If you're a Landlord

The law relating to tenancy agreements is confusing!  This is true whether you’re a landlord or a tenant.  But you still need to make sure that you are complying with all the rules and regulations if you’re going to avoid expensive disputes which may result in court action.  Even you’re planning to rent out a property for a short time, you can’t ignore the regulations that apply to long-term landlords – you still have those obligations and you could be fined or imprisoned if you fail to comply.  We should all learn from our mistakes but it’s generally better to learn from someone else’s.  And we’ve witnessed quite a few!  Let us help you avoid them…

The Tenancy Agreement

It’s important to have a tenancy agreement because it confirms the terms and conditions of the agreement you have with your tenant. It is a contract between you and the tenant for the possession and use of that property in exchange for the payment of rent.  

There are two types of tenancy – assured tenancies and assured shorthold tenancies.  

If your tenant has an assured tenancy, they have extra protection against eviction. There are strict rules about whether you can evict them.  

But if the tenancy was granted since 28 February 1997, it is probably an Assured Shorthold Tenancy (‘AST’). There are some exceptions to this - for example, if you’re receiving rent of more than £100,000 a year or the tenant has taken over an assured tenancy from a family member after their death.

So, an Assured Shorthold Tenancy can be for a fixed term (usually 6 or 12 months) or a rolling agreement that doesn’t have an end date.  There are no regulations regarding rent.  You can give your tenant 2 months’ notice in writing to terminate the tenancy without giving any reason although you still have to follow the correct procedures.

Ending an Assured shorthold tenancy 

The tenancy simply ends at the end of the fixed term. You don’t have to tell the landlord that you intend to leave but it is polite and might help get a good reference!  You can only end the tenancy early if you have a clause in your tenancy agreement that allows it.  Otherwise you’ll need to negotiate with your landlord because you’re liable to pay the rent until the end of the fixed term.

It is different if you have a periodic weekly or monthly tenancy. The tenant must give notice of one clear tenancy period which is usually one month’s notice (if a monthly tenancy) or a minimum of 28 days (if a weekly tenancy) ending on the day before rent day.

Or maybe the landlord wants to end the tenancy.  Perhaps s/he wants to sell it, or move in.  Or maybe the tenant didn’t pay the rent.  The landlord needs to give notice but there are two types: Section 8 Notice and Section 21 Notice.  The correct type depends on the circumstances.  And the landlord needs to do this properly because the tenant has all sorts of protection under the Housing Act 1988 and the Protection from Eviction Act 1977.

Landlord’s Notice

Section 8 Notice

There is a protocol set out in the Civil Procedure Rules which govern all court proceedings and this must be followed by landlords when the tenant is in arrears with the rent. After the first missed payment the landlord should contact the tenant in writing to notify them of the situation and to offer assistance with, for example, a claim for housing benefit. If the arrears continue the landlord can then serve a formal notice under Section 8 of the Housing Act once two months’ rent is outstanding. This notice warns the tenant that if the arrears are not brought up-to-date within 14 days then the landlord can make an application to the court for an order for possession. 

A Section 8 Notice is served when the tenant has failed to comply with an obligation set out in the tenancy agreement and the Housing Act sets out various grounds for possession in addition to rent arrears entitling the landlord to serve the notice. The notice period is different for each of the grounds and these are between immediate notice and two months’ notice. There must be a forfeiture clause in the tenancy agreement to serve a Section 8 Notice which can then be served at any time during the tenancy. Some of the grounds are mandatory which means that if the landlord can prove a breach, the court has no discretion but to make a court order for possession. Other grounds are discretionary which give the court a discretion whether or not to grant a possession order or to make a suspended order for possession, for example allowing the tenant to remain in possession provided that the current rent and agreed instalment payments for the rent arrears are maintained.  

Section 21 Notice 

A notice under Section 21 of the Housing Act is a Notice Seeking Possession which informs the landlord that the landlord is entitled to seek possession of the property. Unlike the Section 8 Notice there does not need to be any fault on the part of the tenant for the landlord to be entitled to serve the notice. It is also perfectly acceptable for the landlord to serve both a Section 8 Notice and Section 21 Notice at the same time (if there are grounds for possession such as rent arrears) and then decide which notice to rely upon if it becomes necessary to issue court proceedings.

There are two different types of Section 21 Notice for either a fixed term or periodic tenancy an it is imperative that the correct notice is served, failing which an application to the court for an order for possession may be dismissed, leading to further expense and delay as a fresh notice must be served and the procedure started all over again from scratch.

