Newsletters Total Records:  35 22/07/2006  Deposit Laws Delayed Tenancy Deposit Protection New legislation for the protection of tenancy deposits was due to come into force in October 2006 but, as many readers will be aware, this has now been further postponed – until next year at least. The Government recently announced that Tenancy Deposit Protection (TDP) will be delayed pending further consultation. The TDP measures are designed to protect tenants who have difficulty recovering their deposits and to help resolve disputes between landlords and tenants. Research from specialist [PDI1] buy-to-let lender Mortgage Trust reveals substantial opposition to the TDP reforms with 55% of respondents feeling that it was not a worthwhile piece of legislation. The biggest concern of intermediaries was the lack of information on the subject. 86% of respondents believed that there is not enough information to enable landlords to prepare for its introduction. Following consultation, it has now become clear to Government that the legislation, which was hurriedly drafted into the Bill at a late stage, and without consultation, is badly flawed and it will be necessary to alter the primary legislation before the deposit provisions can be introduced. Announcing the delays, Housing Minister, Baroness Andrews said "We are determined to ensure that the proposed Tenancy Deposit Schemes do the job that they were intended to do; that is to protect nearly 1.5 million assured shorthold tenants and an estimated £768m of tenancy deposits currently held in England and Wales" At a recent conference of the National Federation of Residential Landlords (NFRL), Phil Alker, the Government TDP co-ordinator explained that several complex issues had arisen as a result of recent consultation. For example, there were concerns expressed by landlords and letting agents about the issue of rent arrears and abandonment of tenancies. The concern arises where a deposit is safeguarded by a custodial scheme and one party cannot obtain the agreement of the other as to the release of the deposit. Under present arrangements, court action would be required to recover the arrears. There are also concerns regarding the amount of financial and personal information that landlords are required to reveal within the administrative paperwork. Many landlords have already stated that they will not be taking tenancy deposits in future if the current system is implemented. When will the new changes happen? A new launch date is to be announced before the Parliamentary summer recess. Earliest estimates suggest that the TDP legislation will be re-launched in April 2007, but a more thorough review of the legislation and the provision of a reasonable implementation lead-in time could easily put the introduction of TDP into the latter end of next year. There is clearly a feeling from many sides that this new legislation is simply a sledgehammer to crack a nut, and that it deserves a complete rethink. We shall keep readers informed of any further announcements. 17/05/2006  New Management of HMO Regulations New Management of HMO Regulations Part of the new Housing Act 2004 provisions require landlords of certain properties to follow a new set of management regulations. Unlike the current RICS-produced code of management for residential property, not complying with the new regulations could bring a fine of up to £5,000 and is therefore much more serious. These Regulations came into force on 6 April 2006. Licensing will affect a comparatively small number of properties. Mandatory licensing will only affect HMOs with 5 or more occupiers on three or more floors. Additional and selective licensing may be run in some areas but this is at the discretion of the local authority. The management regulation will apply to all HMOs, except the section 257 poorly converted blocks (where conversion is not compliant with 1991 building regulations and less than two thirds are owner occupied). This will therefore affect a much larger group of landlords and agents. Many landlords and agents may have no licensable properties, but it will be rare for them to have none that could be HMOs. Part of the secret of understanding the new Housing Act 2004 is to grasp the new definition of an HMO. It is complex and runs to six pages and a schedule. However, for the purposes of the management regulations we are concerned with any situation where there are three or more unrelated occupiers, probably sharing a basic amenity. They could be three friends in a flat, a couple and an unrelated friend in a house, three individuals in bedsit-type accommodation or several other variants. In these cases, the property (could be the whole of the building or just part of the building) will become and HMO and must, by law, be run according to the Management of HMO Regulations. The regulations impose a range of obligations on the manager of the HMO including the requirement to display the name and address of the manager, a requirement to have a mains electrical test done at least every 5 years and the requirement for the manager to make sure the “common parts” are kept clean. Since common parts are defined as any part shared by more than one household (can be read as family) it could end up with some interesting situations in shared houses! The tricky bit for landlords and agents is that today the property may not be an HMO and tomorrow, when we change the tenants, it becomes and HMO. Properties will drop in and out of being and HMO and tracking whether the regulations need to be complied with at any given time will be an interesting task. These regulations could affect the vast majority of landlord and agents and have the potential to have greater impact on the lettings market than licensing does. Even if a landlord never intends to let his property such that it is caught by the regulations, he needs to understand when it might become an HMO in order to even avoid the problem. The full regulations can be downloads from the Stationary office website at http://www.opsi.gov.uk/si/si2006/20060372.htm 27/03/2006  Housing Benefit Overpayment Changes Overpayment recovery changes Following the “Chiltern” case, landlords have had very limited rights of appeal against the decision of the local authority to recover an overpayment from a landlord, as opposed to the tenant. This did not matter if the overpayment was caused by the actions of the tenant (usually failure to notify a change of circumstances, but could have been fraud); if the benefit was paid to the landlord, it could be recovered from the landlord. This was never the intention of government