14. It appears from this article in the local paper that Mr Rayner may actually have purported to exercise the 'raise the rent without notice whenever I like' clause in the tenancy agreements. If so, these rent increases would be unlawful. The question for Mr Rayner is did this happen and if so, when and by how much was the rent increased in this way? And then what is he going to do about the additional 'rent' received following such hikes, if any?

Did Mr Rayner pass on any such unlawful increases to the Council LHA department?

On the face of it, any tenants who had had such a hike could claim the payments back. And if the hikes had given rise to arrears then relied upon in possession proceedings? Hmmm.]

The post On the naughty step: The unacceptable face of London landlords appeared first on Nearly Legal.

The DCLG has published the text of the Government amendment to the Deregulation Bill that is proposed to deal with tenancy deposits and specifically the Superstrike position of a new tenancy (and requirement to re-protect the deposit and re-serve the prescribed information) arising when a fixed term ends and a statutory period tenancy begins.

The text of the amendment – a new S.215A to the Housing Act 2004 – is below.

Briefly, the effect appears to be to provide that a deposit shall not be deemed to be paid or received in respect of a statutory periodic tenancy arising. Once it is in force, there will be no need to re-protect the deposit or re-serve the prescribed information.

This will also apply to any previous move from fixed term to statutory periodic where the issue has not yet been decided in proceedings, at least by the date it is in force – “shall always be deemed to apply [...] whenever it was paid or received”. This is not quite full retrospectivity, but means after the provision is in force, the court shall treat any past fixed term to statutory periodic change accordingly.

The other significant element is that any deposit taken prior to the Housing Act 2004 provisions coming into force in April 2007 before the Housing Act 2004 provisions came into force, which is not yet protected, must be protected within 3 months of this provision coming into force. This is a useful sweeping up, meaning that after the 3 months, all deposits that have taken for an AST, whenever they were taken and no matter how long ago, must be protected and prescribed information served.

The amendment look like it should work at first sight. But, a few points:

This will only apply to fixed term to statutory periodic tenancies. It does not, categorically not, apply to ‘renewal’ tenancies for a fresh fixed term. The deposit will need to be re-protected and the prescribed information served within 30 days for those, even if the landlord/agent just keeps hold of the same deposit.

This does not apply until the bill is passed and the provision is in force. Until then, Superstrike remains valid in operation and not re-serving the prescribed information on a statutory periodic arising means that no section 21 can be served. While this will change once the provision is in force, any possession claim issued before that on an invalid s.21 should still fail.

There is a big question whether the provision would retrospectively validate a purported s.21 notice served (where the prescribed information was not reserved in time) before it came into force.

Those advising both landlords and tenants should look at all of this very carefully.

The clock is ticking on Superstrike defences to possession, and s.214 claims. But I suspect that, as with the Localism Act amends in 2012 and the requirement for all post April 2007 deposits to be protected within one month, there will be a lot of landlords and indeed agents who get caught out by the 3 month provision here. There may not be that many pre-2007 deposits around, but the numbers are not insignificant.

The text of the amendment:

(1) The Housing Act 2004 is amended as follows.

(2) In section 215, paragraph (5), at end insert—

“Shorthold tenancy deposit: further requirements

215A
(1) A tenancy deposit shall not be treated as being paid or received in connection with a shorthold tenancy by reason only of the deemed grant of a statutory periodic tenancy pursuant to the provisions of section 5(1) of the Housing Act 1988 (“the 1988 Act”).

(2) Subsection (1) shall apply (and shall always be deemed to apply) in respect of any tenancy deposit whenever it was paid or receive whether before or after the coming into force of sections 212 to 215 of the Housing Act 2004 (“the 2004 Act”).

(3) Where—
(a) a tenancy deposit has been received in relation to a shorthold tenancy under a tenancy (“the original tenancy”);

(b) the original tenancy was granted as a fixed term tenancy;

(c) the original tenancy commenced before 6 April 2007;

(d) immediately upon the expiry of the fixed term of the original tenancy a statutory periodic tenancy was deemed to be granted pursuant to section 5(1) of the 1988 Act;

(e) the initial requirements (as defined by section 213(4) of the 2004 Act) have not been complied with in respect of that tenancy deposit; and

(f) no event has occurred on or after 6 April 2007 which would otherwise require that tenancy deposit is to be protected in accordance with an authorised scheme under section 213 of the 2004 Act the provisions of subsection (4) shall apply to that tenancy deposit.

(4) The initial requirements under section 213(4) of the 2004 Act and the requirements of section 213(6) of that Act (relating to prescribed information) must be complied with in respect of any tenancy deposit referred to in subsection (3) within 3 months of the date when the provisions of this Act come into force.

(5) The expressions “tenancy deposit” and “shorthold tenancy” in this section shall have the same meanings as for the purposes of sections 212 to 215 of the 2004 Act.”.’.

