Fun With Section 21

[gilf]

Some of you may be following the story but here is the general recap, Landlord got a court summons before Christmas as he hadn't payed the mortgage since last April (before we moved in). In the end he and the morthgage company agreed a payment structure where he paid the arrears and fees for six months as an additional payment and any remaining could be added to the mortgage if payments had been kept up to date. He wrote to us (the first communication from him on the issue) to say everything was sorted and not to worry, zip forward to last week when we got a letter saying the mortgage company were going to take possesion of the property.

Here's the fun part. The landlord sent us a letter on friday saying that he was issuing a section 21 notice and we needed to leave the property....However, it seems he is full of knowledge on section 21 apart from the following points.

1. He can't issue a section 21 notice which terminates the tenancy before the end of the agreed contract period, which he is trying to do. If he wants us out he needs to use a section 8 notice but that can only be done if there is a breach of the contract by us, which of course there isn't.

2. He didn't protect our deposit in a Tenancy deposit scheme, or more specifically he didn't inform us he had done, ever, let alone within 14 days from the start of the tenancy as he was required by law to do. Not protecting the deposit means he is then not allowed to issue a section 21 notice.

3. He has already issued a section 21 notice when we took the tenancy which informed us he wanted the property back at the end of the year.*

It seems the poor chap is in terrible financial trouble, so much so his nice house is on the market and he also wants to sell the property we are in. As it happens we are keen to get out of the property ASAP however as a matter of principle we won't be taking any notice of his little section 21 notice as it's not worth the paper it's printed on. We of course will be moving out in the next few weeks, but he won't be getting the property back from us until the end of the agreed tenancy in July by which time it will have been repossesed and his £20k investment will have gone down the drain....

... still you can't lose with property as it only ever goes up, right?

* Needless to say the issue is now in the hands of our legal representatives.

Edited March 17, 2008 by gilf

[gilf]

I should also that he didn't include a break clause in his original piss poor "downloaded from the internet" tenancy agreement.

[Matt Henson]

I should also that he didn't include a break clause in his original piss poor "downloaded from the internet" tenancy agreement.

Sound like you have your LL over barrel and yes his Section 21 is as you say not applicable in this situation

However if the bank goes for possesion they can and will be able to under the 1988/1925 HA which gives you a month notice once awarded by the court so don't make sure fire plans based on a July exit although it seems most likley...

[Telometer]

>>2. He didn't protect our deposit in a Tenancy deposit scheme, or more specifically he didn't inform us he had done, ever,

Are you doing him for 3x the deposit?

[gilf]

Sound like you have your LL over barrel and yes his Section 21 is as you say not applicable in this situation

However if the bank goes for possesion they can and will be able to under the 1988/1925 HA which gives you a month notice once awarded by the court so don't make sure fire plans based on a July exit although it seems most likley...

I agree totally, we are getting out as fast as we can, my point was we will drag our heels as long as possible in regards to letting him have the place back, we on the other hand will be long gone come July.

Are you doing him for 3x the deposit?

No, not really going to be worth the hassle in my opinion, just want the sorry saga finished. From what little info there is out there it seems actually going to court and getting the 3x deposit will be a long and drawn out process, we have stopped paying rent so we won't be out of pocket. Don't want anything further to do with the bloke and doubt he has the money to pay the 3x back anyway.

[Guest anorthosite]

I agree totally, we are getting out as fast as we can, my point was we will drag our heels as long as possible in regards to letting him have the place back, we on the other hand will be long gone come July.

No, not really going to be worth the hassle in my opinion, just want the sorry saga finished. From what little info there is out there it seems actually going to court and getting the 3x deposit will be a long and drawn out process, we have stopped paying rent so we won't be out of pocket. Don't want anything further to do with the bloke and doubt he has the money to pay the 3x back anyway.

So are you witholding 3 months rent? You have my undying respect if you go for that one!

[southsea13]

So are you witholding 3 months rent? You have my undying respect if you go for that one!

Don`t pay any more rent!

[agent46]

The guy is clearly in s*it street so why are you kicking him when he's down?

