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Lease extension – Absentee landlords

We have already dealt with in a previous article most of the details in relation to a lease extension and the qualifying parts and what to do.  We are now dealing with how preparing the tenants notice and what happens if there is an absentee landlord.

Preparing a tenants notice

The tenants notice does trigger legal procedures for buying a new lease and you are liable for the landlord’s reasonable costs from the date it is received.  It is therefore extremely important that you read our previous article on the costs.  The notice has to be accurate and contain no mistakes because although you can apply to the County Court to have it corrected there is a cost involved in doing this and it could avoid a huge expense.  If the tenants notice is incomplete it will not be valid and a competent landlord can reject it.  We will therefore always advise you to instruct a solicitor in this regard.

Please see our previous article in relation to what a competent landlord is.

You can also register the tenants notice with the Land Registry.  This ensures it protects you from the landlord then trying to sell the freehold.  It does not preclude them from selling the freehold but it lets anybody know that you are applying for your lease in the interim.

When you serve the notice this also fixes the “valuation date” as the date of the notice.  The valuation date is when any figures which affect the price and we could change it are set.  For example the number of years left on the lease and the present value of the flat.  It is therefore important that however long it takes to negotiate or decide on the price the price will be based on the figures that apply on that date that you serve the tenants notice.  We will always advise you to instruct a solicitor to prepare and serve such a tenants notice to ensure that it is correct.

What does the tenants notice include:-

The tenant notice must include the following:-

  • Full name and address of the flat
  • Enough information about the flat to identify the property that the application relates to
  • Details of the lease, including the start date and the number of years it was granted
  • The premium you are proposing for a new lease and other amounts you are proposing to pay if there are immediate leases involved
  • The terms you are proposing for the new lease
  • The names and representatives you have appointed
  • The date by which the landlord must give the counter notice, which must be at least two months from the date of the tenants notice.

You obviously need to appreciate that the premium quoted in the notice may not be the price that is actually agreed between you and the landlord.  You may find that a Tribunal may make a decision or negotiation with the landlord may be that the figure is more than has been stated.  The premium you propose must be a genuine opening offer.  It is not be quoted as a very low figure in order to reduce this as it may invalidate the notice.

What if I have an absentee landlord?

What is an absentee landlord? It is a landlord that you cannot get hold of in relation to the property and has not managed the property for many years.  You have to do all reasonable efforts to try and find them. In the event that you do not you have to do the following:-

  1. If the landlord is a company that is in receivership, you can serve the tenants notice on the receiver. If the landlord is an individual who is bankrupt you can serve the notice on the “trustee in bankruptcy” both the receiver and trustee are acting as the landlord for the time being, and under the 1993 Landlord and Tenant Act they must serve a counter notice and grant a new lease.
  2. If you cannot find the landlord, you cannot serve the tenants notice. In this case you can apply to the County Court for what is known as “vesting order” to extend the lease.  What is a vesting order?

Simply put it is a court order that passes the legal title in lieu of a legal conveyance.  It is an equitable remedy and therefore by its nature discretionary and the results from finding by a court of the way of passing one property to another.  This can be an expensive way of doing it.  If the court is satisfied that you are eligible for a new lease, it will grant the lease to you in the landlord’s absence.  The courts usually refer the case to the tribunal to decide how much the premium should be.  However, there is a specific application that you would need to make under the first tier Tribunal.  We would suggest in this instance that you speak to your solicitor dealing with this.

What are the subsequent procedures?

Once you have served the tenants notice the landlord can ask for evidence that you own your flat and how long you have owned it for.  The landlord has a period of at least 21 days from the date you serve the notice in which to ask for this evidence.  It is important therefore that you provide this evidence within 21 days.  If you do not then you can be prevented from having a lease extension and the landlord may serve you a default notice and ask the court to order for you to provide it.  The landlord also has the right to inspect the flat to carry out a valuation must they must give you at least three written days’ notice.