The post Make do and mend: Undoing Superstrike on deposits appeared first on Nearly Legal.

This is for anyone who got the email version of my post on the tenancy deposit amendment to the Deregulation Bill on Tuesday morning. I have a bit of a confession to make…

The version you got was on the wrong damn amendment. Some over hasty link clickage and I ended up with the Philip Davies version – an MP’s amend, not the Govt’s. That I was not entirely alone in leaping to the wrong conclusion is no excuse, so, I stand before you chastened and penitent. The post has been corrected to deal with the Government’s amendment, which is very significantly different.

So, completely ignore Tuesday’s email, which is Wrong in Important Ways, not least on renewal tenancies, transitional provisions and what happens to s.21 claims and s.214 claims in the interregnum. Instead read the version here

The post Erratum appeared first on Nearly Legal.

The answer appears to be when it is only for access!

Bristol City Council v Digs (Bristol) Ltd [2014] EWHC 869 (Admin)

We first reported on this case briefly as a decision of the Bristol Magistrates Court. It has now been appealed by way of case stated and so the High Court has produced a definitive view.

The facts, briefly, were that Digs owns a series of properties in Bristol which are predominantly let to students. This property is a five storey property which is divided into two two storey maisonettes. The fifth storey is the basement which is not used and forms now part of this case. The case actually concerns the upper maisonette which occupies the second and third storeys. This maisonette is reached by way of a lobby shared with the lower maisonette which is on the ground floor. That lobby has two private doors on it. One opens onto the lower maisonette and the other opens onto a private staircase which climbs to the upper maisonette by way of a small mezzanine on the first floor landing.

Accordingly, Bristol’s case was the the upper maisonettes comprised of four storeys. The two actual habitable parts of the maisonette and the mezzanine and ground floor which formed part of the private staircase entrance. Digs of course disagreed and said that the maisonette was only two storeys and the stair and mezzanine were nothing more than an access arrangement. As the upper maisonette is occupied by five students if the property was deemed to comprise four storeys it would be an HMO subject to mandatory licensing. If it was only two storeys it should not be so licensable.

The issue primarily came down to interpretation of part of Article 3(3) of the Licensing of Houses in Multiple Occupation (Prescribed Descriptions) (England) Order 2006. Parts e and f of that Article help define what might be classed as a storey for the purposes of HMO licensing. They state that storeys should be counted for licensing purposes where they are:

(e) any mezzanine floor not used solely as a means of access between two adjoining floors if –
(i) it is used wholly or mainly as living accommodation;
(ii) it is being used in connection with, and as an integral part of, the HMO; and
(f) any other storey that is used wholly or partly as living accommodation or in connection with, and as an integral part of, the HMO.

Therefore Bristol’s argument was essentially that the stairwell, being private to the maisonette and its sole means of access were storeys being used either wholly or partly as living accommodation or alternatively as an integral part of the HMO. Additionally the mezzanine was being used in the same manner.

I am not going to drag you through the various discussions of what was intended by the legislation. A couple of key points are sufficient. First, there is no definition in the legislation of storey along with a number of other key phrases. This is a glaring omission, especially given that the DCLG consultation that led to the Order states that it will be important to make clear what is meant by a storey! Second, there is a tension between the principle against doubtful penalisation which states that a penalty should not be applied where the underlying legislation lacks certainty and the public policy objective of protecting tenants. Thirdly, “storey” should be given its ordinary English meaning and not have an artificial meaning imposed on it. Finally, the mandatory definition of licensing which was intended to capture the most serious HMOs would inevitably capture some properties which probably did not really need licensing and would equally not capture some properties which should be licensed.

Therefore the stairs and mezzanine were not storeys in an ordinary English sense. It was telling that Bristol had accepted that if the stairwell was not expressly demised to the upper maisonette they would have not argued at all that the stairs were storeys for this purpose. Additionally, living accommodation does not normally include stairs and lobbies. They are access ways that serve that accommodation but they are not a part of it. There may be circumstances in which a stair or lobby is part of the living accommodation if it is larger and includes a desk or some other useable feature. That was not the case here, despite the fact that the students occasionally left some of their possession in that space.

Looking at the mezzanine, it was clear that it was merely access here and did not form a storey to be counted. It fell to be discounted by the language of article 3(3)(e). In that sense, it was the same as the stairs and it would be perverse if the mezzanine was discounted but the stairs were to be included. Interestingly the Court held that there could be a mezzanine which was more than merely access but which did not pass the higher threshold of being part of the living accommodation. He did not elaborate much on this point bit it seems that a storage cupboard on a mezzanine which would make it more than an access might still fall short of use as living accommodation.

Accordingly, the original reasoning of the magistrates court was right. Appeal dismissed.

The post When is a storey not a storey? appeared first on Nearly Legal.