Either stay and pay rent, or leave.

Regardless of how you feel about the situation or the landlord himself, just because he is in mortgage arrears doesn't give you the legal right to withhold rent. If you do, you will be in rent arrears and he may sue you for them. In addition, he might try to recover additional sums arising out of your breach of tenancy - in summary, notwithstanding the fact that he was already in arrears, if, but for the fact that you defaulted on the rent, he could have prevented the re-possession by clearing the mortgage arrears, then it would be a foreseeable consequence of your breach of tenancy that he would have his property re-possessed. If that is the case, and he can establish that your breach caused his losses then he would at least have an arguable case against you.

It's by no means watertight, but a desperate man might think it is worth a punt. I should also mention that as such a case would involve substantial damages (difference between the market value of the property and the price achieved at auction, lender's costs, his own legal costs etc) and a detailed consideration of the law, you may well find yourself defending a High Court claim.

Why risk either the bad credit rating or the bad Karma by screwing the guy over?

PS: FAO: Matt Henson - re: your post in this thread. It is the Law of Property Act 1925 (presumably s.101), not the Housing Act 1925.

Edited March 17, 2008 by agent46

[Guest anorthosite]

The guy is clearly in s*it street so why are you kicking him when he's down?

Either stay and pay rent, or leave.

Regardless of how you feel about the situation or the landlord himself, just because he is in mortgage arrears doesn't give you the legal right to withhold rent. If you do, you will be in rent arrears and he may sue you for them. In addition, he might try to recover additional sums arising out of your breach of tenancy - in summary, notwithstanding the fact that he was already in arrears, if, but for the fact that you defaulted on the rent, he could have prevented the re-possession by clearing the mortgage arrears, then it would be a foreseeable consequence of your breach of tenancy that he would have his property re-possessed. If that is the case, and he can establish that your breach caused his losses then he would at least have an arguable case against you.

It's by no means watertight, but a desperate man might think it is worth a punt. I should also mention that as such a case would involve substantial damages (difference between the market value of the property and the price achieved at auction, lender's costs, his own legal costs etc) and a detailed consideration of the law, you may well find yourself defending a High Court claim.

Why risk either the bad credit rating or the bad Karma by screwing the guy over?

PS: FAO: Matt Henson - re: your post in this thread. It is the Law of Property Act 1925 (presumably s.101), not the Housing Act 1925.

However, the landlord is owe him three months deposit for not putting into a TDS scheme.

If he's leaving in July then it seems fair to cut out the courts and just not pay rent from here on in. Any attempt to collect rent could be repayed with a letter saying he'll sue for the lot.

[agent46]

However, the landlord is owe him three months deposit for not putting into a TDS scheme.

If he's leaving in July then it seems fair to cut out the courts and just not pay rent from here on in. Any attempt to collect rent could be repayed with a letter saying he'll sue for the lot.

Bad idea.

1) He has no proof that the deposit has not been put into a TDS scheme. All he has is an absence of proof that it has been protected. The HA 2004 and/or the secondary legislation passed pursuant to the Act also provides that the "fine" is also payable if the landlord fails to provide within 14 days a certificate proving that the deposit is registered with an approved scheme. Therefore, on strict reading of the law, if the landlord is one day late in serving the certificate, he has breached the relevant provision and is laible for a 3X the deposit payment to the tenant.

However, it is highly unusual indeed for a piece of civil legislation (ie: non-criminal) to,

a) impose a penalty or exemplary damages

b ) impose such a disproportiate penalty (3 X the deposit is potentially much higher than the fines imposed for some quite serious criminal offences)

c) impose a mandatory penalty (most "fines" are expressed to be a maximum, not a mandatory sum)

For any or all of the above reasons, that provision may be open to challenge on human rights grounds.

2) In any event, the legislation is so badly drafted that it probably requires clarification by the appellate courts. If the landlord sues for the arrears, and the tenant counterclaims set off on non-compliance with TDS grounds, then quite apart from the fact that the tenant cannot show any loss, then even if the tenant wins, given how unusual and poorly drafted the HA 2004 is, the landlord may well have good grounds to appeal. The tenant might then eventually find himself having a day out down The Strand, partially at his own expense so that the Court of Appeal can sort out the mess that Parliament left behind.

