Keystone Asset Management Ltd – Voluntary Administration

Reply to the comment left by "Ian Narbeth" at "29/01/2015 - 08:41":

A point I did not pick up on, in Penelope's case (thank you Ian), the flat was purchased in November 2014? If so, then you became subject to the leases and tenancies that were existing at that time. (Sorry, I had been working on the assumption that it was your letting agent that had entered into these agreements on your behalf).

If the flat was purchased in November, and the lease agreement existed at the time, then this should have been brought to your attention by your solicitor dealing with the purchase, and you should have taken legal advice as to how that affected your position. If your solicitor did not bring this to your attention then you may have grounds for complaint against the solicitor. If, however, it was brought to your attention, but you failed to act upon it, then you have no complaint against them as it is up to you to do your due diligence and ensure you understand and are happy to proceed.

I agree with Ian, if the flat is let as a whole self-contained property then it will be a commercial lease to the R2R company, and then they will have given the occupant a standard AST (tenancy) (and even if they call it a licence it would almost certainly still be a tenancy).

The agents do appear to be clueless. And yes you should definitely take some proper legal advice about how to proceed from here.

Hi Everyone and thank you so much
Robert - that was a great help and so detailed. We bought the flat with the tenant in situ, so had no part in the original lease. Both the letting agent (who has another ten properties let to this R2R company) and the company (which seems to be one man) appear to have been under the impression that they had entered into an AST. According to the letting agent, the agreement between the R2R company and the actual tenant is a licence but I take the point about Street v Mountford - hadn't remembered that case for a long time! At present, the letting agent seems to be working hard to get the R2R co. to move the tenant out. I'll up the pressure with a threat of legal action.
Neal and Mark could you elaborate on the s54 point?

Reply to the comment left by "Neal Craven" at "28/01/2015 - 23:23":

"Is an R2R lease protected under the 54 Act, unless contracted out." Short answer: No.

s23 Landlord and Tenant Act 1954 says: "Subject to the provisions of this Act, this Part of this Act applies to any tenancy where the property comprised in the tenancy is or includes premises which are occupied by the tenant and are so occupied for the purposes of a business carried on by him or for those and other purposes."
The premises are not occupied by the R2R company for the purposes of a business. They are occupied by the R2R's sub-tenant as a residence.

The agreement with the R2RE company is not an AST either because leases to companies cannot be ASTs.

Can I ask a question which I know is way off the original topic but related to my problem with the R2R company?

The tenants in actual occupation are a husband, wife and adult son. The husband is extremely obese and is ill, and consequently apparently has to get up every fifteen minutes in the night. This means he cannot share a bedroom with his wife. The son is around 22 - 25 I think, and says he's a student (he, at least, speaks English), although he goes off in his car every morning and we wonder whether he is working. The son said yesterday that the R2R company had offered them a two bed flat but it was too small, so they had turned it down. Does anyone know if they are entitled to a three bed flat? Surely the son must now be counted independent even if he really is a student. And does the fact that the husband have to get up at night mean he is entitled to a separate bedroom?

Reply to the comment left by "Penelope Poore" at "30/01/2015 - 16:17":

Hi Penelope

Do you mean, would they get Housing Benefit for a 3 bedroom flat? Or, are they entitled to a 3 bedroom flat on the Council's housing register? If renting privately then "entitlement" to a particular size property does not come into it, they can rent a 27 bedroom mansion if they can afford it. Likewise some 1 bedroom properties will cost more than some 3 or 4 bedroom properties, depending on the location and condition etc, so size of property is irrelevant except in relation to their Housing Benefit entitlement.

If claiming Housing Benefit, then "on the face of it" they would be entitled to the 2 bedroom rate of Local Housing Allowance (LHA), i.e. one room for the couple, and one for the son. There would be a deduction from the maximum LHA as the son would be a non-dependent so he would be expected to contribute towards the rent. The size of that deduction depends on his earnings. However, if the father has a disability that THE COUNCIL ACCEPT means that an extra room is required, then they may be entitled to the 3 bedroom rate of LHA, (but Councils do not often accept this so this would be a very rare exception). They would probably need medical evidence and a report from Social Services if they wanted to convince the Council that they should get the 3 bedroom rate of LHA.

