Bulletin - Housing - Winter 2011

Welcome to our latest Housing Bulletin

Welcome to the Winter edition of our Housing Bulletin for the private rented sector. In our Spring edition we outlined some of the anticipated changes as a result of the introduction of Tenancy Deposit Schemes and in terms of the Private Rented Housing (Scotland) Bill. In this issue we provide an update on the introduction of Tenancy Deposit Schemes and the 2011 Act and outline the issues that private landlords and letting agents should now be considering. We also comment on the problem of whether a property is abandoned and new legislation in respect of a tenant’s property. Finally we comment on an unusual HMO case.

You can also find us on LinkedIn at the “Lindsays Private Letting Forum” and sign up for all the latest Scottish Private Letting news.

Tenancy Deposit Schemes
Landlord Registration
Tenancy Information Packs
Has my Tenant abandoned the property?
Tenant’s Property
Appeal against refusal of HMO
Fixed Fee Services
Lindsays Seminars

Tenancy Deposit Schemes

We recently spoke at a forum on the schemes held by East Lothian Council. The three organisations who have submitted applications to the Government to run Schemes were also present. The best estimate as to when a Scheme will become operational is April. Both landlords and letting agents should therefore now be making provision for the introduction of the Tenancy Deposit Scheme. Letting agents should be reviewing their terms of business and leases and landlords should be reviewing their leases.

Agents’ existing terms of business will provide for the deposit to be retained by the agent or landlord and for what is to happen in the event the deposit is to be withheld. Upon a Tenancy Deposit Scheme becoming operational these provisions will in our view no longer be relevant and will not protect the agent in the event of a dispute. Agents should therefore now be considering what revisals they need to make to their terms of business in order to reflect the legislative position.

Leases presently in use will also provide for the deposit to be withheld by the landlord or his agent and will set out how the deposit will be returned to the tenant. The Tenancy Deposit Scheme Regulations will prevail over the terms of an existing lease. This means your existing lease will not reflect what will actually happen in law. We would remind readers that your deposit clause sets out the only basis upon which you can use the deposit. It is therefore crucial it covers all the issues you need covered.

Landlords and letting agents should therefore now be revising their leases to allow for the Tenancy Deposit Scheme. If agents and landlords are to revise their terms of business and leases this is an opportune moment to make further revisals reflecting other recent changes in the law and we would be happy to assist with such revisals.

It is important to remember that once a scheme is operational the onus is on the Landlord to pay the deposit in respect of an existing tenancy into the Scheme. It will not be a defence to argue that the Landlord left it to the agent to do so or that the agent held the funds and he failed to transfer them.

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Landlord Registration

The fine for acting as an unregistered landlord has now increased in respect of certain offences to £50,000. Glasgow City Council took the opportunity of the increase in the fine to warn rogue landlords of the risk of the fine if they continued to avoid registration. Apparently about 6,000 private landlords in Glasgow have so far failed to register notwithstanding their legal responsibility to do so.

It will be interesting to see if the Council, with the assistance of the Procurator Fiscal, do now start to take action. Action has previously been threatened by a number of authorities but not strongly implemented although earlier this year four landlords in Edinburgh were successfully prosecuted with a further ten reports submitted to the Procurator Fiscal for possible prosecution.

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Tenancy Information Packs

The Scottish Ministers have not yet specified what information is to be contained in the packs. Failure to provide a pack will constitute a criminal offence and we would hope the implementation of the requirement will be well publicised and sufficient notice will be given before the packs are required. We understand they will be introduced in the next 18 months. Our Private Letting Forum on LinkedIn will keep members updated.

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Has my Tenant abandoned the property?

We are regularly consulted by letting agents and landlords with this enquiry. In the social housing sector there is a specific statutory scheme for what is to happen if a landlord suspects the tenant has left. There is no such scheme in the private sector and this leads to various practices. A reasonable belief of abandonment is a defence to a criminal prosecution for an illegal eviction but there is no specific procedure which has to be followed before you can determine that a property is abandoned.

When you suspect a tenant has abandoned a property you should ensure not to deprive the tenant of their legal right to occupy. If you suspect a tenant has abandoned the property, you should not immediately change the locks, or remove or destroy the tenant’s property.

The only legal way to terminate a tenancy is to serve the appropriate Notices and, if the tenant does not consent to the tenancy being ended, an action would have to be raised in the Sheriff Court in order to obtain an eviction decree.

If you are attempting to determine if a tenant has abandoned the property, there are various things that should be considered:

• Is there an intention to return? Has a tenant indicated, or has a tenant shown by their actions, that they may wish to return to the property?
  
• Have they left items in the property? How valuable are these items?
  
• Are there any signs of cooking? Is there food in the fridge or cupboards? What are the expiry dates of these items?
  
• Is there lots of unopened mail in the property? What are the dates on these?
  
• You could check to see whether electricity or gas has been used in the property by noting the meter readings at two separate intervals.
  
• Have any neighbours seen or heard from the tenants?
  
• Is Housing Benefit still being paid? Does the Housing Benefit office know of any end to a claim on your property?

If you have any doubts with regards to whether the tenant has abandoned the property, you should try and make contact with him.

