There are around 170 different laws governing the Private Rented Sector (PRS), many of which comprise several separate rules, and these can be amended, and new ones added at any time. In just the five years since April 2018, there have been 23 legal changes in England alone that have affected landlords and agents, including:
- The minimum rating on the Energy Performance Certificate (EPC) for rented properties changing to ‘E’
- Banning orders for landlords who breach certain regulations
- Changes to mandatory licencing requirements for Houses in Multiple Occupation (HMOs)
- New fitness for human habitation requirements
- Passing of the Tenant Fees Act
- Mandatory 5-yearly electrical checks
- An update to the smoke and carbon monoxide regulations
- New building and fire safety rules
And, of course, the Renters (Reform) Bill is currently making its way through Parliament, proposing numerous further changes - including the scrapping of Section 21 notices and the introduction of mandatory landlord registration - so there’s a huge amount to know and stay up to date with. Therefore it's understandable to be asking for landlord legal advice.
For landlords in England, the rules are further complicated by the fact that each local authority has the power to set its own licensing laws for both HMOs (additional licensing) and any other type of rented property (selective licensing), and if landlords aren’t proactive at finding out what the local policies are, it’s very easy to unknowingly fall foul of their legal obligations. Even if you’re not deliberately breaking the law, the consequences can be severe.
Failing to comply with legislation can result in landlords being fined up to £30,000 by their local council; issued with a rent repayment order for up to 12 months’ rent; prosecuted in court and even banned from letting property altogether. For more on some of the recent fines that have been handed out to landlords, see our article from last month.
And it’s not just tenant and property-specific laws that landlords get wrong. Many still aren’t clear on what tax they should be paying on their rental income, meaning they may be under-reporting their profits or they could be going the other way and paying more tax than they need to!
Here are five of the most common mistakes we see landlords making in relation to lettings legals:
- Not protecting their tenant’s deposit in a government-approved scheme and giving the tenant the relevant ‘prescribed information’. This means they can’t issue a valid section 21 notice if they want to regain possession of their property, and the tenant can sue them for up to three times the deposit amount.
- Failing to give the tenant a copy of the current Gas Safety certificate. This must be provided to the tenant before the tenancy begins and within 28 days of each annual check during the tenancy, otherwise a section 21 notice is likely to be declared invalid by a court.
- Believing they have a right to enter the property. The law states that landlords must give tenants at least 24 hours’ notice, ideally in writing, if they (or their contractor or representative) wishes to enter the property – and there must be a genuine reason. And while tenants are expected to grant access for repairs, maintenance and periodical inspections, they are not actually obliged to do so.
Nevertheless, we frequently hear about landlords who believe that because they own the property, they have the right to enter it, regardless of whether the tenant has agreed. The only time a landlord can go into the property without the tenant’s express permission is if there’s an emergency. If the tenant repeatedly refuses access, the only options are to either serve an eviction notice or seek a court injunction order.
- Adding unenforceable terms to an Assured Shorthold Tenancy (AST). While it is certainly possible to make changes and additions to a tenancy agreement, just because you’ve put something in and the tenant has signed it, that doesn’t mean it’s enforceable. Tenants have statutory rights that you can’t violate, and if a clause is deemed to be unfair, it won’t stand.
- Assuming a tenant has to leave at the end of a fixed term. Successfully regaining possession of your property relies on serving notice at the right time and in the correct way, then following a specific process if the tenant refuses to leave (see previous article). But one of the most common mistakes is landlords assuming that if the AST states a fixed term and the tenancy is not renewed, then it finishes at the end of the term.
What is s5 of the Housing Act 1988? Under s5 of the Housing Act 1988, a new periodic tenancy will be created automatically at the end of all ASTs. So, if you want to legally regain possession at the end of a fixed term, you must issue a section 21 notice giving the tenant at least two months’ notice, just as if you wanted to evict them at any other point in the tenancy (once any fixed term has expired and not within the first 6 months).
The best way to make sure your property is always legally let and managed is to use the services of a professional agent that has membership of ARLA Propertymark, as we do. Our people are trained and qualified through ARLA and we have legal support to ensure that we’re always kept up to date with the latest legislation so we can inform our landlords and help them make changes to their property, as needed, in order to remain compliant.