Visit the LHA-Direct website to see what amount of Housing Benefit (LHA) the family would be entitled to, as that will give a good indication of the price range of properties that may be affordable to them. Then they can check Rightmove or Gumtree websites to see if there are properties in that price range.

Reply to the comment left by "Robert Mellors" at "30/01/2015 - 22:13":

Hi Robert
I don't understand how this all works. The letting agent tells me that the R2R company is licensed by the council, and gets the rent (presumably housing benefit) paid directly from the council. Is this correct?

I guess, if this is housing benefit for a 3 bed flat, then the R2R has to come up with such a flat. Do the tenants in occupation, the benefit claimants, have a say in where they go? As the R2R company cannot find a 3 bed flat to move them to, and the occupying tenants won't accept a 2 bed, I was wondering if I would suggest to them that I might contact the council to enquire about their benefit status. Equally, if the R2R company is licensed and defaults on the agreement to give vacant possession (there is such provision in the agreement), would it be worth a threat of a complaint to the council? I'm trying to put pressure on both sides to feel it would be better to move out. I really don't want to have to start evicting the occupants, especially as I understand the council will drag it out to the bitter end.

Incidentally, as you suggested, I checked out the rate for a 3 bed flat in the area on LHA Direct, and it seems that the R2R company is making very little a month out of this - about £200 before expenses.

Reply to the comment left by "Penelope Poore" at "31/01/2015 - 11:16":

Hi Penelope

Not sure what the agents are on about, in most circumstances a landlord (inc' a R2R company does not need a licence from the Council to rent out a flat, but there can be exceptions, e.g. in areas where selective licencing has been introduced).

From my experience most letting agents don't know much, if anything, about R2R situations, and very few of them know much about how the Housing Benefit system works either! - I avoid them like the plague.

As I see it, from what you've said:

the R2R company are refusing to hand the property back with vacant possession so they are in breach of their lease agreement?

the occupant have been served with notice by the R2R company but have not moved out? (because they want the R2R company to offer them somewhere else).

The letting agent who set this whole mess up in the first place does not know what they are doing, they have been working on the basis that it is a standard AST tenancy when it is a commercial lease to the R2R company?

You have bought the property without doing the due diligence in relation to the lease to the R2R company, perhaps as a result of a negligent solicitor not identifying this situation to you, and you are now stuck with this mess?

If I were you I would first of all I would ask for copies of ALL documents relating to this situation from the agent and R2R company, including leases and tenancies and rent statements, etc. Then end any contract with the letting agent so you can deal with the R2R company direct. Then end your lease with the R2R company so that the occupants become your tenants (not tenants of the R2R company). Then serve notice on the tenants so that you can regain possession of your flat (then they have total say in where they go).
- It is only at that point that you will be able to start doing anything about getting the flat ready for re-letting at the price you want and to the tenants you choose to let to.

This whole process may take you many months, lots of hassle, and lots of expense, but that is the mess you have bought into and until you start sorting it out then you will remain in that mess.

Personally, I would also start compiling evidence of who has been negligent in this situation, just in case you may have a legal case against any/all of them.

If you need help with the evictions, then please see the thread on this website about evictions, and the companies that may be able to help.

Reply to the comment left by "Robert Mellors" at "31/01/2015 - 12:12":

Hi Robert
I really appreciate all the help and will follow your advice.

We bought the property at auction and couldn't get any more information out of the selling agents, who weren't overly helpful either before the auction or between then and completion. So, my fault I guess! I thought I was dealing with a straightforward AST. I'll know a lot better in future.

I imagine I might have an action against the R2R company if it doesn't give vacant possession, but I'm not sure how solvent it is. I might try a small claims action against it.

Thanks again.

Reply to the comment left by "Penelope Poore" at "31/01/2015 - 16:33":

Hi Penelope

I believe that these are the steps needed, but, as already stated, I am not a solicitor, so please discuss the suggested steps with a solicitor or legally qualified person as well, particularly if you are not confident about going through the eviction process yourself.

Reply to the comment left by "Robert Mellors" at "31/01/2015 - 16:44":

Will do - thanks.