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Deposit Protection

First, I need to write that this article is not meant to act as legal advice in any way, shape or form.

We don’t think the law around the holding of deposits is particularly complicated, but we are certainly not qualified to give it advice.

The law/rules/guidance around what you can and cannot withhold from a deposit is, well, almost entirely subjective and frankly a can of worms (here is the advice the tenants are getting – link below).  

So, the purpose of this blog is a discussion of the nature of deposits and highlight what you should be aware of and possibly do more research into you can do that >>here<<.

 

Should I even bother to take a deposit?

Yes, you absolutely should…….. DEFINITELY!!

OK, so it almost goes without saying that a tenant can cause far more damage than will ever be recovered through the withholding of a deposit.

In many ways, the monetary value is secondary to the commitment to the property and superior financial management that the tenant is displaying in getting the deposit together.

Frequently the first question you’ll get asked by the tenant when they submit their Notice to Quit, is ‘when will I get my bond back?’.

It is quite clearly in their mind, and if that thought holds during the tenancy and they take that little bit of extra care with your property, then you are onto a winner.

The tiny bit of extra daily care that a tenant may take with your property will add up and, although I will never be able to prove this, I believe you will have fewer issues with tenants if you take a deposit.  And if that is too woolly and ethereal for you – well you have the cold hard cash from the deposit to cover any repair costs.

How much should I take?

Amount taken tends to be relative to the rent the equivalent of somewhere between 1 to 2 months.

However, there are a number of reasons why you would want to take a bit more; if the tenant wants to have pets, if the tenants are foreign and a greater potential to skip payments at the end of a tenancy are but two examples.

There is no right or wrong (although as at December 2018 the Labour Party are pushing to have an upper limit on the deposit – so watch out)

So that’s easy, I’ll take a deposit.  Now, what shall I do with the money?

Simple – register it with or submit it to a government-backed scheme.

Tenancy deposit protection was introduced on 6 April 2007 as part of the Housing Act 2004 and updated in the tenancy deposit provisions (section 184) of the Localism Act which came into effect on 6 April 2012.

Much of the justification for the acts was the sharp practices by some landlords predominantly betterment.  Betterment (made up word alert?) is the practice of spotting a small defect and then using it to justify making the property better at the tenant’s expense, for instance, a small mark on a wall could be used as a reason to re-decorate a whole room or house.

The deposit schemes are meant to bring greater parity between tenants and landlords about what the deposit monies can be used for.

Has it worked? We have no idea, but it certainly has changed the relationship and also created a new opportunity for the no win no fee lawyer if the deposit is not correctly registered and the correct paperwork served; You have 30 days from receipt of the money so act quick.

What is this ‘Deposit paperwork’?

The details of what paperwork needs to be served will be available on the scheme’s website, we haven’t listed the requirement here for fear of going out of date and thereby being misleading.

Broadly, it is a document that tells the tenant about which scheme you have used (the prescribed information) and T&Cs/leaflets that give greater depth of detail about the scheme.

To register or go custodial?

The schemes offer two options; in the custodial scheme the deposit is paid the money into a third party account managed by the scheme and registering the deposit involves the payment of a fee to register the deposit which is then held by the landlord/agent.

Which scheme is better?  Only you will be able to decide as it is very much linked to how you manage your affairs and the types of tenancies you have.  Bear in mind that you can use different schemes for different deposits if you so wish.

At the time of going to print the following providers were available, these are the only government schemes available, easily found on google.

  • Deposit Protection Service (DPS)
  • Dispute service (TDS)
  • mydeposits

Were all done then?

Yes and no.  It is also important to ensure that you complete a detailed condition report (inventory) of the property.

This should be a combination of at least a written report and photos; taking videos is also commonplace.

The inventory should be completed with the tenant prior to the point they move any of their belongings and must be signed off by the tenant as a true and accurate (It also is good practice to get them to witness the testing of fire and carbon monoxide detection equipment and take the meter readings at the same time, but we have now strayed to a different subject matter!)

The inventory will then form the basis of any future claims against the deposit if the tenant disputes any monies that you intend to withhold.

If you are not feeling confident, then you can use an inventory service.

You are not tied to this service forever, and it could be quite useful to get them to draw up the inventory in the first instance anyway!

Last words.

Play it by the book.

house chains

Possession: A Quick Guide

An Overview of Possession – service notice on a tenant.

