Legal Hot Points
*****NEWS UPDATE*****We would like to inform all our Landlords that a confirmed date for the Tenancy Deposit Protection Scheme has been issued for 6th April 2007
This will mean that every private landlord in England and Wales letting private residential property will by law required to join one of three government-authorised tenancy deposit protection schemes if
The start date of the tenancy is after 6 April (tenancies already in being will not be affect by the legislation) and
The tenancy is let under an Assured Short Term tenancy agreement.
They take a deposit
As we do not hold deposit we would advise our Landlords to look into the schemes that are on offer.
The three schemes are:
 The Deposit Protection Service (The DPS) - the only custodial deposit protection scheme – is free to use and open to all Landlords and Letting Agents. The service is funded entirely from the interest earned from deposits held. Landlords and Letting Agents will be able to register and make transactions online. Paper forms will also be available should internet access be an issue. The scheme will be supported by a dedicated call centre and an independent dispute resolution service. For more information, visit www.depositprotection.com or call 0870 707 1 707
Tenancy Deposit Solutions Ltd (TDSL) is a partnership between the National Landlords Association and Hamilton Fraser Insurance. This insurance-based tenancy deposit protection scheme enables landlords to hold deposits this is directed primarily to landlords. The fee for joining this scheme is £58.75 joining fee and £30.00 per deposit protected by the deposit protection scheme and an annual membership renewal fee of £14.70. For more information, visit www.mydeposits.co.uk 0871 703 0552
The Tenancy Deposit Scheme (TDS) is an insurance-backed deposit protection and dispute resolution scheme run by The Dispute Service that builds on a scheme established in 2003 to provide dispute resolution and complaints handling for the lettings industry. The new scheme enables letting agents and landlords to hold their deposits. The fee for joining this scheme is £95 per tenancy for unaffiliated Landlords and £45 for Landlords who are members of a landlord trade association.For more information, visit www.tds.gb.com or call 0845 226 7837.
If a deposit is not protected, the landlord will be breaking the law. S/he will be unable to regain possession of the property using notice-only grounds for possession under the Section 21 of the Housing Act 1988. The tenant can apply for a court order requiring the deposits to be protected, or for the prescribed information to be given to them. If the court is satisfied that the landlord has failed to comply with these requirements, or is not satisfied that the deposit is being held in accordance with an authorized scheme, the court must either:
Order the landlord to repay the deposit within 14 days of the issuing of the court order, or
Order the landlord to pay the deposit into the designated account held by the custodial scheme administrator.
The court must also order the landlord to pay to the tenant (or person who paid the deposit on his / her behalf) an amount equivalent to three times the deposit amount within 14 days of the making of the order.
We strongly advise you to take a look at all the schemes so you will be prepared for the 6th April 2007.
You can also Contact Natasha Eddy by email tash@blackkatz.com / 0207 284 3111
What is the Tenancy Deposit Scheme?
Tenancy Deposit Scheme
The government is introducing a provision in the Housing Act 2004, whereby it will be a requirement that all landlords/agents that wish to take a monetary deposit will need to place the deposit into a Tenancy Deposit Scheme this scheme is intended to be introduced later this year. The tenancy deposit scheme is described in sections 212 to 215 and schedule 10 within the Housing Act 2004.
WHY?
It is being introduced to safeguard tenants' deposits which are paid in connection with Assured Shorthold Tenancies against unscrupulous landlords and agents who withhold the deposits with no justified reason, it shall also help to facilitate with resolving disputes over the return of the deposit. Basically this scheme is being introduced to reassure tenants that the return of the deposit is a fair deal due to the fact that the agent or landlord is a member of scheme which uses an independent adjudicator.
How does it work?
There will be two schemes on offer a Custodial Scheme and an Insurance based scheme.
Custodial Scheme—in this scheme the deposit is forwarded to a designated third party. It is then held by this party throughout the tenancy until the termination of the tenancy and is returned when all parties are happy with the appropriation of the deposit.
Insurance Scheme—this is whereby the landlord or the agent holds onto the deposit but the landlord or agent is involved in a scheme that ensures that should the landlord withhold the deposit then the scheme shall pay out.
For more information you go to
www.communities.gov.uk
HMO - Licensing
What are the changes?
Licensing will be broken up into 2 sections; mandatory licensing, additional licensing and selective area licensing which could be introduced by the LHA.
Mandatory Licenses— On the 6th April this year all properties that are more than 3 stories high, this does include basements and attics, which are occupied by 5 or more tenants where 2 or more tenants are unrelated will be a HMO and require mandatory licensing.
Discretionary Licenses—The legislation will allow LHA's to extend the definition of an HMO if they so wish, to any property with 2 or more unrelated tenants.
As the LHA can introduce additional licensing schemes and selective area licensing schemes landlords will need to ensure that they keep up to date with the actions of their LHA.
What are the license requirements?
All licenses will have provisions for anti-social behaviour by tenants which will ultimately be the responsibility of the landlords.
In addition to this the license will specify how many tenants can reside at the property and the minimum facilities required including the number of toilets, baths, showers and kitchens etc. for the number of tenants and the property needs to fulfil the safety requirements.
What happens if the property does not meet the standards?
If the property fails to meet the minimum standards required then the LHA may:
· Grant a license subject to a provision being made about ensuring that extra facilities are supplied within a certain period.
· Grant a license for a smaller number of occupants.
· Refuse to grant a license until the standards have been met.
Are there any fees and how long does a license last?
Yes there will be a fee. The fees vary between LHA's as it is up to them to set the fees. They currently vary between £300 to £500 however it has been stated that one is quoting £1100. These licenses will be valid for five years however it may be possible to get a shorter license.
When will this take affect?
