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by Ian Narbeth
10:36 AM, 9th October 2019, About 5 years ago 8
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Landlords are concerned that the Government has announced it will abolish section 21. Labour and Liberal Democrats are also in favour. I may written elsewhere about why abolition is a very bad idea: ‘Removal of Section 21 Housing Act 1988‘
The fear of it is already causing landlords to pull out of the market. What may will be unaware of is the announced intention to “bring forward” to section 8 claims some of the same obstacles to a claim as currently apply to s21 claims. This will lead to great injustice for landlords. We have not seen the draft legislation, but given the recent trend (and in particular how Draconian the Tenant Fees Act is) I fear the worst. Below are two scenarios that I hope never arise, but fear might. Please lobby your MPs to ensure any legislation does not permit such absurd results.
Larry has let his property to Tony at a rent of £1000 a month. In 2020, Tony is a month late paying his rent. He says he was moving jobs and had temporary cash flow problems. Larry charges a month’s interest for the arrears. Bank Base Rate is 3/4% and so the maximum interest rate allowed is 3% above that, namely 3¾%pa. 31 days divided by 365 x £1000 x 3 ¾% is £3.18. Larry sends a bill for this and Tony pays it.
Some time later Tony stops paying rent. Tony tells Larry he has lost his job and expects to start a new one shortly. No rent is paid and after the third missed payment, Larry takes legal action and issues a claim under section 8. There is a backlog of cases at the court and by the time the case is heard, Tony is still without a job but now 10 months in arrears. The case should be open and shut. Tony owes £10,000 and has been persistently late paying rent. However, on the day of the hearing Tony points out that when he was a month late paying in 2020 it was June and there are only 30 days in June so the interest for late payment should have been £3.08. Larry overcharged him by ten pence.
Under the Tenant Fees Act 2019 that ten pence is a “prohibited” payment. Section 17(3) of that Act (which let us assume now applies also to section 8 claims) says that no claim “may be given in relation to the tenancy so long as all or part of the prohibited payment” has not been repaid. Larry protests that Tony’s debt is 100,000 times the amount of the prohibited payment. However, the judge has no discretion and throws Larry’s case out. He also draws attention to the fact that Larry may be fined up to £5000 by the Council for having taken a prohibited payment or up to £30,000 if he has committed a previous breach of the Act in the past 5 years.
Lenny agrees to rent a house to Theo at £1000 a month with a £1000 tenancy deposit. He takes a holding deposit of £200. The tenancy goes ahead and Lenny sends Theo a completion statement:
| Rent for month | £1,000 | |||
| Tenancy deposit | £1,000 | |||
| less | Holding deposit | £200 | ||
| Balance to pay | £1,800 |
Theo pays the £1800. He continues to pay rent regularly, but Lenny receives complaints from the neighbours about “goings-on” at the house. There are a lot of people entering and leaving most days. Two burly looking men who are regular visitors have Dobermann dogs with them and they look menacingly at the neighbours as they pass. The neighbours’ children are terrified by the dogs. Car doors are slammed at night and the front garden is strewn with rubbish. One neighbour tells Lenny that when she called at the house to speak to the tenant she was told to “F*** off and mind your own f***ing business.”
Lenny decides to visit the property. It is now winter and Lenny notices that whilst the roofs of other houses are covered in snow, the roof of his house is clear. Lenny knocks at the door which is answered by one of the burly men who has a large dog on a leash. Lenny asks to come in but the man tells him that he can’t let anyone in without Theo’s permission. “Where is Theo?” asks Lenny. “I dunno. I expect he is sunning himself somewhere warm. Now go away. Goodbye.” He closes the door. Tony notices a sweet smell emanating from the house. The neighbours confirm they have noticed it too. Lenny suspects the house is being used as a cannabis factory. He leaves and then decides to bring a claim under section 8.
Although the neighbour says she is scared she agrees to give evidence. The case gets to court. Lenny is surprised to find that Theo, though absent, is represented by a barrister, Tarquin, who immediately applies for the case to be dismissed. “On what grounds?” asks the judge. “Under paragraph 3(a) of Schedule 2 of the Tenant Fees Act the holding deposit was supposed to be repaid to Theo within 7 days of the parties entering into the tenancy agreement” says Tarquin. Lenny points out paragraph 6 of Schedule 2 and says that he gave credit for the holding deposit. He produces the completion statement. Tarquin draws the judge’s attention to the precise wording of paragraph 6:
Paragraph 3(a) does not apply if or to the extent that the amount of the deposit is applied, with the consent of the person by whom it was paid—
(a) towards the first payment of rent under the tenancy, or
(b) towards the payment of the tenancy deposit in respect of the tenancy.
Tarquin explains that para 3(a) is only disapplied if Theo had consented to the holding deposit being applied towards the rent/tenancy deposit. Without that consent Lenny has taken a prohibited payment. Lenny must repay the £200 to Theo. Lenny argues that Theo must have consented but the judge points out that silence does not equal consent and that if consent were to be implied the words of the statute would be otiose.
“Nugatory, even” Tarquin chips in, helpfully.