If your landlord wishes to be really difficult then after serving the tenants notice they can ask for you to pay a deposit.  This may be 10% of the premium you propose in your tenants notice or up to £250.00 whichever is the greatest amount.

What is the landlords counter notice?

The landlord now has to serve a counter notice to your notice, the date will be outlined within your notice and his must contain the following:-

  1. Admit your right to a new lease and expect your terms (or propose new terms of his own)
  2. Not admit your right and give the landlord reasons for this. The County Court will then decide on whether you have a right to a new lease.
  3. Claim the landlord has a right to develop. The landlord can refuse to grant the new lease if they can prove to a court that they intend to demolish and redevelop the building.  This only applies to applications where the remaining period of the lease is less than 5 years from the date of the tenants notice.
  4. When the landlord has served the counter notice and you and the landlord cannot agree on a price or some of the aspects of the sale of the new lease there is a negotiation of normally anywhere between two and six months. This is normally carried out by your own valuer/surveyor and he should liaise with you.  If after the first two months of the negotiation period you or your landlord can apply at any time to a Tribunal for an independent decision on the issue.  If they then decide to apply to a Tribunal your professional providers must have all the documents needed for this.

It would then go to the Tribunal and they would make a decision.

If the landlord does not serve a counter notice by the date stated in your notice you can apply to the court for a vesting order (please see above) The application is not for a court order requiring the landlord to serve the counter notice but effectively takes the matter out of the landlords hands by asking the court to grant a new lease.  The court has the right to grant a new vesting order on the terms proposed in your counter notice.  If you decide to a court for a vesting order it has to be done within six months of the date you should have received the counter notice.  Whilst this can be expensive it is your rights to do so and could actually work to your advantage.

What happens if I wish to sell my property?

Once a notice has been served by a tenant then you can assign any right of this notice with the lease.  It basically means that you can serve a notice and then sell the flat with the benefits of the application.  The person who buys the flat will be able to go ahead with the application immediately without having the need for it to be owned for a period of two years.  This will often help in cases when there are not many years left on the current lease and this represents mortgage difficulties for anybody considering buying the flat.  Please see our previous article.

What happens if I die before I buy the new Lease?

In this event your personal representatives can make an application for up to two years from the grant of probate letters of letters of Administration and will have the right to buy a new lease.

What are the normal terms of a new lease?

There are some statutory terms of the lease that you should be aware of and these are as follows:-

  1. A peppercorn ground rent (that is no ground rent at all) will be charged for the whole of the term and this will be a 90 year extension plus how long is left on your current lease.
  2. The new lease must be on the same terms as the existing one, apart from minor modifications and certain exclusions and additions that are allowed by law.

These are:-

  1. Modifications – to take out any alterations to the flat or the building since the existing lease was granted for example to gas lighting, cold stores and correct a problem with the lease.
  2. Exclusions – since the 1993 provides rights to continuously renew the lease, any existing clauses relating to a new lease or ending it early, or the landlords right to buy the flat if you decide to sell it should be excluded.
  3. Additions – a requirement not to grant a sublease which is long enough to give the subtenant the right to a new lease under the Act. You should always get legal advice on the above.

In Summary what are the procedures and the time limits:-

We can summarise these as follows:-

  1. You serve an information under Section 41 of the 1983 Act
  2. The landlord must respond within 28 days
  3. You serve the tenants notice under Section 42 of the Act
  4. The “valuation” date will be fixed as the date you serve the tenants notice.
  5. The landlord can ask for extra information, but they must do so within 21 days of receiving the tenants notice
  6. You have 21 days to provide any information the landlord has asked for
  7. The landlord must serve a counter notice by the date stated in the tenants notice. This date must be at least two months from the date you serve the tenants notice.
  8. If the landlord does not serve the counter notice by the date stated in the tenants notice you can apply to the court for a vesting order within six months
  9. After the landlord serve the counter notice, you or the landlord can apply to a Tribunal for an independent decision. You must do this sooner than the two months from but within six months of, the date of the counter notice served
  10. The fee for applying for a Tribunal can be varied as well as the hearing fee but these need to be paid
  11. The Tribunal decision becomes final after 28 days. If you do not agree with the Tribunals decision you can appeal to the upper Tribunal before the decision becomes final, but only if you have the Tribunals permission.
  12. After the Tribunals decision becomes final, you and the landlord have two months to enter into a new lease.
  13. If you and the landlord have not entered a new lease within two months of the Tribunals decision, final, you have a further two months to apply to the court for a court order to meet their obligations.

