Any landlord committed to the long-term in the private rented sector (PRS) – in view of all the legislative changes introduced over the last 12 months – will seriously need to stay on top of things if they are to remain profitable. New legislation has been introduced thick and fast, enough to challenge even the most diligent of landlords.

One such change occurred in May with the passing of the Housing and Planning Act 2016. Though information about implementation and timescales is scant, I thought this deserved serious comment, so here goes.

Publication of the Housing and Planning Act introduces yet more legislation affecting landlords and letting agents, more rules and regulations that you really do need to be aware of.

Having been batted backwards and forwards between the Commons and the Lords, with various amendments now being included, The Housing and Planning Act 2016 finally made it into law, with Royal Assent granted on the 12th of May.

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One of the later amendments was introduction of compulsory client money protection (CMP) for letting agents, which will include management of short term lets (long-leasehold managing agents it seems are excluded) and relocation agents. This is something that many landlords don’t think about and assume that their deposit and rent money is safe with their agent. With some agents who are not members of a recognised professional body, this is not always the case – there is often no insurance in place, and client money may not be separated from the working capital of the business.

Now, following campaigning for a considerable time from landlord and tenant groups, and most professional agent representative bodies, mandatory money protection will be required of every letting agent, similar to the requirement to be in a redress scheme.

As is becoming the practice with most legislation these days, much of the Housing and Planning Act allows the Secretary of State to introduce more related regulations and bring them into force as required, rather than spelling them out in the Act itself.

It is likely the CMP schemes will be provided as government approved ones, similar to the deposit protection ones, run by selected insurance companies and the agencies professional bodies themselves, under similar provisions as some of these bodies provide already.

Therefore, along with the requirements of the Consumer Rights Act, agents will need to (1) publicise their fees on their website and in their offices, (2) publicise their membership of a redress scheme, and soon (3) their membership of a client money protection scheme.

As with other recent legislation concerning landlords and agents the Act put the onus of enforcement on the local authority concerned, and in order to encourage diligence enforcement, it will now permit the authority to levy fines and retain the proceeds to cover their costs.

Evidence to date shows that local authority enforcement of agency redress scheme membership has been rather random, so it remains to be seen if their performance will improve on this and CMP, with their new ability to retain fines.

The main provisions of the Act as they affect landlords and agents include:

  • Banning orders for rogue landlords and letting agents
  • Setting-up a national database of rogue landlords and agents
  • Rent re-payment orders
  • Recovery of abandoned properties – makes it easier
  • Secure tenancies: the phasing out of tenancies for life
  • New electrical safety standards for properties let by private landlords
  • Licences for HMO and other rented accommodation: additional tests
  • Financial penalties as an alternative to prosecution under Housing Act 2004
  • Offence of contravening an overcrowding notice
  • Power to require property agents to join client money protection schemes

If you need more detail you will find the full Act published here

You will find in this issue further comment on the EU Referendum and how it may affect property, and we have decided to include a poll in the newsletter to try to get some idea of how landlords are likely to vote. Please participate if you can – the results will be included in the lead article, so please keep re-visiting it.

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