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Nick Conner

Posted 2 November 2015
by Nick Conner

Property update November 2015

Changes to the section 21 notice

Readers will be familiar with the service of a section 21 notice by a landlord to end an assured shorthold tenancy (“AST”). From 01 October 2015, changes have been introduced both to the form itself and the circumstances in which it can be enforced.

New form

The new form[1] (introduced to correct certain errors) must be used when ending an AST granted on or after 01 October 2015 and therefore letting agents need to ensure their template notices are updated accordingly.

One of the changes to the form is the removal of the need for the landlord to specify the last day of a period of the tenancy as the date on which the tenancy comes to an end (when seeking to end a periodic tenancy arising after the expiry of a fixed term AST, which is done using a s21(4) notice), which often led to technical errors on the served notices. Landlords and letting agents should still be aware that the date specified in the s21(4) notice must still be not earlier than 2 months from the date on which the notice is given.

When it cannot be enforced

It is very important to note that these new 2015 regulations prevent the landlord from enforcing a section 21 notice where any of the following have not been adhered to:

  • A gas safe certificate has not been provided to the tenant;
  • An EPC has not been provided to the tenant;
  • The landlord has not given the tenant a copy of the government’s “How to rent: The checklist for renting in England”[2].

In terms of other interesting points to note, landlords are not able to serve a section 21 notice where a tenant has made a written complaint to the landlord about the condition of the property or common parts to a building and the landlord has not responded or has given an inadequate response. This could open the floodgates to tenants lodging spurious complaints to delay the landlord’s service of a section 21 notice.

Many landlords used to serve a precautionary section 21 notice immediately at the start of the tenancy. This is no longer possible and the section 21 notice must not be served until after four months (beginning on the date tenancy began) has expired. Any notice served before the four months is up will be invalid. In practice for six month tenancies, this will make it extremely difficult to actually time the service of the notice correctly to require the tenant to leave at the end of six months.

Where a landlord wishes to apply for an order for possession, the claim must be submitted within six months’ from the date the section 21 notice was given or, if a section 21(4) notice was given, within four months from the date specified in that notice. If a claim is not made within these periods, a new section 21 notice must be served.

This change places an onus on landlords to lodge possession claims promptly, rather than letting matters drift in the hope that they will be resolved. If the landlord fails to act within the timeframes detailed above, this will delay their ability to recover possession as a new notice will need to be served.

 

Carbon monoxide alarm regulations

The Smoke and Carbon Monoxide Alarm (England) Regulations 2015 came into force on 01 October 2015 and requires landlord to ensure that:

  • A smoke alarm is installed on each storey of premises that are wholly or partly used as living accommodation;
  • A carbon monoxide alarm is installed in any room (room includes halls and landings. Bathrooms and lavatories are regarded as rooms used as living accommodation) that is used wholly or partly as living accommodation and contains a solid fuel burning combustion appliance; and
  • The smoke and carbon monoxide alarms are in proper working order at the start of any new tenancy.

There are some important exclusions from these regulations and these are set out below:

  • Arrangements where an occupier who shares accommodation with a resident landlord, such as an owner occupier who rents out a room;
  • Long leases (so leases for 21 years or more), and tenancies granted for a term of seven years or more without a break clause for either party;
  • Agreements for accommodation in student halls of residence;
  • Agreements for accommodation in hostels or refuges;
  • Agreements for accommodation in hospitals, hospices, care homes or similar.

Penalties of up to £5,000 can be levied for non-compliance with the new regulations. The House of Lords widely condemned the regulations and felt too little notice was being given to landlords of their introduction, but the Government decided to pass them in any event! Perhaps acknowledging the House of Lords may have had a point; two guidance booklets[3] have been published to assist landlords.

 

Mortgage valuations of no benefit to buyers

We make clear to all buyers at the outset of a purchase that the valuation report carried out on behalf of their lender is not for the benefit and is not something that they can rely on. Accordingly, any sensible buyer should have his or her own survey carried out. Notwithstanding this, many try to save money and fail to do this.

The problems of such an approach were revealed in a recent article[4] explaining the experiences of a couple who paid £500,000 for a Somerset barn conversion. Not instructing their own survey, they instead sought to rely on the lender’s valuation, which concluded that the property was worth the £500,000 being paid. According to the article, the valuation stated the conversion had “several minor areas of disrepair”; that the annexe was in “reasonable repair” and that the B&B building was “in a good state of repair with no outstanding items of material disrepair.”

Numerous issues were uncovered following purchase, with a surveying company (instructed after the event) putting a price tag of £165,000 on the cost of making good these issues.

The couple raised a complaint with NatWest, who duly informed them that NatWest had not lost any money (the couple put down a 30% deposit) and, while they were “sympathetic”, it was not for NatWest to resolve this issue for them.

Buyers take head!

 

Changing use

Building on the temporary relaxation of permitted development rights, which allow office space to be converted to dwellinghouses, the Government has announced this will be a permanent change from May 2016.

The announcement has been made ahead of the publication of the Housing and Planning Bill, as a means of supporting the government’s drive to deliver one million homes by 2020. Developers will no doubt welcome this news.

 

Changes to low-cost homes

At the Conservative party conference, David Cameron announced proposals whereby builders will be able to offer new homes for first-time buyers below the age of 40 on new developments. This will be instead of low-cost rented homes.

Presently, and as many readers will know, developers are obliged to deliver a certain percentage of affordable rental homes in a development through planning obligations contained in a section 106 agreement. The proposal is for these restrictions to be abolished, with new starter homes instead being available (to buy, not to rent) at a discount of 20% off the market price. The price will be capped at £250,000 outside London and £450,000 in London.

 

Robbie Fowler’s property masterclass

Being avid football fans, the Tozers’ property department is well versed in the terrace chants of “we all live in a Robbie Fowler house” sung to the Beatles’ “Yellow Submarine”, a playful homage to the former Liverpool and England striker’s entrepreneurial property streak that has seen him acquire a buy-to-let portfolio “stretching from Cardiff to Scotland.”[5]

For those keen to muscle in on some of the action and worried about conflicting media reports, fear not as Robbie is positively bombastic about current buy-to-let prospects; something he will more than happily expound on at one of his £1,000-a-head property empire courses (not that Fowler will be presenting in person, of course).

Certainly, Halifax reported a 2.7% increase in house prices in August[6] being the highest monthly rise since May 2014.

Also, the Royal Institute of Chartered Surveyors announced it had changed its forecast for UK house prices, predicting they will end the year 6% higher than they started it. At the start of this year it predicted growth of 3%.

Perhaps Robbie is right.

 

[1] The form can be found in The Assured Shorthold Tenancy Notices and Prescribed Requirements (England) (Amendment) Regulations 2015 (SI 2015/1725).

[2]https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/464910/How_to_Rent_October_2015_FINAL.pdf

[3] https://www.gov.uk/government/publications/smoke-and-carbon-monoxide-alarms-explanatory-booklet-for-local-authorities & https://www.gov.uk/government/publications/smoke-and-carbon-monoxide-alarms-explanatory-booklet-for-landlords

[4] http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/11891118/Survey-failed-to-spot-165000-subsidence-hell.html

[5] http://www.theguardian.com/money/2015/sep/11/robbie-fowler-liverpool-footballer-buy-to-let-academy-courses

[6] http://www.theguardian.com/money/2015/sep/10/uk-house-prices-for-august-though-the-roof-halifax

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About the author

Nick Conner

Nick Conner

Partner

Conveyancer and partner in the private client department