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Landlord Insider
On the Landlord Insider blog, you’ll find some excellent resources for landlords of all sizes. From the latest landlord news, to professional advice, tips and guides for landlords, there’s something for everyone. Brought to you by the excellent team behind the Landlord Vision property management software.

When Getting the Law Wrong Can Cost Landlords Thousands

a small statute next to a gavel

In my experience, most landlords who get things wrong do so because they didn’t know that they were doing the wrong thing. Arguably, a person shouldn’t go into a business as important as providing homes without understanding the legislation and regulation involved, but many of us got into the business in the days when it was more straightforward and covered by less legislation and regulation. Unfortunately, I speak to landlords all the time who tell me “I honestly didn’t realise…”. This month I am going to share some examples of the costs involved for landlords and agents who made big mistakes.

£7000 in Fines and Costs AND a 3 Month Curfew!

I’m beginning with a case that happened in Bristol in April this year. The punishment was extreme and applied to a live-in landlord who was letting a room out in her own home. Usually, these occupiers have less legal protection, but in this case, the Judge was going to make a point stating:

“You behaved in an inappropriate way towards her and evicted her 11 days prior to the date on which her occupation was due to end.”

The landlord was fined, and the legal costs of the victim were awarded against her totalling £7,000. However, that is not all. A curfew was imposed and she must now remain in her home between 8pm and 6am each night for the next three months.

Illegal Eviction is a Criminal Offence

The landlord could have been given a custodial sentence.

Only a court appointed bailiff, enforcing a court order can ask a tenant or lodger to leave while they are inside the term of a contract.  Many people give lodgers monthly rolling contracts in order that they can ask them to leave with one month’s notice if things are not working out – this is only lawful when the landlord is sharing a home with the lodger, it doesn’t apply to a situation where the only people living in the property are those paying rent regardless of what is written in the contract. The law will call it an Assured Shorthold Tenancy (AST) and the tenants will be protected from illegal eviction.

Rent Repayment Order of £5,382, a Fee of £300 and Costs of £21,512

This case is toe-curling.

A tenant applied for a Rent Repayment Order for the sum of £5,382 because she had lived in an HMO with 4 other people and the property was not licensed as an HMO. The landlord’s defence was that the property didn’t need a license because there were only 4 occupiers. The landlord supplied a copy of a contract signed by 4 tenants only, and the tenants had not been given a copy of the original contract. This meant that the tenants could not provide any evidence that this was not the contract which 5 of them had signed. The judge asked the landlord to provide the original contract and copies of his bank statements showing rent payments and then set a date for a further hearing.

When the case went back to court, the landlord was represented and his representative said that the landlord now accepted that the property was unlicensed and that 5 people had actually lived there. Therefore the Rent Repayment Order of £5,382 was due.

When the tenant applied for the Rent Repayment Order there was also an application for legal costs, the judge now turned to that application:

“The applicant argued that the landlord had put forward a palpably false account, that there were 4 tenants, not 5, and he could have no honest belief in that case. The landlord had gone to great lengths at the first hearing day, including cross examination and attacks on the applicant. The landlord had forged a tenancy agreement, given false evidence and only on the second hearing date, withdrawing it all. The landlord was well aware of the licensing requirements, and owned many other properties. He had behaved abusively and vexatiously.”

The judge awarded the tenants costs of £21,512. The total hit for this landlord was £27,194 plus his own legal costs. If he had admitted guilt on day one, he might have got away with paying just £5,682 as well as his own legal costs. It was only when he realised that his bank statements would show 5 payments of rent going into his account that he admitted fault.

Some landlords threaten tenants by saying that they will apply for their costs if the tenant takes legal action against them. This can prevent the tenant from taking legal action for fear of ending up with a substantial bill. Tenants are now being told that is it very rare for costs to be awarded against the tenant in these cases, unless they have brought a false or vexatious case. They are also being told to make sure that they apply for their own costs in these cases, as these can be considerable where the landlord makes a defence and needs time to provide documentary evidence.

Note: If an unfair claim has been made against you, ensure that you go to court with the documents which support your defence. I’m sure that I don’t need to say that telling lies and forging documents is an expensive mistake:

“if a person has acted unreasonably in bringing, defending or conducting proceedings” costs can be claimed and the claim is very likely to be successful.

Letting Agent Ordered to Pay Almost £13,000

This case is about an agent who rented a property from the landlord at a guaranteed rent and then let it to several unrelated people. Known as ‘Rent to Rent’ this is common practice. In Oxford, all properties where 3 or more unrelated people share facilities must be licensed and the agent “rent to renter” failed to licence the property. Oxford City Council took action because of the lack of licence and also because of breaches of Fire Safety Regulations.

“This included not having a fire blanket in the kitchen, the installation of a faulty kitchen fire door, while the front door lock was not keyless operation on the inside, meaning tenants may have needed to search for a key to get out if there was a fire.”

The agent was fined £11,500 and ordered to pay costs of £1,385.

Note: Many landlords of HMOs are unaware of the need to have keyless locks on all exit doors. This includes the front and back of the property. This could be the difference between escaping a fire and being overcome with smoke. If you do decide to get into a Rent to Rent contract, make sure that the other party carries out all the necessary requirements to be compliant with HMO legislation, and that both your lender and insurer are aware of the arrangement.

Over £8,000 in Fines and Costs for 6 Offences

When council officers found rat droppings in the kitchen, faulty smoke detectors, a bathroom in “significant disrepair”, damage to a fire door, a broken light switch in the hall, and that several radiators had been removed from the central heating system they took action against the landlord. The landlord pleaded guilty to not dealing with these issues and also guilty to two offences of failure to comply with Improvement Notices.

