Landlords updates on legislation
1. Nationwide‘Additional’ Private Rented Property License, effective 01/10/2018
You are already aware of the compulsory conditions of the Selective License under the PRPL Scheme; you will also be aware of the effect on non-compliance, where the local authority is in a position to serve fines for breach, resultingin potential a fine of £20,000.00 for each property.
To ensure compliance for each and every relevant Property, there has been a substantial increase in continuous administration required to update the relevant authorities of your compliance.
You should be aware of the importance of having a valid License under the PRPL Scheme, and that the failure to do so, where necessary, will result in voided s.21/ 6a Notices (further details under point3).
There has been additional onus on all managing agents since the introduction of the PRPL Scheme where we, as the rent receiver, are now also obligated to meet the requirements of the Scheme conditions and we have had to increase our insurance premium to cover any potential claim against us for a Landlord’s failure to comply with the conditions.
2. Tenant’s Fee Ban, effective 01 June 2019
As you may be aware, there was a proposal as part of the Queen’s Speech to ban fees charged to Tenants, this is now effective from 01 June 2019.
Part of the overall costs for managing your Property is derived from fees charged to the Tenant, such as Credit checks / Referencing/ Admin charges; as these charges will be banned, such contributions to these costs will now need to be derived from Landlords.
If you are found to be charging non-permitted fees, a financial penalty with a fine of £5,000 for an initial breach of the ban, with a criminal offence where a person has been fined or convicted of the same offence within the last 5 years. Financial penalties of up to £30,000 can be issued as an alternative to prosecution.
3. Deregulation Act 2015: protection from retaliatory action and s.21 Notice conditions, effective 01/10/2015
You may already be aware of the changes that were introduced as part of this Act; essentially the Act will protect a Tenant from eviction if a Tenant can prove that, instead of undertaking works to effect repairs, the Landlord has served a notice seeking Possession.
Furthermore, the Act has now introduced a time limitation in responding to Tenant complaints, being 14 days, informing the Tenant of the action that will be taken and a reasonable time frame to address the complaint.
Further to the above, the following conditions were introduced:
o A valid Energy Performance Certificate (EPC), which contains information about how much it will costs to heat the property.
o A valid annual Gas Safety Certificate, which is proof that the gas appliance(s)have been checked by a Gas Safe registered engineer.
o A copy of the Department for Communities and Local Government’s “How to rent: the checklist for renting in England” guide, which gives tenants key details about their rights, and what they should expect from private renting.
o Provide mandatory information required by other legislation [e.g. PRPL], including relevant tenancy deposit protection information.
As these conditions that have been drafted into a standard form, each and every Tenancy is now required to comply with the above conditions to ensure validity of the Notice of possession.
4. Limiting the EPC range that is permitted in a rental property 01/04/2018
This means that, 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. From the 1st April 2020, landlords must not continue letting a relevant domestic property which is already let if that property has an EPC rating of band F or G (as shown on a valid Energy Performance Certificate for the property). As your agent we have had to administer the compliance of this change. Where a local authority is satisfied that a property has been let in breach of the Regulations it may serve a notice on the landlord imposing financial penalties up to £5000.00.
5. Right to rent Regulations 01/02/2016
Right to Rent, which also applies to people who are subletting their property or taking in lodgers, was introduced in the Immigration Act 2014. Landlords who fail to carry out checks risk a potential penalty of up to £3,000 per tenant. As a landlord, you have a responsibility to restrict illegal immigrants accessing the private rented sector.
Landlords should not let property for use by an adult who cannot satisfy a right to rent check. Some documents will allow for an unlimited right to rent, while others will allow for a time-limited right to rent.
Landlords have the option to appoint an agent to act on their behalf. Where an agent has accepted responsibility for compliance with the scheme, the agent will be the liable party in place of the landlord.
6. AML Due diligent checks for All Clients 26/06/2017
Involvement in money laundering offences may result in unlimited fines and/or a prison terms of up to 14 years. Estate agency businesses must comply with the Regulations. They must not carry out estate agency work if they are not registered with HMRC.
HMRC can take various measures from warning letters to criminal prosecution and financial penalties, if your business does not comply with the regulations.