and they have moved to address this by changing the rules so that the local authority have, as part of the decision making process, to consider who was responsible for causing the overpayment and target that person as a priority. Some local authorities consider who and what caused the overpayment and then decide from whom to recover the overpayments. However, the form in many local authorities is to target landlords and agents, where there is direct payment, as it was simpler and faster to get a single cheque repayment, rather than to wait for the payments from a claimant which might have been limited to about £8.50 per week. The faster and easier method of recovery then becomes more important than the cause. The circular says: Regulation 101 of the HB regulations are amended, “so that the chief consideration when deciding ‘whom to recover from’ should be who has misrepresented or failed to disclose information, and in a case of official error the person who could reasonably have been expected to realise that there had been an overpayment. This will mean that overpayments caused by a change to the claimant’s personal circumstances, which the landlord could not possibly know about, should be recovered from the claimant rather than from the landlord. If this legislative requirement to recover from the person who has misrepresented or failed to disclose information (or could reasonably have been expected to realise there was an overpayment) is not taken into account, the person from whom payment is wrongly sought will have a right of appeal to an appeal tribunal”. Also amended are the rules dealing with a situation where the local authority cannot recover an overpayment from the landlord even if the benefit was paid directly to him. In the situation where the overpayment occurred because of the claimant having left the property, the benefit will be recoverable from the landlord regardless of if the landlord informed the local authority he suspects an overpayment. This situation should not affect many claims as it must meet 4 fairly stringent tests before it applies and does not affect the above landlord’s right to appeal. These regulations came into force on the 10th April 2006. The Housing Benefit and Council Tax Benefit (General) Amendments Regulations 2005, Statutory Instrument 2005/2904 26/03/2006  HMO New Rules Seminar IBC and Suffolk District Council have proposed a meeting on 30 March 06, 6pm, venue to be comfirmed, for Landlords, to help explain the new HMO rules. For details contact Stacey Quarton on 01473 433010, or email Stacey.quarton@ipswich.gov.uk 17/03/2006  HMO Licensing HMO Licensing - will the new HMO regulations scare off landlords from this important sector of the market? Under the new HMO licensing rules due to come in force from April 2006, many landlords are finding that their properties will now qualify as a ‘house in multiple occupation’ or HMO. The definition of an HMO has been revised under the Housing Act 2004, and is, essentially, any house or flat occupied by more than two people who do not form a single household, and share an amenity. For the purposes of the HMO rules, a household could be either a single person, a family, or a co-habiting couple. Therefore, under the new definition, a family will classify as a household, whereas a group of individuals sharing a house will normally be considered as multiple occupation. Not all buildings that are HMO’s will need to be licensed. The Government has defined that the current threshold for licensing will be buildings with three or more storeys (including any sub-floor basement) and five or more occupants. From the date of introduction, it will be an offence to operate an HMO without being licensed by the local authority. Unfortunately, due to the complexity of the new legislation, and Government delays in setting the secondary legislation and publishing the related guidance, many local authorities have not been able to accept new licence applications. Enforcement will not start until July giving a short period in which to make the application. Under the new HMO definition, many landlords will be required to register - whereas previously they managed to avoid licensing by claiming that the tenants shared the house, and lived in the manner of a single household. According to Richard Perrin of the South Devon Residential Landlords Association, many local authorities are finding that the new tighter rules are already backfiring when it comes to providing housing for young or vulnerable people. Houses that used to be let as rooms for bedsits to young people are being increasingly redeveloped into self-contained flats to avoid the requirement for HMO licensing, and the availability of simple low cost accommodation is drying up. Landlords should also beware that the HMO legislation appears to suggest that once a building has become licensable, then it may not be “unlicensed”. Because, this could cause a drop in the building’s value, HMO landlords need to consider very carefully whether they wish to continue letting as an HMO after April, and the costs of any conversion and safety work that the local authority may require of them if they do. Many local authorities will, by now, have set their standard licence rates for HMOs - houses in multiple occupation. Plymouth City council have set their standard HMO licence at £690, Torbay at £400 and Wandsworth at £1,100. The Council of Mortgage Lenders has warned that new regulations introduced as part of the Housing Act 2004 could make mortgage lenders very reluctant to lend on student houses and other types of multiple occupation property. Ultimately, this could reduce the number of places available. From April 2006 landlords will require a licence if their property is of three or more storeys and is let to five or more tenants in separate households. Landlords will be required to improve the safety of the accommodation and will have to provide fire escapes and additional bathrooms if the property does not meet local safety standards. The mandatory requirement for safety improvements in high risk properties is a useful outcome of the legislation but further extension of the legislation into lower risk property will make rental housing more expensive to provide. Research from Mortgage Trust showed that 46% of landlords are ignorant of the Houses in Multiple Occupation regulations planned for 2006. The lender also expresses concerns that the implementation of HMO licensing may create upward pressure on rents, with 48% of landlords with HMOs saying that they may put their rents up First Prev   1234567of 7  Next Last