The Independent has reported that a Jeremy Corbyn led Labour Government would end ‘no-fault’ evictions in order to give stability to tenants and tip the balance of power away from landlords and towards tenants.

What does this mean?

The term ‘no-fault evictions’ is a reference to section 21 notices given by landlords and evictions following them; these notices do not require the landlord to specify any reason for evicting the tenant. Private landlords in England may serve a section 21 notice after four months have passed from the start of a tenancy, and the notice may require the tenant to leave the property two months later. The notice will be effective as long as the landlord complies with various technical requirements and the fixed term of the tenancy is over (or the landlord has a break clause).

Scrapping section 21 notices would mean that private landlords could only evict tenants by serving a different type of notice and proving that certain ‘Grounds for Possession’ apply. This is most often rent arrears or breaches of the tenancy agreement but other grounds cover specific situations. Sometimes the landlord needs to persuade a judge that it is reasonable to evict the tenant as well as proving the ground.

The impact for tenants would be that if they paid their rent and kept to the terms of their tenancy agreements they would usually be able to stay indefinitely in their properties.

Which tenancies would be affected?

Housing legislation passed by a Jeremy Corbyn-led government would apply to England only, since housing is a devolved issue. This policy would apply only to Assured Shorthold Tenancies – but this type of tenancy makes up the vast majority of private sector lettings.

However, it is unlikely that the new rules would apply to existing tenancies because this would probably breach landlord’s rights to ‘peaceful enjoyment’ of their possessions under the European Convention on Human Rights. Primary legislation would be needed and it is likely that after a cut-off date all new private tenancies could not be ended by a section 21 notice.

What if landlords need to move back into or sell their properties?

One of the grounds for possession already covers the situation where a landlord or their spouse or civil partner want to move into the property – it is just not used very much because section 21 notices are easier.

However, there is currently no ground for possession which allows the landlord to evict tenants just to be able to sell the property with vacant possession, meaning that properties would have to be sold with the tenants in place.

When might this happen?

This policy is extremely unlikely to be adopted by the current Government so the earliest time the law could be passed is after the next General Election. That might be as far away as May 2022. Since primary legislation would be required it would take some time after that before these rules could be in force.

How likely is this proposal to become law?

Not only would Labour need to be the largest party after the next election, but a Labour housing bill applying only to England would need to pass through the ‘English Votes for English Laws’ rules in the House of Commons. That may prove to be a problem.

This policy announcement could turn out to be merely a ‘trial balloon’ – a policy announcement put out to test public opinion. If this policy is unpopular with swing voters it could be quietly shelved.

How would this affect the private rented sector?

Making it more difficult to evict tenants is likely to have an impact on the supply of properties made available for letting by private landlords. The perception that tenants cannot be evicted regardless of what they do will affect landlord behaviour, even if that perception is not quite accurate.

However, at this stage it is far too early to carry out any detailed analysis of Jeremy Corbyn’s announcement because the effect of scrapping section 21 notices will be tied up with the policy Labour ultimately adopts in relation to rent control. If section 21 notices are abolished without new rent controls being introduced this may result in rent increases being used as an alternative way for landlords to recover possession of properties. Since rent control is already a hot political topic we can expect Labour to develop further policy on this.

There is every indication that the private rented sector will be a key battleground in the next general election and this means that any of the major parties may embrace a radical re-design of the legal framework of private sector tenancies as we have seen in Wales and Scotland.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

The government has today published its response to the consultation on banning letting agent fees to tenants along with a draft bill.

 

Consultation Response

There was a disparity between the views of agents and tenants in terms of the response to the consultation. Most agents felt that the new requirement to publish fees had increased transparency. Most tenants felt the opposite. Landlords were fairly neutral. Tenants were strongly anti-fees and said that fees charged had limited their ability to move house. Around half of tenants claimed to be unaware of fees. There was a surprising disparity in the fee levels with agents responses suggesting an average fee of £238 per tenant with tenant responses suggesting an average fee per tenant of £327. This is likely to be due to confusion over how agents charge fees and the different fee models in use were a point of comment for the government with it stating that unless there was more standardisation there would remain a lack of transparency.

