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Rogue landlords: do leaseholders need more protection?

Posted: 06/11/2017

With the news constantly full of Brexit, it is easy to forget that the country still has to tackle other equally serious home-grown problems, such as fixing the property market, which successive governments have so far failed to do.

As part of the Conservative party manifesto, the Government is committed to reforming and modernising the housing market to make it fairer for all. One aspect that it will have to tackle is to consider whether it should strengthen the current statutory protection given to leaseholders against unscrupulous landlords which sadly still bedevil the market.

Leaseholders are currently protected against unscrupulous landlords trying to overcharge them, since under the Landlord and Tenant Act 1985, Section 19(1) a landlord can only charge leaseholders for costs which are ‘reasonably incurred’. This statutory provision has been heavily amended over the years so that before any major expenditure on the building can be incurred, there must be a full and adequate consultation and tenders obtained and scrutinised.

Cos Services Limited v Irene McNicholson [2017] UKUT 282 (LC)

The above case was recently heard in the Upper Tribunal and is a perfect example of how the legislation currently protects leaseholders. The building is situated in Harpenden, Hertfordshire and is a purpose built block of flats consisting of 16 flats with the leaseholders of one apartment challenging the landlord’s claim for insurance premium over the building for the last three years.

The landlord wanted to claim the following amounts:

  • 2013/14 £12,598.20
  • 2014/15 £12,620.02
  • 2015/16 £13,561.94

After a trial in the Lower Tribunal, the insurance premium properly recoverable was reduced down to:

  • 2013/14 £2,803.10
  • 2014/15 £2,819.08
  • 2015/16 £3,017.65

Understandably, the landlord appealed to the Upper Tribunal claiming the original amounts were reasonably incurred and therefore properly due. Once again, the Upper Tribunal sided with the leaseholder, saying that the onus of proof was on the landlord to justify the sums being claimed and that if the tenant had put forward quotations for cover on similar terms as the landlord proposed, but for much reduced premiums, then the leaseholder’s figures were to be preferred.

18 October consultation

Rather surprisingly, the DCLG on 18 October published a new consultation paper entitled ‘Protecting Consumers in the Letting and Managing Agent Market: Call for Evidence’ whereby the Government is seeking evidence as to whether a new regulatory model is needed in this sector and if so, what form that should take.

We therefore wait to see the outcome of this latest consultation but having seen various abuses committed by rogue landlords in this sector for many years, it is the writer’s view that all agents should be properly regulated and belong to an independent professional body who can set minimum standards and oversee the profession. The imposition of a regulatory regime is something which the good agents in this sector wish to see, as this will drive out the bad ones and improve the reputation of all agents. An amateur approach is no longer acceptable.

Anyone with a view on this subject should respond to the DCLG before the consultation closes on 29 November.

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