Tuesday, 17 July 2012

Time is running out to get your properties insulated free of charge

The Green Deal is due to be launched in October this year, along with a new funding regime to provide energy efficiency works for those on a very low income and also for premises where the cost of improving the energy efficiency will be very high, such as solid wall properties.  
The new funding regime will see the end of the current round of subsidies for cavity wall and loft insulation, which have been available for many years although generally not as generous as they are now.  There are currently some incredible offers for insulation as the energy companies become more desperate to meet the targets set by the government before the end of this year.
Many energy companies will provide free insulation for anyone, not just their own customers, whilst some are even giving cash bonuses  of up to £100 and even a finder’s fee of up to £50, along with the free  insulation.   The offers are available for owner occupiers, tenants and landlords and so if you don’t have adequate loft or cavity wall insulation act now before the offers end. 
Too good to be true?  Phone the Energy Saving Trust on 0300 123 1234 to find the latest offers and find the best deal for you and your tenants.
Get your properties insulated now whilst it’s free and before the enforcement of energy efficiency standards are introduced.  You will also avoid the paperwork which will be associated with any Green Deal funding.

Section 48, Landlord & Tenant Act 1987 

Under a different provision Section 48 of the Landlord and Tenant Act 1987 every
landlord must give his/her tenant an address for service which must be within
England or Wales. This applies to all landlords renting out residential properties
and includes lettings under assured shorthold tenancies. It is still applicable even
though the rent is payable without a demand being necessary as it is fixed.
Failure to comply means that rent is irrecoverable until the address for service is
given. It is a one-off requirement and the address given stands until a new
address is notified by the landlord. The case does not affect this.

Section 47, Landlord & Tenant Act 1987 

Section 47 is differently worded as it requires a demand to include the landlord's
name and address. This applies every time a demand is issued and it is not a
one-off obligation.
The Upper Chamber decided that the landlord in that situation could not use an
agent's address. The demand has to show the landlord's place of residence or
place of business (if the landlord has one) such as an office-owned or rented by
the landlord where the landlord carries on business. For a company it is its
registered office or a place where the company itself actually caries on business.
However the sanction for non-compliance is non-recoverability of any service
charge payable until the landlord has complied. It does not make any rent as
opposed to service charge payable irrecoverable.

Arrears and evictions on the rise 

The number of private tenants in severe arrears climbed by 7,000 (eight per cent) in the second quarter of this year, putting pressure on landlords’ finances.
And the number of court orders to evict tenants was six per cent up on the previous quarter.
The figures come from Templeton LPA, the specialist practice of LPA Receivers and part of the LSL Property Services Group. 
Templeton says that in the second quarter, 100,400 tenants in England and Wales were in severe arrears – an increase of 24 per cent compared to a year ago. This is the highest number on Templeton’s records, which go back four years.
The increase also represented a proportional rise. In the second quarter of 2012, tenancies in severe arrears represented 2.6 per cent of all tenancies in the private rented sector in England and Wales – an increase from 2.4 per cent in the previous quarter.
Paul Jardine, director and receiver at Templeton LPA, said: “As the private rented sector grows, the number of tenants in dire financial straits is steadily climbing. “Falling wages in real terms have been compounded by rising rents, pushing a greater number of rented households over the edge financially. With the instability in the labour market and wider economy, and public sector cuts still to come, the section of renters in multiple months of arrears is likely to continue its expansion.
"But Jardine said that although the number of severe arrears cases (tenants with arrears of more than two months) continues to climb, the general level of tenant arrears across the entire market has improved, with 8.9 per cent of all rent in the private rented sector late or unpaid by the end of May, a decrease from 9.9 per cent at the end of April.
Jardine said: “The wider rental market currently includes a much higher proportion of financially comfortable tenants who would have been buyers before the initial credit crunch, reining in general arrears across the market as a whole.
“However, this will be no comfort to the growing minority of tenants several months behind with their monthly rent cheques. As mortgage finance remains difficult to secure, the contrast between better-off frustrated buyers stuck in rented accommodation and renters in severe arrears will grow starker yet, and the number of tenant evictions is likely to increase.”
The increased number of tenants in severe arrears has driven a rise in the number of tenants being evicted through court orders. In the first quarter of the year, 26,060 tenants faced eviction notices – six per cent more than in the previous quarter, and five per cent more than in the same period of 2011.
The growing number of severe tenant arrears cases and evictions has yet to filter through into increasing buy-to-let mortgage arrears.
In Q1 2012, the number of buy-to-let mortgages more than three months in arrears fell by four per cent compared to the previous quarter, representing an annual decline of 19 per cent.
However, at 23,700, there are still almost double the buy-to-let mortgages in severe arrears as four years ago.
Jardine said: “The rising level of severe tenant arrears has yet to filter through into buy-to-let arrears. In fact, buy-to-let mortgage arrears have been steadily falling since the Bank of England reduced interest rates in 2009.
“Landlords have been enjoying historically low mortgage payments, which has cushioned the blow of late rent payments, and many have met the lower mortgage costs with money set aside from slush funds, or rental guarantee schemes. However by necessity an increased number of landlords have had to resort to court orders to remove tenants in long-term arrears, and this has increased.
“While landlords’ mortgage arrears are unlikely to rocket up until the interest rates are hiked, rising tenant arrears and an unsteady labour market will provide upwards pressure.”
David Brown, commercial director of LSL Property Services, said: “The average landlord hasn’t seen anywhere near the level of capital gains they did a couple of years ago, and the onus is firmly on rental income as the main driver for annual returns.
“In this environment, late or non payment of rent is even more of an issue for investors, and it’s not uncommon to see landlords be flexible on the rent at the outset of a tenancy to secure renter with the strongest evidence of sound finances and affordability.”
Kay Boycott, director of campaigns, policy and communications at Shelter, said: “This is yet more evidence of the crushing impact that rising rents and stagnating wages are having on family finances. Shelter research found that average private rents are now unaffordable for working families in over half of England, with many paying up to half of their income each month.”
David Whittaker, managing director of specialist BTL lender Mortgages For Business, said: “Arrears are a serious issue for landlords, and so anyone investing in the private rental sector must balance the size of yield with the likelihood of arrears.
"Ensuring you invest in areas where tenants are less likely to fall behind in their payments may mean sacrificing a percentage point on the monthly returns, but it could be the difference between receiving a full 12 months of rent and not.”