Most landlords charge little or no fees at all and the difference is remarked on by the government. Landlords also said that agent fees had affected their agency decision in the past and that increased agent fees would motivate them to move agents in the future.

A hugely persuasive part of the consultation responses was the fact that tenants felt that it did not matter whether they knew about agency fees or not as they had no power to affect the fees charged. This aligned closely with the government initial thinking that it was landlords who truly had the power to choose agents and therefore to drive fees down.

Most tenants were keen to see the ban extended to landlords and for it to include all other premiums and other fees. Most tenants accepted the idea of holding deposits but 7% of tenants did not agree with those either.

The consultation also showed a very high level of support for a cap on tenancy deposits more generally although the exact level of cap was disputed. There was also a surprising amount of support for caps on holding deposits, even from landlords and agents.

 

The Bill

The draft bill creates a blanket ban on all fees charged by a landlord or agent for the grant, renewal, or continuation of an assured shorthold tenancy or a licence. Any tenancy that falls outside the Housing Act 1988 regime will not be covered. Strangely the draft bill also does not mention lease assignments. In practice, this means that ASTs and licences cannot have fees charged in respect of them but other tenancies such as company let agreements and the like can. There appears to be no particularly good reason for ignoring other types of tenancy although that has been the case before and the reality is probably that the government only had a weak understanding of such tenancies.

There is then a list of permissible fees set out in the schedule which includes fees for breaches of the tenancy and holding deposit fees. This schedule can be amended by the Secretary of State by order.

There are some anti-avoidance provisions such as disallowing a rent for a higher sum initially which then drops later on. There is also a provision which states that any clause in a tenancy which purports to charge a banned fee is void although this does not make the entire agreement void and tenants can seek repayment of their money through the county court as well.

Enforcement will be through trading standards officers. However, they are under a duty to enforce the legislation unlike the current regime where they are not so obliged and so agents will be able to complain about other agents who are not obeying the provisions properly. The initial penalty is up to £5,000 payable as a civil penalty. A repeated breach is a criminal offence but can also be dealt with by a civil penalty of up to £30,000. If the sum taken unlawfully has not been repaid already and no claim has been made for it through the civil courts then this can be added to the fixed penalty and recovered for the tenant in this way. As usual, if the offence is being committed by a company the directors can be made individually liable as well.

There are also amendments made relating to Client Money protection on which a consultation has also opened up.

Finally, there are amendments requiring all fees being charged to be shown on any third-party website (eg. Rightmove etc) that the agent is advertising on.

 

Deposit Limits

There is a limitation in the bill over tenancy deposits too. These are capped at 6 weeks rent equivalent. This has increased from the month originally proposed which is a positive step. However, this will mean that some tenancy deposits will need to be reduced in certain cases.

 

Next Steps

This bill is still in draft and has not yet been formally laid before Parliament, so there is still some way to go before this all comes into force. However, the writing is clearly on the wall for agency fees. Given that the consultation responses make fairly clear that landlords will vote with their feet if they are asked to pay more agents will need to start considering their business models carefully now. Reviewing fees charged for tenancy breaches and also fees charged in tenancy types that fall outside the legislation will be important. Considering how best to implement a holding deposit regime will also be useful. Agents should also give some thought as to how this will work with their clients. For example, if a tenant has breached the agreement giving rise to breach fees then these will need to be in the tenancy agreement but the agent terms of business will need to make clear that they will be passed to the agent by the landlord if they are paid. Likewise, if there are deductions from the tenancy deposit due because of rent arrears and there are also breach fees due then the agent will need to consider if they are going to demand their fees first before any residue is paid to the landlord.

Anthony Gold is holding a legal update seminar on 6 December at which we will be discussing this issue.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

Letting agents who grant tenants “sham” licences run the risk of being prosecuted by the local authority following a successful prosecution in Islington London Borough Council v Green Live Ltd, t/a Green Live Estate Agents (Highbury Corner Magistrates’ Court, 10 August 2017).

The difference between a licence and a tenancy is trite law. The hallmarks of a tenancy were set out by the House of Lords in a case which should be familiar to all property lawyers: Street v Mountford [1985] AC 809.