During the whole of the process if at any point you would like a quote for the insurance of the building to see whether your landlord is charging you more than he should then please don’t hesitate to contact us.

Section 20 Notice what is this? (Part 2)

If I have a resident’s management company or a right to manage company do I need to serve a Section 20 Notice?

Yes, of course, because you are under a right to manage you still have to go through the standard legal process to carry out any major works. The procedure can be dispensed with but only rarely if you get an Order from a Tribunal or a Court.

The procedure is prescribed and then detailed by the Government and failure to do so can lead to some form of penalty.

If you do not serve the relevant notices then you are not able to recover more than £250.00 per leaseholder so for instance if there were four flats no more than £1000.00 so if you carried out work of £10,000.00 without consulting you would only be entitled to £1,000.00 back. It is so important thus that you serve the correct notices and in the correct format.


What is the procedure?

A Section 20 Consultation must be carried out as stated above if work more than £250.00 per lessee is required. There are three stages in total to be done:-

Stage 1

Serve a Notice of intention to carry out works. The Notice must be served. Setting out what works are proposed, why they need doing and should provide any comments and nomination of contractors from leaseholders. There are very set notices within the provisions of the Act and these should be considered when serving any such notice. You may wish to consult a solicitor or a professional in this regard.

Stage 2

This is the statement of estimates.

This is once estimates for the works have been obtained. The notice must be served to all leaseholders detailing the costs, how to inspect them and inviting any comments. There has to be a minimum of two estimates for any such work together with details of the work itself. The estimates are served with such a notice but a landlord can specify dates where and when documents can be inspected and these must be reasonable.

A landlord does have a duty to have regard to what you have given by way of observations. If a landlord receives written observations during the consultation they have a duty to take them into account. The law doesn’t define unfortunately “have regard to” and it basically means that they must look at the written observations and do a response within 21 days.

Where work is being queried by tenants or a nominated contractor is requested. The landlord doesn’t have to use a nominated contractor or accept the lowest estimate. / You have to be aware that within 21 days of entering the contract the landlord must give a written statement of the reasons for awarding the contract. Which we will come onto later being stage 3 or provide facilities for the tenants where they can inspect the statement of reasons. If at any point the landlord and/or managing agent do not lay out any of the procedures then they cannot recover the money.

Stage 3

Notice of reason.

Once a contract is awarded. The landlord must serve a notice. If they did not choose the cheapest estimate or a contractor nominated by the lessees. They have to explain why they chose that particular option. They have to have a very good commercial or particular reason for not choosing the cheapest quote. For instance, they may say that whilst the quote is cheap it does not take into account all the work that is required. Extras would thus be requested bringing the quote up to exactly what was previously laid out by another contractor i.e. they have not been comprehensive in their quote.


How long does this consultation take?

For the stages of 1 and 2 all the leaseholders have to have at least 30 days to reply to any comments. It sometimes takes longer to get estimates obtained so it can take up to at least two to three months as a minimum. It is also laid out in the RICS guidelines for managing agents for them to take into account any delays in the post over and above the 30 days.

So the tenants have at least 30 days to respond to the Notice of Intention served at the pre-tender stage.

The tenants have a further 30 days from the notice of intention of statement of estimates to make any further comments. If the cheapest quote is then accepted the work is then instructed.


What if I dispute the works required and want to object to a Notice?

In the first instance you should talk to a solicitor before you do anything further. Section 20 Notices can be very complicated and it is important that you get the best advice as quickly as is possible.

