Trade group wants new government to improve slow court process

By Graham Norwood

The Residential Landlords’ Association is demanding that the new government improves the “slow, complex, and underfunded” system which means that it takes an average of 43 weeks for landlords to repossess properties after tenants stop paying rent.

The association says that it is unacceptable but not entirely surprising that faced with such a long wait some landlords seek to take the law into their own hands and force tenants out.

The RLA has made an improved court system one of its key demands of political parties in the build up to the June 8 General Election.

It says tenants, too, find the court system equally slow and hard to navigate. When faced with landlords who are not fulfilling their repairing obligations it is difficult for tenants to establish what their rights are, to obtain expert evidence to prove the disrepair, and to actually get the money that they are owed, or get an order to make a landlord put their property in repair.

As a result tenants are driven to under-funded and over-pressed local authorities who, the RLA claims, only respond to around half the complaints about property standards made to them.

The RLA says it wants a new, properly funded, housing specialist court modeled on the existing Residential Property Tribunal.

This would have its own experts within the tribunal, removing the need for parties to hire external experts. It would also, again like the current tribunal, visit properties itself in order to assess their condition, minimising the need for witness statements and arguments over the state of a property.


This specialist court could deal with cases on paper where appropriate and also direct parties to mediation to settle their disputes quickly where possible. It would be able to use its specialist knowledge of property and of the law to decide matters without the need for expensive lawyers and long arguments.

This would reduce costs for landlords and tenants, provide better access to justice, and reduce the cost of the process for the parties and for the government, the association claims.

“We know this model works. Scotland has been using a similar specialist tribunal successfully for some time for housing disrepair matters and has now expanded it to cover possession matters as well. Ireland also has a successful specialist housing disrepair tribunal” says a statement on the association’s website.

“We have invested a great deal into the existing Residential Property Tribunal structure but continually limit its operations to matters involving HMO licensing.

The RLA is calling for that tribunal to be able to do much more and to use its substantial expertise to benefit the PRS across a wider range of issues.”

https://www.lettingagenttoday.co.uk/breaking-news/2017/5/trade-group-wants-new-government-to-improve-court-process

TPO appoints new council chair

By Marc Da Silva

When a tenant paid his initial one month’s rent in addition to a tenancy deposit in exchange for the keys to his new rental property last year, he did not expect a few weeks after moving into the flat to be contacted by the landlord wanting to know where his money was.

When it materialised that the letting agent had had not passed on his deposit or initial rent payment to the landlord, the tenant issued a worthwhile compliant to The Property Ombudsman (TPO) which was upheld by the Ombudsman, who ordered the letting agency to pay the money owed to the landlord totalling more than £4,000, together with £250 compensation to the tenant.

But to make matters worse, the London-based company failed to pay the award, despite the fact that TPO members are required to comply with any award and direction given by the Property Ombudsman and accepted by the complainants.

Failure to pay the fine subsequently resulted in the agency’s expulsion from the residential agency ombudsman, which means that the company in question cannot legally trade as a letting agency, because as many of you will undoubtedly know, it is mandatory that all letting agents and property management agents register with one of three government-approved redress schemes, none of which will allow previously expelled agents to join.

Although in most cases disputes are resolved without a formal referral, these government approved schemes, run by The Property Ombudsman (TPO), Ombudsman Services Property and the Property Redress Scheme (PRS), provide fair and reasonable resolutions to disagreements between members of the public, including buy-to-let landlords, and property agents, ensuring that tenants and landlords have a straightforward option to hold their agents to account when required.

To help strengthen its offering, TPO has appointed Baroness Warwick, the current chair of the National Housing Federation, as the scheme’s new council chair, after Lord Best officially stepped down from the role after his eight-year term came to an end.


Baroness Diana Warwick (pictured beside) said: “I am delighted to succeed Lord Best in this important role and hope that the qualities and skills I bring will help to reinforce the commitment to high standards that he has fostered.

“I share the Property Ombudsman Scheme's values of independence and public service and strongly support its purpose in providing free, fair and impartial service to buyers, sellers, tenants and landlords of property in the UK.”