In Street the court identified the fundamental elements of a tenancy to be:

1. The grant of exclusive possession;
2. For a term;
3. In return for the payment of rent.

The court concluded that if these three features are present, then it is likely that a tenancy has been created; regardless of the intention of the parties. The court also concluded that any attempt to disguise the grant of a tenancy would be a “pretence” or a “sham” agreement.

Despite this, landlords and letting agents ingeniously attempt to describe such agreements as “licences” or a “licence to occupy”. The benefit of granting a licence means that the usually statutory protections associated with a tenancy would not apply.

Islington based letting agents, Green Live Limited, granted “sham” licences to tenants. The use of a “licence” suggested that tenants were not offered the usual protections, for example, the requirement to provide two months’ notice to vacate pursuant to s21 Housing Act 1988 or have their tenancy deposits protected within a Government authorised scheme pursuant to s212 Housing Act 2004.

Because a letting agency is a business engaging in a “commercial practice” to “consumers”, Islington Council sought a prosecution under the Consumer Protection from Unfair Trading Regulations 2008.

Under the Regulations, a commercial practice is considered to be “unfair” if it is a misleading action which is satisfied under Regulation 5(2):

1. It contains false information and is therefore untruthful; or its overall presentation in any way deceives or is likely to deceive the average consumer, even if the information is factually correct; and
2. It causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.

The Defendant pleaded guilty to two offences under the Regulations and were handed an £11,000 fine, ordered to pay compensation of £3,000 to the tenants and pay the prosecutions’ costs.

Licences are, of course, a perfectly legal way to grant occupancy provided that they are done correctly. Simply naming a document a “licence” will not suffice and letting agents attempting to circumvent the law in this way could face prosecution.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

My colleague, Robin Stewart, has previously written about the substantially extended eviction powers to be found under the upgraded Right to Rent provisions. These were introduced by the Immigration Act 2016 which amended the Immigration Act 2014 to upgrade the power to evict for landlords where occupiers do not have the Right to Rent and also uprated the penalties for not taking action to remove people who are shown not to have the proper Right.

The eviction powers work on the basis of a notice served by the Secretary of State telling the landlord that some or all of the people in the property do not have a Right to Rent. This is now known by the Home Office as a Notice of Letting to a Disqualified Person which reduces to the acronym NLDP.

Where a landlord receives an NLDP or NLDPs which refer to some of the occupiers he can seek a possession order through the courts. More controversially, where the NLDP or NLDPs refer to all of the persons occupying the property the landlord does not have to go to court. In these cases the landlord serves a notice under s33D(3) of the Immigration Act 2014 giving the occupiers 28 days to leave.

Once the s33D(3) notice has expired the landlord is permitted to remove the tenants from the property themselves using reasonable force. They do not require any form of court order to do so. For landlords who do not wish to take this risk they can also instruct a High Court Enforcement Officer to do this and, unusually, the NDLP and s33D(3) notice together are treated as an order of the High Court so a writ of possession can be sought directly.

The slight problem with all this is that the seeking of a Writ of Possession is covered by court rules, specifically the Civil Procedure Rules, and these were out of date. They required that any application for a writ of possession be accompanied by a court order or judgement. Clearly a landlord acting on an NDLP would not have a court order or judgement, that is the entire point of the new provisions.

Happily, this odd situation will be corrected from 1 October as rule 11 of the Civil Procedure (Amendment No. 2) Rules 2017 amends CPR 83 to state that where a writ is being sought in order to enforce an s33D(3) notice what must be enclosed with the application form is that notice rather than a judgement or order.

Whether all this makes a huge amount of difference in practice is less certain. The Home Office has suggested from previous studies that the vast majority of properties contain a mixture of persons who do and do not have the Right to Rent and so it seems that situations where an NDLP will apply to every occupier in a property are likely to be rare. In addition, it is unlikely that persons who are in the country without the Right to Rent, and presumably therefore at risk of deportation, are going to want to remain in a property where they have been identified by the Home Office and they are therefore likely to seek to move long before any s33D(3) notice has expired. However, where a landlord wishes to use such a notice the rules now all match up.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

What is a Rent Repayment Order?

