Don’t fall foul of new residential tenancy rules

Don’t fall foul of new residential tenancy rules is the message coming loud and clear from the Central Association of Agricultural Valuers’ spokesperson, Kate Russell.

With rental income from cottages and converted farm buildings becoming an increasingly important financial lifeline for many farmers, they need to take heed of these latest developments.

In the main, the new rules are being put in place to protect tenants from unfair treatment but landlords who may have behaved perfectly reasonably can be caught out by the new legislation.

Probably the most important new rule in 2015 was the introduction of prescribed legal requirements for Section 21 notices, which have to be served to terminate an Assured Shorthold Tenancy.

For tenancies beginning after October 1, 2015, landlords may not serve a Section 21 notice to terminate a tenancy unless the tenant has been provided with:

•    A free and valid Energy Performance Certificate (EPC)
•    A copy of the gas safety certificate for the property where appropriate and
•    A copy of the government’s guidance note: How to Rent: A Checklist for Renting in England

Other new rules include Right to Rent checks.  Since February 1, 2016, landlords must check that their tenants (and any adult living with them) have the legal right to rent in the UK. Penalties for failure to conduct such checks can result in fines of up to £3,000.

In order to comply, landlords or their agent must check original documents such as a passport or birth certificate in the presence of the document holder and then keep copies of them for a year after the tenancy ends.

In addition, all landlords must ensure there is a smoke alarm on each storey and a carbon monoxide alarm in every room with a solid fuel burning appliance, including wood burning stoves, open fires and Agas.  Failure to comply with these rules, which cover both residential and agricultural tenancies could ultimately lead to a fine of £5,000.

Then there are restrictions on landlords serving termination notices in response to tenants who may have complained about the condition of the property and the Landlord has failed to respond adequately.

And from April 1, 2016, a landlord cannot unreasonably refuse a tenant’s demand for energy efficiency improvements if they can be carried out without cost to the landlord.  While from April 1, 2018, a domestic private rented property cannot be let on a new tenancy if it has an EPC of F or G. This will also apply to existing tenancies from April 1, 2020.

However, where a property does not comply, landlords who have done everything they can to improve its energy efficiency (at no cost to themselves) can apply for a five-year exemption every five years.

So the message is that regulations concerning renting out properties are becoming more and more stringent and landlords either need to get clued up on the new legislation themselves or employ professional help to ensure their rental properties do not become an unexpected financial burden.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Good landlords risk falling foul of catch-all law

Legislation now widely known as the law that stopped retaliatory evictions was intended to make bad landlords conform.

 

But it risks becoming something of a catch-all for otherwise good landlords who inadvertently may have a gap in the paper trail recording their compliance with legislation covering items of maintenance, repairs, and safety checks.

 

Tenants are likely to have been following the press coverage since the law came into effect on October 1st last year so may be well informed about their tenancy rights – and some more unscrupulous individuals could take advantage of the law to avoid vacating a property when served with a Section 21 notice.

 

Most important is that landlords ensure that at no time is a tenant given the opportunity to dispute a Section 21 notice. Undesirable tenants tend to become good amateur lawyers, or know someone who is or where to get advice on their rights, as soon as the possession notice arrives. No matter how frustrating the law may be, it’s therefore essential that you can prove the existence of gas and electrical safety certificates, the installation of smoke or CO2 alarms where required, and that general maintenance has been carried out, with defects corrected, as soon as practicable after work is requested by the tenant.

 

Once a tenant has made a complaint the landlord is prevented from retaliatory eviction under section 33 of the Deregulation Act 2015. This makes it imperative for landlords to stay on top of their legal obligations for maintenance and that they attend to repairs before the tenant can head for the local authority’s office and seek the serving of an Improvement Notice.

 

Whenever you receive a complaint from a tenant regarding the condition of the property you must within 14 days give an “adequate” response in writing. If you don’t comply, a Section 21 notice may not be valid should it be used as evidence in court. The legislation refers to the complaint being in writing but possibly all complaints, no matter how minor, should be clearly logged and receive a response.

 

The section also provides that if the tenant is unhappy with your response he can complain to the local authority who may then serve a notice requiring works to be undertaken. If such notice is served, no valid Section 21 notice may be served for six months from the date of that notice.

 

Good processes regarding complaints handling, and a clear understanding by tenants as to who is responsible for accepting complaints, is now more important than ever in residential lettings property management.