Law works in funny ways sometimes - even when you win, you lose. The courts tend to take a fairly dim view of self-help remedies, and so people who try to be smartalecs often end up with egg all over their faces.

Edited March 17, 2008 by agent46

[Guest anorthosite]

Do you have any basis for this, or are you merely sticking up for a landlord that has failed to comply with a very simple law?

And it sounds to me like this landlord will never be able to afford all that.

[agent46]

Do you have any basis for this, or are you merely sticking up for a landlord that has failed to comply with a very simple law?

Yes, I do have a basis for all of my opinions - they are based on settled legal principles. If you think you can mount more convincing counter-arguments, then feel free to do so.

No, I'm not "simply" sticking up for a landlord. Although I am not in possession of all (or even many) of the facts, I thought it was clear from what I wrote that I am merely pointing out the potential pitfalls of a lay person trying to be a clever-dick when it comes to the law.

I personally know a freeholder who has been involved in litigation with one of his lessees for nigh on 10 years over what began as a single, minor breach of covenant. The litigation has more or less taken on a life of its own and has sprouted all sorts of satellite claims, counter-claims, interlocutory hearings, applications for injunctions, appeals, cross-appeals, applications to strike-out, appeals against refusals of permission to appeal etc.

The costs of all this nonsense so far? Last time we discussed costs about 2 years ago, he estimated his costs to be around £70,000.

As a result of seeing such situations, as a general rule of thumb, you find that very few lawyers are litigious in their personal affairs.

And it sounds to me like this landlord will never be able to afford all that.

You may be right, but is it worth the gamble? The landlord may be simply experiencing short-term cash-flow problems.

In any event, it costs almost nothing to issue a claim and if he represents himself, or has a friend or family member to do it for him, then smirks can very soon be wiped off faces simply because it is so damn inconvenient to defend a claim.

Moreover, he may not even be interested in recovering his losses - he may just be a vindictive swine seeking revenge for the loss of his investment.

Edited March 17, 2008 by agent46

[southsea13]

However, the landlord is owe him three months deposit for not putting into a TDS scheme.

If he's leaving in July then it seems fair to cut out the courts and just not pay rent from here on in. Any attempt to collect rent could be repayed with a letter saying he'll sue for the lot.

Kick the landlord while he`s down - go on stick the boot in!

From now to June is about three months. It`ll take ages for the LL to sort out a S21 and if he`s been dodgy on the deposit then shame on him.

Let the LL come claiming for the money - put the onus on him to chase the credit!

[Matt Henson]

Kick the landlord while he`s down - go on stick the boot in!

From now to June is about three months. It`ll take ages for the LL to sort out a S21 and if he`s been dodgy on the deposit then shame on him.

Let the LL come claiming for the money - put the onus on him to chase the credit!

Southsea why do you always trash a perfectly good thread with moronic posts, whether you like the post of not people are entitled to a view and if you kicked every landlord you would fast find yourself homeless.

[Matt Henson]

The guy is clearly in s*it street so why are you kicking him when he's down?

Either stay and pay rent, or leave.

Regardless of how you feel about the situation or the landlord himself, just because he is in mortgage arrears doesn't give you the legal right to withhold rent. If you do, you will be in rent arrears and he may sue you for them. In addition, he might try to recover additional sums arising out of your breach of tenancy - in summary, notwithstanding the fact that he was already in arrears, if, but for the fact that you defaulted on the rent, he could have prevented the re-possession by clearing the mortgage arrears, then it would be a foreseeable consequence of your breach of tenancy that he would have his property re-possessed. If that is the case, and he can establish that your breach caused his losses then he would at least have an arguable case against you.

It's by no means watertight, but a desperate man might think it is worth a punt. I should also mention that as such a case would involve substantial damages (difference between the market value of the property and the price achieved at auction, lender's costs, his own legal costs etc) and a detailed consideration of the law, you may well find yourself defending a High Court claim.