OK, guys, we will apologise in advance, this isn’t going to be anywhere near entertaining.

Nevertheless, it needs writing, we are going to, for the sake of continuation get straight to the point, avoid our usual satiric approach and simply get down to business!

Shall I, shan’t I?

So, after much deliberation and consideration, you have decided that you would like to take back control of your property.  There could be a multitude of reasons for this; but whether the tenants’ departure is benign or not, the strategy considerations will be broadly the same.

In the next few paragraphs, the intention is to run through strategic choices, touching on the legal procedures.  As ever, if you have any detailed or specific questions, you may need to consult a lawyer.

Carrot or stick?

The best option to get possession of your property is to find a solution agreeable with your tenants.  If you manage to do this, then make sure that you get the agreement in writing as soon as possible. This is normally with either a ‘notice to quit’ or a deed of surrender.

The difference between them is that a ‘Notice to Quit’ is a unilateral notice from the tenant informing you that they intend to leave whereas the Deed of Surrender is an agreement by the landlord and the tenant to terminate the tenancy, so it can be as flexible as you are.

The main practical differences then are that the Deed of Surrender should be used if the tenancy is still in the fixed term and it can include financial considerations. The Notice to Quit should be aligned with the terms in the tenancy agreement so in theory is less flexible. With either form, once signed the tenant is committed to leaving on the agreed date unless the landlord agrees to a change.

If the tenant makes it known that they intend to be problematic about leaving, then the landlord will need to serve notices and could ultimately require court action and bring in the bailiffs.  These tools should be avoided if possible because they are time-consuming and expensive.

However, if the tenant won’t sign the paperwork then is clear that they do not intend to make possession easy. At this point it is worth mentioning that there are only two legal weighs to end a tenancy, the first mentioned above, voluntary surrender; the second is to obtain a possession order from a court.

What about abandonment? Yes, I know, new rules are in play but we’ll save that for a different article.

Help, I don’t know where to start?

First, you need to understand the difference between Section 21 and Section 8 notices.

A Section 21 notice is the no-fault route. It is designed for scenarios in which the landlord would like to take possession – it could be to move back in, to sell the property etc.  Therefore, it follows the tenancy agreement clauses closely, i.e. two months (periods) notice, it cannot be served to expire within the fixed term, and there is no recovery of monies – other than pro rata rent.  So long as your procedure is correct, the judgement is guaranteed.

Section 8, on the other hand, stipulates failures (called the grounds for possession) by the tenant to stick to the clauses of the tenancy.  There are currently 17 grounds you can use, be careful some are not mandatory so they will be at the discretion of the judge as to whether you get possession.  It also differs from the Section 21 because you can include monies in the judgement to recover the arrears.

Both routes have a standard form that you need to use, a Form 3 for a Section 8 and a Form 6a for the Section 21.  There are grandfather rules for these forms, so you need to check that you don’t fall foul of them if you are dealing with an old tenancy.  You need to be up to speed with how the notices should be served.

You can serve both notices and then choose which path to follow at a later date.  However, if you need to go to court, you will need to decide which notice to use and make this extremely clear to the tenant so that they don’t use confusion as a ‘get out of jail free’ card.

However, before you start completing any forms, it is worth checking that you have set up the tenancy correctly, meeting all the legal requirements.

You should have supplied the following paperwork;  

  • A written Assured Shorthold Tenancy Agreement
  • The up to date ‘How to Rent’ leaflet.
  • The Deposit Prescribed Information – in the correct format.
  • The property ‘Energy Performance Certificate’.
  • The Gas Safety certificate.
  • Moreover, that you have protected any deposit taken in an approved scheme, if you haven’t done any of these things it would be worth ‘playing catch up’ as soon as possible, the implications for not doing these things is a collapsed court case – expensive, time consuming and avoidable!.

It may be worth mentioning that when you serve notice, it’s a good idea to include the most recent ‘how to rent’ leaflet as it may differ from the one issued at the start of the tenancy. You can download the latest version here

The notice has expired, but nothing has happened?

If the notice has expired, then you will need to initiate court action.  You complete the paperwork (or do it online) and enclose the evidence.  The court issues you with a date at which you should get a possession judgement granted.

But the tenants won’t leave?

Then you will need to get the bailiffs to evict them. This requires more paperwork (and money) to book them through the county court.

You should now have possession of your property.