 

As a reminder, the law also stipulates that at the start of the tenancy, the landlord or letting agent must give the tenant details of where and how the deposit is held and copies of both the EPC and, where applicable, the gas safety certificate and the Government’s eight-page booklet “How to Rent: the checklist for renting in England”. This is only available electronically and has to be printed and handed over each time.

 

Details of what must be served are contained in the The Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 which can be found here.

 

Good practice will no doubt dictate that at the time of serving the correct Section 21 notice the rest of the documentation should be re-served so that there can be no question of the tenant having received it.

Lisa Simon, 

Partner Head of Residential Lettings

T: 020 7518 3234 

E: lisa.simon@carterjonas.co.uk

PRS - A political hot potato

The private rental sector (PRS) is in danger of becoming as hot a political potato as the EU.

Labour currently has no intention of a referendum on EU membership while Ukip has driven the Tories to despair with its relentless campaign to abandon the EU - and a referendum policy as a populist idea.

But what could be more populist than introducing controls for the PRS, driven by the urge to do highly visible things such as ending letting agents’ fees, which Labour has failed to push through before the General Election in May 2015 but which it promises will be on its agenda, along with three year tenancy terms and fixed rents?

Rent caps in places of high property values are one of the biggest fears that could drive the PRS into terminal decline. Yields become ever smaller as rents are constrained during periods of strong capital growth. Many owners would find it more beneficial to cash in and invest the money somewhere more sensible. Even a bank deposit account with three per cent interest could be better than renting at two per cent yield with all the accompanying risks of repairs, dilapidations, and the costs of regaining possession when yesterday’s dream tenant becomes tomorrow’s nightmare as their economic circumstances change.

Figures from ARLA show that 17 per cent of landlords are expected to sell one or all of their properties in the next 12 months, the highest proportion since 2008. The same source also revealed 59 per cent of lettings agents are reporting more would-be tenants than properties available. Just as the PRS needs to retain landlords, many are plotting their escape route to reap the benefits of the property price surge.

When you talk to lawyers and owners of high end properties in London’s prime quarters it becomes apparent that what interests buyers more is long term capital growth than short term low yield income. Buy to let is out, buy to reap substantial profit could well be coming in if it’s not here already.

Rent caps across the country are unrealistic because there are so many regional variations in property prices and therefore what seems like a fair return on investment. Are we to return to the days of the regional Rent Tribunals as the first avenue of escape for tenants served with notice to quit? The Tribunals, chaired by lawyers, could fix rents as well as deflect a notice to quit and were readily accessible to tenants with some savvy and no lawyer.

With commentators predicting that in very short time there will be more private sector renters than owners, restrictions on landlords and lettings agents could be as good for Ed Miliband as the right to buy council houses turned out for Margaret Thatcher.

Longer tenancies are also a real issue. A tenant who seems heaven-sent on day one could be the tenant from hell by month seven but then it would be too late to serve notice so easily. Employers, who see their staff and assess their performance every day, get four times the trial period it’s proposed to give landlords even though contact with the tenant is frequently non-existent and, at best, sporadic. Three year tenancies by default with a six month trial period will be seen as too risky to be realistic by many landlords. What is designed to protect tenants could actually reduce their chances of finding a home in the first place if availability shrinks. Rents would then rise because the cap is intended to be assessed through market conditions.

Lettings agents’ fees are another conundrum. It’s wrong, it’s said, for agents to charge for referencing or administration such as the inventory but under current plans landlords, and their agents by default, will soon be responsible for checking the immigration status of tenants and their right to live and work in the UK. This would need to apply to every tenant, with a birth certificate and some form of photographic identification to be safe even for those claiming UK birth and lifelong residence. Let to the wrong person and there’s a £3,000 penalty. If that person is working without the right to do so the penalties are stiffer still. When a tenant with the right to live in the UK arrives on the doorstep and it then transpires they don’t have the right to the employment they are using to pay the rent what does the landlord do - allow the tenancy because there’s no right to deny it and then report the tenant for paying the rent?

Someone has to fund the lettings agent’s time in processing all this as Civil Service substitutes because few landlords will want to undertake the task. If there are no fees for tenants, only for landlords, then rents will have to rise to cover the cost. But when the rent is capped, how can the cost of fees be applied?

There is too much fag packet planning and not enough real thought going into all this regardless of which political party happens to be having another bright idea today. Everyone is agreed on the importance of the PRS, everyone agrees it could be fairer all round, but who is going to sit down and work it all out as a policy and not a series of knee-jerk responses to the latest comment article?


Lisa Simon, 
Partner
Head of Residential Lettings
T: 020 7518 3234 
E: lisa.simon@carterjonas.co.uk