Landlord Advice Section

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Tenancy Agreements

A tenancy agreement is a legally binding contract in writing that sets out the rights and responsibilities of both the landlord and tenant. It will contain various details such as the length of the agreement, the rent payable, and what is and isn't allowed in the premises.

The most common agreement is an assured shorthold tenancy (AST). An Assured ShortholdTenancy entitles the landlord to possession of his or her property after the initial agreed period, which cannot be no less than six months. The landlord is therefore able to evict the tenant after the initial fixed term without a legal reason i.e. rent arrears. If this is the case and the landlord does not wish to renew the tenancy then they are obliged to give at least two months' notice using a section 21 to end the tenancy. However, if both the tenant and landlord are happy to continue with the rental agreement another tenancy agreement can b eagreed and renewed for a further fixed period.

It is extremely important that the tenancy agreement is written and compiled by a professional person and must contain certain clauses that ensures you as a landlord are fully covered.

Residential Tenancy Rental Arrears

It is important that landlords take precautions as outlined below. Landlords canconsiderably reduce the risk of rent payment problems, if the correct procedures arefollowed. However, you can never eliminate the risk entirely, and sometimes financialproblems go beyond the tenant’s ability to control.

It is recommended that tenants pay by Standing Order or Direct Debit. It is advised that landlords monitor bank accounts regularly to ensure that payments have been made on tim and in full. It is suggested that a payment reference is placed on the standing order or any payments made to the landlord including details such as: Tenants name, house number, property reference number etc.

If payments are not received, you need to be able to prove this through bank statements or a rental payment schedule.

Rent arrears need immediate action. Firstly to let the tenant/s know that you take rent arrears very seriously and secondly to take appropriate steps at an early stage to prevent the matter getting out of hand.

Landlords must quickly establish why the rent has not been paid. It is quite possible that the bank has not made the payment or the tenant has overlooked his/her account.
Most tenants, when reminded about a missed payment, will respond quickly and remedy the situation. However, if after a few days the situation still persists then you may have a more serious rent payment problem. Landlords need to act quickly in order to resolve the issue with the tenant. If the tenant has confirmed that they have financial problems or the tenant has lost his or her job it may be possible to come to some mutually acceptable arrangement. Should both the landlord and the tenant agree, we would advise to set out in writing a plan of action with timescales for payments and back payments of rent arrears. (This may includeaccepting a smaller rental payment with increasingly additional amounts to pay off the rental arrears over a period, or the agreement to pay a lump sum at some future date to make upthe rental arrears).

Landlords must remember not to accept the security deposit as a rental payment, this is the landlords only security in this type of situation and is also under deposit protection which can therefore not be utilised under the Deposit Protection Scheme until the end of a tenancy. Tenants in a rent arrears situation often refuse to communicate and actively avoid contactwith their landlord. This makes things very difficult and often results in the inevitable -possession proceedings through the courts.

Landlords must remember to follow up all communication to the tenant with a letter andmost importantly keep copies. (Putting everything in writing may be vital evidence should the matter be taken to court).

When landlords are faced with no other alternative but to begin legal action against the tenant then there are two routes that can be applied:

The accelerated Possession Procedure (Section 21) is where normally no hearing is required and the judge can issue a possession order based on the application alone. It must be noted that this route does not include a claim for any rent arrears. We would advise in this case to issue a claim for the rent arrears owed through Small Claims procedure.

The Section 8 route involves claiming for possession under one of the seventeen grounds se tout in the 1988 Housing Act. Under this particular procedure, a claim for the rent arrears owed is included.

Under the Section 8 procedure there are some grounds that will give mandatory possession when a tenant is in full two months’ rent arrears. There are other non-mandatory grounds, known as discretionary grounds, which can also be invoked, but with less certainty of the outcome.

17 Grounds for Possession - Housing Act 1988 & 1996

Mandatory Grounds:

Ground 1

The residential investment property was previously the landlords only or main home or the landlord or their spouse require it to live in as his or her main home.

Ground 2

The residential investment property is subject to a mortgage which was granted before the tenancy started and the lender, usually a bank or building society, wants to sell it, normally to pay off mortgage arrears.

Ground 3

The tenancy is for a fixed term or not more than 8 months and at some time during the 12 months before the tenancy started, the property was let for a holiday home.

Ground 4

The tenancy is for a fixed term of not more than 12 months and at some time during the 12 months before the tenancy started; the property was let to students by an educational establishment such as a university or college.

Ground 5

The residential investment property is held for use for a minister of religion and is now needed for that purpose.

Ground 6

The landlord intends to substantially redevelop the residential investment property and cannot do so with the tenant there. This ground cannot be used where the landlord, or someone before him or her, bought the property with an existing tenant, or where the work could be carried out without the tenant having to move. The tenants removal expenses will have to be paid.

Ground 7

The former tenant, who must have had a contractual periodic tenancy or statutory periodic tenancy, has died in the 12 months before possession proceedings started and there is no one living there who has a right to succeed to the tenancy.

