Squatting; An end to Property Theft.

Squatting; An end to Property Theft.

On Saturday 1 September 2012 squatting in England and Wales became a criminal offence. Until this point it squatting had always been a civil matter with landlord having to take the route of the courts to take possession back for their property.

This new law that came into effect on 1 September 2012 will speed up the removal of squatters from unoccupied residential properties with the 3 main changes to the law being;

  Squatting is now a criminal offence

  The crime carries a prison sentence, £5000 fine or both

  New legislation also protects landlords, local authorities or second home owners

So what questions would you like to see answered? Here is the RPS Ltd guide to Squatting and how the new law will benefit landlords who have their property stolen;

What is a squatter?

Someone who lives in an empty or abandoned building which they don’t own or rent without the owner’s permission.

Why do people squat?

The UK has a long history of squatting but there was an explosion in 1960s and 1970s as young people experimented with alternative lifestyles or took part in political protests.

These so-called “lifestyle squatters” are now thought to be far outnumbered by rough sleepers and other vulnerable groups in housing need. According to a recent study by homeless charity Crisis 39% of homeless people have squatted at some time.

Squatting groups say there has been a rise in the practice since the mid-2000s due to a lack of affordable housing, particularly in the South-East of England. Other types of squatter include people who have set up businesses, such as cafes, or community centres, or who want to preserve historic buildings.

How widespread is squatting?

The government estimates there are 20,000 squatters in the UK but squatting groups say the real total is far higher.

Squash, Squatters’ Action for Secure Homes, points out that the number of people on local authority housing lists has nearly doubled since 1997 to five million and there are an estimated 650,000 empty properties in the UK.

What rights do squatters currently have?

Since 1977, it has been illegal to threaten or use violence to enter a property where someone is present and opposes the entry.

The law was introduced to stop landlords from using violence to evict tenants. It is what is commonly meant when people talk about “squatter’s rights”.

What rights do property owners currently have?

Squatting is currently treated as a civil matter and homeowners – including councils and housing associations – have to go to a civil court to prove the squatters have trespassed before they can be evicted. This process can take by time consuming and costly for property owners.

However, people who have been made homeless by squatters can legally force entry to the property and demand the trespassers leave. If they refuse, the offence can be reported to the police.

Police can also take action if other offences, such as breaking doors or windows to gain entry or stealing electricity, have taken place.

So what is different under the new law?

The main difference is that it will speed up the removal of squatters from unoccupied residential properties, such as vacant council houses, second homes or properties for sale.

For the first time, police will be able to raid a building on suspicion it is being occupied by squatters and remove them.

According to Ministry of Justice guidance issued to law enforcement agencies, “The new offence will make it more difficult for trespassers to assert they have rights in respect of residential buildings because their occupation of the building will be a criminal act”.

It tells officers not be deterred if they see a “squatter’s rights” notice on the door as “the police have lawful authority under section 17 of PACE (the Police and Criminal Evidence Act) to enter the property to make an arrest”.

What about non-residential buildings?

Squatters occupying non-residential buildings will still be able to claim “squatter’s rights”.

What penalties do residential squatters face?

The offence of squatting in a residential building carries a maximum penalty of six months’ imprisonment, a fine of up to £5,000 or both.

What about squatters who are homeless?

Police are advised to work with local authorities, who have a legal duty to help the homeless find accommodation, before raiding a squat “to ensure they are ready to assist if required and give appropriate advice on housing options”.

Will tenants who fall behind with their rent be classed as squatters?

No. Police must prove that a person knowingly entered a building as a trespasser and “is living or intends to live” in it.

Someone who falls behind with their rent or remains in a property at the end of a lease or tenancy would not be committing an offence under the new law.

Source; BBC website 31/08/2012

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The RPS Top 10 Estate Management Tips

Behind a well run and organised estate is a proactive management with financial control and a professional team who communicate well with their client and tenants.

So here is a summary of how RPS Ltd management their clients estates;

1. Employ quality staff who have knowledge of property, investment and understand what both their clients and occupiers expectations are.

2 Its’ about the numbers; rent roll, service charges, recoverable and non-recoverable costs, insurance premiums, business rates, professional fees, void rates. It will always be about the numbers……

3 Pay your staff and suppliers on time, keep them informed and motivated. Say thanks for  a good job done. What they do reflects on what you do….they represent your service.