Rent Repayment Orders (RROs) have been around since their introduction under the Housing Act 2004 (HA 2004). Previously, RROs were very limited in scope and allowed a tenant or a local authority to make an application for a repayment of rent or Housing Benefit. An application could be made by the tenant but only if the landlord had been prosecuted and found guilty of an offence for failing to obtain the correct property licence or the local authority had already obtained a RRO for the return of housing benefit. If the application was successful, the landlord could be ordered to repay rent for the period during which the offence was committed up to 12 months preceding the date of the tenant’s application.

Since April 2017, it has become easier for tenants to make an application for an RRO. Provisions introduced under the Housing and Planning Act 2016 (HPA 2016) widen the scope for tenants to make an application to the Tribunal.

What are the key changes?

The most significant change is that tenants no longer require the local authority to bring a successful prosecution in the magistrates’ court for an application to be made. Previously, tenants were dependent on the local authority prosecuting the landlord (or possibly a successful private prosecution) and for the landlord to be found guilty of a licensing offence.

However, under the new regime tenants can now make an application to the Tribunal without securing a criminal conviction, but merely by proving that the landlord has committed an RRO offence.

What is an RRO offence?

Previously, an application for an RRO could only be made in circumstances were the landlord had been prosecuted for failing to obtain the correct property licence required under HA 2004. However, the HPA 2016 substantially extends the range of offences for which an RRO can be sought.

In addition to failing to obtain the correct licence, a tenant can make an application for an RRO if their landlord commits one of the following offences:

• Violent re-entry;
• Unlawful eviction or harassment;
• Failing to comply with an Improvement Notice served by the local authority;
• Failing to comply with a Prohibition Order served by the local authority;
• Where the landlord is in breach of a banning order.

The tenant must prove that the offence has been committed at any time in the preceding 12 months. The new provisions are not retrospective; therefore the commission of the offence must have been committed after 6 April 2017.

How do I make an application for an RRO?

Applications for RROs are made to the First-tier Tribunal (Property Chamber). The tenant is not required to serve the landlord with notice of intended proceedings and can make an application straight to the Tribunal.

If a tenant is making an application for an RRO without the landlord being found guilty of an offence in a magistrates’ court, they must prove that the landlord has committed an RRO offence. The burden will be on the tenant to prove, beyond reasonable doubt (the criminal standard of proof) that an offence has been committed. The landlord will have the opportunity to defend the application by demonstrating either that the offence has not been committed, or that they have a reasonable excuse defence.

Are there time limits on when an application must be made?

If the offence committed has a definitive date, such as an unlawful eviction, then an application must be made within 12 months of the offence being committed. If the offence is ongoing, such as a failure to license, then an application can be made at any time whilst the offence is still being committed but the amount of the RRO will be limited to the period of 12 months prior to the tenant’s application.

Should my local authority assist me with proving that an offence has been committed?

It could be difficult for tenants to prove that an offence has been committed as they will usually rely on evidence form the local authority, such as evidence that no application has been made for a property licence or that the landlord is in breach of an Improvement Notice. This is important because tenants will be required to prove the offence beyond reasonable doubt; which is a high burden of proof. The HPA 2016 encourages local authorities to assist tenants with an application for an RRO. This could include providing advice to tenants on their rights or by conducting proceedings on tenants’ behalf.

How much can I re-claim?

The amount of rent that tenants can reclaim is capped at 12 months. Tenants can seek to recover the rent paid in the period of 12 months before the date of the offence being committed. If the alleged offence is continuing, for example, a failure to obtain a licence, then the amount to be repaid will relate to the rent paid during which the landlord was committing the offence for a period of up to 12 months prior to the tenant’s application to the tribunal.

The amount of the RRO cannot exceed the amount of rent paid by the tenant. The Tribunal is not obliged to award the full amount of rent (but will in specific circumstances) but will consider the nature of the offence committed, whether the landlord has already been convicted or received a financial penalty and in certain cases, the Tribunal will consider the landlord’s financial position and conduct. The landlord will also have an opportunity to make their own representations to the Tribunal.

I receive housing benefit/universal credit – can I make an application?

If you receive housing benefit or universal credit which covers your whole rent then you are not entitled to make an application for an RRO. In such cases it would be for the local authority to make a claim for a RRO. If housing benefit or universal credit pays a proportion of your rent and you are responsible for a “top-up” payment then you are entitled to make an application which will be limited to your own personal contribution. When making an RRO the tribunal will deduct the housing benefit or universal credit payments.