Ground 8

The tenant owed at least 2 months’ rent if the tenancy is on a monthly basis or 8 weeks rent if it is on a weekly basis, both when the landlord gave notice seeking possession and at the date of the court hearing.

Discretionary Grounds:

Ground 9

Suitable alternative accommodation is available for the tenant, or will be when the court order takes effect. The tenants removal expenses will have to be paid.

Ground 10

The tenant was behind with his or her rent both when the landlord served notice seeking possession and when he or she began court proceedings.

Ground 11

Even if the tenant was not behind with his or her rent when the landlord started possession proceedings, the tenant has been persistently late in paying the rent.

Ground 12

The tenant has broken one or more of the terms of the tenancy agreement, except the obligation to pay rent.

Ground 13

The condition of the property has got worse because of the behaviour of the tenant or any other person living there.

Ground 14

The tenant or someone living in or visiting the residential investment property:

• Has caused, or is likely to cause, a nuisance or annoyance to someone living in or visiting the locality: or
• Has been convicted or using the property, or allowing it to be used for immoral or illegal purposes, or an arrestable offence committed in the investment property or in the locality.

Ground 15

The condition of the furniture in the property has got worse because it has been ill treated by the tenant or any other person living there.

Ground 16

The tenancy was granted because the tenant was employed by the landlord, or a former landlord, but he or she is no longer employed by the landlord.

Ground 17

The landlord was persuaded to grant the tenancy on the basis of a false statement knowingly or recklessly made by the tenant, or a person acting at the tenants instigation.

There are many reasons why an eviction process should be initiated, for example:

1. Not paying the full amount of rent
2. Continuously causing damage to the property
3. Any severe health hazard
4. Involvement in any kind of illegal activities
5. Violating any of the terms of the lease
6. Unauthorised entry such as forceful entry
7. Not moving out even after expiry of the tenancy

Section 8 notice

A 'section 8 notice' or also known as a 'section 8 possession notice', is so called because it operates under section 8 of the Housing Act 1988. A section 8 notice is different from the more common section 21 notice in that it is served on the tenant by a landlord wishing to regain possession of a property during the fixed term of an Assured Shorthold Tenancy (AST) due to a breach of the tenancy.

A section 8 notice can only be issued to a tenant when they have breached the terms of their tenancy agreement. The most common reason to issue the section 8 notices is involving rent arrears. The Housing Act 1988 provides 17 grounds (see above) on which a landlord may seek possession before the fixed term of tenancy has finished. A landlord cannot evict a tenant without first obtaining an order for possession from a court. Before applying to the court the landlord must serve a Section 8 notice to quit on the tenant. The notice states that the landlord intends to seek possession of the property and states the ground or grounds on which possession is sought. If the sole reason action is being sought is due to rent arrears then it must be noted that the tenant must be two months or more in arrears at the time of service.

The notice must be laid out in a prescribed format and must specify which grounds the landlord intends to use to gain possession and the landlords reasons for relying on those particular grounds. Any error made when issuing the section 8 notices is likely to delay the landlord gaining possession. Click here for our online payment.

Section 21 notice

A Section 21 Notice operates under section 21 of the Housing Act 1988 and is the notice a landlord must issue to a tenant to regain possession of their property at the end of an Assured Shorthold Tenancy (AST). The landlord is able to issue the tenant with a section 21 notice without giving any reason for ending the tenancy agreement. The notice can be issued at any time during the tenancy but must expire inline with the expiry date of the tenancy agreement or in some cases in conjunction with any break clause that may be included in the terms of the tenancy.

The section 21 notice is for possession only and does not cover any breaches of the tenancy agreement including any rent arrears. If you have issued a section 8 or section 21 possession notice, make sure you do not start court proceedings until the possession notice has expired. If you do not wait until the notice expires, the court might reject your claim. Click here for our online payment.

In most rent arrears situations, a landlord should serve these notices which we can serve on the landlords behalf:

1. (A Warning Letter) A polite letter reminding the tenant that he or she is in rent arrears which must be made up as soon as possible.
2. A letter before action explaining that as no response has been received; you will be taking legal action within 7 days. Click here for our online payment.
3. Section 21 Notice - 2 months' notice - which cannot be actioned until the end of the fixed term. Click here for our online payment.
4. Section 8 Notice - usually citing grounds 8 (8 weeks Rent Arrears) 10 (Behind with rent payments) and Ground 11 (Persistent late payments). Click here for our online payment.

County Court Judgement (CCJ)

Most people will want to avoid the stigma and the disadvantages of having a County Court Judgement (CCJ) recorded against them for monies owed, as they will have great difficulty in obtaining credit i.e. loans, mortgages & credit cards etc. in the future.
If a tenant does not settle his or her amounts owed, there are various routes open to the landlord such as requesting an attachment of earnings order, charging orders and third party debt orders etc. All these actions incur additional fees, but providing the tenant can pay, all the fees will be added to the overall debt.