7. GDPR Regulations 25/05/2018
As a processor of data, the GDPR places specific legal obligations on us; for example, we are required to maintain records of personal data and processing activities. We will have legal liability if we are responsible for a breach of administrative fines of up to 4% of annual global turnover or €20 million – whichever is greater. The ICO can also impose a temporary or permanent ban on data processing which in turn could stop us trading.
8. ESI becomes a Legal requirement
9. Smoke and Carbon Detectors
10. Changes to the section 21 notice it is now section 6a
First-Time Landlord Lettings Checklist:
Everything a First-Time Landlord Needs to Think About Before Letting Their Property
If you don’t know what to do with a property which has suddenly come into your possession, letting it via an agency can be a good extra source of income. However, becoming a landlord unexpectedly can be a daunting prospect.
There’s a lot to consider when becoming a first-time landlord - if you neglect to complete certain tasks, you could fall foul of legislation and face fines or, worse, prosecution. It’s a good idea then, to review our comprehensive checklist to ensure you haven’t missed anything out.
Before Letting the Property
- Clean the property
- Carry out improvements and decorate if needed
- Ensure the Energy Performance Certificate is valid and get a new one done if not
- Ensure the Gas Safety Certificate is valid and get a new one done if not
- Have an Electric Installation Condition Report (EICR) compiled
- Ensure working smoke detectors are installed on each floor
- Ensure a working carbon monoxide detector is installed in any room using sliid fuel
- Have risk assessments for fire, legionella and asbestos completed
- Ensure that building and/or landlord insurance is valid and get new insurance if not
- Set up a self-assessment tax account with HMRC as a business owner
- Compile inventory of contents
- Take photographs to advertise the property
- Decide whether smokers and/or pets are acceptable
- Prepare an Assured Shorthlid Tenancy agreement and other documents to be signed
When a Tenant Has Been Found
Ensure the tenant provides the following:
- The full specified deposit amount
- Evidence that they have the legal right to rent in the UK
- Create and jointly sign Assured Shorthlid Tenancy (AST)
- Jointly sign guarantor’s form with guarantor if needed
- Get written confirmation from tenant they are happy to receive letting documents by email
- Jointly sign inventory
- Get tenant’s contact details
- Take deposit from tenant
- Take first month’s rent from tenant
- Tenant to set up direct debit with you for rent
- Take meter readings
- Notify local council Council Tax Department of new tenants
- Notify utilities companies
- Protect deposit within 30 days of receiving it
- Signed hard copy of the Assured Shorthlid Tenancy agreement
- Signed hard copy of the Guarantors Agreement (if needed)
- Signed hard copy of the contents inventory
- Your contact details
- Your bank details for direct debit
- Signed hard copy of current Energy Performance Certificate
- Signed hard copy of current Gas Safety Certificate
- Up-to-date copy of the “How to Rent – The Checklist for Renting in England” guide
- Copy of current Electrical Safety Certificate if carried out
- Copy of instructions for electrical and gas appliances
- Certificate of Deposit Protection
- Signed hard copy of Deposit Protection Prescribed Information and Clauses
- Electrical Installation Certificate for any new or modified electrics
- Minor Electrical Installation Work Certificate for any new or modified electrics that do not include a new electrical circuit
- Deposit Protection Scheme information leaflet
- Guarantors Agreement (if needed)
- Copied evidence to prove tenant has a right to rent in the UK
- Keys for all doors
- Window keys
- Keys to outside structures such as garages or garden sheds
- Meter box key if applicable
- Re-serve the most up-to-date copy of “How to Rent – The Checklist for Renting in England” between renewed tenancies if applicable
- Re-protect deposit if you create a new tenancy agreement
- Log all communications with tenant and create and maintain a letter/email trail
- Respond to written complaints in writing within 14 days
- Address anything that falls under your responsibilities
- Inform tenants at least 48 hours ahead of time
- Note the condition of the property, jobs that need doing and any tenant concerns
- Feed back your property inspection findings along with flilow-up actions if required
- Serve the correct form of notice depending on the circumstances of the tenancy coming to an end
- Ensure current tenants give access to prospective new tenants to view the property
- Clilect keys and any other items given to tenant
- Take meter readings
- Check inventory and list deductions
- Tenant to sign list of deductions from deposits and amounts
- Return whlie/part of deposit
When all parties have confirmed they would like to move forward:
Provide the tenant with the following:
During the Tenancy
Periodic property inspections
At the End of the Tenancy
The Security Deposit
This is held as a security deposit against damages and any other breach of the tenancy agreement. Victor Michael Limited is a member of the Tenancy Deposit Scheme, which is administered by:
The Dispute Service Ltd,
PO BOX 541
T: 0845 226 7837
F: 01494 431 123
• If we are / the Agent is instructed by you / the Legal Owner to hold the Deposit, we / the Agent shall do so under the terms of the Tenancy Deposit Scheme.