If you would like any further advice in relation to Rent Repayment Orders or any other housing issue then call a member of our team today on 020 7940 4000.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

The shocking events at Grenfell Tower have rightly brought renewed attention to fire safety in residential property. Over the following weeks, months and years there will be a forensic examination of both what went wrong at Grenfell Tower, and more generally, how the regulatory framework for fire safety can function better.

This tragedy must be a wake-up call for any private landlords who see fire safety regulations as a burden to be borne half-heartedly. The risks posed by fire in a typical HMO are different from the hazards faced in a tower block, but many HMOs are at high risk of fire – and need to be treated accordingly.

The most authoritative guidance on fire safety provisions in HMOs continues to be the “LACORS guidance” (read here). This sets out how to carry out a risk assessment and what installations are likely to be appropriate to create safe escape routes, and detect and prevent fire. Landlords can draw on the LACORS guidance, as well as expert advice and guidance from landlord associations.

There is a legal framework of standards and regulations which all landlords of HMOs must comply with, whether the property requires a licence or not.

Landlords of all HMOs must ensure that their properties comply with The Management of House in Multiple Occupation (England) Regulations 2006. These regulations place a duty on the person managing the HMO to ensure that all means of escape from fire in the HMO are kept free from obstruction and maintained in good order and repair. The manager must also ensure that any fire-fighting equipment and alarms are maintained in good working order that notices indicating the escape routes are displayed in prominent places.

In practical terms this means:

1. Fitting fire doors at the appropriate FD30 or FD30S standard, with working door closers and intumescent strips;
2. Ensuring tenants have sufficient space to store their possessions in places which are not escape routes;
3. Installing a suitable heat or smoke detection and alarm system; and
4. Putting up signs to mark fire exits, where appropriate.

Larger HMOs or those with more complex layouts may require specialist lighting or more signage.

In addition to The Management of House in Multiple Occupation (England) Regulations 2006, landlords of HMOs may also need to have regard to the Regulatory Reform (Fire Safety) Order 2005. This Order applies to the common areas of buildings which contain bedsits and separate flats, but not to a HMO where the occupiers share the property on a joint tenancy.

The Fire Safety Order (FSO) places more onerous duties on the “responsible person” which would usually be the landlord. These duties include carrying out a risk assessment and, in a broad regulation which imposes wide duties, to take such general fire precautions as may reasonably be required in the circumstances of the case to ensure that the premises are safe”. In addition to these rather vague requirements, specific rules such as “emergency doors must open in the direction of escape” are also imposed by the FSO.

While the FSO does not always require risk assessments to be recorded in writing, there is little point in going to the effort of doing one if you cannot later show that you did it – so all risk assessments should be recorded in writing. However, if the ‘responsible person’ for the property employs five or more people there is a specific duty to record both the significant findings of the assessment and any group of persons identified as being especially at risk. A risk assessment is a good idea even for HMOs which are not covered by the FSO as they are a clear demonstration of concern for fire safety.

Fire is also a hazard under the Housing Health & Safety Rating System (“HHSRS”). Where the local authority feels that there are insufficient protections in place local authorities can serve an improvement notice and require that specific works are done. This, of course, takes fire safety beyond HMOs as the HHSRS can be applied to any residential property.

In an unlicensed property, local authorities can serve a remedial notice under The Smoke and Carbon Monoxide Alarm (England) Regulations 2015; this requires landlords to install appropriate detectors and alarms. Licensed properties will now include compliance with these regulations as a compulsory condition, and there will be other conditions requiring specific fire safety outcomes.

Whenever significant works are carried out in a dwelling, these works will need to comply with Part B of the Building Regulations 2010. These regulations are very detailed and must be followed to the letter. Complying with Part B is helpful as it will generally be assumed in cases of dispute that a building which complies with Part B will also meet the appropriate standards for the FSO and HHSRS.

