Our roundup of news items over the past week. This weeks items include a report on the Northwood v Fearn Court of Appeal hearing, the cost of EPC upgrades, and a damning criticism by the Lords of the Governments ‘help to buy’ scheme.
Signature of documents and the Northwood v Fearn & Ors case
This week the court of appeal case of Northwood v Fearn case was heard, in what is expected to be a final decision after more than two years of dispute.
For those unfamiliar, this was a case that answered two important legal questions for landlords:
- What is the correct way for a company landlord to sign a deposit prescribed information certification?
- And what is the correct way for a company landlord to sign a section 8 possession notice?
We originally reported the case in Newsround #182. In the County Court, it was held that landlords would need to sign a prescribed information certificate in the way set out by section 44 of the Companies Act 2006. Section 8 on the other hand could be signed by an agent or the landlord section 44 did not apply.
Section 44 of the Companies Act stipulates that when signing documents on behalf of a limited company, it must be signed either by two directors, or by a director and a company secretary, or by a director before a witness.
This case was a major concern for many landlords and agents as it could potentially render possession notices invalid as well as giving tenants an opportunity to claim the penalty for failing to provide correct tenancy deposit prescribed information (which can be up to three times the deposit amount).
Thankfully for landlords and agents throughout the country, Northwood appealed.
The Court of Appeal decision was handed down on 26 January, and to the relief of many, the Judge held that neither a section 8 possession order or a prescribed information certificate had to be signed on accordance with section 44.
The Court agreed with the landlord’s position that the documents in question do not require the level of formality required by section 44. The landlords had argued that under agency law, a properly authorised individual is fully capable of validly authenticating these documents on behalf of the landlord with their personal signature.
Therefore, both a landlord or an agent working on the landlord’s behalf can sign the document. Solicitor David Smith who acted for the landlords said
This case continues the clear line from the Court of Appeal that technical defences to section 8 and 21 notices are not likely to work.
You can read David Smith’s report here.
NRLA – one in four landlords hit by rent losses caused by Covid
A new poll by YouGov commissioned by the NRLA has revealed that 23% of private landlords suffered losses of rental income caused in some capacity by the Covid pandemic.
This included 11% of respondents who had negotiated rent reductions and temporary suspensions of rent payments with their tenants. In addition, 36% of the landlords who lost rental income as a result of the pandemic said they planned to either exit the market completely or sell a portion of their portfolio, further exacerbating the supply crisis which many analysts agree is hurting tenants.
The NRLA in response to this troubling report are calling for local authorities and the Government to make use of available funds to help tenants get Covid rent debt cleared so as not exacerbate the rental supply crisis.
Ben Beadle, Chief executive of the NRLA said:
Today’s figures show the extent to which landlords have been hit by the pandemic as we have been warning over the last two years. With confirmation that those most affected are more likely to leave the market, it is vital that the rent debt crisis does not worsen the rental housing supply crisis we now face
NB Landlords looking to help tenants find grant and other aid to clear arrears may be interested in the Landlord Law Kit here.
House of Lords Report condemns Help-to-Buy scheme
A report published this month by the House of Lords environment committee has strongly criticised the Government’s help to buy scheme.
The committee reports that the £29bn spent by the scheme by 2023 has not only failed to give value, it has actually ‘inflated prices by more than its subsidy value in areas where it is needed the most’ . The report adds that this money would be better spent on increasing supply.
The report acknowledged that ‘right to buy’ was a ‘bargain’ for the two million tenants who took advantage of it, but was disastrous for the low-earners who came after. The report also found that this policy is contributing to the current housing supply problem, in both the private and public sector.
So, a comprehensive failure all round.
Landlords may need to spend £10,000 to meet EPC standards
Research conducted by Aldermore Bank has revealed that landlords will pay an average of £10,400 per property to get their properties up to the EPC rating ‘C’ in alignment with Government targets.
To fund this expense, research shows that 71% of landlords expect to use their savings. Only a quarter expect to use government funding and a similar proportion of 23% plan to put up the rent to afford the costs.
While there are grant schemes available, including £5,000 by the Government to install heat pumps and other low carbon systems, it is worrying that most landlords see their only alternative of increasing the rent for their tenants or pay using their own savings.
And the Government wonder why so many landlords are considering leaving the industry….
Shawbrook Bank are now advising that property investors should check EPCs before buying an investment property to assess their potential liablity.
No Government plans for more Covid restrictions for the PRS
In a recent question to the Housing minister Eddie Hughes, it has been revealed that the Government are currently not considering any more restrictions on the rented sector. However, they will monitor the situation closely.
In a recent question by Lillian Greenwood MP, the Housing minister was asked if any restrictions in the private rented sector were being considered with the upsurgence of the omicron variant of Covid-19.
In the response, Hughes considered the restrictions brought in earlier in the pandemic (such as the eviction ban and longer notice periods) were successful in reducing the damage caused by Covid to the sector. Hughes responded that while the Government does retain the power to reintroduce restrictions until the 25 March 2022, there are currently no plans to do so.
Newsround will be back next week.