• If you, the Legal Owner, decide to hold the Deposit yourself, we will transfer it to you within 5 days of receiving it. You / the Legal Owner must then register it with another Tenancy Deposit Protection Scheme within a further 9 days if the Tenancy is an Assured Shorthold Tenancy.
• If you fail to do so the Tenant can take legal action against you / the Legal Owner in the County Court. The Court will make an order stating that you/ the Legal Owner must pay the Deposit back to the Tenant or lodge it with the custodial scheme which is known as the Deposit Protection Scheme.
• In addition a further order will be made requiring you/ the Legal Owner to pay compensation to the Tenant of an amount equal to three times the Deposit. You the Legal Owner will be unable to serve a Section 21 Notice on your Tenant until compliance with the above conditions and the Court will not grant you / the Legal Owner a possession order. The Agent has no liability for any loss suffered if you / the Legal Owner fail to comply.
• If you / the Legal Owner decide to hold the Deposit and the Tenancy is an Assured Shorthold Tenancy you / the Legal Owner must specify to us / the Agent prior to the start of the Tenancy under which other Tenancy Deposit Protection Scheme the Deposit will be covered.
• If the Deposit is covered by Tenancy Deposit Solutions, you / the Legal Owner must provide proof of membership, together with a copy of the insurance policy before the Deposit can be released. If the Deposit is to be sent to the custodial scheme known as the Deposit Protection Scheme, we / the Agent will forward the Deposit to the DPS and register the details of the Tenancy.
• The Agent holds tenancy deposits as a Stakeholder.
• At the end of the tenancy covered by the Tenancy Deposit Scheme
• If there is no dispute we/the Agent will keep any amounts agreed as deductions where expenditure has been incurred on behalf of the Legal Owner, or repay the whole or the balance of the Deposit according to the conditions of the Tenancy Agreement with the Legal Owner and the Tenant. Payment of the Deposit will be made within 10 working days of written consent from both parties.
• If, after 10 working days following notification of adispute to the Agent / Member and reasonable attempts have been made in that time to resolve any differences of opinion, there remains an unresolved dispute between the Legal Owner and the Tenant over the allocation of the Deposit it will be submitted to the ICE for adjudication. All parties agree to co-operate with any adjudication.
• When the amount in dispute is over £5,000 the Legal Owner and the Tenant will agree by signing the Tenancy Agreement to submit the dispute to formal arbitration through the engagement of an arbitrator appointed by the ICE although, with the written consent of both parties, the ICE may athis discretion accept the dispute for adjudication.
• The appointment of an arbitrator will incur an administration fee, to be fixed by the Board of The Dispute Service Ltd from time to time, shared equally between the Legal Owner and the Tenant. The liability for any subsequent costs will be dependent upon the award made by the arbitrator.
• The statutory rights of neither, you / the Legal Owner or the Tenant(s) to take legal action against the other party remain unaffected.
• It is not compulsory for the parties to refer the dispute to the ICE for adjudication. The parties may, if either party chooses to do so, seek the decision of the Court. However, this process may take longer and may incur further costs.
• Judges may, because it is a condition of the Tenancy Agreement signed by both parties, refer the dispute back to the ICE for adjudication. If the parties do agree that the dispute should be resolved by the ICE, they must accept the decision of the ICE as final and binding.
• If there is a dispute, I / we must remit to The Dispute Service Ltd the full deposit, less any amounts already agreed to by the parties and paid over to them. This must be done within 10 working days of being told that a dispute has been registered whether or not you or I / we want to contest it.
• Failure to do so will not delay the adjudication but The Dispute Service Ltd will take appropriate action to recover the deposit and discipline me / us. The Agent must co-operate with the ICE in the adjudication of the dispute and follow any recommendations concerning the method of the resolution of the dispute.
Refund of Deposits
The Deposit must be refunded directly to the tenant unless there is a dispute; see deposit section as detailed above.