Deposit Protection Scheme

As part of the Housing Act 2004 the Government introduced tenancy deposit protection for all assured shorthold tenancies (AST's) in England and Wales where a deposit is taken. As from the April 6th 2007, (updated 6 April 2012) all deposits paid under an AST (Assured Shorthold Tenancy Agreement) are required by law to be protected within thirty calendar days of receipt of the deposit by the landlord or agent. The tenant must also be provided with the prescribed information in order to ensure the protection valid. The following factors are not affected and will not need to be registered with a tenancy deposit protection scheme:

Any deposit taken before 6 April 2007 did not require protecting through this scheme. However, when an existing tenancy is renewed the initial deposit taken must then be lodged with a tenancy deposit protection scheme. There are three government-authorised tenancy deposit schemes, The Deposit Protection Service (DPS), Tenancy Deposit Solutions Ltd (My Deposits) and The Tenancy Deposit Scheme (TDS). Schemes are completely independent so any disputes will be settled fairly.

If a Landlord fails to secure and register the deposit the landlord may be taken to court and if they failed to comply, the court will order the landlord to pay three times the deposit amount to the tenant. The landlord will also not be able to obtain any possession order against the tenant under the section 21 notice.

The landlord may make reasonable deductions from the deposit for the following cases, although it must be noted that both the tenant and the landlord must agree on the terms ofany deductions:

1. For damage to the property

It is always advisable to obtain receipts and written quotes for works that may need to be carried out. Landlords can only deduct as much as is needed to repair or replace what has been damaged on a like-for-like basis.

2. Unpaid rent

Landlords are entitled to deduct outstanding monies owed from the deposit. If the value of the deposit is lower than the outstanding rent, the landlord can take the matter through the court to obtain a judgement on monies owed.

3. Missing items

Without a signed and dated inventory it is very hard for a landlord to prove that items have been damaged or are missing from the property. Always ensure a comprehensive inventory is done for each new let, date it and make sure all parties read and sign it. It is advisable to ensure that the inventory list is drawn up by an independent person. See the Inventory Section for more details.

4. Cleaning

The tenant should ensure that the property is returned to the Landlord in a clean and tidy condition. This excludes normal wear and tear.

Inventory

Having an inventory organised at the start of a tenancy is very important in order to ensure that no complications arise at the end of a tenancy. We would advise all landlords to use a professional inventory company who will compile a full report including photographs at the start of the tenancy. This report is then signed by both tenant and landlord and at the end of the tenancy the same company will return to carry out a sign out report checking the items and conditions against the original signed report.

If at the end of the tenancy it is found that the tenant has caused damage to the premises and costs will incur out of the deposit, then it is very likely the matter will be brought up against the dispute service who will decide, based on the evidence provided, to whom the deposit should be returned to. In this case, unless the landlord can provide sufficient evidence of the condition of the premises before and after the tenancy i.e. a full inventory with photographic evidence, it is very likely that the deposit will be returned to the tenant. Please see our landlord services and documents section which has an inventory template report which can be used at the start of the tenancy. We can also organise to carry out the inventory on your behalf. Click here for full Inventory Service.

EPC

The Energy Performance Certificates (EPC) was introduced on the 6th April 2008 by the government to help improve the energy efficiency of buildings. If you are renting your property out, the assessment of the premises must be carried out by law by an accredited energy assessor.

The certificate will provide an 'A' to 'G' rating for the building, with 'A' being the most energy efficient and 'G' being the least.

Energy Performance Certificates (EPC's) provide a detailed recommendation report showing what you could do to help reduce the amount of energy you use and your carbon emissions. The report lists:

• Suggested improvements, like fitting loft insulation
• Possible cost savings per year, if the improvements are made
• How the recommendations would change the energy and carbon emission rating of the property

Please note that landlords do not have to act upon the recommendations in the report and the report itself lasts for ten years. Click here for our online payment.

Example EPC:

Gas Safety Inspections

All properties rented that have appliances that use a gas supply must by law have a gas safety test carried out every 12 months. The landlord has a duty to ensure that each inspection is carried out by a qualified Gas Safe registered engineer.

You can check if the company or engineer is registered by simply checking on the GasSafe website at www.gassaferegister.co.uk.

It is very important that the landlord keeps a record of each test carried out and that the tenant is also provided with a copy of the certificate. If a landlord is using an agent then they must also keep a record of the gas safety on file.

If a safety test is not carried out and should a situation or fault occur at the premises which results in someone being injured or even worse, then the landlord is legally responsible and will be prosecuted through the courts.

Electrical Safety Tests

Electrical tests at a rented property are not enforced by law or any specific legislation unlike the gas safety test. However it is the landlords duty to make sure the property and systems/appliances are safe for tenants to use. The only way to make sure this is the case is to have an electrical safety check carried out at the premises on a regular basis.

The electrical safety inspection should be carried out by qualified electricians that are members of a body such as the NICEIC and a copy of each report should be kept on record.

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