News and Articles
23rd May 2013: A Cautionary Tale - Denison Till Newsletter
Calculating a secure tenant's statutory damages following unlawful eviction by a landlord - a Cautionary Tale
In London Borough of Lambeth v H Loveridge [2013] the Court of Appeal has overturned the decision of the High Court on how statutory damages, awarded under sections 27 and 28 of the Housing Act 1988, should be calculated following a secure tenant's unlawful eviction.
Mr Loveridge (the tenant) was granted a secure tenancy by Lambeth Borough Council of a one-bedroom ground floor flat within a two flat purpose-built building. The upper flat was also let to a secure tenant. Under the terms of the tenancy, the tenant was required to notify the Council if he was absent from the property for more than 8 weeks.
On 9 July 2009, Mr. Loveridge went to Ghana and did not return until 5 December 2009. He continued to pay his rent but failed to notify the council of his absence. The Council became concerned that the tenant might have died in the property and forcibly entered the flat in September 2009. The council cleared the flat, sold the tenant's belongings and found a new tenant. Mr. Loveridge brought proceedings against the Council for unlawful eviction and for damages for the wrongful disposal of his possessions.
Damages for the loss of his possessions were agreed at £9,000 and common law damages reflecting the tenant's actual loss for unlawful eviction were agreed in the sum of £7,400. Valuers were instructed by both parties to assess the statutory damages under the Housing Act 1988.
The Act says that a residential occupier who has been unlawfully evicted from residential accommodation should be paid for the loss of his right to occupy the premises. The statutory damages are calculated by reference, not to its actual loss, but to the "profit" made by the landlord as a result of the eviction.
The tenant's valuer valued the building subject to an on going secure tenancy of the flat and concluded that this would depreciate the value of the building by £90,500. The Council therefore stood to make a hypothetical profit of £90,500 on a sale free of the tenant's interest. The trial judge agreed with this approach and assessed the statutory damages at £90,500.
The Council appealed. The Court of Appeal decided that the valuer was obliged to take into account the fact that a secure tenancy would be 'downgraded' into an assured tenancy on a sale by the council to a private purchaser. Therefore the value of the landlord's interest subject to the tenant's rights was by reference to the tenant being an assured tenant and not a secure tenant. As a result the statutory damages were assessed at nil and the agreed damages for actual loss of £7,400 should be awarded.
Comment
The decision of the Court of Appeal will have been a relief for the Council! However, it was the correct decision as it properly takes into account the nature of a valuation based upon a hypothetical sale which is a familiar concept to property valuers.
The case serves to remind landlords of the risks of taking possession of a property without a court order even if it appears that the tenant has vacated as the tenant a right to damages for unlawful eviction unless they are reinstated before proceedings are finally disposed of.
For further information contact Johanne Spittle at jcs@denisontill.com or Emma Major at elm@denisontill.com
Related link: http://www.denisontill.com/
16th May 2013: Landlord Immigration Duties ~ Reasonable or Not?
Reactions to the Queen's Speech proposal that would require landlords to assess the immigration status of potential foreign tenants have been somewhat negative, with one lawyer slamming the initiative for lacking detail and clarity.
Private landlords will be threatened with large fines if they do not properly check the immigration status of potential tenants - a new law that has been heavily criticised.
Jeremy Raj, Head of residential property at London law firm Wedlake Bell, said: "Expecting landlords to carry out the work of immigration officials is unreasonable and unworkable. It will create delays and uncertainty in an already difficult market, and clearly the vast majority of landlords will have no idea of how to go about it."
However, UKALA welcomed the Government's announcement in the Queen's Speech that under a new Immigration Bill, private landlords will be legally responsible to check the immigration status of tenants and ensure that properties are only let to tenants who have the legal right to live in Britain.
Read the full article at PROPERTYdrum HERE
7th May 2013: When a payment under an AST is advanced rent rather than a rent deposit
The following article is from the Denison Till Property Litigation Newsletter
In the recent case of Johnson and others v Old [23 April 2013] the Court of Appeal has considered the nature of a payment made in respect of rent due under an Assured Shorthold Tenancy (AST), in particular whether the sum was a deposit that fell to be protected under the Tenancy Deposit Scheme or simply an advance payment of rent.
The tenant entered into an AST dated 1 May 2009, for a fixed term of six months. The tenant was obliged to pay both a deposit of £1,425 and a sum equal to six months' rent to the landlord's agents before she took possession. The deposit was paid into a TDS. The agents retained the advance rent payment and each month they paid an amount equal to the monthly rent to the landlord, from the advance rent payment.
When the AST expired the tenant took a new six month AST, on similar terms, including the payment of six months' rent in advance and the payment of a deposit of £1,425. When the six month period of the second AST expired, the tenant again took a new AST, rather than hold over under the existing tenancy. The third AST was on similar terms to the previous two, although there was a slight increase in the monthly rent that was payable (to £1,000 a month). Once again, as well as paying a deposit, the tenant had to pay six months' rent in advance (which amounted to £6,000).
The fixed term of the third AST expired on 31 October 2010, but this time the tenant remained in occupation under a statutory periodic tenancy.
The tenant fell into rent arrears and the landlord served a S21 notice.
The possession proceedings came before the Deputy District Judge who dismissed the claim for possession saying that a sum equal to five months' rent had been paid as security for the tenant's obligation to pay rent (the first month's rent was paid to the landlord at the start of the AST) and that this sum amounted to a tenancy deposit and, as this money had not been protected in a TDS, the possession procedure under section 21 of the HA 1988 was not available to the landlord.
The landlord successfully appealed but the tenant then appealed to the Court of Appeal. The Court of Appeal dismissed the tenant's appeal and found that the £6,000 was not a payment made as security for either the performance of the tenant's obligations or the discharge of any liability arising under or in connection with the relevant tenancy; the £6,000 was simply a payment, in advance, of the first six months' rent.
The Court of Appeal agreed that landlords have various ways of dealing with the risks of a tenant not paying rent:
- They can obtain a guarantee.
- They can take a deposit.
- They can require payment up front.
There is a difference between money paid to discharge an existing obligation and money paid as security for such an obligation. The £6,000 paid by the tenant was an advance payment of rent and not a tenancy deposit.
Comment
This decision will be welcomed by landlords; there had previously been doubt as to whether a landlord could take more than 'a couple of months' rent in advance without the sum being a tenancy deposit.
For further information contact Johanne Spittle on jcs@denisontill.com or 01904 561425
Related link: http://www.denisontill.com/