The safety of furniture provided in a furnished property is also key. All upholstered furniture must comply with the Furniture & Furnishings (Fire) (Safety) Regulations 1988. Such furniture must have a permanent label clearly stating that it passes the “ignitability test” (i.e. they are resistant to ignitability if a lighted match or cigarette is placed on them). Beds and mattresses must comply with the Standard BS 7177.

The regulatory framework sets a minimum standard, but landlords should aim higher. In most areas of life we expect our behaviour to be better than merely not quite criminal. All involved in the private rented sector should be seeking to promote a culture of trying to obtain the best protection from fire which can be reasonably achieved in their properties. Rather than consider merely what needs to be done to secure bare compliance with the regulations,  landlords should always be carrying out a thorough risk assessment and doing what they can to minimise risks. Inexperienced landlords should seek out help with this from professionals or local authority officers, rather than try to use their inexperience as an excuse for failing to meet regulatory standards.

Meeting the minimum legal standards may be enough to avoid prosecution, but landlords can and must do more than the bare minimum to escape the accusation that profit is put before tenants’ safety in the private rented sector. The moral case for going beyond the minimum is compelling and the sector will need to be seen to take this issue seriously otherwise further regulation is likely to be imposed.

This blog originally featured in the London Property Licensing website.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

Most tenancies granted in the private rented sector are ‘assured shorthold tenancies’ and this had led to the “AST” becoming the default tenancy agreement for many letting agents and landlords.

In residential landlord and tenant law, it is often the reality of what was agreed between landlord and tenant that is more important than what the paperwork says. This means, if a landlord grants exclusive possession of a property for an identifiable period of time in exchange for rent, there will be a tenancy.

Where some go wrong is in assuming that any tenancy of residential premises will be an AST. An AST can only arise where all the conditions and none of the exceptions set out in the Housing Act 1988 are met.

Can it be an assured shorthold tenancy?

An assured shorthold tenancy can only arise if the conditions at section 1 Housing Act 1988 are met. First of all, there must be a tenancy, as opposed to a licence. However, setting up a licence rather than a tenancy is difficult and simply writing down that things are licences will not mean that they are.

Secondly, the property being let must be a dwelling-house and let as a separate dwelling. Dwelling-house can be a house, a flat or a bedroom.

The tenant must be a person, or if are joint tenants, at least one of them must be a person. The tenant or at least one of the joint tenants must occupy the dwelling house as their only or principal home.

This means a company let will not be an AST, nor will a rent-to-rent arrangement where the tenant is sub-letting and so is not actually going to live in the property.

Do any exceptions apply?

Schedule 1 to the Housing Act 1988 specifies situations where an AST cannot arise. The most important exceptions for private landlords are:

1. Tenancies at very high or very low rent (in London, this means an annual rent below £1,000 or above £100,000);
2. The property is licenced for the supply of alcohol;
3. The tenancy is a holiday let;
4. The Landlord lives at the property.

Common Law Tenancy

If a tenancy of residential premises is not an AST, then the common law rules for tenancies will apply. However, the Protection from Eviction Act 1977, the Landlord and Tenant Act 1985 and sometimes the Consumer Rights Act 2015 will still apply. This means landlords still face restrictions on what they put into a tenancy agreement and how they can end tenancies.

Where the tenant of residential premises is a company the tenancy will be a common law tenancy; there is no distinct category of ‘company lets’ in law, but this is a useful term to describe a set up where the tenant is the company, and the company allows employees to live in the property.

Practical Steps

It important for landlords to understand what type of tenancy they are granting and to make sure they use suitable paperwork.

If a tenancy is not an AST there is no obligation to protect the deposit in a government approved scheme, and there are different routes to recover possession. Failing to understand the legal position properly will mean that time and money are wasted when seeking possession.

As common law tenancies are primarily contractual, the wording of the tenancy agreement is particularly important. The landlord is likely to have substantial powers when the tenant is in rent arrears depending on the wording of the contract or those powers can be quite limited. In general, a landlord will be more restricted for other breaches.

It is particularly important for landlords with lodgers to ensure that they use a suitable lodger agreement. These can easily be obtained online. Using the wrong agreement could make it much more complicated to remove a difficult lodger than it ought to be.

For company lets, there are some different considerations. A bespoke company let may make provision for what happens if an employee is dismissed or the company is dissolved. A standard AST will not address these matters.