Final thought.

The best way to protect yourself starts at the beginning of the tenancy.

Get the right tenants and set up the tenancy right.

keys in hand

An Overview of Possession – Service notice on a tenant.

* COVID UPDATE (02/2021) – In light of the current CoV-19 situation we strongly suggest seeking professional advice on this matter. However, the bulk of this article is still relevant.

Ok, guys, we will apologise in advance, this isn’t going to be anywhere near entertaining.

Nevertheless, it needs writing, we are going to, for the sake of continuation get straight to the point, avoid our usual satiric approach and simply get down to business!

Shall I, shan’t I?

So, after much deliberation and consideration, you have decided that you would like to take back control of your property.  There could be a multitude of reasons for this; but whether the tenants’ departure is benign or not, the strategy considerations will be broadly the same.

In the next few paragraphs, the intention is to run through strategic choices, touching on the legal procedures.  As ever, if you have any detailed or specific questions, you may need to consult a lawyer.

Carrot or stick?

The best option to get possession of your property is to find a solution agreeable with your tenants.  If you manage to do this, then make sure that you get the agreement in writing as soon as possible. This is normally with either a ‘notice to quit’ or a deed of surrender. 

The difference between them is that a ‘Notice to Quit’ is a unilateral notice from the tenant informing you that they intend to leave whereas the Deed of Surrender is an agreement by the landlord and the tenant to terminate the tenancy, so it can be as flexible as you are.

The main practical differences then are that the Deed of Surrender should be used if the tenancy is still in the fixed term and it can include financial considerations. The Notice to Quit should be aligned with the terms in the tenancy agreement so in theory is less flexible. With either form, once signed the tenant is committed to leaving on the agreed date unless the landlord agrees to a change.

If the tenant makes it known that they intend to be problematic about leaving, then the landlord will need to serve notices and could ultimately require court action and bring in the bailiffs.  These tools should be avoided if possible because they are time-consuming and expensive.

However, if the tenant won’t sign the paperwork then is clear that they do not intend to make possession easy. At this point it is worth mentioning that there are only two legal weighs to end a tenancy, the first mentioned above, voluntary surrender; the second is to obtain a possession order from a court.

What about abandonment? Yes, I know, new rules are in play but we’ll save that for a different article.

Help, I don’t know where to start?

First, you need to understand the difference between Section 21 and Section 8 notices.

A Section 21 notice is the no-fault route. It is designed for scenarios in which the landlord would like to take possession – it could be to move back in, to sell the property etc.  Therefore, it follows the tenancy agreement clauses closely, i.e. two months (periods) notice, it cannot be served to expire within the fixed term, and there is no recovery of monies – other than pro rata rent.  So long as your procedure is correct, the judgement is guaranteed.  

Section 8, on the other hand, stipulates failures (called the grounds for possession) by the tenant to stick to the clauses of the tenancy.  There are currently 17 grounds you can use, be careful some are not mandatory so they will be at the discretion of the judge as to whether you get possession.  It also differs from the Section 21 because you can include monies in the judgement to recover the arrears.

Both routes have a standard form that you need to use, a Form 3 for a Section 8 and a Form 6a for the Section 21.  There are grandfather rules for these forms, so you need to check that you don’t fall foul of them if you are dealing with an old tenancy.  You need to be up to speed with how the notices should be served. 

You can serve both notices and then choose which path to follow at a later date.  However, if you need to go to court, you will need to decide which notice to use and make this extremely clear to the tenant so that they don’t use confusion as a ‘get out of jail free’ card.

However, before you start completing any forms, it is worth checking that you have set up the tenancy correctly, meeting all the legal requirements. 

You should have supplied the following paperwork;  

  • A written Assured Shorthold Tenancy Agreement
  • The up to date ‘How to Rent’ leaflet.
  • The Deposit Prescribed Information – in the correct format.
  • The property ‘Energy Performance Certificate’.
  • The Gas Safety certificate.
  • Moreover, that you have protected any deposit taken in an approved scheme, if you haven’t done any of these things it would be worth ‘playing catch up’ as soon as possible, the implications for not doing these things is a collapsed court case – expensive, time consuming and avoidable!.

It may be worth mentioning that when you serve notice, it’s a good idea to include the most recent ‘how to rent’ leaflet as it may differ from the one issued at the start of the tenancy. You can download the latest version here: https://www.gov.uk/government/publications/how-to-rent

The notice has expired, but nothing has happened?

