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Em

Em Morley

Dealing with Disputes on a Joint Tenancy

Published On: February 6, 2015 at 4:58 pm

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Recently, the Landlord Referencing forum received a question from a landlord concerning a joint tenancy.

The landlord, named as Miss Elly, explained her predicament: “I rented a house to a group of sharers on a 12-month joint AST [Assured Shorthold Tenancy]. The signed and witnessed tenancy agreement states an amount of rent to be paid monthly for the whole property.

“These tenants have been paying the rent into my account, each making payments of their own share of the total amount, which have varied each month by small amounts.

“I have finally got my act together and outlined to them that there is a small shortfall of rent, about £350, and asked them to bring the rent up to date.”

Miss Elly continues: “They have raised an issue with me because in one email to one tenant a few days before they moved in, she queried, “What is the rent again?” and I sent her a quick email with a lower amount identified, which was an error.

“She caught me on the hop and I replied without checking my files. She now says that my typographical error email “constituted the contract and superseded any contracts previously.” I think that she is trying it on. What do I do now?”1

A landlord named Jo was quick to respond, sympathising that this is “a horrible position to be in.”

Jo also offers her advice: “I think that if the tenancy agreement signed by all the sharers has the correct amount on it, then that is the right rent on the contract.”

She continues by providing a solution: “You could offer to accept the error and ask for the correct rate from now, sending each of them a letter explaining the problem.”1

Crossrail Homes Provide Profits

Crossrail Homes Provide Profits

Additionally, another landlord, Mary Latham, details the situation thoroughly, explaining what the landlord did wrong and how it can be rectified.

Latham says: “Many landlords make a fundamental mistake when issuing a joint AST, and unfortunately you have done the same.”

“You have communicated with an individual and spoken about an individual rent,” she explains.

“This is the way that a joint tenancy should be managed:

  1. The tenants named are the global tenant, they are not individuals and should not be treated as such or communicated with individually. All communications should be addressed to all named tenants and each should be sent a copy.
  2. The rent is the rent for the whole property, as is the deposit. We should not refer to an individual’s contribution; that is for the tenants to decide.
  3. The property is the whole property and we should not refer to individual rooms; that is also for the tenants to decide.
  4. This is a joint tenancy, which means that they are both jointly and individually responsible for all costs and it is vital that we don’t do anything to change that legal obligation.”

Latham goes on to say how the tenants will also be affected: “Not only are you in a difficult situation, the other tenants are too:

  1. The whole rent for the property, as stated on the AST, is due.
  2. If one of the joint tenants pays less, the others must make up the difference; they won’t like that and will be supportive of your request for the full payment.
  3. You have slipped up by communication with one individual, but that person has signed the AST knowing the rent that is due and therefore if that person pays less the others are forced to make up the shortfall; I am sure that the individual does not realise this.
  4. If at the end of the tenancy there is a shortfall, you will be able to make a claim against the joint deposit for the balance.
  5. Your communication was an error, but the AST is a legally binding contract which has been signed and witnessed, and therefore can be enforced.”

Latham offers support for other areas also: “All of the above applies to rent arrears and damages, and I have seen many landlords try to claim from an individual when in fact they should be claiming from the joint deposit, which should be protected as one amount in the name of the lead tenant, naming the others as joint tenants.

“Any claim is then sorted out between the tenants when they know the total amount being withheld; only they know who is responsible in common areas and therefore only they can decide who should take the loss from their deposit contribution.”

Latham then provides a conclusion: “In this situation, it’s best to write to all the tenants and explain the above and let them come back to you with the solution.”1

It appears that Miss Elly has not responded to the advice, and thus it is not clear what happened in her situation. However, the tips from Mary Latham could help many landlords in a similar situation.

1 http://www.landlordreferencing.co.uk/forum/discuss/community-forum/i-made-a-mistake-can-i-be-held-to-it/#p28133

Oil Prices and the Property Market

Published On: February 6, 2015 at 4:09 pm

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Categories: Property News

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During housing bubbles, shocking statistics can prove just how bad things have become in the market.

In the 1980s, during Japan’s bubble, the land around the emperor’s palace in Tokyo was reportedly worth more than the whole state of California.

In Britain today, the value of London property is higher than Brazil’s GDP, says estate agent Savills.1

Now, people are wondering what will burst the housing bubble, and consequently how far prices will fall.