A fixed term Section 21 Notice can be served at any time during the fixed term of the tenancy up until the last day of the term. However, it is essential that the following steps required by the Housing Act are complied with prior to the service of the notice otherwise the notice will be deemed invalid: 

• The notice must be served after the tenancy agreement is signed and;

• The deposit must be protected in a deposit protection scheme and the prescribed deposit notice is served on the tenant. 

• Once the fixed term has come to an end and the tenancy becomes a statutory periodic tenancy, the deposit must be confirmed with the agency and the deposit notice must be re-served on the tenant within 30 days. 

The Section 21 Notice for both fixed term and periodic tenancies must give a minimum of two months’ notice and should state the date upon which possession is required by the landlord. 

One of the main advantages of using Section 21 Notice as opposed to the Section 8 is that provided the landlord has followed the correct procedures and the documentation is in order, the court has no discretion and must grant the possession order.  

Application to the County Court for possession 

Standard possession proceedings

The same procedure is used to make an application to the court for possession once the Section 8 or Section 21 Notice has expired. After the application has been made to the court the claim will be listed for a hearing within 6 to 8 weeks from the issue of proceedings. The claim for possession can also include a claim for any outstanding rent. 

The Order for Possession will set a date for the tenant to leave the property, which is usually 14 days from the date of the order. However, the court has the discretion to extend this date up to 6 weeks if the tenant can prove exceptional hardship. 

The court can also make a money judgment allowing the tenant to remain in the property as long as the payments set out in the order are made.

Accelerated possession proceedings

The accelerated possession procedure is only available for Section 21 Notices where there is a written tenancy agreement.

The procedure is on paper only and provided the court is satisfied that the correct notice has been served and the landlord is entitled to possession, the court will make a possession order without the need for a court hearing. The court will determine whether the landlord has complied with all of the steps set out in the Housing Act including protection of the deposit and if the Judge is satisfied that everything is correct an order will be made. 

As an order can be made without a court hearing, this procedure is quicker and less expensive. However, the judge retains the discretion to order a hearing if required, for example if the tenant serves a defence. 

One disadvantage with this procedure is that the landlord cannot make a claim for rent arrears and therefore this must be done by way of a separate claim.

 

Application to the court for a warrant of possession 

If the tenant fails to vacate the premises by the date set out in the order for possession, the landlord must apply to the court for a warrant for possession. The warrant will be executed by the County Court Bailiff and will add further delay to proceedings. It should also be noted that the tenant can apply to the court to suspend the warrant, which will be listed for a hearing. 

At this hearing the judge will not have the discretion to suspend the execution of the warrant if it was obtained under s21 or one of the mandatory grounds in section 8. However, the court will have discretion to suspend the execution if the order was obtained pursuant to one of the discretionary grounds set out in the Section 8 Notice. In any event the application will serve to delay matters.

 

From dummies guide:

Managing rental property is not everybody’s cup of tea.

Maybe you’ve inherited a property from a relative and you don’t want it to sit idle (the property that is, not the relative).

While we should all learn from our mistakes, it’s even better to learn from someone else’s.

It is important that you still use an Assured Shorthold Tenancy (AST) agreement, even if you aren’t planning to rent for the long term.  This protects both you and the tenant, setting out minimum standards that you must both abide by.

Just because you’re only planning on renting out your home for a few months a most doesn’t mean you can ignore the regulations that apply to longer-term landlords.  You have the same responsibilities to your tenant and if you fail to comply you could end up with a hefty fine, or in prison.  So get to grips with the law.

A tenancy agreement is important because it outlines the terms and conditions of the agreement you have with your tenant.

You’ll also need to draw up a tenancy agreement so that it’s ready to go as soon as you find a tenant for your rental property.  Most tenancy agreements are for six or 12 months’ duration, although you may want to draw up a shorter or longer one.

The tenancy agreement is the primary document that specifies the terms and conditions of the agreement binding the landlord and the tenant.  It is a contract between the owner of the rental property and the tenant for the possession and use of that property in exchange for the payment of rent.  

Most landlords use the Assured Shorthold Tenancy agreement.  When this tenancy agreement was introduced in 1988 and later amended under the 1996 Housing Act, it revolutionised the residential letting market. 

For the first time, it granted the landlord a series of guarantees that made it easier for the landlord to let property at a market rate and to recover possession of the rental property if needed.  The tenant has no security of tenure after the end of the term agreed between landlord and tenant; the landlord is certain to obtain possession of the property and doesn’t have to give a reason as to why she wants possession.  You still have to follow the correct procedure, however, and give two months’ notice in writing.