If the notice has expired, then you will need to initiate court action.  You complete the paperwork (or do it online) and enclose the evidence.  The court issues you with a date at which you should get a possession judgement granted. 

But the tenants won’t leave?

Then you will need to get the bailiffs to evict them. This requires more paperwork (and money) to book them through the county court. 

You should now have possession of your property.

Final thought.

The best way to protect yourself starts at the beginning of the tenancy.

Get the right tenants and set up the tenancy right.

See our article on finding & keeping the right tenant

 

AdobeStock_49309089-1024x731

GDPR – What’s All The Fuss?

So, what is GDPR?

The analytical department of WOPT has deduced with great scientific and complete conjectural accuracy that 97.42% of all emails currently received are from companies that you purchased a candle from 12-years ago asking you to stay in touch with them.

This is because In the past when you looked online at something like a lightbulb all relevant and often irrelevant companies were informed through data sharing. The outcome was random emails or pop-ups from ‘Lightbulbs ‘R’ Us’, ‘We buy any old lightbulb.com’ and the life and times of Thomas Eddison. 

Great news for us, GDPR is designed to stop this

GDPR stands for ‘General Data Protection Regulations’, and in a nutshell, it’s the new European wide rules that will ultimately govern what information or data an organisation or individual can hold on other people and how they can ultimately use such information. It prevents companies or individuals from sharing and selling your personal data and browsing preferences.

What does it change for us?

Not much really for our community (landlords and property managers).

You will need to be a little bit more thorough and robust with your data handling, have a think through where and how you store others’ data and what you do with it.

If you are just using the information to run your property empire, then there shouldn’t be any change.  There are five reasons (shown here on our free ‘privacy statement’ template) why you can hold and process data, and they apply to you broadly as follows.

You will receive ‘consent’ to hold and process data on your application forms.

If the applicant is successful, you have a ‘legitimate interest’ to hold and process data about them and their tenancy.

That’s great, but what do I need to do?

Well, like we have just mentioned, you’ll need a privacy policy so it’s not a bad idea to work through our free template here and as you write yours it will show what is needed. 

To make it simple, think about the information you hold and what you do with it.  The RLA has produced an excellent article if you want to get right into the detail.  CLICK HERE

Although you should already be registered, it is important that, if not you now register with the ICO

How does it affect the information I hold?

You will need to be clear about exactly what you are holding, how you are protecting it and how long you keep it for.

The first bit, what you are holding, is fairly straightforward but you may get asked by a client or tenant about what you hold on them.  You have a time limit on getting back to them with this info. Currently this is 30 days.

You then need to make sure you are holding it in GDPR compliant repositories. 

We use cloud data storage, property management software and a referencing company.  All have declared GDPR compliance.

There are also time limits as to how long you hold the data for so have a plan to have a good clear out every now and again.

So thats it! That’s what all the fuss is about?

Well yes and no, our article only covers how the changes will affect us as landlords or property managers, it is far more complicated for larger organisations, but that’s none of our concern here.

We suggest, like we always do at WOPT, to do your due diligence and if you are in any doubt seek further advice. The rules are new and whizzy so no doubt the ‘no-win no-fee’ brigades are looking for an angle.

Be thorough with your business administration – see our article about systemising your business for more ideas. 

Just one final piece of mitigation before we leave you

If you decide to pass on your tenants info to a far eastern prince, who emailed you out of the blue, because he needs this information to get a large ‘tax-free’ cash sum out of his country and into your bank account then we can only wish you the very best of luck, not even the careful guidance of WOPT can save you here!!

EPC fail

EPC Changes – What you need to know!

With EPC’s firmly back in the spotlight and with the new regulations approaching we take a close look at what the changes are, what you need to do to comply and how they may affect us as landlords or property managers.

What is an EPC?

Ok, so we are not about to patronise you here and demonstrate the sucking of the proverbial egg. You don’t need to be a property guru to be familiar with the term EPC, but for those who are completely new to the industry and perhaps are not familiar with the term, we will give you our 8-second layman guide to an EPC.

EPC stands for ‘Energy Performance Certificate’ and just like Ronseal it does exactly what it says on the tin, and by that I mean it is an overview of how a particular property performs in relation to energy or rather more accurately how energy efficient the property is.

