Letting Agents Blog
A quick reminder that the ‘Notice Requiring possession’ procedures using section 21 Housing Act 1988 (the “no fault eviction procedure” requiring two months notice) were significantly changed on 1st October 2015.
First, the good news for Landlords. Two traps into which many Landlords have fallen are now removed:
1. Incorrect wording. There is now a prescribed form. It is compulsory to use it for any tenancy created on or after 1st October 2015 and can be used for other tenancies.
2. The expiry of the notice. Landlords – and even some solicitors – have slipped up in the past resulting in their claim being dismissed by the Court. In future, the notice will not have to expire on a rent payment day for tenancies created after 01/10/2015.
Now, some words of warning for landlords:
A. A landlord can no longer issue a section 21 notice when he grants the tenancy. No notice given within the first four months of a tenancy will be valid. Where the landlord has granted successive tenancies to the same tenant, the four month period will start from the beginning of the original tenancy.
B. To the existing situations where a landlord’s section 21 notice will be invalid (e.g. failure to register the deposit and give the prescribed information to the tenant within 30 days) has been added a new reason: a “retaliatory eviction”. The provisions are widely drawn and potentially encompass all complaints by the tenant to the landlord about the state of repair to which the landlord does not respond in writing within 14 days and which the tenant then refers to the Local Housing Authority for action.
- The effect is that no section 21 notice will be valid for 6 months from the date of the service of an improvement notice by the Local Housing Authority. However, there are some significant exemptions such as where the property is genuinely on the market for sale.
- If you are a letting agent or a landlord and have recently issued a section 21 notice – or are intending to do so – please feel free to seek assistance from Martin Ross Solicitors at firstname.lastname@example.org or email@example.com.
Flat owners - What could you do if you are hit by high service charges or poor maintenance?
What can a flat owner do when he is asked to pay high service charges –or the building is not being properly maintained?
Here are just a few of the many possibilities:
1. Request copies of the invoices paid by the manager. Provided the flat owner requests them in time he has a statutory right to see them. He/she should check: does the total add up to the amount demanded? Was all the work actually done? Is the amount demanded by every invoice reasonable in relation to the work done? Was the work done to a reasonable standard?
If the flat owner has an issue with any invoice he should take it up with the manager. He should pay the undisputed items but withhold payment for the disputed items until he obtains satisfaction;
2. If he remains dissatisfied with any item either because:
a. The works done were not reasonably necessary; or
b. The works were not done to a reasonable standard
then he/she can apply to the First Tier Tribunal (FTT), [formerly Leasehold Valuation Tribunal] for an Order that he/she is not obliged to pay for that item or items in the service charge demand. He/she can do this either alone or jointly with other flat owners.
3. Jointly with a majority of the flat owners, form a Resident’s Association and have it officially recognised by the freeholder/manager. Once recognised, the manager must consult with it on major works
4. Talk to other flat owners about taking over the management of the building. If a majority of the flats in the building want to do that they can jointly form a “Right to Manage” company. That company can then serve notice on the freeholder that it requires the freeholder to hand over the management to it. The freeholder can only object if the paperwork is wrong. The flat owners do not have to prove that the building is being poorly managed—the RTM company has an absolute right to manage, provided the paperwork is in order. Once the RTM company has taken over the flat owners can then decide whether they will personally manage the building or whether they will appoint their own managing agent to manage according to their wishes.
With Right to Manage no payment has to be made to the freeholder to take over the management. The freeholder continues to own the freehold and Ground Rents remain payable to him.
5. Joint purchase of the freehold. This is a right given to leaseholders by Act of Parliament. The freeholder normally cannot prevent it. Again, a majority of the flats must participate before the right can be exercised. Normally, each participating flat will pay a proportion of the purchase price. Only those flats which participate will become joint owners of the freehold. The remainder will continue exactly as before with their existing leases, paying the same Ground Rent and having the same length of lease.
