This particular Bill has had a great many amendments since it first went under discussion in 2015, but it has now finally made it into legislation. Of course, as housing policy is devolved to individual countries within the UK, these changes apply to England only.
There are five key elements to the Act which are likely to be of interest to you, as a landlord:
- Recovering abandoned rental properties
- Changes to electrical safety rules for landlords
- Requirement for agents to have client money protection.
- Banning rogue landlords and property agents from operating
- Establishing a database of rogue landlords and property agents, as well as a list of landlords who have been issued with rent repayment orders for failing to make necessary repairs
How will these changes affect you as a landlord?
The good news is that some of these changes are actually quite beneficial to you – as long as you are letting property legally.
It may be be easier to get your property back if a tenant leaves
Until now, if a tenant simply left a property, even if they owed you rent, you would still have to issue a Section 21 notice or obtain a possession order through the courts.
However, thanks to the changes in the Act, although you still have to give due warning to the tenant that you are going to take your property back, you won’t necessarily need to go to court.
As long as your tenant has:
- left the property, and
- owes you more than one month’s consecutive rent
you can simply give them three warning notices. You can send the first when they are one month in arrears and the third must be five days before you intend to take the property back. The second can be sent at any time but you do need to give the tenant eight weeks to come back to you on the first or second notices before the third is issued.
So, while it’s not ideal that the process still takes months, you are now able to issue the first notice after just one month, rather than two, and can avoid the cost and additional time delay of going through the courts.
Naturally we will handle all this on your behalf if we’re managing the property.
This is still a very grey area and we hope the rules on electrical checks will be clarified in the near future. Currently, a rental property can only be legally let if it is deemed ‘electrically safe’, however, the requirements to achieve this are not clear.
Although the Act doesn’t state what changes are going to be made, it does give the government powers to introduce more legislation to impose a requirement. What the experts are calling for is an electrical safety check that must be passed and certified every five years, in the same way that a Gas Safety Certificate must be obtained annually.
Client money protection requirements for agents
We find it astonishing that a letting agent would run their business without signing up to Client Money Protection.
This is an insurance policy that we take out, so that if something happens to the rent we collect while it’s under our care, your income is protected. Many agents don’t currently offer this, meaning that if one of their staff members runs off with the money or they go bust, you may well lose the rent the tenant paid to them.
As a result of the new Act, all agents will have to offer client money protection - but don’t worry, if we’re currently collecting your rent, you’re already fully covered!
Clamping down on rogue landlords and agents
One of our biggest frustrations is the number of landlords and agents that seem to get away with bad practices, treating tenants and landlords in a way that shouldn’t be allowed. So we’re delighted that these poor practices are now going to incur heavy fines and will hopefully be prosecuted in the future.
The clampdown will include a database being set up to log rogue landlords and agents who have been prosecuted for consistently breaking the rules. They can also be fined from £5,000 for breaching a banning order up to £30,000 for other infringements - a substantial amount of money for any landlord or agent. Other new rules mean a landlord may have to repay rent if they haven’t licensed a property properly.
What are timings for the changes?
For the most part, you won’t have to do anything immediately as time has been set aside to work out how the changes will be implemented. This normally takes the form of consultations and discussions with all those concerned; in the case of lettings, that will involve letting agents, landlord associations and organisations such as NAPIT (National Association of Professional Inspectors and Testers) who are approved to sign off electrical work.
Key changes involving abandonment, civil penalties, repayment orders, being a fit and proper person to be a landlord and anything to do with banning landlords and agents are all expected to come in next year (2017).
Naturally, we’ll keep you up to date with the changes as they are implemented.
One to watch: HMO licensing to change?
Although little detail has been given so far, there is also an expectation that the criteria for licensing multi-let properties will tighten, to include two-storey buildings and flats above shops. There is also a question as to whether minimum room sizes will be set too, but we are still months away from these changes.
Keeping up with legislation
So, as you can see, there are a vast number of changes yet again hitting landlords and agents. At Reeds Rains we will always do our best to make sure you’re kept informed so your properties remain legally let and as a landlord you stay on the right side of the law.