An Assured Shorthold Tenancy tends to start with an initial fixed period.  No upper limit is specified, but six months to a year is normal.  If you opt for six months, for example, you can’t repossess the property during this length of time unless the tenant breaks the terms of the agreement.  After the fixed term, you can renew the agreement for another fixed period or allow it to continue indefinitely on a periodic basis, such as month to month.

If you’re renewing for a fixed period, you need to draw up a fresh tenancy agreement.  If you’re continuing indefinitely on a periodic basis, you don’t need to take action to continue the letting, but you do have to make the tenant aware that you’re continuing on the same terms.

An Assured Shorthold Tenancy is legally binding between landlord and tenant; however, it can be difficult to enforce if one of the parties decides not to abide by it.

Before you can offer an Assured Shorthold tenancy agreement on your rental property, certain conditions must be met:

• The tenant (or each of the joint tenants) must be an individual, not a company.

• The tenant must occupy the dwelling as her only or principal home.

• The annual rent must not be greater than £25,000.

• The landlord must not live at the rental property.  However, if the landlord has converted the basement in her house into a self-contained flat with separate entrance and lets this to tenants, an Assured Shorthold tenancy can be created as normal.

The tenancy agreement must also include definitions regarding what you mean by the terms landlord and tenant and on what grounds the tenancy can be terminated.  You should also clearly state the notice period to be served by either party – one month by the tenant; two months by the landlord – and the agreement should state that the tenancy must run for at least six months.

You and your tenant have to sign the tenancy agreement in the presence of witnesses.  The document then becomes legally binding.

With an Assured Shorthold Tenancy, you cannot increase the rent or change other terms of the tenancy until the current agreement expires.  Also, you cannot terminate or end the tenancy before the agreement expires, unless the tenant doesn’t pay her rent or violates another term of the tenancy agreement. (The majority of tenants move only because of a job transfer or another significant reason, or because the landlord does not properly maintain the property.)

Although the tenancy agreement legally binds both you and the tenant, it’s not difficult for a tenant to walk away from a tenancy agreement.  The tenant is responsible for paying the rent for the whole of the initial period even if she leaves early.  If you find a replacement tenant during that time, you should let your former tenant off the hook and only charge her for the rent up until the new tenant moves in and begins paying rent.  However, you are not obliged to do so.

Although oral rental agreements are binding, make sure all your tenancy agreements are in writing, because so many issues surrounding those agreements involve monetary considerations.  Memories fade, and disputes can arise that could well be resolved in favour of the tenant should legal action be required.  Oral agreements also create the potential for charges of discriminatory treatment.  Always put all terms and conditions in writing, even if you know the tenant personally or you only intend to let the property for a short period of time.  Oral agreements are only as good as the paper they’re not written on because they can’t be substantiated and they’re not always enforceable. 

The number one reason for tenants to insist on a tenancy agreement is that the rent is fixed for a minimum period of time.  The landlord cannot unilaterally vary the terms of a tenancy after it’s been granted.  So you cannot increase the amount of rent without the consent of the tenant, unless the terms of the tenancy allow you to do so.  Therefore, be sure to include a term in the tenancy agreement allowing you to increase the rent.

Landlords are legally allowed to choose which tenant they want to live in their property as long as their decisions comply with anti-discrimination laws and are based on legitimate business criteria.  

Tenants and landlords alike are usually aware of all the legal paperwork involved in renting a home.  And although sifting through all those documents isn’t fun for anyone, it is important.  Landlords and tenants each have specific legal rights and responsibilities that are outlined in these documents, and being aware of what you’re agreeing to – and being sure that your tenants know what they’re agreeing to – is crucial.

Be sure that your tenant understands that, when she signs your tenancy agreement, she is entering into a business contract that covers significant rights and responsibilities for both parties.  Before your tenant signs the document, carefully and methodically review each clause of the tenancy agreement.

Certain clauses in the tenancy agreement are so important that you should have the tenant specifically initial them to indicate that she has read those points and understands her rights and responsibilities in relation to them.  

If you’re having trouble collecting rent from one of your tenants, you may need to pursue legal action.  If your tenant is on an assured shorthold tenancy agreement with a term of six months, it may be possible, depending on how long he’s lived in the property, to wait until the mandatory possession notice can be served in the normal way.

Mandatory possession is possible where the tenant is a full two months in arrears both at the time of service of the notice and at the actual court hearing.  In the case of a weekly tenancy, the tenant must be more than eight weeks in arrears.

Exploring alternatives to eviction

Evictions are not only expensive but emotionally training as well.

Taking your tenant to court

Your nearest county court is the place to go if you have problems with tenants caused by non-payment of rent or if you want to evict a tenant.  Speak to a court official who can explain the procedure to you; remember, though, that they can’t give legal advice.  Many cases relating to property rental are heard in the small claims court, which is party of your local county court.  You should go to the small claims court if you’re claiming £5,000 or less.