There is a first tier Tribunal that can refer this to, to make a determination on whether it is reasonable or not. The first tier Tribunals role in dealing with service charge dispute is to determine whether the charge is payable and if so whether it is then reasonable.

These issues can either be heard together or separately. Either a leaseholder or a landlord/managing agent can apply for determinations on the following:-

  1. Whether the service charge is payable
  2. To whom it is payable
  3. The amount which is payable
  4. The date which it is payable
  5. The manner in which it is payable

An application would be made in respect of any charges which have been levied or which are proposed on whether they have not yet been charged. Payment of the charge does not amount to an agreement or admission by a tenant that the charge is payable. But you should consult a solicitor on this.

The first tier Tribunal will resolve the dispute and uncertainties on whether a tenant is liable to pay the service charge. They will make a determination on whether it is also reasonable for the service charge. They can deal with any issues or liability before these need to be addressed and paid.

Determinations can be laid out for various different applications such as:-

  1. Whether the costs have reasonably been incurred
  2. Whether the works have been done or the services have been or are presently being provided
  3. Whether the works or services are of a reasonable standard
  4. Whether there is an interim charge before costs can be incurred and it is reasonable
  5. Whether the costs would be reasonable
  6. Whether the services are proposed in the future
  7. What amount can be charged on account
  8. Various different situations and scenarios for leaseholders and freeholders/managing agent.

They can also determine on whether works were required at all. Whether they were enough to remedy a problem. Whether they were adequate enough works. Whether an element of the work was either neglected or mismanaged by the landlord. Were there genuine grounds for extra works of an urgent nature. Were procedures followed and lots of different aspects of a dispute particularly within the content of a lease.

You will find that most leases are different and have a way to lay out exactly how much landlords are entitled to cost and how they must be paid. Section 20 Notices can only be dispensed with by a first tier Tribunal when urgent works are required. So if major works have taken place and they weren’t served then you still have the right to go and object to these.

The above is only a guide and you should take legal advice but the same Act also provided legislation for flat owners to run their own affairs and make their own decisions about management and upkeep of flats. This included dealing with expenditure such as insurance repairs and service charges by way of a Right to manage company.

You will often find that where major works are due to take place or being carried out that this is where most disputes start. You must remember that a landlords consent is not required for their consent to enter into a right to manage. A right to manage process is not to determine fault but enables the leaseholders to manage their own building. There is no rule to prove any form of mismanagement or that the current managing agents have not done the implementation of the lease. This allows lessees to be able to run and set up their own company with a view to reducing their costs. You would need to read our other articles in relation to the Right to manage to see how this works and what the benefits are.

Section 20 Notice what is this? (Part 1)

A Section 20 Notice is an intention to tell you that your landlord/freeholder plan to do some major works to the building. It is the most contentious part of any management. It often leads to lessees considering why they are being charged so much money for repairs.

It often leads to lessees considering whether it is worth considering a Right to Manage. Or to buy the freehold by way of an enfranchisement.

Leaseholders have to pay various charges. But must be consulted by a landlord carrying out qualifying works or entering into a long term agreement for provision of services.


Why must they consult you?

Under the terms of your lease, you must pay towards the cost of services or any work to your home that is in or on the estate that you are on. You do this by paying what is known as a service charge which is detailed within the contents of your lease. A Section 20 is a notice under the Landlord & Tenant Act 1985 which was amended by Section 151 on the Commonhold and Leasehold Reform Act in 2002.

The regulations separate the consultant procedures into four schedules each covering different types of contracts. The format of notices is often required by regulations and have not been prescribed in the legislation. There are three main headings in relation to these regulations in respect of qualifying works, qualifying long term agreements and qualifying works under long term agreements.


What must they consult you about?

They must consult before doing any work as follows:-

  • Carry out any work that will cost each one leaseholder more than £250.00 including repairs, maintenance and improvements to your building.
  • Enter a long term agreement for more than 12 months with outside contractors for work supplies or services that will cost each leaseholder.
  • Carry out a long term agreement where the work will cost any one leaseholder more than £250.00.