4 Plan and regularly review the estates plans for minimising voids, marketing, service charges, repairs and refurbishments. Be profitable and reduce costs.

5 Be clear in your understanding of your clients objectives and demonstrate how you are delivering them.

6 Have good finacial support and access to expertise on tax planning, IHT, SDLT and VAT. You need to be able to speak their language.

7 Can you deal with the bigger picture and projects? Think development opportunities, energy saving schemes and capital expenditure projects.

8 Prepare a structured 5 year plan on how the property will be managed. Review this annually with the client.

9 Keep records and keep accurate records. Being a good adminstator is essential.

10 Communication; Absolutely essential. Be aware of the key issues in your chosen field. What is important to your tenants, occupiers and clients now, where are the threats and where are the opportunities? And don’t be frightened to express an opinion (but make sure you can back it up!).

Let RPS manage your property investments and we’ll show you sound advice, support and management.

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How to get your lease break option wrong…again!

Tenants continue to find ways to make costly mistakes when exercising their lease break options and here’s another example;

A tenant intended to exercise a break option contained in its Thames Valley office lease but incorrectly served the notice on a previous landlord. The notice was then kindly forwarded to the current landlord’s managing agents who then emailed the tenant accepting the notice but also asking that a fresh notice be served on the correct landlord. This didn’t happen and the landlord subsequently argued that the break option notice was invalid and that the lease should continue.

So, who was wrong?…………….

Well, even though both sides agreed that the tenant had failed to serve a valid notice, the courts held that the managing agents acceptance of the defective notice subsequently bound the landlord and therefore validating the break option notice.

An expensive mistake for the managing agent!

At RPS we know that Lease Break Options are one of the most contentious issues in property litigation. We always carefully consider our proposed actions and responses to protect our clients position. Our role to is protect and advise you of the options available and to proceed accordingly.

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Thinking About Giving ‘Consent in Principle’? Think Again..

Although the pressure to get deals done for tenants wishing to take occupation of vacant property’s is high. With the pressure coming from both the tenant and the landlord who is keen to see the rental coming in, agents can find themselves in seriously hot water if consent is considered to have been granted without knowing!

In 2002 a contract for assignment for a West End lease required landlords consent. The Court of appeal concluded that one of the landlords solicitors letters consituted consent. The letter granted ‘Consent in Principle’ even though it was headed ‘subject to Licence’ and included several conditions including completion of a formal licence. It was also considered that an email headed ‘Consent in Principle’ could also be considered acceptance of the tenants proposal.

At RPS we always recommend that landlords do NOT provide any such ‘consent in Principle’and that tenants proceeding with their propoals for fit works or assignments without the full licence being completed do so at their risk.

Planning well ahead for licednce agreements and having in place good communications with landlords and their agents is thebest way to proceed.

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The Business Rates Anti-avoidance Test

Two cases have recently been settled where challenges were made to the status of the occupation and where billing authorities have argued they represented ‘aviodance’

In the recent cases of Makro & PSCT the judges decisons did not establish new law but clarified the proper interuptation of the current rules and whether the four tests of of rateable opccupation have been satisfied;

 (1)Actual occupation that is (2)beneficial to the occupier and (3)exclusive for its own particular purpose and that (4) the occupation must not be transient. It must be more than de minimis.

RPS consider it likely that more short term occupations will be challenged as more business rates relief is claimed and business rates income subsequently decreases. It is hoped that the Government will investigate this badly drafted tax that for landlords is simply a tax on an asset that generates no income.

If you are considering how to minimise your exposure to Business Rates or would like to take the opportunity of a short term occupancy then RPS can help you achieve this.

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Live in a Flood Risk Area?….Check Your Policy

Flooding of homes, land and commercial property has been an irregular occurrence in the UK for some years and its predictability has been…..unpredictable. As witnessed during these early months of summer 2012. The Environment Agency estimate 200,000 properties at ‘significant risk’.

Owners and landlords have understandably looked to their insurers as a form of protection from flood damage although from June 2013 this may not be so easy when the ‘Statement of Principles’ between the Government and Association of British insurers (ABI) is withdrawn.

This arrangement has been in place for property at ‘Significant risk’ providing insurance cover to homes and businesses as long as plans were in place to reduce the risk to ‘Below Significant levels’ within 5 years.