Mandatory licensing will take affect on the 6th April 2006 however 3 months grace is being applied to ensure that Landlords have sufficient time to register and apply for a license.
Are there any penalties?
It will be a criminal offence to operate an HMO without a license and will be subject to a fine of up to £20,000. The tenants within your property may also apply for a rent repayment order whereby the tenant can apply for the landlord to repay all the rent paid whilst the property was run as an HMO without a license, up to a years back payment can be applied for. Another restriction will be that while a Landlord operates without a license he will be unable to serve a Section 21 to regain the property.
Are there any companies that are helping Landlords with applying for a License?
We do not currently know of any however we will post any information as soon as we find out. We would advise that you speak to your council as some councils are providing assistance with applications at an extra charge.
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FAQ's
We believe that it is vital that both Landlords and Tenants are aware of their legal rights and obligations. Below are some essential questions and answers.
As a Landlord do I have to perform an annual electrical safety check on my rented property?
The Electrical Equipment (Safety) Regulations 1994 governs the safety requirements of electrical appliances. As a result Landlords and managing agents have a duty of care to ensure that the electrical appliances that they provide are safe to use. This regulation relates to both new and second hand goods; however, there is no mandatory checking period.
If a fault occurs at a later date and tenants are injured and you are taken to court you will need to provide evidence that you took reasonable steps to ensure that the appliances were safe to use. It is strongly recommended that any second hand appliances that you have are professionally tested and that all your appliances have the relevant CE symbol on them. It would be advisable that you carry out checks on all your appliances and maintain records of when you carried out these checks, you will also need to provide all the instruction booklets for all the appliances and if you are in doubt over the condition of any appliance then get it checked by a qualified electrician.
Should an incident occur and you are found to be guilty you can be charged both with a criminal offence and with Civil offence. The criminal offence carries a maximum fine of £5,000 and/or imprisonment.
I have a fixed 12month contract which is due to come to term in two months time. Do I still have to provide notice to our Landlord?
At the end of a fixed term in an Assured Shorthold Tenancy, the tenancy will automatically become a periodic tenancy unless either you or your landlord has served notice or agreed to renew your tenancy. It is therefore advisable that you serve your landlord a month's written notice and the likewise for your landlord he/she should serve you the minimum of two months notice which should not expire any sooner than end of the fixed term.
In some cases your landlord may have served a section 21 at the start of the tenancy stating that at the end of the 12month period they want to take possession of the flat, in such circumstances you will not need to serve notice.
Can I use my deposit as my last months rent?
Deposit monies are given to landlords as a security against damage caused by the tenants during the tenancy and the settlement of any outstanding bills left by tenants. Therefore the deposit can not be used as the last months rent, some tenants find this unfair when they have dealt with unscrupulous landlords who withhold deposits. This problem has been tackled by new legislation written into the Housing Act 2004; Tenancy Deposit Scheme will be implemented to safeguard tenants' deposits. This new legislation was due to take affect in October 2006 however the date has been postponed and a new date should hopefully be announced this July. For more information on how this scheme will work please see our Legal Hot Points column.
My Landlord is withholding my deposit, what can I do?
When a tenancy ends it is normal practise for the landlord to carry out a check out of an inventory or at least an inspection of the property. Once this has occurred then the landlord can make any necessary deductions for damage to the flat or furniture or for any outstanding utility bills or rent arrears. However, the landlord can not make any deductions for normal wear and tear; he/she can not withhold your deposit without providing you a written notice of why and what for. Should you disagree with the reasons or the landlord is not providing you with a reason you should seek legal action or start proceedings through small claims. Usually a letter from the Citizen Advice Bureau will force the landlord into action. The government has introduced a section in the Housing act 2004 that deals specifically with tenants' deposits and the government should be implementing this in the near future. For further information on this please see our Legal Hot Points column.
What is the Landlord responsible for?
- Repairing obligations to the structure and exterior of the property; heating and hot water installations, sinks and other sanitary installations.
- Ensuring that all gas and electrical appliances are safe.
- Ensuring that the furniture and furnishings within the property meet the fire safety standards.
What is the Tenant responsible for?
- Paying the rent in the agreed manner and taking proper care of the property
- Paying the utility bills for the property as agreed with the Landlord, such as gas, electricity and telephone.
- Paying council tax, water and sewerage charges as agreed by the Landlord.
Does a Landlord have to provide a Gas Safety Certificate for each new Tenancy?
NO. The legislation in place relating to the installation and maintenance of gas appliances (Gas Safety (Installation and Use) Regulations 1998) demands that all Landlords must ensure that any gas appliances within their rental property is inspected and passed annually by a CORGI qualified engineer. Failure to comply with the regulation carries a fine of up to £5,000 and/or imprisonment of six months (or more). The Landlord is responsible for keeping a record of all the Safety checks and provide the Tenants with a copy.
A Tenant has informed his/her Landlord about a repair, however the Landlord has failed to carry out this obligation, what are the Tenants rights?
Depending on how the disrepair occurred in the first place then the tenants rights are as follows. The Landlord is not responsbile for the repairs arising from the damage caused by the Tenant. If the damage was caused by the Tenant then the Tenant would be responsible for paying and ensuring that the work is carried out. Apart from this the Tenant only has to do repairs if the terms in the Tenancy Agreement say so.
If the Tenant has tried on numerous occassion to get the Landlord to carry out his repairing obligations and has no success then he can either:
- sue the Landlord in court
- seek help from the local authorities as they have powers to ensure that the Landlord does the repairs
- or in some circumstances, if the right procedure is followed then the Tenant could do the works and take the cost out of the rental payments. Tenants need to know that with holding rent would be in breach of their tenancy terms and the Landlord could take action to repossess the property.
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