There was a case in the High Court in 2012 of Phillips –v- others and Francis that cast doubt on whether there is a cost threshold which landlords do not need to consult on qualifying works. This was qualified in October 2014 by the Court of Appeal which set out an approach i.e. Section 20 Consultations should be applied to individual sets of qualifying works without reference to either time periods or service charge years.

They gave a guidance on what factors should be taken into account when qualifying works. These were:-

  1. Where the items of work are to be carried out.
  2. Whether they are subject to the same contract
  3. Whether they are to be done at more or less the same time or at different times
  4. Whether the items of the work are different in character from or have no connection with each other
  5. Whether all the works are subject to one contract
  6. The way in which work is planned. Unless there are reasons for the way they are implemented are also of relevance.

What are qualifying long term agreements?

A long term agreement is one that is entered into by the landlord with an independent organization or contractor for more than 12 months. The landlord must consult where the amount payable by any one contributing leaseholder under the agreement in any accounting period exceeds £100.00. A property with unequal service share the landlord must consult all leaseholders if any one of them would have paid more than £100.00 in any one year. There is a calculation for this.

If they do not consult you then the landlord may not be able to recover more than £100.00 per leaseholder in that accounting period for the cost under that agreement.

It is important that you understand what your rights are and at that point contact a solicitor.


What is a Section 20 Notice?

A section 20 Notice is to tell you that they intend to carry out work or provide a service to the leaseholders that you have to pay towards. They must serve a Section 20 on any leaseholders affected by the work and/or received a service. They must send a copy of the Section 20 to any registered tenants association that may be associated with your building or home or the estate that it is on. The Section 20 includes certain information thats required.

It will give you the opportunity to take part in the consultation process and everything that may be planned. It is important that if you disagree with the work or want to take part in the consultation that you contact whoever is serving this on you.

A section 20 Consultation is only part of the process. There are other notices that need to be served on you.

You have a right to give your views and comment on any of the works within the consultation period which is normally 30 days. Any managing agents and/or freeholder must take notice of any comments that they require and clearly consider these.

Where they are planning to do major work you have in certain circumstances the right to suggest a person, firm or contractor that you may wish to tender for the work.


What does a Section 20 Notice have to include?

It has to do the following:-

  1. Describe what agreement or tell you where you can get information on what work they intend to carry out.
  2. Explain the reasons why they want to carry out the work
  3. Say what work is required
  4. Invite you to make comments and proposals in writing
  5. Invite you to suggest a nominated contractor
  6. Give you a date on which the consultation finishes and this can’t be less than 30 days

It is unlikely at this time that they will give you an indication of what the cost of the work will be. The Section 20 is the way that they serve a schedule of works via a specification from a surveyor and will normally thereafter put it out to tender.


Who must be consulted?

Notice must be sent to either individual leaseholders, any residents association and/or any other people.

The Act doesn’t necessarily need a contractor to be nominated by leaseholders but they can do so.


What is the second stage of the Consultation?

Once the Section 20 has been served they will then look to send the documentation out by way of a tender to various different companies in order to get quotes so that you have an idea of what the costs will be. A second document is served on you being the statement of estimates which we will mention later.

Tyneside Flats – What are they?

They are a property development scheme in Tyneside. The main difference in these to other flats is the responsibilities laid out in the lease. A Tyneside flat appears from the front as a single fronted terraced house. However, there are two or sometimes three flats on top of each other. Each flat has its own separate front and back door and garden areas.

Construction of Tyneside flats started in the late 1800s as low-cost housing for a growing workforce. With separate floors and staircases, there is no relation between the lessees internally or externally. The backyard is divided in half. Originally each garden would have its own coal house and private outside toilets. It was an ingenious solution at the time for affordable housing. Now they make for profitable investments for landlords. The land was often sold on the condition that only properties with no more than two households could be built. Who enforces these rules now is unclear.