Foreign money

London house prices have been fuelled by foreign investment. Almost 70% of property sold in central London in the past few years has gone to residents outside of the UK. For the whole of London, this number is about 20%.1

The biggest group of buyers is said to come from Russia, with one in five property sales worth £10m or more coming from there.1

For those who are not British citizens, there is a generous tax system for buyers. For rich Russians, putting money into London may be favourable to keeping it in Moscow.

It is not just Russian’s buying into the market. The Eurozone crisis has brought a lot of money into the UK.

Oil Prices and the Property Market

Oil Prices and the Property Market

Oil prices

A lot of wealth driven by $100 per barrel oil has gone into the London property market.

With the decline of oil prices, there is a lot less money going around. Furthermore, President Putin is attempting to get Russians to bring their money back home. 

Additionally, Britain has also been made less of a safe haven for foreign investors, due to sanctions.

There has been a general sense of anger towards the area of London dominated by second homes, adding more pressure to tax wealthy and foreign property owners. Depending on the result of the general election in May, there may be a mansion tax introduction.

This is causing overseas buyers to think twice about property in the capital.

Quantitative easing

The London housing market could also experience pressure from the recent move from the European Central Bank’s (ECB) decision to introduce quantitative easing (QE).

Money Week’s John Stepek expects this to affect the value of the euro. The currency has already dropped against the sterling. However, JP Morgan’s Strategic Bond Fund’s Nicholas Gartside believes that it could decrease by a further 10%.1

This would make London homes more expensive for Eurozone buyers. Importantly, the ECB has also begun printing money. Signs of a wider recovery could see money leave London and go back into cheaper Eurozone assets.

Dropping prices

For now, interest rates seem likely to stay low. Also, whoever wins the election will need to keep prices high. The British housing market is considered too big to fail.

It is thought that UK property prices will remain the same as they are currently; particularly steady in London, and rising slightly outside of London.

Money Week’s Merryn Somerset Webb believes now to be a good time to downsize from the capital into the country.

However, this could be an idyllic viewpoint.

Rarely, overvalued markets remain static. They are more likely to jump from high to low.

Paul Hodges, demographics expert, predicts that prices could fall by a lot more, as much as 50%.1

1 http://moneyweek.com/the-oil-price-crash-and-european-qe-will-pop-londons-property-bubble/

Movies Cause Property Prices to Rise

Published On: February 6, 2015 at 1:40 pm

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Homebuyers are looking to move to towns and villages in the UK that have featured in films. However, those wishing their lives to be like the movies have caused house prices to spiral in some parts.

Movies Cause Property Prices to Rise

Movies Cause Property Prices to Rise

Knowing that location scouts have chosen an area seems to have had the Cinderella-effect on some places.

However, these popular parts also boast expensive house prices, with some areas seeing rises of a quarter in only five years.

The Halifax has reviewed property price trends in locations featured in 20 popular British films. Cambridge, home to the Stephen Hawking biopic The Theory of Everything, experienced growth of 26% in the last five years.1

A lot of the film, starring Oscar-winner Eddie Redmayne, was filmed at the University of Cambridge’s St. John’s College. Anthony McCarten, screenwriter and producer of the film, says: “St. John’s is one of the most beautiful, if not the most beautiful, colleges at Cambridge. The main hall is known as the wedding cake because it has such grandeur about it.”1

Although Cambridge has been an appealing place to live for a while, the more unlikely star of Halifax’s findings is Milton Keynes in Buckinghamshire, where The Imitation Game was filmed in Bletchley Park.

Due to the film, starring Benedict Cumberbatch, house prices in this area have increased by 25% in the last five years.1

Many locations included in the research were already experiencing price rises before the films reached the cinema, although the success of these movies has added appeal.

In Cambridge and Milton Keynes, house values have grown at a faster rate than their whole regions, indicating that these films had quite the influence.

1 http://www.dailymail.co.uk/news/article-2941999/From-Cambridge-Milton-Keynes-films-send-house-prices-soaring-Costs-areas-quarter-just-five-years.html

Who is Responsible for Clearing Gutters?

Published On: February 6, 2015 at 12:30 pm

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When one user took to the Landlord Zone forum to introduce the topic, responsibility for clearing gutters, they may not have expected what was to follow.

It appears that landlords and tenants alike cannot agree on the matter, regardless of legislation or past rulings.

The user kicked off discussions by asking: “It seems common practice to put a clause into ASTs [Assured Shorthold Tenancies], which makes tenants responsible for the clearing of gutters. Is this acceptable/legal?”

The person continued by explaining that they think making this a requirement is “going one step beyond what you can expect a tenant to do.”