A fair amount of homework needs to be done before serving notice on the freeholder. For instance, professional advice may need to be taken as to the likely price. That can be a complicated calculation. Each flat lease must be looked at individually and a figure worked out based on the remaining term of the lease and the amount of Ground Rent (if any).
When the likely cost of the freehold is known it has to be fairly apportioned between the participating flats. It will only be fair for flats which have already paid the freeholder to extend their lease to pay less than those which have not done so. The amount will therefore usually follow the surveyor’s individual calculation for that flat.
Then, each participating flat owner has to raise his/her share of the purchase price.
Once everything is in place, the participating flat owners can form their limited company to buy the freehold and can then give notice to the freeholder stating the offer price;
The freeholder is then given two months to serve a counter notice which can cover not only a counter offer on price but, for instance, also rights of way he might wish to reserve over the flat’s land in favour of neighbouring land which he will continue to own.
The terms, including the price, will then be negotiated between a surveyor for the flat owners and a surveyor for the freeholder. Usually, agreement is reached by the two surveyors. If not, the flat owners must make application to the FTT within a fixed period to hear evidence and determine the price of the freehold.
Should the flat owners fail to meet the deadline their notice becomes null and void and they must start again. However, they are not allowed to do so for a period of over 12 months.
Finally, a word of warning: from the moment the freeholder receives the Initial Notice the flat owners become liable to pay his legal costs of giving counter-notice and of transferring the freehold. Also for his surveyor’s costs of inspecting the flats and calculating the value of the freehold.
So, flat owners should try never to serve notice on the freeholder prematurely and then be forced to withdraw.
One of my recent cases involved the Transferable Nil Rate Band for I. H. T. The testator’s first wife had died and he had re-married. He and his second wife decided to keep their assets separate. He wished to benefit both his second wife (to whom he was greatly attached) but also the two adult children of his first marriage. He had made a Will in 2006 (before the Nil Rate Band became transferable) giving to his two adult children “such a sum as shall equal the maximum sum which can be given by this Will without Inheritance Tax becoming payable in respect of the gift to…”. Then two years later, after it became possible to transfer the Nil Rate Band, he made a new Will. He did not give instructions that he wished to increase the amount going to his two adult children. In fact, the tenor of his instructions was the other way: he increased his wife’s share of the estate to an absolute interest in residue.
The Solicitors were aware that his first wife had died. They did not however, seek information as to how much of her Nil Rate Band would be available on his death. They were therefore unaware of the amount of the transferable Nil Rate Band. They did not advise the testator that the amount of the Nil Rate Band could exceed £325,000.00. The Solicitors used the same wording for the Nil Rate Band legacy as in the 2006 Will.
The testator died in 2014 leaving an estate of around £750,000.00. All property was held in his sole name. None was joint. The effect of the wording was that the two adult children would receive an amount equivalent to the testator’s own Nil Rate Band and also the transferable part of his first wife’s Nil Rate Band. The combined amount was £635,000.00. After payment of debts the widow would receive rather under £100,000.00. Had the legacy to the two adult children been restricted to his own Nil Rate Band they would have received £325,000.00 and the widow around £400,000.00.
From circumstantial evidence it was clear that the testator had not intended to leave the bulk of his estate to his two adult children with just a small percentage to his wife.
Rectification proceedings were commenced. They were settled at mediation by a payment from the two adult children to the widow.
Some of the lessons to be learnt by wills draftsmen are:
(i) Always check whether your testator has ever been a widow or widower;
(ii) If so, will the net estate exceed the I.H.T threshold?
(iii) If so, does the testator wish to leave “an amount equivalent to the Nil Rate Band” to anyone?
If so, be very careful to take full instructions whether he/she wishes to leave only an amount equivalent to his/her own Nil Rate Band – or whether that plus the Transferable Nil Rate band. Then, use appropriate wording. Alternatively, give a fixed amount to the non-exempt beneficiaries.