There are complications with the legal status of a Tyneside flat and the responsibilities between the landlords. The upper flat shelters the lower flat and the lower flat supports the upper flat. This has led in the past to specific legal schemes known as Tyneside flats cross or crossover lease arrangements. Under the Tyneside flat scheme, each tenant, even if holding the freehold of their own flat, becomes the landlord of the other. This allows the responsibility to be enforced without an external landlord or management company.

This type of flat ownership has come into context recently as part of the recent Law Commission leasehold reform. Another alternative to leasehold being commonhold which has also been considered. It is something to keep an eye on in the future as to what will happen.


How does it actually work?

The owner of a first floor flat will own both the leasehold title to their flat but also the freehold to the title, the ground floor will also have the same. 

The property is typically a terraced house with two front doors usually side by side.

  • Each door leads to a separate flat and there is no shared entrance hall
  • The ground rent is a nominal value or no value such as a peppercorn
  • There is a criss-cross arrangement that operates on the basis of each flat being dependent on the other i.e. the right for structural soundness of each property to be physically supported and maintained by the other property
  • There are repairing responsibilities for the structure but these can vary widely, for example, the owner of the first floor flat may have repairing responsibility for the roof and the owner of the ground floor is responsible for the foundations. This is obviously not ideal and puts many lenders off.  This has a criss-cross lease which enables the ground floor to enforce against the first floor on repairing covenants and vice versa.  Enforcement extends to other complications too.  A covenant is basically how the lease describes an obligation owed by one party to another.  Examples of an obligation where the landlord has to insure the property for a leaseholder or for the leaseholder to obtain consent from the landlord for subletting. 
  • There can be alternatives for these. The lease can state the repair and responsibility for the structure of the building are the joint responsibility.  This would cover such parts of the building as roofs, foundations, joists, beams, and shared pipes, drains, gutters and electrical wiring in any other common areas.  What would then happen is the costs of repairs of the shared facilities are usually split equally between the two flats.
  • You may also find that these leases contain a ban on any alterations to the building but alterations to each individual flat can be allowed with the consent of the landlord. That is the owner of the other flat.  So if the first floor flat owner wishes to alter their property they need the consent of the ground floor owner.  This can obviously cause a huge amount of problems.
  • You often find if a first floor flat were to sell the leasehold title they must also sell their freehold title on the ground floor at the same time.


Managing the building

The above is not a typical scenario and is very difficult for people to manage a building.  It is therefore not unknown for express provisions in the lease to require the first floor and the ground floor owners to:-

  1. Produce a certificate statement of account for service charges.
  2. Hold service charge funds in a trust account
  3. Collect a reserve fund


In these situations, it may save time, effort and transparency for the two flat owners to hire independent third parties such as an accountant to do this.  It is not absolutely necessary but it can solve a lot of disputes.

Alternatively, in the spirit of cooperation, the two flat owners may agree their own arrangements that suit their circumstances but this doesn’t necessarily apply to the lease requirements.  If you then fall out it can be no end of a problem.


What happens if I fall out with the other flat owner?

There are various ways of dealing with a dispute.  There is mediation or other forms of alternative dispute resolution which can be pursued in preference to doing litigation which can be a very costly and time-consuming process.   A common provision in the lease is for disputes to be finally decided by a jointly appointed administrator.  In the absence of any such agreement an arbitrator can be appointed then it would normally be the president of the Law Society, the Institute of Chartered Accountants or the Royal Institute of Charted Accountant to decide.


What is the difference between Tyneside leases and the wider law?

Tyneside leases are still also subject to the law on leaseholds such as:-

  1. Reasonableness of service charges under the Landlord and Tenant Act 1985
  2. The cost of items classed as service charges are open to a reasonable challenge in the first tier TribunaL
  3. Lease extensions under the Leasehold Reform and Housing and Urban Development Act 1993. Although a more advantageous means of a lease extension would be to run voluntary arrangements. This would be where both flats would agree to extend each other’s leases for a term that they choose at no premium and split the legal fees between them. It should be noted that there may be tax implications when completing a lease extension and therefore you should seek legal advice as well as a specialist accountant.  It is important that you look into exactly what is required when it comes to Tyneside flats as they are not easy.


