Landlord and Tenant – Level 1

Question 1

• What is the most up to date edition of the RICS Guidance note on leasehold reform?

Answer 1

• Leasehold reform in England and Wales 3^rd Edition, August 2015.

Question 2

• When can a tenant not renew a tenancy under the L&T Act 1954?

Answer 2

1. Breach of the repairing covenants.
2. Persistent arrears.
3. Other breaches.
4. The landlord is able to provide suitable alternative accommodation.
5. The lease was a subletting of part only and the continuing letting of part reduces the rental value of the whole.
6. The landlord intends to demolish and reconstruct the property or carry out substantial works of reconstruction (commonly referred to as “redevelopment”)
7. The landlord intends to occupy the property.

Question 3

• What are the rights and obligations of a landlord under the 1954 act?

Answer 3

• A landlord has the right not to renew under specific grounds of the act which much be satisfied.

Question 4

• What other statutory frameworks apply to landlord and tenant?

Answer 4

1. Landlord and Tenant Act 1985.
2. Housing Act 2004.
3. Housing Act 1996.
4. Housing Act 1988.

Question 5

• Give me some examples of what is contained in a lease.

Answer 5

• Name of landlords and Tenants.
• The property.
• The rent amount.
• The length of lease.
• User Restrictions
• Repairing liability
• Insurance liability
• Review Dates.
• Alienation.
• Review/Renewal procedure.

Question 6

• Tell me about the RICS guidance note on leasehold reform in England and Wales 3rd addition, August 2015.

Think?

The two Acts.

Tenants Rights.

Houses.

Flats/Collective.

Flats/New.

Basis of values.

General Provisions.

Valuers Role.

Information to obtain.

Valaution principles.

Answer 6

1. Leasehold Reform Legislation:

• There are two primary statutes.
• Leasehold Report Act 1967 (the 1967 Act) – enfranchisement and extended leases for houses
• Leasehold Reform, Housing and Urban Development Act 1993 (the 1993 Act) – collective enfranchisement - blocks of flats) and new leases for flats.

1. The tenants rights:

• There are three main areas:
• Houses – enfranchisement and an extended lease.
• Flats: collective enfranchisement and;
• Flats: a new lease.
• Houses:
• There are five areas of valuation.
• The extended lease at a modern ground rent.
• Section 9(1) (no marriage value payable) – Applies to low value houses.
• Section 9(1A) (marriage value payable) – Applies to higher value houses with 50% marriage value.
• Section 9(1C) (like 91A with compensation – Applies to all houses that did not qualify until the amendments of the 1993 Act.
• Section 9(1AA) (vacant possession value, subject to assumptions) – Allows tenants who have extended lease to buy their freehold interest.
• Flats: Collective enfranchisement
• 1993 Act introduced collective rights of tenants in blocks of flats.
• Basis of value is:
• Value of freeholders and leaseholders interests.
• 50% of marriage value and
• Any compensation payable to landlords other losses.
• Flats: New leases:
• At a peppercorn ground rent.
• 90 years extension after the term date of the existing lease.
• Basis of value:
• The diminution in value of the landlords interest and any leaseholders interest in the tenants flat.
• 50% of marriage value
• Any compensation payable for landlords other losses.

1. General provisions:

• Allowed if the tenants lease is in excess of 21 years.
• The tenants have served notice to exercise his/her rights in leasehold reform or as a participator.

1. The valuers role:

• To assist with the tenants decision making and advise on rights and the premium payable.
• Undertaking negotiations to agree a figure with the landlord.
• In preparation and presentation of evidence in a tribunal.
• Inexperienced valuers should not accept instructions.

1. Information to obtain by a valuer:

• Terms of existing leases.
• Details of deeds of variation.
• Ground rents payable and if they are fixed.
• Planning history.
• Covenants to be included in the freehold transfer.
• For houses the rateable value.

1. The valuation principles:

• Establish the method of assessing the value of the freeholder’s loss or the landlords diminution in value.
• Existing ground rent received including any increases must be valued.
• In collective enfranchisements hope value for non-participating tenants may be appropriate.
• Marriage value at 50% for leases less than 80 year.

Question 7

• Tell me about the RICS Guidance note on Service charge residential management Code and additional advice to landlords, leaseholders and agents 3rd edition. What are the main points of the GN?

1. Ethics.
2. Appointment of a managing agent.
3. Duties/conduct of managing agent.
4. Complaints and disputes.
5. Clients money.
6. Service charge, ground rents and administration chharges.
7. Health and safety - risk management.
8. Repairs and other services.

Answer 7

1. Ethics

• Agents have both a legal and ethical responsibility.
• Must conduct business in an honest, fair, transparent and professional manner.
• Avoid conflicts of interest.
• Must not discriminate
• You are responsible for staffs actions as well as your own.

1. Appointment of a managing agent:

• Prior to accepting instructions you should clarify whom you will be working and how you will be paid.
• Agree you terms of engagement along with fees and charges.

1. Duties/conduct of a managing agent

• Should not act outside the scope of your authority or competence.
• Respond promptly to reasonable requests from leaseholders for information relevant to the management of the property.
• Must be aware of Data Protection.

1. Complaints and disputes:

• Have clear procedures for dealing with disputes.
• Disputes between occupiers should be referred to the lease.
• The lease agreement may contain a disputes procedure such as arbitration.
• You must have a formal complaints handling procedure.
• There are other Alternative Dispute resolution matters that can be used.

1. Accounting for other people’s money (clients’ money):

• If receiving clients money you must have a separate clients account.
• Clients money is held in trust and should not go overdrawn.
• A bank or building society is not entitled to combine the clients account with any other account to offset payments.
• Clients money received should be paid in within 24 hours or the next banking day.
• Accounts records should be kept for 12 years.
• Your contract should provide clear means of termination.

1. Service Charges, ground rents and administration charges:

• Landlords are generally responsible for maintaining and insuring the structure and common parts.
• Must be aware of the statutory protection for tenants with variable service charges.
• You must not underestimate provide misleading estimates for future contributions.
• Leaseholder can apply to the First Tier Tribunal if they feel the charges are not reasonable.
• The lease may make a provision for a reserve/sinking fund.
• Service charge monies must be kept separate from landlords and managing agents own monies.
• The lease will dictate the apportionments and method and frequency of the payments.
• Arrears must be monitored and reminders issued in a timely manner.
• You must not commence forfeiture proceedings or attempt to recover any associated costs or administration charge.
• Annual accounts should be issued to leaseholders following the end of each service charge period.

1. Health and safety: risk management

• Managing agents must satisfy that all buildings under their management meet the relevant health and safety standards.
• There is a legal duty for employers/employees relating the Health and Safety at Work to maintain equipment and systems of work that are safe.
• Common parts of residential development are considered to be a place of work.
• Fire risk assessment and safety must be adhered to.
• An asbestos survey of the common parts must be carried out.
• Gas appliances should be serviced.
• Electrical PAT tests must be carried out annually on equipment within the common areas.
• Fire and furnishings certificates to be carried out if items supplied.
• Hazardous substances for products containing chemicals etc.
• Work at heigh regulations apply when working at height.
• Water risk assessments to keep water supplies wholesome.

1. Repairs and other services:

• You must have regard to the repairing obligations under the lease.
• Leaseholders should be told how to report repairs/defects.
• Regular cleaning of common areas should be carried out.
• Give adequate notice when contractors need to enter individual dwellings.
• Forced entry should only take place in an emergency and request the attendance of the police is advised.