New rules coming in for landlords
It is really important that landlords are up to date with all the new rules coming in.
The new Housing and Planning Act 2016
This soon to be enforced act will put in place the following:
There will be a new abandonment procedure
This sounds good, and indeed it is, but the process will take some time. You will have to serve not less than three formal notices at the property, which need to be spaced about 8 weeks apart. So although you will not have all the bother of going to court, you probably won’t save a lot of time. Still, it is better than nothing.
Local Authorities will be able to apply for ‘banning orders’
Local Authorities will be able to apply to the First Tier Tribunal for a banning order against you if you have been convicted of a ‘banning order offence’. Most landlords won’t have a problem with this – but it does mean that you need to be extra careful about complying with all the regs. As if you are, for example, prosecuted for breaching the HMO regs, you could be liable for a banning order. However, it will largely be aimed at the worst ‘rogue’ landlords operating the worst properties. Hopefully not you!
There will be a database of ‘rogue landlords’
You could go on this if you are subject to a banning order, and also if you have been convicted of a banning order offence. The list (at the moment) will only be available to Local Authority officers – but it will obviously be undesirable to be on it.
Rent repayment orders
These are currently used just where HMO landlords do not have a license. However, once these new regulations come into force they will also be used for:
- Violent entry onto premises
- Harassment or eviction contrary to the Protection from Eviction Act 1977
- Failure to comply with an improvement or prohibition order and
- Breach of a banning order
You really don’t want to have a rent repayment order made against you as it can be hugely expensive – considerably more than having to pay a fine.
In short
As you will see, the act (insofar as the Private Rented Sector is concerned) is primarily about dealing with criminal / rogue landlords. However, this does mean that you need to be really careful from now on about complying with all the regulations – in particular, those connected with HMO properties, as it is easy to fall foul of them and get caught up in prosecutions if you are not careful.
Right to rent update
The details for the new rules are as follows:
Criminal Offence
There is a new criminal offence of renting to someone who does not have a right to rent or, if you are an agent, failing to inform your landlord that the tenant does not have a right to rent. There is a defence to this if you have taken steps to evict the tenant/s within a reasonable period of time from finding out that the tenants do not have a right to rent – a ‘reasonable’ period of time being three months.
Eviction procedures
Landlords can now serve a notice, which should be in a prescribed form, after receiving notification from the Secretary of State that their tenant/s do not have a right to rent. It must give not less than 28 days notice and must attach the Secretary of State’s notice. If the tenant has not vacated by the expiry of the notice period, you can treat it as an order of the High Court and get the High Court Sheriffs to evict the tenants – without having to get a Court Order first.
You can, however, only do this if ALL the tenants are without a right to rent. Otherwise, you should use the new Ground 7B which has been inserted into Schedule 2 of the Housing Act 1988. This is a mandatory ground – however, if some of the tenants do have a right to rent, the Judge will have the option to transfer the tenancy into their names alone.
The new eviction ground means that the Section 8 prescribed form is being amended again. This new form will be effective from 1 December so you need to be sure that you are using it. Otherwise, tenants will have a technical defence to claims based on an out of date notice.
Enforcement of possession orders
Hopefully, you will not have to bring eviction proceedings against any of your tenants, and if you do, hopefully, they will move out in good time.
But what if they don’t?
The standard procedure is to instruct the County Court bailiffs who are the people who actually go around and physically remove the tenants. However the service is under tremendous pressure and in some parts of the country, in particular in some of the London courts, there are very long waits for a bailiff’s appointment. Which can be eight, ten weeks or maybe even more. If your tenant is in situ and not paying rent this is obviously bad news and understandably landlords look around for a quicker option. Enter the sheriff’s – also known as High Court Enforcement Officers.
The Sheriffs’ service
The Sheriffs claim to offer a considerably quicker service. However, as they are only licensed to enforce High Court orders, before they can do anything about your possession order (which will be a County Court order) it has to be transferred to the High Court. Sheriffs have been doing a rather quick job on this in the past, but it came to light recently that they were doing this by using an incorrect procedure. In fact, the procedure, the proper procedure, is rather cumbrous.
- The landlord must first apply to the County Court for leave to transfer up to the High Court. Judges will not grant these applications as a matter of course and landlords will have to show that there is a real need.
- Secondly, once the order has been transferred, an application will have to be made to the High Court Judge and also notice of this will have to be served on the tenants.
Despite this, it may still be quicker to use the Sheriffs in some cases. Although, in order to save time, you really need to make an application at the court hearing, ideally on notice. In the majority of cases, though, this is not necessary. For example, if your tenant is waiting to be rehoused by the Local Authority they will generally ensure that this is done before any bailiffs appointment. But the moral of this story is to beware any High Court Enforcement Officers saying that they can get you a quick eviction appointment. Under the current rules, this is impossible. And if your tenant is evicted via an illegal procedure, your tenant will have a claim for unlawful eviction.
