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Navigating the Red Tape of the Private Rental Sector

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Wed 06 Feb 2019

Navigating the Red Tape of the Private Rental Sector

The lettings industry has always been a minefield of legislation, but over the past decade it has become more and more confusing and the penalties have become much heavier.  The private rental sector has been hit recently with one piece of legislation after another, and now there are over 150 laws which must be adhered to in order not to face prosecution, fines or even jail sentences.  

Every day we speak to landlords, many of whom have been in the rental market for decades, but who are now wondering if it is the time to sell up.  On top of the confusion over Brexit, the additional stamp duty for 2nd homes and the cuts in tax benefits for mortgage interest, there are at least 2 major pieces of legislation coming into play in the first half of the year.  The solution is to instruct a REGULATED letting agent, such as ourselves at Wills & Smerdon, who are Members of Propertymark ARLA (The Association of Residential Letting Agents).  Whilst we cannot affect what happens with Brexit and taxes, we do know that owning a rental property is still a very viable commodity and one which will continue to offer respectable rental yields and capital growth, much more favourable than other saving options.  

We urge you not to take this legislation lightly.  Trading standards officers in all locations have been empowered to regulate this industry and are on the prowl for landlords and agents who are not adhering to their legal liabilities.  Make sure you either a) study and keep up to date so that you can truly ensure your tenancies are fully compliant or b) contact us today.  

Some of the major pieces which apply to almost every tenancy agreement are listed here:
  • Housing Act 1988, as amended 1996 & 2004
  • Landlord and Tenant Act 1985
  • Unfair Contract Terms in Consumer Contracts Regulations 1999
  • Data Protection Act 1998
  • Gas Appliance (Safety) Regulations 1995
  • Gas Safety (Installation and Use) Regulations 1988
  • Furniture and furnishings (Fire) (Safety) Regulations 1988
  • Landlord and Tenant Act 1988
  • The Electrical Safety Quality and Continuity Regulations 2002
  • Furniture and Furnishings (Fire) (Safety) (Amendment) Regulations 1993
  • Smoke and Carbon Monoxide Alarm Regulations 2015
  • Deregulation Act 2015
  • Consumer Rights Act 2015
  • Immigration Act 2014       
  • Consumer Protection from Unfair Trading Regulations 2008
  • Housing (Tenancy Deposits) (Prescribed Information) Order 2007
  • Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007
  • Licensing and Management of Houses in Multiple Occupation and other houses (Miscellaneous Provisions) (England) Regulations 2006
  • Housing Health and Safety Rating System Regulations 2005
  • Private Water Supply Regulations 2001      
  • Rent Act (Maximum Fair Rent) Order 1999
  • Law of Property (Miscellaneous Provisions) Act 1994
  • Notices to Quit (Prescribed Information) Regulations 1980
  • Rent Act 1977
  • Protection from Eviction Act 1977
  • Unfair Contract Terms Act 1977
  • Criminal Law Act 1977
  • Landlord and Tenant Act 1927
  • Law of Property Act 1925
     
It is amazing that any landlord takes on the letting and management of their own rental property without studying the law because genuinely, a regulated letting agent will understand these regulations and will incorporate them into every tenancy or rental situation they handle.  However, things are getting even more complicated, and the 2 new pieces of legislation coming in during the coming months are:

Fitness for Human Habitation Act & the Housing Health and Safety Rating System (HHSRS)

The fitness for human habitation act comes into force on 20 March 2019, to replace by the complicated provisions of Part 1 Housing Act 2004, which provided a system for assessing housing conditions and enforcing housing standards called the Housing Health and Safety Rating System (or HHSRS for short).

The full system used by local authority uses numbers to represent the likelihood of an occurrence as the result of a hazard and to represent the possible spread of harm. In this way, a score is produced to reflect the inspecting officer’s judgement as to the severity of a hazard, but these are more conveniently put into bands covering ranges of scores. The bands (and the scores) allow the severity of very different hazards to be compared, for instance, damp and mould, with carbon monoxide. The bands range from A (scores of 5,000 or more), which is the most dangerous and life-threatening, down to J (scores of nine or less), the least.

Local authorities are under a duty to take action in the case of category 1 hazards. If necessary (or if the owner/manager requests) the local authority may carry out any necessary remedial work themselves and reclaim the costs. They also have powers to take action in the case of all category 2 hazards (i.e. those which carry lower risks). Local authorities also have the power to make a reasonable charge as a means of recovering certain expenses incurred in taking enforcement action. There is no statutory limit but the charge needs to be reasonable.

There are 29 hazards which need to be considered, and these have been divided into four groupings:

Physiological hazards

  • Damp and mould growth
  • Excess cold
  • Excess heat
  • Asbestos and manufactured mineral fibre
  • Biocides
  • Carbon monoxide and fuel combustion products
  • Lead
  • Radiation
  • Uncombusted fuel gas
  • Volatile organic compounds

Psychological hazards

  • Crowding and space
  • Entry by intruders
  • Lighting
  • Noise

Infectious hazards

  • Domestic hygiene, pests and refuse
  • Food safety
  • Personal hygiene, sanitation and drainage
  • Water supply for domestic purpose

Hazards which cause accidents

  • Falls associated with baths
  • Falling on level surfaces
  • Falling associated with stairs and steps
  • Falling between levels
  • Electrical hazards
  • Fire
  • Flames and hot surfaces
  • Collision and entrapment
  • Explosions
  • Position and operability of amenities
  • Structural collapse and failing elements

The Tenant Fees Bill will be made law on 1st June 2019 and it will abolish most upfront fees for tenants in England and cap security deposits at the equivalent of five weeks’ rent where the annual rent is less than £50,000.  The cap is still six weeks’ rent where the annual rent exceeds £50,000. 

Fees which are being banned: 

  1. A tenant (or anyone acting on their behalf or guaranteeing their rent) CANNOT be asked to make certain payments in connection with a tenancy.
  2. Tenants cannot be asked to enter into any contract with a third party or make a loan in connection with a tenancy.
  3. The only payments a tenant can be charged in connection with a tenancy are:

RENT

This is usually paid monthly in advance of the tenancy, sometimes a tenant may ask to pay for a longer period, this is still permissible.

REFUNDABLE SECURITY DEPOSIT

Reserved for any damages or defaults on the part of the tenant & capped at no more than five weeks’ rent.

HOLDING DEPOSIT

A refundable payment provided in goodwill to reserve a property & capped at no more than one weeks’ rent.

CONTRACTUAL AMENDMENT FEES

Payments to change details of the tenancy when requested by the tenant & capped at £50, or reasonable costs incurred if higher.

EARLY TERMINATION FEES

Payments associated with the early termination of the tenancy, only when requested by the tenant.

UTILITY PAYMENTS

Payments in respect of utilities, communication services and council tax.

DEFAULT FEES

Payments arising from a default by the tenant, such as replacing a lost key.