Reflecting on the appointment, the Property Ombudsman, Katrine Sporle, said: “I look forward to working closely with Diana who has spent many years helping the government make and shape laws, and debate public policy matters."

"She will be a great asset to TPO which aims to raise standards in the industry and protect consumers from unfair practices.”


https://www.landlordtoday.co.uk/breaking-news/2017/5/tpo-appoints-new-council-chair

The Landlord Law Conference takes place tomorrow

By Marc Da Silva

Despite recent tax changes, buy-to-let property remains an attractive investment at a time of low interest rates and volatile stock markets, but some investors fail to recognise that becoming a landlord comes with added responsibilities, which are constantly changing.

Failure to comply with the rules can result in prosecutions, fines and the inability to evict non paying tenants, and that is where the Landlord Law Conference could potentially help you.

The conference, which will take place at the Sprowston Manor Hotel on the outskirts of Norwich tomorrow, will feature a number of legal talks from specialist lawyers and trainers, as well as an exhibitors area, with specialist companies there to talk to and advise you, including Anthony Gold solicitors, the Property Redress Scheme, Aston Shaw Accountants and the Residential Landlords Association, among others.

The day should prove to be a good opportunity to network with other buy-to-let landlords and property professionals.


To attend the event, you will have to buy a ticket, at a cost of £204. To do so, click here.

https://www.landlordtoday.co.uk/breaking-news/2017/5/the-landlord-law-conference-takes-place-tomorrow

Councils want 'tiny' flats banned and jail for rogue landlords

By Graham Norwood

A body representing 370 councils in England and Wales wants the government to close a legal loophole which allows the conversion of houses into multiple tiny ‘units’ which are then let as self-contained flats.

The tactic is reported to have been used by some landlords to secure the maximum level of housing benefit payments which are paid on behalf of tenants direct to landlords.

The Local Government Association claims the loophole abuses legal exemptions and the lack of clarity in environmental health, planning and housing benefit rules to avoid detection, and is resulting in widespread abuse of taxpayers’ money as well as housing tenants in poor and often dangerous accommodation.


The LGA is also calling for more prison sentences for the worst landlords, rather than imposing fines. It says some fines can be as low as £1,000 for serious safety offences and claims these are often offset by profits at the expense of exploited and vulnerable tenants whose lives may be at risk.

The association says private landlords pocketed £9.3 billion in Housing Benefit in 2015, twice that of £4.6 billion in 2006. The micro sub-division of properties - called the Lockdown model - is thought to have contributed to this sharp rise and the loophole which first started in London is now spreading across the country.

Landlords can convert homes into a maximum of six small self-contained studios with en-suite showers and portable cooking equipment, without planning permission, but the LGA says electricity supplied to the different properties is often run on stolen meters or hotwired supplies, creating fire hazards.

Under recently-introduced legislation, councils can issue the worst landlords with fixed penalty notices of up to £30,000 for offences including failure to comply with improvement and overcrowding notices. Councils can also apply banning orders when new government regulations come into force later this year.

But the LGA says the micro-conversion loophole being exploited by rogue landlords is undermining these new powers, and states that councils need streamlined housing and planning powers to stop landlords converting properties into “micro flats” without planning permission to protect tenants.


https://www.lettingagenttoday.co.uk/breaking-news/2017/4/councils-want-tiny-flats-banned-and-jail-for-rogue-landlords

Investors add Brexit clauses to British property deals before EU vote

Estate agents boards are lined up outside houses in south London, Britain June 3, 2014.

REUTERS/ANDREW WINNING/FILE PHOTO

Commercial property investors are writing clauses into contracts giving buyers the right to walk away from real estate deals if Britain votes to leave the European Union this month, as a way to unfreeze a sector stalled by uncertainty over Brexit.

Transactions in commercial property fell by 40 percent in the first quarter, according to the Bank of England, with many buyers and sellers waiting to see the outcome of the June 23 referendum in case an exit vote hurts property prices.

In one example from a commercial transaction seen by Reuters, a clause sets a deadline after the vote when the buyer would be permitted to terminate the contract if the referendum results in a decision to leave.

