A landmark ruling by the Court of Appeal making it easier to serve eviction notices on tenants could save landlords thousands of pounds.

Landlords wishing to end a tenancy once a fixed term has expired are required to serve their tenants with a Section 21 notice, which requires a minimum of two months’ notice ending on the last day of a period of the agreement.

However, it was always widely believed that if, for example, rent was payable on the first day of the month and the landlord gave notice on the second, then this would mean having to give two months’ notice plus the days remaining in that month, making the notice period closer to three months.

However, the Court of Appeal has ruled that two months should mean two months, regardless of when the Section 21 notice was served.

A Section 21 notice specifically requires “not less than two months’ notice in writing”, meaning that a landlord who serves such a notice on 2 January would be entitled to take possession of the property on 2 March, rather than the end of March, as previously thought.

The ruling means that landlords could now potentially save thousands of pounds which would have arisen as a result of the eviction being delayed under the previous understanding of the rules.

January 2014

Welcome to Focus On… our special quarterly bulletin looking at issues relevant to particular sectors and topics of interest.

In January’s Focus On… Property, we look at how rising house prices and the easing of mortgage restrictions could see more accidental landlords selling up, potentially creating greater demand for rental properties. Meanwhile, landlords are being advised to take out rent arrears cover after new figures revealed that nearly four in 10 landlords had experienced rent arrears in the past 12 months. We also highlight a Court of Appeal ruling on Section 21 notices which could potentially save landlords thousands of pounds in eviction delays. Finally, new figures show that rents for the social sector increased by six times more than rents for the private sector.

If you would like to discuss any aspect of our specialist accountancy and business advisory services for landlords, letting agents and estate agents, please contact Richard Grayson, Managing Partner at Nicholsons, at richard.grayson@nicholsonsca.co.uk or phone 0845 27 66 555.

Court ruling could save landlords thousands of pounds

January 2014

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Demand for buy-to-let properties will increase in 2014 as more ‘accidental landlords’ finally decide to sell up, it has been claimed.

National letting agent franchise Belvoir Lettings says accidental landlords are more likely to sell their homes as prices rise and mortgage restrictions are eased. An accidental landlord is someone who has resorted to renting out their property to tenants because they are either unable to sell it or because they are in negative equity.

According to Belvoir chief executive Dorian Gonsalves, this will reduce the number of properties

on the rental market, unless these properties are bought by other investors, driving up demand.

At present, demand generally outstrips supply in the rental market and this trend looks set to continue as experts predict a recovery in the housing market.

However, increased property prices could still price many people, including buy-to-let landlords, out of the market.

Meanwhile, Belvoir is also predicting ‘modest’ rent increases in 2014 as demand for quality accommodation increases.

Accidental landlords could help boost buy-to-let demand

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Rents in local authority controlled homes have increased six times more than rents in the private sector in the past eight years, according to new analysis from the Residential Landlords’ Association (RLA).

The RLA has analysed figures from the Department for Communities and Local Government showing that between 2005 and 2013, average weekly rents for local authority housing went up from £55.27 to £78.78 – an increase of 42.5 per cent.

In comparison, figures from the Office for National Statistics for the same period show that rents from the private rented sector increased by just 7.2 per cent. With RPI increasing by 30.3 per cent over the same period, this means that private sector rents actually fell when taken in real terms.

RLA chairman Alan Ward said: “These figures burst the myth that it is private sector rents that are spiralling out of control, when it is tenants in local authority controlled housing who are facing far steeper increases in rents.”

Social sector rent increase six times that of private sector

The National Landlords Association (NLA) has urged landlords make sure they have cover in place to protect themselves financially if their tenants fail to pay their rent.

The reminder came as research from the NLA revealed that nearly four in 10 (38 per cent) landlords had experienced rent arrears over the last 12 months, with an average of £1,943 owed by tenants who fell behind on rent payments in that time.

The association also found that nine in 10 (89 per cent) landlords do not take out an insurance policy to cover themselves in the event of financial loss through rent arrears.

Its research also revealed that 85 per cent had

buildings cover but only 53 per cent had public liability cover and less than half (47 per cent) had contents cover.

Most rent arrears insurance policies protect landlords against non-payment of rent while also covering the cost of legal fees which may be required to recover unpaid rent.

Carolyn Uphill, chairman of the NLA, said: “Most landlords will be affected by rent arrears at some point and there are many different reasons why tenants could find themselves with difficulties over meeting their rental obligations.

“It’s important to be prepared as the amount of money lost through arrears can roll into tens of thousands

of pounds in the worst cases. It can also be a very stressful and costly process to regain possession and claim any unpaid monies through the courts.

“NLA would advise all landlords to take out specialist rental arrears cover, such as NLA Rent Protect. It gives you peace of mind that you won’t lose out if your tenant can no longer pay the rent – whatever the reason – and it also means you have access to legal advice and specialist lawyers to assist in the recovery of any lost monies.”

Nicholsons is experienced in working with landlords with portfolios of all sizes and can provide expert advice on maximising the financial efficiency throughout their businesses, including all aspects of tax. For more information, please contact us.

Landlords urged to take out rent arrears cover