Why risk either the bad credit rating or the bad Karma by screwing the guy over?

PS: FAO: Matt Henson - re: your post in this thread. It is the Law of Property Act 1925 (presumably s.101), not the Housing Act 1925.

I did mean the 1925 Property Act section 101, I just couldn't be bothered to type it ;-)

I also believe 3x rule is being misconstrued here, it seems it is being assumed that if the LL does not protect the deposit in the TDS scheme he/she is automatically "fined" 3x the deposit value.

In my view the TDS scheme was not put in place to protect tenants it was put in place to reduce the burden on the court system and so the 3x punishment is a "threat" the courts can use to encourage people to use scheme, secondly if the LL unlawfully or unfairly withholds the deposit and it goes to court the judge can apply the 3x times rule in punitive damages (the small claims court can not traditionally apply punitive damages) if it is found in the tenant favour.

I am perfectly happy to be proven wrong but that is my interpretation of the law.

Back to the thread about withholding rent, Agent46 is right, you are liable under the AST to pay the rent for the whole term (as you pointed out there is no break clause), if you are trying to protect your deposit which is fair enough then withhold that amount but start paying rent again once you have covered your deposit. The alternative is a potential court case against you which you are unlikely to win and will damage your credit rating and chance of getting somewhere new if the next LL does a credit search.

[agent46]

I did mean the 1925 Property Act section 101, I just couldn't be bothered to type it ;-)

I also believe 3x rule is being misconstrued here, it seems it is being assumed that if the LL does not protect the deposit in the TDS scheme he/she is automatically "fined" 3x the deposit value.

In my view the TDS scheme was not put in place to protect tenants it was put in place to reduce the burden on the court system and so the 3x punishment is a "threat" the courts can use to encourage people to use scheme, secondly if the LL unlawfully or unfairly withholds the deposit and it goes to court the judge can apply the 3x times rule in punitive damages (the small claims court can not traditionally apply punitive damages) if it is found in the tenant favour.

I am perfectly happy to be proven wrong but that is my interpretation of the law.

Back to the thread about withholding rent, Agent46 is right, you are liable under the AST to pay the rent for the whole term (as you pointed out there is no break clause), if you are trying to protect your deposit which is fair enough then withhold that amount but start paying rent again once you have covered your deposit. The alternative is a potential court case against you which you are unlikely to win and will damage your credit rating and chance of getting somewhere new if the next LL does a credit search.

It is not a threat, it is mandatory (ie: the court has no discretion in the matter - it MUST make the order)

From "Halsbury's Laws of England"

Where a tenancy deposit has been paid in connection with a shorthold tenancy, the tenant or any relevant person may make an application to a county court on the grounds:

(1) that the initial requirements of an authorised scheme have not been complied with, or the statutory requirement to give information to the tenant or other relevant person has not been complied with, in relation to the deposit; or

(2) that he has been notified by the landlord that a particular authorised scheme applies to the deposit but has been unable to obtain confirmation from the scheme administrator that the deposit is being held in accordance with the scheme.

If on such an application the court is satisfied that the initial requirements or the statutory requirement mentioned in head (1) above have or has not been complied with in relation to the deposit, or is not satisfied that the deposit is being held in accordance with an authorised scheme, as the case may be, then the court must, as it thinks fit, either:

(a) order the person who appears to the court to be holding the deposit to repay it to the applicant; or

(b ) order that person to pay the deposit into the designated account held by the scheme administrator under an authorised custodial scheme,

within the period of 14 days beginning with the date of the making of the order. The court must also order the landlord to pay to the applicant a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order

You will note that once the court is satisfied that the statutory requirement to give information within 14 days (s.213(3))has not been complied with, it must make the order. You will also note that the only element of discretion in the making of the order relates to whether to order the deposit to be repaid to the tenant or order it to be paid into the TDS Custodial Scheme.

As you can see, there is no provision dealing with remedial compliance. Therefore, I have not misconstrued the "3X deposit rule" and your interpretation is incorrect.