Evicting a tenant

Unfortunately, some tenants just don’t pay their rent; others break the rules or are involved in criminal activities.  In these situations, after you’ve explored your other options, you may have no other reasonable alternative but an eviction.  The evicting process can be intimidating and costly, but keep in mind that allowing the tenant to stay only prolongs the problem.

Serving legal notices

The law states that non-paying or unsatisfactory tenants can be evicted after eight weeks of behaviour that directly defies their tenancy agreement.  In order to evict a tenant, you have to instruct a solicitor to serve an eviction notice on your tenant, which must be handed to him in person.  You have to pay for this service; be aware that you may not recover your money.  If your tenant does not leave or pay up what he owes of his own accord, the next step is to take him to court, if you think doing so is worth it.

Going to court

If your tenant has fallen into rent arrears, you may feel that an accelerated possession procedure is not for you if you want to recover outstanding rent, as with this procedure you can only regain possession of the property and the costs of bringing the action.  IF the rent is late, write to the tenant immediately, saying that the rent doesn’t seem to have been paid.  It may be a simple mistake; perhaps the tenant just forgot to do it or he had a mix-up with his bank account.  If the tenant puts the situation right immediately, that should be the end of the problem.  But if you don’t get a response, write to the tenant again, giving him 14 days to pay the amount in full and stating that, if he fails to do so, court proceedings will be instigated.

If they don’t, you must fill out a form, available from your local county court, detailing the amount you are owed in arrears, plus any damage to the property or goods stolen.  You’ll be charged a court fee, calculated on a sliding scale and depending on the amount owed.  If you win your case, you get this money back from the tenant.

The court then sends the completed form to the tenant.  He can either pay up there and then, counterclaim or let the judge decide the outcome of the matter at a court hearing.

If the tenant simply can’t afford to pay you, the courts say that there is no point in taking legal action in the first lace to get back the money he owes you in unpaid rent.  A judge can order the money to be paid, but enforcing this judgement is up to you.

Accelerated possession

Problems with your tenant don’t have to end up in court.  An accelerated possession procedure enables tenants to be evicted without a court hearing, purely on the basis of a written representation.   Such a procedure does not include a claim for rent owed to you however, so if your tenant owes you a lot of money this procedure may not be the best solution for you.  But it is a means whereby bad tenants can be evicted – and quickly.

You can use this procedure where the tenancy is of the Assured shorthold kind, claiming possession under Section 21 of the Housing Act 1998.  If your tenant has an Assured tenancy dating back to before 1997, you can use this procedure under Section 8 of the Housing Act.  Whichever tenancy agreement you have, you must supply reasonable grounds for taking the action. 

Under Section 21, reasonable grounds include:

• The tenancy was for a fixed period, which has expired

• The existing tenancy is for an unspecified period

• You have given your tenant at least two months’ written notice under Section 21, informing him that you wanted possession of the rental property.

Claiming under Section 8 of the housing Act 1988 is more complicated and more limited.  Grounds include:

• The property is your main home and you want to reclaim it.

• You intend to live in the property as your main home.

• The tenancy was a holiday let, let to students or is no needed as a residence by a minister of religion.

Where these grounds apply, you must give your tenants at least four months’ notice before the end of the tenancy.  If he still fails to vacate the property, you then need to file your application to the court, along with all the papers required, including a copy of your tenancy agreement after the four months are up.  The tenant is given 14 days to reply.  If an order for possession is made, the tenant is normally told to leave the property within 14 days.  The court may extend this period for up to six weeks maximum if the tenant can prove that to leave within this timeframe would cause exceptional hardship.

Because an accelerated possession procedure is carried out purely on written evidence, all of your documents must be in order.  The tenancy agreement must be written and can’t be verbal.

Enforcing county Court judgements

If a CCJ is made against the tenant for non-payment of rent, the judge decides how much the tenant needs to pay you back.  If the tenant doesn’t pay, he could be paid a visit by a bailiff with the legal authority to remove the goods to sell to pay off the debt he owes you.  

Alternatively, the judge may decide that the debt should be deducted in instalments from the tenant’s wages or benefit.

Landlords are under a direct statutory obligation to carry out repairs.  This includes maintaining the structure and exterior of the property in a safe and watertight condition.  It also means you must keep internal installations for water, gas, electrical services, heating and hot water in  good, safe condition.  If you don’t fulfil these obligations, the Environmental Health department of your local authority has the power to inspect private rental properties and serve enforcement notices on landlords where repairs are deemed necessary.