Therefore home owners could be in breach of their mortgage covenants if they are unable to place adequate cover, business could be forced to operate with cover that does adequately reflect risk and rental could subsequently fall.

RPS recommends that occupiers, owners and landlords review their current level of risk via the EA website, speak with their insurers and understand what the risk levels are. If purchasing or letting property then the flood risk and likely insurance premium levels should now be raised higher up the due diligence ranking list.

http://www.environment-agency.gov.uk/homeandleisure/floods/

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Let’s Change the Business Rates System to Improve Demand for Retail

This week the Government announced plans to reduce the 11% 0f vacant High Street retail units with one idea being to allow business 2 years in which to make their planning applications.

Although this is if great if you are looking to change of use from say, A1 to A4 but the vast majority of high street units operate within the A1 user class and cafes operating within A3. It also assumes that landlords will consent to the proposed use of the premises and its change of use. Some landlords are just not that receptive.

‘Critics say ‘the high level of rents and rates are a more serious hurdle than paperwork for new shopkeepers…..’

Clients of RPS agree. Rental, although a high cost of occupation is negotiable and if landlords want to rent premises then they must set realistic levels. By return tenants can negotiate incentives and / or lower rents that result of overall lower occupancy costs.

Business rates however are neither negotiable nor reflective of current commercial leasing deals. Rents are lowering but rates demands are not. This is the same shout coming from many retailers.

We believe the current system of 3 months rates relief at the end of a 3 month tenancy should be turned on its head. Why not offer the relief at the start of the tenancy? Giving the new occupier lower occupancy costs at the start of their business and higher demand for renting retail premises that benefits the landlords.

RPS 22/07/2012

http://www.bbc.co.uk/news/business-18920027

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government confirmation of new Heathrow rail link

Justine Greening confirmed today, 12/07/2012, of the Governments plan for a rail link that will service Heathrow airport directly from Slough railway station.

Although Heathrow has long been one of the busiest international airports in europe it has  suffered with access problems with restricted road access and just the one rail access to Paddington.

It is anticipated that by 2020 it will be possible to take a train directly from Cardiff into Heathrow. Benefits will also been seen with a reduced level of road traffic around the M4 / M25 junctions. Reduced emissions and faster access into and out of Heathrow.  linked with the Reading railway station improvements and Crossrail that will link the South East directly into Europe this will make the Thames Valley an even more attractive venue for business to base themselves.

This project may raise the resurect prospect of an additional runway at Heathrow.

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Are you a Competent Landlord?

It may sound like a silly question but in the eyes of the law the test of a competent landlord has huge consequences on a landlord’s ability to make and exercise options on a property and lease protected by the Landlord & Tenant Act 1954. Or its ability to accept or decline tenants requests for tenants lease renewals under the act.

The Act specifies a competent landlord as one with a freehold interest OR a superior leasehold interest with a minimum of 14 months left to run. If the immediate landlord does not qualify for the 14 month rule then the competent landlord will be the next superior landlord with a minimum 14 month qualification or the freeholder.

So ensure that you consider both the timing of any notices you intend to issue and who you are issuing them on if the identity of the competent landlord is likely to change during any lease renewal proceedings.

Being aware of key dates and planning well ahead will help to ensure that you don’t fall foul of the rules.

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SDLT ‘hit’ on residential property; A Summary of the Finance Bill 2012

This Spring, the Chancellor, George Osboune, focused on what has been seen a wealthy individuals avoiding their duty to pay tax through their use of schemes and corporate vehicles and then selling those shares free of SDLT.

Here are some of the key points with further legislation expected;

  • 7% SDLT on residential acquisition after 21/03/2012 where the chargeable consideration is above £2m.
  • 15% SDLT on residential acquisitions where the chargeable consideration is above £2m by a ‘non-natural person’ (Corporations, partnerships, collective investment groups).
  • Annual charges for companies holding residential property valued more than £2m (rate TBC).
  • Capital gains charges on disposal of residential property by non-resident companies.

The intention is to bring these rules into operation from April 2013 and details are still awaited. RPS recommends that you take expert advice to identify any exposure or opportunities that may be available. It is possible that there could be a high number of transactions on the months leading up to these changes and planning well in advance may help in avoiding having to accept lower values.

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