Are you keeping up to date with the changes to the Private Rented Sector?
There have been so may new pieces of legislation to affect the private rental sector it’s enough to make your head spin!
Lets start with a recap of the most recent changes:
Tenancy Deposit Legislation - In April 2007 it became law (Housing Act 2004) that all deposits collected by Landlords or Agents, need to be registered in either a custodial scheme or an insurance based scheme, this was even mandatory when renewing an existing tenancy. These schemes were put in place to protect all deposits on Assured Shorthold Tenancies in England & Wales and to stop rouge landlords from refusing the return of the deposit. If a Landlord fails to register a deposit with a relevant scheme they may be ordered to pay a minimum of one times the value of the deposit but a maximum of three times the deposit. Further penalties may include being unable to serve a section21 notice, until the deposit breach has been rectified.
Right to Rent – Under s.22 of the Immigration Act of 2014, as a landlord, you have a responsibility to restrict illegal immigrants accessing the private rented sector. Landlords or letting agents have a responsibility for checking the tenants’ have a right to rent, by checking the tenants’ immigration status before granting a new tenancy. If the status has an expiry date this check needs be done prior to expiry before granting an extension to the tenancy. The maximum penalty a landlord can face for non-compliance is up to £3,000 per tenant and/or a custodial sentence. This was yesterday (1st March 2019) ruled to breach human rights, as it stands landlords and agents still need to check prospective tenant right to rent. The Residential Landlords Association and the Joint Council for the Welfare of Immigrants have written to the Home Secretary seeking an urgent meeting. Both organisations believe the government should scrap the scheme and go back to the drawing board.
De-Regulation Act 2015 - A number of changes were introduced as a result of this Act, they include prescribed information in respect of deposit registration, time limits in relation to the service of a section21 notices and the introduction of ‘retaliatory eviction’ (when a landlord tries to evict a tenant after reports of repairs or complain about conditions of the property) A Landlord maybe unable to serve a section21 requesting possession of your property if you have failed to comply with any of the many prescribed legal requirements under this act.
Smoke Alarm & Carbon Monoxide Alarm Regulations – All rented properties are required to have a smoke alarm fitted to each floor of the dwelling. Where there is a solid fuel appliance, the requirement is to include a carbon monoxide alarm. Landlords have an obligation to evidence that these alarms are tested and working upon the day the tenants move-in. Failure to do so is in breach of regulations and can prevent you from serving a section21 notice and you can forfeit your right to regain possession.
How to Rent Guide – This guide was introduced in October 2015; there is a statutory requirement that all new tenants must be issued with a copy prior to the commencement of the tenancy. Failure to comply could render a landlord unable to request possession of their property under section21 notice.
New EPC Regulations - The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 establish a minimum level of energy efficiency for privately rented property in England and Wales. Therefore, from April 2018, landlords of privately rented domestic and non-domestic property in England or Wales must ensure that their properties reach at least an Energy Performance Certificate (EPC) rating of E before granting a new tenancy to new or existing tenants.
Legislation due in this year:
20th March 2019 - Homes (Fitness For Human Habitation) Act 2018
This legislation means a tenant can sue a landlord for any defect that constitutes a category 1 or category 2 hazard in line with the HHSRS (housing health and safety rating system). The FFHH is based on each individual property circumstance with the back up of the HHSRS system as a national grading system. The FFHH and HHSRS are not the same, they do have their similarities. To read more upon this take a read our other blog articles we have written
On 1st June 2019 the Tenant Fee Ban comes into force. This legislation is pretty much what it says on the tin, no fee’s can be charged to tenants. This legislation works on the basis of the fee isn’t listed as an allowed fee in the legislation it isn’t allowed. The allowable charges are as follows:
Holding deposit equivalent o one weeks rent - this can only be held for 15 calendar days after this you have to get signed agreement from the prospective tenants to hold the deposit longer and allocate this amount towards the first months rent.Deposit - capped at 5 weeks worth of rent, no additional pet deposit is allowed on top of this. To worth this out follow this formula (£800 has been used for this example)
£800 x12 = £9600 (yearly rent)
£9600/52 =£184.615385 (weekly rent)
£184.615385 x5 = £923.07 Deposit allowed to charge
- Rent arrears - once tenants fall 14 days into arrears you can charge 3% above base rate for each day 14 days onwards until the rent is paid. for example if tenants pay 11 days late no charge is allowed but 14 days you can charge 3% above base rate.
- Keys/security device - if tenants loose keys or a security device the cost of that key/device can be passed to the tenant to pay. The legislation does not allow for an agent or landlords time to go and give a spare keys to a tenant out of business hours if they should lock themselves out.
- Surrounded of tenancy - permitted payment and can charge the outstanding rent of the tenancyChange of sharer - A £50 payment is allowed, we are waiting for clarity if an agents time usable to be charged to the tenants for the cost of the time o do the paperwork involved in this process.
- Any novation of contract - for example if tenant ask if they can get a pet and the answer is a yes a £50 fee is able to be charged, if the answer is a NO, no fee can be charged.
Please make sure the above default fee’s allowed in the legislation are within the Tenancy Agreement signed by all parties otherwise they are non enforceable. A contractors call out charge for issues caused by tenants can’t be passed back to a tenant to pay, the fee has to deducted from the deposit at the end of the tenancy. For example, tenants are to lock themselves out of a property and a locksmith is needed the fee for the locksmith and work can’t be passed to the tenant to pay, the landlord is to pay the contractor and deduct the cost from the tenants deposit at the end of the tenancy. If a landlord doesn’t wish to wait this long for the refund of the cost the tenants can b taken to court for damages where a judge can award the refund but please note this will cause a very fractious and sour relation between the landlord and tenant.
The penalties involved in getting this wrong are:
Returned prohibited payment
Can’t issue a section 21 notice until the fee is returned
£5000 first offence
£30,000 second offence in a 5 year period or the beginning of criminal proceedings
I will be doing a full article on how the tenant fee ban will affect tenancies moving forward, keep your eye’s peeled for this.
Legislation that is yet to be given a date:
Mandatory 5 year electrical checks - This will be introduced in a phased manner and it's been discussed this will happen over a 2 year transitioning period. In the first year all new tenancies and renewal tenancies will be affected and the second year will be when those existing tenancies need to be bought into line with the new legislation. To find out more on this read our blog post https://www.principal-properties.co.uk/waterloovillepropertyblog/electrical-tests
Housing Complaints Resolution Service - to be introduced for the entire residential property market that will require all buy-to-let landlords to become a member of a redress scheme enabling tenants to take unresolved complaints to a single body. Any Landlords who refuse, could face a £5000 fine. To read more on this check out our article https://www.principal-properties.co.uk/waterloovillepropertyblog/landlord-redress-scheme
I hope the above hasn’t completely scared you and has been of some help and given some clarity on the newer pieces of legislation.
If you do have any property related questions please don’t hesitate to contact me and I will be happy to help.