Re: your advice to withold rent: For the reasons already given in my other posts in this thread, that course of action is inadvisable. It seems you are quite enthusiastic when it comes to becoming involved in litigation as a hobby, but for most people, even if they eventually win, court cases turn out to be a bit of a nightmare simply due to the time and effort involved.

Edited March 18, 2008 by agent46

[southsea13]

Southsea why do you always trash a perfectly good thread with moronic posts, whether you like the post of not people are entitled to a view and if you kicked every landlord you would fast find yourself homeless.

Oh, so it`s moron now - I thought we cleared up that issue a long time ago (or are you still smarting because I called you a cheesed1ck?)

So you`re saying that it`s fair to treat a scumbag shyster reasonably then? I didn`t advocate any breach of the law, just making it hard for some exploiter to do any more exploiting.

Re. homelessness - never going to happen. I can find myself a perfectly decent LL having come across so many scumbags.

I am also entitled to my view, so if you object does that not make YOU the moron?

[Foul language removed by moderator]

[Matt Henson]

As you can see, there is no provision dealing with remedial compliance. Therefore, I have not misconstrued the "3X deposit rule" and your interpretation is incorrect.

Thank you for the clarification and I wasn't suggesting YOU had misconstrued the rules.

As an agent do you know any cases where it has been applied?

Also if you read the post you would see I am agreeing with you and avoiding court should be the objective, as it happens I don't do litigation as a hobby, I just enjoy finding out about the law and with the help of people like yourself I find out more

Edited March 18, 2008 by Matt Henson

[Matt Henson]

Oh, so it`s moron now - I thought we cleared up that issue a long time ago (or are you still smarting because I called

So you`re saying that it`s fair to treat a scumbag shyster reasonably then? I didn`t advocate any breach of the law, just making it hard for some exploiter to do any more exploiting.

So why is he a scumbag shyster? What exploiting has he done?

The house he rents is being repossessed because for reasons we don't necessarily know he can not pay the mortgage.

Your issue I suspect is envy that he owns a house and you don’t

I seem to recall it was you who placed an apology on the board for your “Bruno” moment perhaps you need some anger management treatment…

Edited March 18, 2008 by Matt Henson

[gilf]

Thanks for all the replies, however I do wish people wouldn't jump to conclusions.

Firstly we stopped paying the rent this month, under instruction from legal representation. We are not, "not paying the rent" we are withholding the rent on the grounds that as far as we know the mortgage company are taking possession of the property, if the situation is sorted out we will back date the rent and continue as normal. Having said that he has already "in writing" said he wants us out of the property ASAP.

We have missed one rent payment, under the rules of a Section 8 notice this is not long enough for a case to stand up in court and we feel it is more than reasonable to without the rent in the current circumstances. As suggested this is in effect one months rent in lue of the deposit.

My point about dragging heels was that while we are more than happy to leave the property ASAP we will not do under a Section 21 notice which is not valid. We are simply making the landlord aware of his legal responsibilities.

The issue is that the Landlord is trying to use a legal system to his advantage, however our stance is that we won't let him get away with that unless everything he does is by the book. I can assure you everything is above board and legal on ourside, we have consulted a legal professional through the entire process and also been in constant communictation with the mortgage company and their legal representatives.

agent46 - I'm in total agreement with you on the 3x deposit stuff which is why as I said I'm not even going to bother with it. The way it is worded makes it seem as if once the 14 days are up you get a big lump of cash, for me I can't see that working too well.

You may be right, but is it worth the gamble? The landlord may be simply experiencing short-term cash-flow problems.

His problems are far worse than a short term cash flow problem, as I said he hasn't paid a single penny on the mortgage since before we moved in. However this is no gamble we are fully aware of what we are doing and our responsibilities under the AST.

So let me confirm, this isn't some idiot who thinks withholding the rent is a bit of a laugh and getting one over the landlord, we were advised to stop paying the rent last year but we chose to give him the chance to sort the situation out, which in hindsight he was never going to be able to do.

