Archive for August, 2015
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Another interesting read concerning the question of tenants working from home:
Agents and residential landlords have long been concerned about tenants who work from home.
There has always been a worry that by permitting the operation of a business the landlord will inadvertently create a tenancy under the provisions of the Landlord and Tenant Act 1954 and the tenant will then gain the automatic right of renewal provided by Part II of that Act.
The Government has reacted to this concern by passing Section 35 of the Small Business, Enterprise and Employment Act 2015 [http://www.legislation.gov.uk/ukpga/2015/26/section/35/enacted].
This creates a new definition of a “Home Business Tenancy”.
This is any tenancy under which the tenant is required to occupy the rented property as a home and is also permitted to run a home business from the property.
A home business is defined as any business which can reasonably be run from home but specifically excludes any business for the sale or supply of alcohol.
Where a tenancy is a Home Business Tenancy it will automatically be excluded from the Landlord and Tenant Act 1954 and will count as a tenancy of a single dwelling for the purposes of the Housing Act 1988.
The Housing Act 1988 already permitted some home working as long as the tenancy was substantially for the purpose of providing the tenant with a home. As a result, all forms of home working will now be possible and those tenancies will fall within the Housing Act 1988.
However, that does not mean that everything is now okay.
While there may now be no issue from the landlord’s perspective in relation to home working, there are other parties to consider.
Mortgages, superior leases in flats, and insurance policies all routinely have clauses requiring home use only and prohibiting business use of the property.
Depending on how these are worded, permitting business use by the tenant, even as a home business, may not in fact be an option for landlords.
The changes also do not apply to any tenancy which exists before the new provisions come into force, which they have yet to do, or which are renewals of tenancies which existed before the provisions came into force.
Therefore, while this is a sensible change which is welcome, it will be of no effect unless it is taken up by notoriously conservative mortgage lenders and insurers. Hopefully, the Government will take steps to encourage changes in their terms to allow this in future.
* There is an interview with David Smith on the Property Tribes website in which he spells out some current concerns for the private rented sector.
Source: Rosalind Renshaw, Property Industry Eye: http://www.propertyindustryeye.com/essential-advice-is-it-okay-for-tenants-to-work-from-home/
Rosalind Renshaw from Property Industry Eye reveals all:
The Right to Rent scheme – by which landlords or their agents must check the immigration status of tenants and evict any tenant who does not have right to live in the UK – is likely to go live nationally by next April, and possibly much sooner.
There could be a phased roll-out across England from this autumn onwards.
Landlords – and presumably their agents – who do not comply face fines or prison sentences of up to five years.
The eviction of illegal tenants will be abrupt, and without having to go through court.
It would follow the issuing of a notice by the Home Office when an asylum application fails, confirming that the tenant no longer has the right to rent.
The Government is expected to enact new criminal offences as early as next month. Normally, measures enacted in September come into force the following April. However, in view of the crisis in Calais, sources say there is speculation that ministers could decide to bring implementation sharply forward.
Greg Clark, the communities secretary, said the legislation will also create a blacklist of persistent rogue landlords and letting agents to allow councils to know where to concentrate their enforcement action.
“We are determined to crack down on rogue landlords,” said Clark.
There will also be measures to prevent the letting out of sub-standard properties.
The new measure looks to be controversial.
The pilot scheme in the West Midlands has been running only since December and awaits evaluation.
In the pilot, there is no criminal penalty, with civil sanctions of up to £3,000.
Also in the pilot, landlords are able to assign Right to Rent responsibilities to their agents, and it is thought that this same system will continue in the national scheme.
The new clampdown is already raising fears that landlords and agents will simply discriminate against certain types of prospective tenants – including those with a right to live in the UK.
The Joint Council for the Welfare of Immigrants said that the pilot has shown serious shortcomings, with British people who have foreign accents finding it difficult to find somewhere to rent.
Lawyer and policy director of the Residential Landlords Asociation David Smith told the BBC’s World at One that there was evidence that landlords in the pilot were reluctant to let their properties to anyone without a valid passport.
He said: “This means that huge segments of the population, including genuine UK national who do not have passports – of whom there are many – are being excluded.”
There are also accusations that the Government is guilty of a knee-jerk reaction to the Calais crisis.
However, David Cox, managing director of ARLA, said: “ARLA believes that the measures announced by the Government today are a good first step and we welcome the proposals in principle.
“The plans will help to weed out the minority of rogue landlords who exploit vulnerable immigrants for their own financial gain and, with the introduction of a new five year imprisonment penalty, will help to deter other such unscrupulous individuals from entering the private rented sector.
“The proposals also build upon the Right to Rent checks as imposed by the Immigration Act 2014.
“We will be organising training sessions for our members to ensure they are fully prepared and understand the new rules and we urge all letting agents to ensure they are ready for the impending roll out.”