Ultimately, if you want to try and make sure that the tenant has abandoned, you could put a notice in the property outlining that the landlord intends to repossess the property should the tenant not make contact. This should be clear and state the date that you would intend to repossess the property. You should advise them to seek legal advice as they are in danger of losing their home.

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Tenant’s Property

It is also important to be aware of provisions introduced by the Bankruptcy and Diligence etc (Scotland) Act 2007 as from 14 April this year should it be necessary to raise a court action to evict your tenant. Section 216 introduces a requirement to serve a 14 day charge on the tenant prior to any eviction being carried through. An important provision is in Section 218 headed “Preservation of Property Left in Premises”. This Section provides that a court when granting an order for eviction “may direct that the Pursuer [landlord] takes such steps as the court considers appropriate for the preservation of any effects removed from the subjects or premises”. Section 218(2) provides that the court, when making any such direction, can order the tenant to be liable for the costs incurred in taking such steps. In our opinion, this Section was introduced for the benefit of tenants. It endeavours to set out a procedure for the removal and storage of the tenant’s belongings. If, however, a landlord anticipates the tenant will not remove his belongings before the eviction is carried through, this Section does provide some scope for obtaining an order from the court as to what the landlord has to do in respect of such belongings. On presenting a Summons to a court, a landlord should consider whether he wishes to seek any such specific order.

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Appeal against refusal of HMO

In a case decided earlier this year under the then in force Regulations a Landlord’s appeal against the decision of the local authority to refuse him a HMO Licence on the grounds that he was not a fit and proper person was refused. There are various exemptions to the requirement to obtain an HMO Licence. These include occupation by a family or by members of a religious community. In this case the Landlord had a six bedroom property which he wanted to let to students. He did not yet have an HMO Licence but was anxious to let the property to avoid ongoing losses. He accordingly came up with a plan whereby he submitted that the students were either members of a family (even though they were all individuals and unrelated) or a religious community. He went so far as to insert the following clause in the Lease:

“8. The subjects are let for use as study/bedrooms for six persons only who agreed to live as one religious order/family in a way that maintains exemption from the local authority “homes of multiple occupancy” regulations.”

The Landlord discussed this requirement with his tenants and supplied them with a copy of the Bible and told them that they should consider their values daily! The local authority received a complaint about the flat and wrote to the Landlord to indicate that they believed it to be operating without the required HMO Licence. The Landlord claimed exemption based on his tenants’ maintenance of a Christian community and even referred to a retreat in Utah where they could pray, study and worship! His second argument was that the students were an “unconventional family”.

Perhaps not surprisingly the Landlord’s application for an HMO Licence was refused on the basis that the Licensing Committee held the Landlord was not a fit and proper person given his actions to date. The Landlord appealed. He argued that the family could be described as “an unconventional family” and according to the sheriff “speculating on the possibility of their relationships and postulating that it was not for him to enquire about any such relationships”! The sheriff also said “there was never a realistic prospect of six individual students normally resident in different areas of the United Kingdom and Ireland constituting a family. [The Landlord’s] attempts to justify his position on that point are ridiculous”.

The sheriff concluded that Mr Thomson had made a deliberate attempt to mislead the council official.

The general test for a Court in considering such an appeal is whether the course of action followed by the local authority and their decision was one no reasonable authority, having taken account of all relevant circumstances, could have adopted or decided. The sheriff had no hesitation in deciding that the local authority decision to reject the licence was reasonable and should not be overturned.

Part 5 (Licensing of Houses in Multiple Occupancy) of The Housing (Scotland) Act 2006 is now in force. If you need advice on any HMO issues, Lindsays’ Licensing Team which is the largest in Scotland will be able to assist.

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Fixed Fee Services

Our Housing Team offer a wide range of specialist legal services for landlords and agents on a fixed fee basis. These services including the following:

• Lease Review and Terms and Conditions Review
  
• Telephone Helpline
  
• Drafting and Serving Notices
  
• Court Actions for Eviction and Payment
  
• Enforcement/Debt Recovery

If you would like to discuss any of our fixed fee services with us, please do not hesitate to contact a member of our Housing Team. We would be happy to meet with you to discuss your requirements and to give you an indication of fees.

Lindsays also offer a full conveyancing and estate agency service for buy to let landlords. Our Estate Agency Director, Mark Coulter, can advise on market conditions for purchase and sale of buy to let properties and our Director of Residential Conveyancing, Chris Hardie, can answer all your enquiries in respect of the purchase and sale of properties. If you wish details of our services or our fixed fees, please do not hesitate to contact Mark or Chris.

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Lindsays Seminars

In advance of the introduction of the Tenancy Deposit Schemes, we are holding seminars in Edinburgh (9am on 22 March 2012) and Glasgow (9am on 29 March 2012) to advise letting agents and private landlords on the implications of the new Schemes and also to provide an update on other changes in the private letting sector. The seminars will also have a general Q & A session. Full details will shortly be posted on our website. If you would like to register for these seminars, please visit our website.

This newsletter has been issued by Lindsays on the basis of publicly available information, internally developed data and other sources. Whilst all reasonable care has been taken to ensure the facts stated and the opinions given are correct, Lindsays does not accept any responsibility for its content and advise that specific advice should be sought regarding the topics covered.
© Lindsays 2012