Tenants pay the price for damage 

Tenants lose a total of £367m per year as a result of deposits being withheld.
According to the website FindaProperty, 40 per cent of tenants in the last three years have lost some or all of their deposit, with the amount averaging £313 per tenant. One in five said they had had over £500 withheld.
One-fifth of tenants claim they were penalised because of damage caused by previous tenants, and 10 per cent resorted to legal action to try to recover withheld deposit money.
The most common reason for deposit monies being withheld was to cover the cost of cleaning (37 per cent) and damage to carpets and curtains (21 per cent), while 19 per cent of charges related to marks on the wall and 13 per cent to poor garden maintenance.
A disgruntled 43 per cent of tenants who have had deposit funds withheld say the amount of money deducted was considerably more than it would have cost to fix the problems.

Landlords warned over address on 
legal notices 

An important court case has delivered a warning that any legal notice served on a tenant must have the landlord’s own address on it and not that of the agent.

The case of Beitov Properties v Elliston Bentley Martin [2012] UKUT 133 (LC) ruled that a landlord seeking to recover a service charge from a tenant had not complied with the statutory requirements of section 47 of the Landlord and Tenant Act 1987 because the landlord used an indirect address ‘care of’ its managing agents in its demand notice. 
The landlord was deemed not to have served a valid demand and so nothing was due from the tenant.
It is common practice for a landlord seeking payment for sums due from a tenant – whether rent, service charge or insurance – to delegate the collection task to managing agents and for the managing agent to be named as the correspondent and recipient of the sum due in payment notices.
This case therefore serves as an important reminder to both landlords and managing agents to get the technical details right.
Section 47 of the Landlord & Tenant Act 1987 requires a landlord to give his or her name and address in any written demand to his residential tenants.
The Act applies to landlords of all types. An individual has to provide his/her residential address, and a company has to provide its registered office. Using a managing agent’s address does not suffice, as it is not the landlord’s address.
The implications of the Beitov decision may be more far-reaching than is first apparent. For example, it may not be possible simply to re-serve the demand with a correct address, as the demand could be out of time: service charge demands must be made within 18 months of the liability being incurred.
And of course, many landlords do not like to disclose their addresses to their tenants.
Finally, if a tenant has already paid as a result of a demand that proves defective, he or she may be able to claw back the last six years’ payments on the basis that they were paid under an invalid demand.
Caroline DeLaney, real estate disputes partner at London law firm Kingsley Napley, said: “Landlords and managing agents need to take urgent note of this case or suffer the consequences if their demand notices to tenants are found to be technically defective.  
“An astute tenant can defer payment successfully, or at worst may be able to refuse to pay monies at all, if demand notices are not fully compliant with the Landlord & Tenant Act in terms of correct address details.
"As always, landlords are urged to obtain professional advice where they are unsure of any situation regarding the law.