Important New Section 8 Notice Applies
Did your Tenants have a good Christmas at your expense? In January many Landlords experience rent arrears due to the tenants having too much of a good Christmas. Should you be experiencing rent arrears you may now need to start proceeding to evict.
IMPORTANT LAW UPDATE - Should you encounter rent arrears and have to issue a section 8 notice then remember a new Section 8 Notice [England] came into being 1 Dec 2016. The new Notice allows for provision of the Immigration Act 2016- Right to Rent legislation. Previously revised April 2015 for Anti-Social Behaviour, Crime and Policing Act 2014.
With regards rent arrears only you can decide how much flexibility you are prepared to give and what financial exposure you are prepared to accept. No matter how upsetting the situation is, retaining your composure is paramount for whilst the Tenant is talking to you there may be a way forward.
The easiest thing to do is serve a Notice but before doing so it is in your best interests to try to find out everybody’s intentions regarding the tenancy and plan accordingly.
21% Of Landlords Take Four Months To Sign Up First Tenants
A major Building Society's survey states that it takes one in five landlords (21%) four months and sometimes longer, to have their first tenants renting their property after completing their buy-to-let mortgage.
The research also found that 53% of landlords receive their first monthly rent within a couple of months, however many are having to suffer financial pressure through delays.
The average landlord has an additional cost of £2,000 on top of the mortgage before successfully signing up a tenant, whilst 35% managed to incur an extra £1,000.
Approximately 62% of the respondents stated that they had to refurbish or redecorate the property with 28% saying that the work took them more than two weeks.
Stephen Reade, Lettings Operations Manager of the building society, said: “Becoming a landlord remains attractive for thousands of people, but it is clear landlords need to think carefully before making the decision and also to plan ahead. Having to wait four months or more before getting tenants in can put a strain on finances and landlords need to ensure they have spare money to invest in their property over and above basic mortgage costs."
The research also claimed that on average landlord spends around £700 a year for each property on maintenance with 37% saying that they had spent less than £500.
Rents Will Continue To Rise This Year
Rents will continue on an upward trend due in part to the lack of necessary new builds and less properties in the PRS as some landlords have had enough of the government's anti-landlord stance. An association of letting agents recent poll shows that the banning of the letting agents' fees will have a major impact on the market.
It has been taken for granted by 80% of the respondents, that the abolition of their fees could mean that landlords will raise rents if agents raise their management charges.
David Cox MD of the association said “The number of rent hikes reported by letting agents continued to decrease in November, and it’s a shame the ban on letting agent fees will have the opposite impact on rent prices when the measure comes into force.
He added: “The buy-to-let market is becoming less attractive for investors as the ban on fees, combined with the scrapping of mortgage interest relief and the stamp duty increase on second homes push costs up for landlords. So unfortunately, regardless of the uplift we saw in supply this month, we expect to see the number of properties available to rent fall next year.”
Simon Lambert, editor of This is Money, wrote on the website: “Landlords are always ripe for a kicking in some circles, so it should come as no surprise that they were swiftly painted as potential future villains in the ban on tenant fees.
“The theory on the news that chancellor Philip Hammond would ban tenant fees in his Autumn Statement was that buy-to-let owners would respond by passing on higher costs through rent rises.”
Landlords Need To Be Given More Support
Landlords are having to face more day to day pressures as 'rogue' tenants are on the rise, with increasing debts of unpaid rent, property and possessions being left in a disgusting state. A leading journalist calls for more protection to be given to private landlords.
Emma Lunn has written an article for The Spectator demanding that 'a register of rogue tenants' should be introduced as quickly as possible and should be readily available in the public domain.
Lunn highlights that fact that 'rogue landlords' face fines and even penal sentences, whilst 'rogue tenants' get away with everything virtually scot free and are able to "fleece one landlord after another”. Many landlords who suffer because of a 'moonlight flit' by tenants disappearing owing large amounts of unpaid rent, have no real legal support in attempting to claw back the money as the law deems it a 'civil matter' and not a crime.
The only recourse landlords have to is to take the perpetrators to the Small Claims Court however even if ruled in their favour there is still little chance in ever receiving the full sum.
Lunn said: “As is stands, a rogue tenant can move from one property to another leaving a trail of rent arrears and unpaid bills in their wake. Tenant references are fairly easy to fake while credit checks don’t show if a tenant has paid their rent on time.
“If the government is keen on protecting tenants from rogue landlords, why not protect landlords from bad renters too?”