They ask: “What happens if the tenant has no ladders, or is afraid of heights? What would happen if the tenant fell off a ladder while trying to clear the gutters? Would the landlord be liable for forcing them to go and do it?”

The user claims: “Is it an unfair term in the AST? I’ve read a few OFT [Office of Fair Trading] reports indicating that they consider it to be such.”1

They also include the Landlord and Tenant Act 1985 in their enquiry, which applies as follows:

11 Repairing obligations in short leases.1 

(1) In a lease to which this section applies (as to which, see sections 13 and 14) there is implied a covenant by the lessor—

(a) to keep in repair the structure and exterior of the dwelling-house (including drains, gutters and external pipes)

And:

17 Specific performance of landlord’s repairing obligations.1

(2) In this section—

(d) “repairing covenant” means a covenant to repair, maintain, renew, construct or replace any property.

Who is Responsible for Clearing Gutters?

Who is Responsible for Clearing Gutters?

The above legislation explains that it is the landlord’s duty to keep the gutters in repair. Repair is then indicated to also include maintenance.

However, another user replies by saying: “Keeping in repair the structure of a gutter is not the same as cleaning it.”1

They then refer to the Warren vs. Keen 1954 case, in which Lord Denning defined the term, tenant-like manner. He said: “The tenant must take proper care of the place… In short, he must do those little jobs about the place which a reasonable tenant would do.”1

It became apparent, following this statement, that users had a difference of opinion on what classes as reasonable.

The initial user who posed the question says: “I really don’t think it’s reasonable to be putting in contracts that tenants must clear the gutters.

“With reference to the Denning statement above, that was in 1954, and times do change. Health and safety, and liability are much more at the forefront of consideration.

“I’d quite like to see the outcome of a case where a tenant fell off a roof as a result of the landlord asking them to clean the gutters.”

The user then offers an alternative for landlords: “Wouldn’t it be safer for the landlord to employ a suitable gutter cleaner and just up the rent to cover it?”1

Another user, who has both a gutter cleaning business, and a gutter clearing business, states: “Gutter cleaning and gutter clearing are two separate services.

“Furthermore, I’m a landlord. We’re responsible for maintaining our property and it’s fixtures. We pay good money to insure our property. If we don’t maintain it properly, our insurance may be invalidated.”

They then give their opinion: “I’d suggest that clearing the gutter is in the interest of the property owner.”

From a landlord insurance perspective, they explain: “Insurance companies may want evidence that the gutters have been maintained in the event of a claim. Professionals provide invoices and some offer photos and video footage to their customers.

“If the gutters haven’t been cleared by the last tenant how will you know? If you need to make an insurance claim, how will you prove they’ve been maintained if you didn’t arrange it?”

It may be in the best interest of both parties to have professionals take care of the issue and for the cost to be a responsibility of the tenant, or for the landlord to conduct the work themselves.

The user concludes by offering: “This is the kind of area I think can separate a good landlord from a bad one.”1

Furthermore, another landlord agrees: “I’ve tended to take the view that if I haven’t provided a ladder that is tall enough, it is not reasonable to expect the tenant to clear the gutter. I couldn’t reasonably expect them to mow the lawn if I hadn’t provided a mower.”

A tenant then steps in to offer their side of the story. They explain: “I have refused point blank the following in any tenancy agreement: 1, I will not clean gutters; 2, I will not replace tap washers.

“I tell the agents this, even if it is in the AST, I put in writing that I will not perform items 1 and 2.”

The tenant then says that they have never been challenged on this.

Another user believes that tenant-like behaviour, as explained by Lord Denning, does not “include anything that involves clambering up a ladder to the roof.”

They also think that it is down to the fact that blocked guttering is not caused by the tenant, and “unless the tenant actually physically blocks the gutters, an obligation on him to clear them would be void.”1

However, another user points back to the 1985 act, saying: “The lessee has to repair the structure and exterior, which is clarified to include drains and gutters. Keeping a gutter clear of obstruction is not a repair, it’s maintenance; fixing a broken or leaking pipe would be a repair.”

Then they say: “It might be sensible for a landlord to clean out gutters as part of tidying up between tenants, but once in situ, I’d expect the tenant do keep them clear, and therefore better to put that in the contract to make things clear.”1

As legislation and previous rulings seem to still cause disagreement in the sector, it could be wise for this specific issue to be cleared up in a tenancy agreement, and avoid one party believing they do not hold responsibility.

The tenant who will not clear gutters explains why they believe there should not be such a difference over repairs and maintenance. “Getting a yearly gas certificate is not a repair, it’s checking everything works, nothing is repaired for the money you spend on the checking procedure, so should the tenant pay for that?” they ask. “Servicing a boiler is not a repair, it’s maintenance to ensure correct operation.”

