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Private Sector

Posted on 30th May at 01:48 PM

Regulated Tenants

Tenancies that commenced before 14th January 1989 will have their Fair Rent (including net rent and service charge) set by the Rent Service and reviewed every two years under the Rent Act 1977.

The landlord will supply details of current costs (including the cost of works to the communal TV aerial in preparing for switchover) and the Rent Service will consider how much of those costs are reasonable when setting a new Fair Rent.

Where the Rent Service registers a Fair Rent with a variable service charge, then the service charge can be varied in accordance with the tenancy agreement. This would allow a private landlord to recover all their costs in providing Digital TV provided that all other requirements had been met.

The Rent Acts (Maximum Fair Rent) Order 1999 imposes a restriction on the amount a housing association can recover from the tenant following a revised Fair Rent being set by the Rent Service.

Where there is a fixed service charge (i.e. fixed for 2 years), the maximum allowable increase on re-registration of the Fair rent is the Fair rent plus RPI plus 5%. This will be the total increase including the service charge. Where there is a provision for a variable service charge, the same formula will apply to the net rent, but the variable service charge element is excluded from the effect of this Order.

Where repairs or improvements (including the replacement of any fixture or fitting, such as a communal TV aerial system) are carried out by the landlord or superior landlord to a dwelling or the communal parts and the costs included in the rental element, The Order makes provision for increases to be included as long as they do not exceed 15%.

Assured Tenants

  • All new lettings after 15th January 1989 will be either assured periodic tenancies or assured shorthold tenancies.
  • If the tenancy agreement does not have a provision for increasing the rent and service charge, (such as a reference to an external index such as RPI) a landlord will have to serve a Notice in accordance with s14 of the Housing Act 1988. This will show the amount of the service charge currently being charged and the amount of the new service charge after the increase.
  • The assured tenant can challenge the amount of the new rent by appealing to the Rent Assessment Committee. If the service charge is fixed, the Rent Assessment Committee will consider the amount of both the net rent and the service charge.
  • If the service charge is variable, Rent Assessment Committee will consider only the net rent aspect. The landlord will be able to recover his full costs, provided they are reasonable.

Assured Shorthold Tenants

  • This is now the default tenancy for the private sector and will usually be for relatively short periods of time. If the tenancy agreement allows, the landlord will be able to charge for services in addition to the rent, and therefore the cost of preparing for digital switchover should be reflected in the service charge levied from time to time.

Leaseholders

  • The landlord/freeholder should be able to recover the cost of digital switchover if the lease allows for such costs to be recovered.
  • Many blocks of flats in the private sector are managed by Resident Management Companies, even though some may appoint an agent to undertake the day to day running of the block. It is important that these Resident Management Companies recognise the need to act and ensure that works to the communal TV aerial systems are initiated.

Freeholders (subject to an Estate Charge)

  • There will also be cases where a freeholder has transferred ownership of individual properties to others but has retained the responsibility for maintaining a communal TV system, the costs of which are recovered through an “estate rent charge” set out in the conveyance or Transfer. If no such provision has been made, then the costs will not be able to be recovered except by agreement with the individual freeholders.
  • Those who have reserved rights out of a conveyance/Transfer to collect an estate rent charge for the provision of services to communal areas (such as communal TV system) will be able to recover their costs in full if the conveyance/Transfer allows.
  • It should be noted that ss18-30 of the Landlord and Tenant Act 1985 (the provisions about the recovery of service charges) do not apply to freeholders who own their own homes but have a communal TV system provided by another party.
  • It could also be restricted by whether the lease or tenancy agreement allows for a variable or a fixed service charge. The main difference between variable and fixed charges is that a variable service charge allows a landlord to vary the service charges each year, to reflect any under or over recovery of charges. A fixed charge means that there is no adjustment each year to reflect any under- or over-recovery. So the landlord bears the costs of any under-charge, or benefits from any surpluses.
  • Legislation tends to give more freedom to those landlords operating a variable charge. It allows for more resident empowerment, and the right to be consulted about expenditure before it is incurred. Fixed charges tend to have more restrictions imposed by legislation, since there is no obligation on landlords to work in partnership with their residents.
  • The lease or tenancy agreement (and conveyance or Transfer) under which the resident occupies his property is fundamental to the ability of the landlord/freeholder or a third party to recover the costs incurred in preparing for digital switchover. If the lease agreement or conveyance/Transfer is inadequate in that regard, there is provision for such agreements to be varied.
  • Any tenancy agreement or lease can be varied by the express agreement (in writing) of each tenant and leaseholder affected by the proposed change(s); in the case of leases, this would also include any mortgagee who has registered an interest in the property at the Land Registry;
  • Where not all leaseholders accept the proposed changes, there is a procedure set out in the Landlord and Tenant Act 1987 (ss 35-37) whereby the Leasehold Valuation Tribunal (http://www.rpts.gov.uk/about_us/lvt.htm) can consider an application for changing the wording of the leases provided that certain criteria apply;
  • A secure tenancy agreement (housing associations and local authorities) can be varied by the landlord following the procedure set out in ss102 and 103 of the Housing Act 1985.