For all of these reasons and many more, it’s important for landlords to make sure that they are using agreements that are suitable for their needs, and it is not possible to do this without understanding when a tenancy falls outside of the Housing Act 1988 and is therefore not an assured shorthold tenancy.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

There are sometimes situations where a landlord, through no fault of their own, finds themselves falling foul of one of the property licensing schemes created by Part 2 or Part 3, Housing Act 2004. That is HMO or selective licensing. Landlords can commit criminal offences and be liable for fines, civil penalties or repayment of rent. The solution to this problem is the Temporary Exemption Notice, or TEN for short.

What is a TEN?
The TEN, as its name suggests, provides an exemption from the need to licence a property for a temporary period of up to three months. They are intended to allow landlords who have unexpectedly found that their property needs a licence a short period of exemption from that requirement so that they can put the situation right.

Things a TEN is Not
A TEN is not a get out of jail free card or an alternative to licensing. If a landlord needs a licence then they should seek one. Similarly, a TEN is not a means of avoiding a prosecution for failure to licence. One of the criteria for the granting of a TEN is that the landlord is taking steps to ensure that the property will no longer need licensing and so this puts a substantial limit on its use.

What Can I Do with a TEN?
As soon as a valid application for a TEN has been made in respect of a property which requires a licence but lacks one, it is treated as no longer being “unlicensed” until the application has been determined. A landlord can immediately serve a valid section 21 notice. If the TEN is granted, then the property continues to be treated as not requiring a licence. The TEN gives landlord a short window to put the property in a position where it no longer needs to be licensed. This might involve serving section 21 notices or selling the property. This also protects the landlord from prosecutions or rent repayment order for the period of time when the exemption is in force.

Can I get a second TEN after three months?
A TEN can only last a maximum of three months with an extension in exceptional cases only for a further three months. A renewal of a TEN is much harder to obtain. It is only available as a further single extension of up to three months of an original TEN and the local authority should only grant it in “exceptional circumstances”. The tribunal has been pretty clear that where the word “exceptional” is used it really means exceptional and so the case for renewal of a TEN will have to be very compelling indeed. The landlord would need to show real progress in procuring that the property concerned no longer required a licence and that there was a small temporary hiccup which was slowing things down. It is important to note that the law only permits one extension to a TEN so the maximum length of any TEN is six months, given in two three month blocks. There is no possibility of second or further extensions.

What are the Criteria for Getting a TEN?
A TEN can only be granted where the landlord notifies the local authority of their intention to take particular steps with a view to securing that the house is no longer required to be licensed.

This might be evicting tenants or reducing the number of occupiers. Since a TEN can only last a maximum of three months with an extension in exceptional cases only for a further three months, any set of actions that are going to take longer than three months are not ones where a TEN is likely to be suitable. Any course of action that will take longer than six months will never be suitable for a TEN.

Finally, local authorities are much more likely to grant a TEN where a landlord has found themselves involved in a licensing regime inadvertently. As a tenant will likely be evicted as part of the process a TEN is not likely to be looked on favourably if it is being sought by a landlord who ought to have been aware of a licensing scheme but was simply ignorant. If a person coming into control of a property on the death of a previous owner or the property being let to a single family and the tenant breaching the agreement by allowing other persons to stay there.

What is the Application Process?
There is no fixed process for applying for a TEN and local authorities can be quite variable on this. The local authority will generally need to know what the special circumstances are and they will want to see evidence to support this. Such evidence might be a death certificate of the previous owner, or the contract for sale if the property is being sold. There should be no fee for making this application. The local authority will decide whether to grant a TEN and if they refuse they are required to give written reasons for the refusal.

What can I do if the Local Authority Refuse to Grant a TEN?
If a TEN is not granted there is a right of appeal to the First-tier Tribunal Property Chamber. This appeal must be lodged within 28 days of the refusal of the application. The tribunal make their own decision on the merits of the case and can take into account new evidence which was not available to the local authority. The other option is to  make an application for a licence. Even if the local authority are definitely going to refuse the application, making a valid application achieves the same things as a TEN does, for a short time. If the local authority is slow to deal with the application, this might be enough time for the landlord to solve the issue that has arisen.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*