Sellers too are taking legal precautions, seeking language in contracts to ensure that Brexit will not be considered a "material adverse change" that would annul a deal.

Paul Firth, head of real estate at law firm Irwin Mitchell LLP, said a significant percent of the firm's "bigger investment deals" with values ranging from 10 to 80 million pounds either included Brexit clauses, or purchasers had sought to negotiate that they be included.

He said the use of such clauses had increased in recent weeks as the referendum date draws closer.

"(Investors) fear that the value and return on investment properties may decline and that it may not be as good an investment if Britain withdraws from the EU," he said.

Since commercial real estate deals are usually confidential, it was not possible to determine precisely how common such clauses are.

However, half of the 24 law firms, brokerages and commercial property firms Reuters spoke to said they had used Brexit clauses, brokered a deal with such a clause or had requests to include them in at least one deal. Some of the others said they had seen them.

Prime Minister David Cameron and other politicians supporting the campaign to stay in the EU say a vote to leave would damage the economy and cause property prices to fall. Those campaigning to exit say any such threat is overblown and Britain can prosper outside the EU.

But whether overblown or not, it is a risk some buyers seem unwilling to take.

Guarantees are being offered not only for commercial property but also for homes. An invitation to a May 25 launch of some floors of Two Fifty One, a 41-storey luxury apartment tower going up in south London's gentrifying Elephant and Castle district, offered buyers a "money back Brexit guarantee pledge".

Buyers attending the launch would not have to exchange contracts until July 6 and could withdraw their offer and get their deposits back if they were unhappy with the outcome of the vote, said Martin Lent, chief executive of SCM, the development manager for the project by residential developer Oakmayne.

In commercial property, Brexit clauses are more common in higher value deals where the risks are greater, said Andrew Friend, director of a UK property fund at Henderson, one of Europe's largest investment managers.

"Deals that include these clauses tend to be at the higher lot size end of the market and they're more focused on sectors such as financial office space in London, which are more sensitive to a Brexit type situation," said Friend.

FOREIGN INVESTORS

Brexit clauses are particularly in demand among overseas investors. Two lawyers dealing with property said most enquiries about Brexit clauses were from foreign investors who were concerned that an "Out" vote could weaken sterling, as well as reduce appetite for leasing commercial space in Britain.

"When it comes to international investors looking to build global or European portfolios, we are either 'on hold' or would use a Brexit clause," said Rob Wilkinson, chief executive of AEW Europe, which managed property assets in the UK worth about 2.1 billion euros as of March 31.

Melanie Curtis, a real estate partner at law firm K&L Gates LLP, said she had worked on a deal with a Brexit clause in a commercial property transaction worth more than 10 million pounds, in which her firm acted on behalf of an overseas buyer.

"The buyer required a Brexit clause, as it may reassess its UK investment policy in the event of withdrawal from the EU."

James Crookes, head of real estate and property at law firm Pinsent Masons LLP, said some clauses, rather than giving the buyer the right to walk away or renegotiate, would automatically reduce the purchase price of a property in the event of a Brexit vote. In one deal, the price would be lowered by 1 million pounds.

"So they're factoring in a valuation on the assets based on Brexit."

Nick Lloyd, national head of capital markets at commercial property broker Lambert Smith Hampton, said offering Brexit clauses could also be beneficial for sellers, to secure deals while fewer transactions are taking place, in anticipation of a potential flood of properties returning to the market if Britain votes to remain in the EU.

"Whilst they mitigate downside risk for buyers, they can be attractive to a vendor who wants to avoid the risks of marketing during a potential oversupply of new stock after the referendum," said Lloyd.

But with less than a month to the vote, two law firms and one property broker said they were now advising clients to reject demands for a Brexit clause and simply put deals on ice.

"One seller recently asked the buyer to confirm it would proceed with the purchase irrespective of the outcome of the referendum," said Mark Payne, a partner in the real estate team at law firm Clifford Chance LLP.

"This proposal was, however, rejected."

(Editing by Robin Paxton, Guy Faulconbridge and Peter Graff)
http://uk.reuters.com/article/uk-britain-eu-property-idUKKCN0YR0EG