Lenny doesn’t know what those words mean and feels out of his depth. However, things don’t seem right and so he plays his final card. “But as soon as I repay the £200, Theo will then owe me £200!” protests Lenny. “True” says Tarquin “and Theo will gladly repay it – my client is a very successful businessman – but in the meantime, your honour, you must throw out Lenny’s claim. The Tenant Fees Act does not allow for exceptions. Lenny may also be fined up to £5000 by the Council for having taken a prohibited payment.“
“That’s absurd” says Lenny. “No” replies the judge “I am afraid it’s the law of England. Case dismissed.”
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Whiteskifreak Surrey
12:32 PM, 9th October 2019, About 5 years ago
Time to leave the PRS and leave this LAWLESS country.
NB - with S 24 I have contacted my MP a number of times. She does not listen. She passes template letters from Gauke & Co. She tells me to stop bothering her (in a nicer manner, though). She is now among the 21 'excluded' from Tory Party. She does not give a ..... what is happening in PRS.
Saying that - I might want to go to her anyway.
Seething Landlord
12:44 PM, 9th October 2019, About 5 years ago
To coin a phrase, the law is a ass.
However, the solution is to take extreme care to ensure total compliance in all dealings with tenants. We are already operating in a hostile environment and should not expect any change in our favour. It is not going to happen, at least until the whole rental sector starts to fall apart.
Dr Rosalind Beck
13:16 PM, 9th October 2019, About 5 years ago
Hi Ian
I have also given a scenario to the consultation committee - with the scenario of if a gas safety certificate isn't given on the exact day it should have been and/or hasn't been signed in the correct place that it has been received, and pointed out that this could lead to a non-paying and/or abusive tenant staying forever in the landlord's house, rent-free. The answers I received were completely unsatisfactory. I should have been given assurances that this would never be allowed to happen. I wasn't. They also seem to not realise that the purpose of legislation relating to gas safety should be about gas safety and not pieces of paper - it should be enough if the landlord can show that a gas safety certificate was in place at the time. However, the bigger picture is the one I outlined - how can they bring in legislation which would deprive a person - the landlord - of their property whilst also keeping them completely liable for all the costs associated with that property forever, whilst someone else lives there rent-free?
Dr Rosalind Beck
13:25 PM, 9th October 2019, About 5 years ago
I have sent the link to this article to the consultation. If anyone wants to also pursue this key issue that the consultation should be addressing, this is the email address to write to:
tenancyreform@communities.gov.uk
It is worth doing, although one must be aware that when another 'post-decision consultation' on Section 24 took place I was informed by the head of the Finance Committee that no-one had read any of the submissions, because they didn't have the time.
Whiteskifreak Surrey
13:57 PM, 9th October 2019, About 5 years ago
Reply to the comment left by Dr Rosalind Beck at 09/10/2019 - 13:16
Very good point Ross.
They can and they will. I am not sure if that is a vote maker, or simply a strategy to enable their rich cronies to acquire properties cheaply.
I am not sure if the law is working in this country anymore.
We fear Commie Corbynov and his Marxist / communist /socialist Agenda but effectively we have the same, just about to be imposed on by a supposedly capitalist government.
I do not think Brexit is going to change anything. In the current situation and a no deal Brexit looming no PM will have any moment to reflect on the nuances of Landlords/Tenants issues. I think we are all doomed.
Peter Fredericks
14:07 PM, 9th October 2019, About 5 years ago
The removal of Section 21 is a very idea indeed in principle. Whose property is it anyway?
If S21 goes, landlords will be faced with dealing with our laughing stock civil justice system. I have just been back to Court (one year to the day after issuing a county court claim) to obtain judgment against a seriously defaulting tenant confirmed as awarded in my favour, 3 months after receiving a so-called reserved judgment in my favour. That's two hearings, a costs submission and a further hearing of a groundless application from the tenant seeking to frustrate and delay the inevitable.
It's time to get out of the PRS altogether I think but that is more easily said than done in many places outside the south-east where prices are at or even below pre-crash levels. I would accept these Parliamentary decisions with greater equanimity, if MPs were themselves democratically legitimate in the first place but under the first-past-the-post system they just cannot be. But what really hits home is that there is no party of business on our side any more.
Chris Hart
11:12 AM, 10th October 2019, About 5 years ago
Trying to change the opinion of those that are not prepared to listen is a waste of time,and only makes them more convinced they are right.It will only become apparent things are in a bad way when the acute shortage of private landlords is a fact. Then Shelter,local and national government and any others jumping on the bandwagon can deal with the problems they have engineered and created. Remember "the road to hell is still paved with good intentions"
Dr Rosalind Beck
14:23 PM, 10th October 2019, About 5 years ago
Reply to the comment left by Peter Fredericks at 09/10/2019 - 14:07
You ask: 'Whose property is it anyway?'
That is the question we should constantly repeat to them. The effects of the removal of Section 21 could be worse than McDonnell's RTB in the PRS. With that, the landlord would get some paltry payment for their house; if the landlord gets stuck with a non-paying tenant forever and is unable to sell because they can't evict then that is even worse. And that's saying something.
Unfortunately, the Conservatives over the last 4 years have behaved despicably to private landlords, with their confiscatory Section 24 and now their disgraceful aim of removing us from having the power over our own assets, whilst we retain all the liabilities.