Date 5 July 2011
Channel 4’s Dispatches programme last night shone a light on the practices of some unscrupulous landlords in the private rented market who ignore the statutory protection offered to tenants in the pursuit of profits.
While the number of prosecutions of private landlords by local authorities revealed by the programme was staggeringly low, Jon Snow was at pains to point out that the law is actually on the side of tenants. If you didn’t see it, the programme focused on several main issues:
1. Unlawful eviction
Many private landlords who I act for are often surprised at the extent of the protection offered to assured shorthold tenants and the length of time that it can take to evict them from a property even if there are significant rent arrears or cases of anti social behaviour. What is it that should stop private landlords from simply changing the locks and kicking a tenant out on the street overnight?
My advice to landlords is that it is a criminal offence to evict a tenant without lawful authority under the Protection from Eviction Act 1977 and so unless the tenant is prepared to vacate voluntarily then a Court order is required. Not only that, the tenant may be able to acquire an injunction (with associated cost consequences for the landlord) to be let back into the property and damages for unlawful eviction. Damages for unlawful eviction are assessed by reference to the difference in value between the property with the tenant in situ and the value of the property with vacant possession. This can be a considerable sum and provides a further disincentive for landlords to act improperly.
The grey area shown to be exploited on the programme were methods of persuasion used to procure a voluntary surrender from the tenants. Basically, private landlords should avoid pressuring tenants to vacate because such conduct could result in a constructive unlawful eviction claim (i.e. conduct by the landlord which is such that the occupier cannot reasonably be expected to remain, although physically he could, and the occupier accordingly gives up his occupation of the premises).
The real issue unearthed by the programme was that while the law is there to protect the tenants from being exploited, the cost of getting that advice is too high for many of those affected. It is that lack of access to justice that the landlords were exploiting for their own profit (but that is a blog for another day!).
2. Rent control
One of the landlords on the programme was shown to be demanding rent increases from tenants as a means of intimidating them into leaving their property. While there is very little in the way of practical statutory rent control in the private rented market what appeared to be shown was unilateral variations of contract by the landlord which did not have to be accepted by the tenants (i.e. just because the landlord says that he is increasing the rent doesn’t automatically mean that a tenant must agree). Basically, if a landlord wants to increase the rent it would have to do so consensually or grant a new tenancy at the higher rent (after lawfully terminating the current tenancy).
Tenants themselves may apply to the local rent assessment committee to determine the rent which the landlord might reasonably be expected to obtain under the assured shorthold tenancy and any excess above the determined rent is irrecoverable from the tenant. However, in my experience this is very rarely utilized by tenants and the cost of instructing legal representation can outweigh the potential savings.
3. Disrepair
Several of the properties shown on the programme looked to be in a dilapidated, damp and in some cases dangerous condition. The Landlord and Tenant Act 1985 requires not only that the property be fit for human habitation but specifically there is an implied covenant by the landlord:
(a) to keep in repair the structure and exterior of the dwelling-house (including drains, gutters and external pipes),
(b) to keep in repair and proper working order the installations in the dwelling-house for the supply of water, gas and electricity and for sanitation (including basins, sinks, baths and sanitary conveniences, but not other fixtures, fittings and appliances for making use of the supply of water, gas or electricity), and
(c) to keep in repair and proper working order the installations in the dwelling-house for space heating and heating water.
These provisions cannot be contracted out of but unfortunately for tenants, they stop short of imposing the same criminal liabilities that exist in relation to unlawful eviction.
4. Overcrowding
Some of the properties shown in the programme were home to a staggering number of occupants. A licensing regime exists for Houses in Multiple Occupation that (in general terms) requires landlords of properties to obtain a license from the local authority if:
(a) it consists of one or more units of living accommodation not consisting of a self-contained flat or flats;
(b) the living accommodation is occupied by persons who do not form a single household;
(c) the living accommodation is occupied by those persons as their only or main residence or they are to be treated as so occupying it;
(d) their occupation of the living accommodation constitutes the only use of that accommodation;
(e) rents are payable or other consideration is to be provided in respect of at least one of those persons' occupation of the living accommodation; and
(f) two or more of the households who occupy the living accommodation share one or more basic amenities or the living accommodation is lacking in one or more basic amenities.
Failure to hold a licence for a qualifying property is a criminal offence and landlords can be ordered to repay any housing benefit received on behalf of the occupants. However, it is down to local housing authorities to prosecute such cases and save for the issues outlined above the tenants themselves do not have tremendous private recourse against the landlord.
5. Sale and rent back
There was one example of an elderly couple who had sold and rented back their property as a means of releasing some value from it quickly. However, they had not realised the lack of security of tenure that they would have once they became private tenants of what was previously their home. The first lesson to learn from their experience is to ensure that you take your own independent legal advice in relation to such a transaction so you fully understand the consequences.
The next point to note that after widespread reports of abuse as the property downturn hit these arrangements are now governed by the Financial Services and Markets Act 2000.
Such arrangements are now regulated activities and it is a criminal offence for a person who is not regulated by Financial Services Authority (and the transaction is not subject to an exemption – there are a few) to;
- enter into a regulated sale and rent back agreement;
- administer a regulated sale and rent back agreement;
- arrange regulated sale and rent back agreements;
- advise on regulated sale and rent back agreements; or
- agree to carry on any of the above activities
However, vendors still need to be very careful as dealing with an unregulated operator takes them outside the protection of the Financial Services Compensation Scheme, so when bringing a private claim they may find themselves as one of a number of creditors in an insolvency, which unfortunately is a frequent occurrence in cases of transactions which occur outside the regulatory framework.
As I mentioned above, there is protection and numerous legal remedies for tenants in most of the situations shown in last night programme. However, Dispatches rightly highlighted the vulnerable nature of the individuals involved which clearly assists in the landlords in this exploitation, making it a calculated risk on their part. However, with criminal sanctions involved in many cases such conduct cannot be endorsed.
For further information about our Property Litigation services or to discuss a particular matter or situation in more detail, contact David Linklater at our St Albans office by email at chris.alexander@salaw.com or on 01727 798000.
© SA LAW 2011
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