Note: Having been served two Improvement Notices, this landlord should have realised that it was only a matter of time before the council took legal action. He must now ensure all the repairs are carried out and pay £8,000, which would have been a significant contribution towards the costs. Even during lockdown, local authority officers are working and taking action against non-compliant landlords.

Fines, Costs and Surcharges totalling £29,597.59

A landlord who should’ve known better has now agreed to put 18 HMOs in full management, and carry out repairs to the kitchens, bathrooms, fire safety equipment as well as clear outside areas in 3 HMO properties. She faced a total of 8 offences.

“She is a portfolio landlord who has been renting property for many years” and the magistrates commented “that as such she should have the knowledge and experience to act on the issues identified.”

Note: This is another case where the fine is probably costing more than the works needed. £30,000 would buy a lot of repairs and replacements.

Some Good News – Rent Repayment Order Reduced Because of Tenant’s Behaviour

In this case, the tenant had sued the landlord for the rent paid over a period of 7 months totalling £7,418. However, at the time of the hearing, the tenant was already in £10,000 worth of rent arrears incurred after the period of time that they were claiming for.

“The circumstances of the present case are a good example of why conduct within the landlord and tenant relationship is relevant; it would offend any sense of justice for a tenant to be in persistent arrears of rent over an extended period and then to choose the one period where she did make some regular payments – albeit never actually clearing the arrears – and be awarded a repayment of all or most of what she paid in that period. That default, together with the respondent’s kindness and the respondent’s financial circumstances, led the FTT to make a 75% reduction in the maximum amount payable, and I see no reason to characterise any of those considerations as irrelevant or the decision as falling outside the range of reasonable orders that the FTT could have made.”

The tenant was eventually awarded £849.19 – it’s a pity that she was awarded even that amount when she had continued to withhold rent and arrears increased. It’s good for landlords to know that the tenant’s behaviour and rent arrears can be taken into consideration when the tenant sues for a Rent Repayment Order.

Student Wins Entire Years Rent Back and Writes Her Dissertation on the Case

In another case where the tenants found out that their house was not licensed, despite being shared by 8 students, not only did they apply for a Rent Repayment Order, but one of the tenants wrote her end-of-year dissertation to tell the tale.

The students were studying at the University of Birmingham and sharing a house nearby when they discovered:

a series of notes, which previous tenants had hidden around the home warning of the landlord’s “rogue behaviour” and problems with the property, including ants’ nests, mould in bedrooms, leaky showers and broken ovens.”

Early on the problems began:

“the boiler did not work for the whole month of October, which meant we were forced to shower at friends’ houses and at the university gym. We text and called our landlord many times, he’d always say he was sending someone but he never did.”

It’s very difficult to gain compensation for poor standards or disrepair, but they investigated further and found that the property was not licensed. This meant that they could potentially reclaim a years worth of rent through a Rent Repayment Order, and that is what they did. Having gone through the legal process and gained a Rent Repayment Order for 8 occupiers, one of the tenants wrote her dissertation on the process, which she titled:

The Power Dynamic in Renting: Rogue Landlords, Vulnerable Tenants and Policy Proposals for Change.”

She is now planning a career in housing and in particular:

“hopes to one day take on a policy researcher role and develop “new and radical” housing legislation.

Note: I remember, in the late 90’s, listening to the debate in the commons about introducing Tenancy Deposit Protection, up until that time landlords would just take deposits and pretty much give back what they decided to give. Landlord legislation is there to protect tenants from rogue landlords.

Is it Safe to Hand Our Properties to Managing Agents?

There is no doubt that it is becoming more difficult for private landlords to be legally compliant, or even to keep up with requirements and I believe that more and more of us will turn to letting agents to ensure that we don’t make expensive mistakes. Unfortunately, sometimes letting agents do not fully understand the law either and these agents take their commission but do not keep their landlord clients safe.

ARLA Propertymark are calling on the government to deal with this. It has been two years since the government published the Regulation of Property Agents Working Group (ROPA) and since then this has not moved forward. ARLA Propertymark are asking the government to ensure that anyone acting as an agent:

  • is licensed
  • adheres to a strict code of practice
  • holds at least a Level 3 qualification (the level equivalent to an A-level)

This is long overdue and it is only since fairly recently that agents must be registered with one of the government-approved consumer redress schemes and hold Client Money Protection through a government-approved scheme, so it’s no wonder that landlords don’t know who to trust with our portfolio’s. Let’s hope that the government is listening and that this is high on their priority list because none of us want to be the landlords in the cases above.

Many landlords are unaware that Letting and Managing Agents must belong to a redress scheme and that the scheme to which they belong should be on their website/office premises/stationary. These schemes give both landlords and tenants free redress if the agent doesn’t do his job properly and if they are found guilty of breaking the Code of Conduct, they are removed from the scheme and cannot join another scheme. If they are not members of a scheme they cannot legally operate as an agent, this is powerful but it only works if landlords understand it. 

The days where a tenant walked into an agent’s office to ask what properties are available to rent are almost over. What happens now is that tenants find the property that they are interested in, usually online, and apply to the agent who is marketing that property. It is our properties that enable an agent to attract tenants, therefore it is our responsibility not to use a non-compliant agent with whom our prospective tenants must work.

Read More Like This.

https://www.landlordvision.co.uk/blog/buy-to-let-property-checks/

Mary Latham

Mary has been a self-managing landlord since 1972 and until July 2018 she was the West Midlands Regional Representative for the NLA. Over the years Mary has been consulted by government, local authorities and other groups within the housing industry and is well known for her in-depth knowledge of legislation and regulation. She continues to run regular landlord accreditation seminars on behalf of local authorities. Mary regularly contributes to the Landlord Vision newsletter and blog providing our readers with valuable, down to earth and realistic insights into the key issues that keep landlords awake at night.