Edited March 18, 2008 by gilf

[agent46]

Thank you for the clarification and I wasn't suggesting YOU had misconstrued the rules.

As an agent do you know any cases where it has been applied?

I'm not aware of any cases as yet, but I haven't looked into it. There certainly don't seem to have been any cases heard on appeal yet, because otherwise they would be cited in Halsbury's.

The only avenue of argument open to a landlord would be to point out that the section uses the words "have or has not been complied with" and this wording could be, for want of a better word, "stretched" into covering remedial compliance. In other words, if the tenant receives the prescribed information later than 14 days after paying the deposit, but before the hearing, he cannot say that the requirement to give information "has not been complied with." However, the counter argument to that point would be that as the initial requirements for compliance impose a time limit on serving the information on the tenant (14 days), once that deadline has passed, it is impossible to comply retrospectively with the requirements imposed by s.213(3) because the time limit is an integral part of the requirement.

I think the court could come down on either side of that argument, but the uncertainty involved opens up the possibility of appeal from the disappointed party. Appeals are expensive because they involve arguments on points of law and if you want to stand a chance of winning, should really be conducted by counsel and not in person. And then, there is always the possibility of an appeal to the House of Lords.

So what started out as someone trying to be a bit smart, even if they are ultimately proved to have been right, could well end up in tears.

[southsea13]

So why is he a scumbag shyster? What exploiting has he done?

The house he rents is being repossessed because for reasons we don't necessarily know he can not pay the mortgage.

Your issue I suspect is envy that he owns a house and you don’t

I seem to recall it was you who placed an apology on the board for your “Bruno” moment perhaps you need some anger management treatment…

I have no jealousy at all regarding my current landlord - he is perfectly reasonable and has been for the last three years, ever since I moved in.

Before that I had several dealings with van Hoogstraten types, including harassment and threats of violence and even death.

I don`t need a house as I`ve got a roof over my head, and if it came to the crunch I`ve always got enough put aside to rent again (pay deposits etc). I don`t waste my money on cr*p.

Yes, I did apologise - and still do - for the `Bruno` moment and then you stir it up again by accusing me of being a moron.

Actually I`ve got Lithium, Prozac, Lamotrigine and Haloperidol to keep me stable - anger management just doesn`t work.

[gilf]

A final update of the whole thing (I hope).

We got a letter from the court on March 20th informing us the Baliff was coming on 2nd April (my birthday ), not a great deal of notice especially given it was the Easter Bank Holiday the next day. However we called the Baliff who was a nice chap who agreed to delay by a week so we could get our stuff out.

As luck would have it we had already found a place which was going to be available from 31st March, however we wanted the extra few days just in case of any problems. However we had problems with the references because we of course had to detail our current property. I don't know what the landlord put down but in all fairness to him he would have had to put down the fact we didn't pay the last months rent, however I'm also pretty sure he wouldn't have bothered to explain the situation in full which would have put him in a very bad light.

A call to the letting agent sorted the problem out in the end but it was a bit of a pain, especially as we have done nothing wrong during our tenancy despite having plenty of problems with the landlord.

Luckily my wife works in commercial property and has plenty of contacts in the legal profession (big city legal firms) who owe her a favour, we got one of those to send a very strong letter to the Landlord detailing his legal responsibilities, including the points about the section 21 notice. The landlord spoke to the chap and was very apologetic and agreed that he would have to cover any cost we might incur due to us leaving the property early*, he also agreed that not paying the rent was exactly what he would have done in the situation.

On the rent point it also goes to show that with holding was the right thing to do as we were being kicked out of the property only 2 weeks in to the month, therefore not only would we have paid a whole months rent and not got the deposit back, we would have only had 2 weeks in the property. We told the landlord he could keep the deposit, which is pretty generous given it's about 3 times the rent owed and the fact he won't incur any costs from our tenancy given the bank will own the property from next Monday.

* we won't incur any costs of course and neither were we claiming we would, the transcript of the conversation we got from the lawyer and the landlord was very good as it was obvious that the lawyer had led the conversation detailing exactly the legal situation which the landlord had no option but to agree with.