The tenant concludes by saying: “Sorry, gutters are not my problem, it’s outside and above my head.”1

The outcome seems to indicate that various tenants, landlords, and tenancies will hold a different perspective on the issue. Another user believes: “It seems quite unreasonable to expect a tenant on a six-month let to clear the gutters, or even a 12-month.

“Someone who has been resident for years though, it’s perhaps less unreasonable.”

They refer to tenant-like behaviour: “Lets were longer when the tenant-like manner concept was introduced. Having the chimney cleaned/cleared is, from what I read, considered the tenants’ responsibility, a similar thing perhaps to having the gutters done where they have blocked over the course of a longer tenancy.”1

Another landlord points out: “I don’t have to get the boiler serviced, but I do as it is likely to prolong the life of the boiler, but this is something that is of little interest to a tenant.

“Most tenants are unlikely to notice if the gutter needs clearing, and it is of little interest to them either way. It is however of interest to the landlord, as long-term structural damage can result from overflowing gutters.

“Where a, the job is dangerous, and b, it’s not necessarily something that needs to happen every tenancy, and c, the structural maintenance of the building depends on it, I as landlord would expect, and want, to take responsibility for it.”1

Regardless of the varying views and opinions of landlords, homeowners, and tenants, this issue could cause problems if not outlined definitively at the beginning of the agreement. Despite whose duty it is to clear the gutters, it is still important for the landlord to confirm whether they are happy to sort it, or they expect it of tenants.

1 http://www.landlordzone.co.uk/forums/archive/index.php/t-48386.html

Mortgages Drop by £1,700 a Month as Lenders Fight for Low Rates

Published On: February 6, 2015 at 10:21 am

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Categories: Finance News

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Mortgages Drop by £1,700 a Month as Lenders Fight for Low Rates

Mortgages Drop by £1,700 a Month as Lenders Fight for Low Rates

The average mortgage has dropped by £1,700 in just a month as banks are competing over low rates.

As lenders fight over achieving the lowest rates and attracting consumers, borrowers are being offered cheap rates. Experts expect record low deals in the future.

Buyers with a 10% deposit gained the highest savings, revealed data from broker’s London & Country.

First Direct offers one of the best five-year rates available, at 2.28%. It will also provide a record low offer at a 2.89% fixed rate for ten years.

HSBC will also offer customers with a 40% deposit a 1.19% two-year deal.

Banks can provide these deals as economists predicted that the Bank of England (BoE) would not increase its base rate from the historic low of 0.5% until next year.

Long-term deals give buyers confidence that their repayments are secure, even if interest rates increase dramatically.

Experts expect rates to drop even further, and claim that two-year deals could fall below 1% and five-year rates below 2%.

Trinity Financial’s Aaron Strutt says: “For fixed rates to go below 1% would be extraordinary.”1

Managing Director of SPF Private Clients, Mark Harris, explains: “Lenders are keen to advance more money this year and they’re cutting their prices to attract customers. Banks will hope to make money by selling customers other products such as current accounts and credit cards.”1

1 http://www.dailymail.co.uk/news/article-2942143/Mortgage-war-cuts-cost-home-loan-1-700-month-Customers-offered-cheaper-rates-lenders-battle-business.html

A Warm Tenant is a Happy Tenant

Published On: February 5, 2015 at 2:40 pm

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A Warm Tenant is a Happy Tenant

A Warm Tenant is a Happy Tenant

The National Landlords Association (NLA) has spoken about energy efficiency measures in the private rental sector, reminding landlords to take the wellbeing of their tenants into account.

Following the Department of Energy and Climate Change’s announcement regarding the results of a consultation on minimum energy efficiency standards in the sector, Chief Executive Officer of the NLA, Richard Lambert, says: “The Government has struck a delicate balance between making clear what is expected and ensuring that there is a realistic prospect of landlords being able to comply.

“Setting the standard at a sensible rather than aspiration level, allowing time to achieve it and granting exemptions if the necessary improvements cannot be funded through the Green Deal or other Government subsidies, means that these new regulations will not impose an unreasonable burden. Indeed, where a landlord is in a position to undertake improvements, there will be no good reason not to.

“The NLA actively encourages landlords to improve the energy efficiency of their properties because it’s good practice; a warm tenant is a happy tenant.”1

1 http://www.landlords.org.uk/news-campaigns/news/warm-tenants-are-happy-tenants-says-nla