How to Insure the building

The terms of the lease dictate the insurance arrangements. Previously there have been two methods. These are as follows: –

The first-floor flat owner will insure the freehold interest of the ground floor as the landlord of the flat and vice versa. The lease may grant each flat owner the right to see proof of the current insurance policy. Or both owners may be required to insure the whole of the property in joint names and split the cost equally.

We now have a policy that covers this type of property, therefore, all the above is no longer required. Solicitors have in the past advised to take out a criss-cross lease indemnity that covers either party in the event of the absence of insurance. However, we now have the policy that you need. Speak to us about these properties and how to insure them.


Our policy includes:
• Replacement value of the property following loss or damage by the insured perils
• Tracing and repair of leaking underground pipes drains and cables
• Accidental breakage of fixed glass, double glazing, ceramic hobs, and sanitary fixtures
• Malicious damage by third parties
• Loss of rent or alternative accommodation costs
• Damage to landscaped gardens
• Replacement of keys and lock replacement following a theft
• Accidental loss of metered water
• Emergency access
• Theft of fixed fabric of the property including fixed CCTV equipment and security lighting
• Specified contents cover

Tenants Fee Bill

The new tenants’ fees bill is due to have a second reading in the House of Lords.


This bill is going to affect the whole property industry. The same fee ban has already taken place in Scotland and shook the industry to its core. 55% of letting agents disappeared overnight or merged with other companies in that case. It also increased rents for tenants by 7%.
The details of the bill are still up for debate. It could extend as far as including renewal fees, arrears fees and anything else that letting agents could charge.
Does this mean that landlords will pick up the bills? Will letting agents add it to the rent charge? Will landlords have a choice in future of letting agents? We anticipate that this will rock the market. A lot of landlords will lose out as estate agents who do lettings and sales go into liquidation. It could force Landlords to choose a new agent and the choice could be very limited in the future. How will it affect tenants? It will be good for them as there will be no fees involved. However, will there be a reduction in service? If letting agents are charging tenants for any form of their service the charges will be heavily landlord based.

Update: The Tenants Fees Bill has been Announced

The Government has now confirmed that the tenants’ fee bill will take place from the 1st June 2019. This will dramatically change the whole way that letting agents charge tenants. It could possibly be detrimental to landlords, causing them to increase their rents. The main amendments are:-

  • The maximum security deposit is now limited to five weeks rather than six. The original proposal by the Government capped the deposit at four weeks rent. Various landlords then campaigned to increase it, arguing that the average charged was 4.8 weeks. Hence the increase to five weeks.
  • Default fees are now permitted where costs arise from the fault of a tenant. For instance, where the tenants have lost a key or other security device or where the tenant is two weeks late in paying their rent. Where there are further contractual breaches the landlord will be able to charge for damages. However, if a tenant fails to pay, the landlord will either need to pursue the claim in court or make a claim against the security deposit. There is also a clause in the bill that allows the Government to change the charges in future. This will mean that further changes will not require going back to Parliament.
  • The landlord and/or agents are now only allowed to take one holding fee for a property at any one time. They must pay the first tenants deposit back in full before taking a second holding deposit. That is unless the tenants choose not to enter the tenancy or provide false information. In these cases, the landlord and/or agents can hold the deposit.
  • Where landlords and/or agents retain a deposit they must explain to the tenant in writing why they are doing so.
  • If there is a right to retain the deposit but the tenancy is still not entered into it must be returned to the tenant.
  • The landlord/agent must refund the holding deposit if the landlord/agent breaches any terms. Or if the landlord or existing tenants behave in an unreasonable manner, delaying the tenancy going ahead.



The tenant fees act is going to completely transform the letting market. It throws the emphasis from tenants back to landlords for fees. It will be interesting to see how the market changes over a period of time with letting agents not being able to charge fees. A substantial amount, we suspect, will go out of business or change their method to instead charge landlords. This may leave the market with a very small amount of independent letting agents and large corporates.