Fallon v Wilson & Ors [2014] UKUT 0300 (LC)

The Upper Tribunal has again found itself considering the issue of Rent Repayment Orders and has provided some further enlightenment on its position after the case of Parker v Waller (which we wrote about here).

Background
Mr Fallon had been convicted of operating a property without an HMO licence and fined a, very modest, £585 with assorted costs and a contribution to the victims fund. Three of his five occupiers then made separate applications to the FTT(PC) (or “futpuc” if you prefer NL’s pronunciation) for RROs and the FTT then made an award to each applicant for 100% of the rent paid in the last 12 months.

Mr Fallon appealed on 9 grounds. The FTT allowed a limited appeal on some but the UT gave a further permission to appeal on all grounds. The UT heard the matter by way of a review with the possibility of returning the matter to the FTT for a rehearing.

The Appeal
The UT lumped the various grounds of appeal together and found for Mr Fallon on 2 bases. First it found that the FTT had failed to exercise its discretion properly or at all and second, in any exercise of its discretion the FTT had failed to determine what payment was reasonable in the circumstances.

Taking the most important issue first. The FTT had mentioned discretion at several points in its decision. However, it then went on to state that it had “no hesitation” in returning the full sums paid to the Applicants. The UT saw this as the FTT applying “the test incorrectly and proceeded on the basis that a repayment of the maximum amount of rent paid should be made unless there were reasons for not doing so”. This was precisely the same error that was fallen into in the case of Parker v Waller and so the decision of the UT is not terribly surprising here although it is vitally important.

All the other issues relate to the precise manner in which the figure should have been assessed and whether the FTT took the appropriate matters into account.

On utility payments the FTT had again not followed Parker v Waller. The FTT had held that utilities that were being paid out of the rent receipts were not deductible before assessing the RRO as they were part of the “usual outgoings and expenditure” that all landlords were subject to. The UT stated that this was incorrect as the seriousness of the situation did not justify a departure from the position set out in Parker.

The FTT had not considered the issue of conduct. They had taken the view that “ignorance of the law is no defence” but this was wrong. The very low fine given by the magistrates (£585 as against a maximum of £20,000) was a clear indication of the lack of seriousness of the offence and this should have been considered as should Mr Fallon’s position as a non-professional landlord who was only letting this single property. The UT mentioned that this had been his family home before the letting, whether this was a relevant factor in conduct or was a separate factor to consider is not clear.

The other conduct issues which the UT drew attention to were the short period of the offence, the relatively good condition of the property, the fact that the tenants had not indicated any dissatisfaction with the property, that two of the tenants had not sought RROs at all, and that the rent was relatively low with all bills being taken from it.

The FTT had also failed to take into account the very low profit margin enjoyed by Mr Fallon.

Finally, the UT again called attention to the double penalty arising from a fine by the magistrates followed by an RRO. This was a factor which had to be considered and which the FTT had again not considered.

For these reasons the RROs were set aside.

Comment
The most important issue that arises from this appeal is one that a number of FTTs have had trouble with. That is where and how do they begin to assess the amount to be paid under an RRO. This case again makes clear that the starting point is not to be “everything paid by the occupiers”. By extension it is also not “zero” or, indeed, any figure in between. The UT here endorsed the statement in Parker v Waller that the FTT “must take an overall view of the circumstances determining what amount would be reasonable”. In other words there is no starting point, it is a fresh consideration to be arrived at having considered the circumstances. I expect that this lesson will still be one that FTTs will find hard to learn (because it is not an easy thing to do!) and it may well lead to further appeals.
The other matters are mainly repeats of Parker as well. However, some further complexion is added to the consideration by the manner in which the UT approached the decision. It is quite clear that the full matrix of facts must be considered. It is also important to consider the seriousness of the offence and the effects on the occupiers along with the profit made by the landlord and, it seems from this decision, the profit motive of the landlord as well.
No doubt further decisions will add more to this picture.

The post The UT Repays Again appeared first on Nearly Legal.

The Appellant tenant in Spencer v Taylor [2013] EWCA Civ 1600 (our note here) has had permission to appeal to the Supreme Court refused, on the grounds that it did not raise an arguable point of law.

This means that the Court of Appeal decision stands. Where an assured shorthold tenancy has had a fixed term and a statutory periodic tenancy has arisen, there is no requirement to use a s.21(4)(a) notice, or have a date of expiry at the end of a period of the tenancy. A section 21(1)(b) notice with two clear months notice is adequate.

Where a tenancy was periodic from the start, or where the tenancy provides for an initial fixed term, then a periodic tenancy thereafter (a contractual periodic) a s.21(4)(a) notice will still be required, I believe.

We should have a more detailed post on Spencer v Taylor coming along in a few days, as there was much about the Court of Appeal judgment that didn’t make a great deal of sense on first reading, but does with background.

The post Spencer v Taylor – section 21 news appeared first on Nearly Legal.