It has been law to provide tenants with an EPC since the 6th of April 2008 and to clearly show the EPC rating on any property advertised since the 9th of January 2013. The latter has been enforced by the threat of a £200 non-compliance fine, but the new laws which come into effect on 1st April 2018 and 1st April 2020 respectively are set to throw all this wide open and maybe just maybe cause a very small stir for a very small amount of you.

What do the new regulations state?

Here at WOPT our team have been working tirelessly to develop simple ‘no-nonsense’ guide to the changes, and we think we have it here for you, for free, because we care!

Simply read through our list below and see which applies to you to see if there is any action you need to take

  • If the property has a current EPC rating of E or above your activity level, as a result, is that not too dissimilar of a sloth, garden slug or giant tortoise. And for those of you who are not zoologists or are not 100% clear on this, it basically means nothing at all!

Job done!

  • If the property has a current EPC rating of F or G but has a current AST in place, and you have no plans to renew that tenancy, i.e. you are continuing with your rolling contract then again your immediate action levels are that of a sloth, garden slug…… ok, you get the gist! Job done!

However be prepared, you will need to make previsions to get your overall rating improved and up to a rating of E or above by 1st April 2020.

  • If the property has a current EPC rating of F or G but has a current AST like in our example above, BUT you plan to renew this at the end of the term, then the minimum efficiency standards will apply as soon as you renew the contract. It may be worth considering a rolling contract at this point if you are unable to bring the rating up to standard in that time. Remember that this will need to be implemented before 1st April 2020 anyway.

  • If the property has a current EPC rating of F or G and is empty or untenanted, then you will be required to adhere to the new law as of 1st April 2018. This means you either let the property before this time buying you a couple of years grace or you do the inevitable and bring the property up to standard before you rent it.

Somethings to be noted on the above scenarios are:

  1. If the initial fixed term of the AST (shorthold or non-shorthold) comes to an end after the 1st of April 2018 and subsequently falls automatically to a rolling tenancy or a ‘statutory periodic tenancy’  then this is deemed a new contract or new letting for these purposes and the new regulations need to be adhered to.

    An example being, the six months fixed term was started in December 2017, therefore the initial term ends in May 2018, one month after the new laws comes into effect. This would usually mean that the tenancy is an existing tenancy, and would harbour no action. Think again. If the property has an F or G rating, then you need to make previsions to bring the standard up to and E.

    2. This one may confuse or baffle you, BUT there is a loophole that will reflect a very small portion of existing tenancies out there. Like previously mentioned it became law to provide your tenant with an EPC from 6th April 2008, however EPC’s only last 10 years and there is no obligatory requirement to obtain a new EPC if the tenant is still in place.
  • This means that if your property has a rating of F or G, but you are still letting to the same tenant in 2020 (meaning the tenancy is more than 10 years old), then there is no need to obtain a new EPC, therefore no need to adhere to the new regulations. As soon as this tenancy ends, of course, there will be a mandatory requirement to bring the property up to specification before you either re-let or sell the property. As far as we are aware, there are no plans to close this loophole.

Note: here at WOPT  we believe in responsible letting so even in the case of the above we would always recommend that the property is brought well in line with the required standards. 

Flats, Bedsits and HMO’s

Self-contained units such as flats need their own EPC. Even if the building has its own obligatory EPC, then it is the individual flats, not the building’s certificate that needs to be issued to show that the minimum standard has been met.

This one could open a can of worms so I am going to keep it light and general so as not get roped into the whole S21 argument. 

So IN GENERAL, non-self-contained units such as some bedsits or HMO’s do not need their own EPC, however, if the property has an obligatory EPC, like in the case it has been sold or bought since it became law to provide EPC’s with the sale AND this EPC is current then, yes you guessed it, the minimum standards do apply, until of course, the EPC runs out!

Exemptions to the rule

Ok, so there are some exemptions to the rule. Listed buildings, devaluation of the property, unable to gain consent, cost-effectiveness and even a six-month grace for new landlords, but if you feel that you may be mitigated because of one of the above you should seek further advice.

In general

Be warned that non-compliance can carry hefty fines of up to £4000

The Government has declared its wish to raise these standards further, such that the minimum standard is likely to rise to a D rating and a C Rating in 2030.

To see if your property has a valid EPC certificate and to see its current rating, simply accept the terms and input the relevant postcode into the following link online EPC register