It will be interesting to see how the market will react over the next few months. The government wanted to put an end to tenant fees so whether that happens remains to be seen. It is surprising to us why all landlords have to take on the burden of the cost. But we understand the frustration from tenants point of view and the amount that they have to pay out. We hope that this will equalize the position for all parties concerned.

New Fitness for Human Habitation Bill

The Homes Fitness of Human Habitation and Liability for Housing Standards Bill (Fitness for human habitation) is now going through the Commons.

Firstly, how will this affect landlords and tenants in the future? Its report stage is due on the 26th of October this year.  It then goes back to the House of Commons for a third reading before it goes through the House of Lords. It is then considered for amendment at the end with royal consent.  However, it has crossed party support and could well become law.

How will it affect you?

The bill would give private and social tenants the ability to take landlords to court if their homes are unsafe. It means tenants would have rights to repairs for property issues. Things such as mould, excess cold, fire risk etc. It compels landlords to carry out works to their properties. The courts are able to give the Injunction to promote landlords to do work or give large damages. Where landlords fail to carry out works the tenants have rights to take legal action. This is on the grounds that the property is unfit for human habitation.
Most Societies and the National Landlord Association have given their backing to the bill.  Keep an eye on our newsletter as we will keep you updated on when this Bill becomes law.  It has wide-ranging consequences for landlords and tenants as well as wide support.


We can confirm that the private members Bill has now passed and is now law. The Bill gives greater responsibility to residential landlords. It implies in a residential tenancy that the property must be fit for human habitation at the beginning of the tenancy and throughout. The Landlord & Tenant Act of 1885 was the original legislation. The latest bill is an update to that. It means that tenants have the right to take legal action if landlords fail to keep properties in a state that is fit for human habitation.
The definition of fit for human habitation is as follows. “So far defective in one or more matters that it is not reasonably suitable for occupation in the condition”


What does this mean for landlords?

The bill focusses on landlords making repairs and keeping the property liveable. The items it addresses are below:

  • Stability – this could be due to the property having subsidence etc.
  • Freedom from damp – although a grey area freedom from damp means that landlords now need to ensure that the property is free from all forms of damp
  • Internal arrangement – ensuring that the interior of the property is fit for human habitation
  • Natural lighting – this is to ensure that there is as much natural lighting within the property as is possible.
  • Facilities for the preparation and cooking of food – it is essential now that landlords provide cooking facilities. Landlords must repair these within a set period of time. Landlords can involve the local authority if repairs are not done quick enough.
  • Water supply – landlords need to ensure that they have a consistent water supply.
  • Drainage and sanitary convenience – these need to be free from any form of problems and that they actually work.
  • Ventilation – the landlord needs to ensure that the property is and has a free flow of air.
  • Facilities for the disposal of wastewater – the landlord has the responsibility to make sure that there is a working outlet for waste water.

The above is going to be very important with landlords that deal with HMO Properties.


Why is this needed?

There have been long-standing concerns about property standards for a considerable length of time. In 2016/2017 the English Housing Survey found that 38% of private renters lived in poor or substandard housing.
The current Statute of obligations regarding the upkeep of properties has become outdated. They have ceased to become effective as a result of annual rent limits. The bill now applies to all residential property thereby bringing to an end the outdated anomalies. It also gives tenants a civil remedy meaning they can appeal against their living conditions.


Are there any exceptions?

There are some exceptions from the implied covenant to keep properties in a suitable state. Landlords will not be liable for the unfitness of a property in the following circumstances:-

  • Natural disaster
  • Tenants failure to use the property in a tenant like manner

The legal remedies are for the tenants to report the matter to the local authority. The local authority will then have the right to impose fines and potentially stop the landlord for re-renting the property. The tenant will also have the right to damages in the Courts. It is therefore important that landlords not only maintain their properties but keep them updated on a regular basis.

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