October 1st 2018 is an important day in the private rented sector (PRS) as there are several rule changes coming into force which affect landlords and agents – you should be aware of these important changes by now, but here is a reminder.
The New HMO Rules
From today, all landlords (or managing agents) of properties which have five or more occupiers who form two or more households will need to have (or at the very least have applied for) a mandatory HMO license. Remember, there is no grace period and the penalties for not complying can be severe.
These guidelines are based on English law and are not a definitive interpretation of the law, every case is different and only a court can decide, so seek expert advice.
If you have a property with five or more occupiers who do not form just one household, and this includes children, regardless of the number of floors (storeys) the property has, you need an HMO license issued by your local authority.
The penalty is up to £30,000 fine, a First Tier Property Tribunal Rent Repayment Order and a Banning Order being placed on you, not to mention getting a criminal record.
Some landlords may need to make structural alterations or improvements to safety standards to comply with the new minimum room sizes in HMOs.
Section 21 rule changes
From 1st October 2018 the new Section 21 rules which came into force on 1 October 2015 for all new assured shorthold tenancies (AST), will apply to ALL ASTs.
For tenancies commencing prior to 1st October 2015 there were two s21 notices: The Fixed-Term s21(1)(b) and the Periodic notice s21(4)(a). These are now replaced with one notice, the s21 6A notice with its prescribed terms, for tenancies started after 1st October 2105, and ALL tenancies after 1st October 2018. A full collection of AST notices is available free of charge on a government website here
The older s21 fixed term notices had no time limit and could be served from day one, and lasted indefinitely. Now, since 1st October 2015, a valid section 21 notice cannot be served during the first 4 months of the 1st tenancy and it lasts for just 6 months.
For tenancies with rent periods of more than one month, for instance, quarterly rent payments, quite rare these days, proceedings must begin within four months of the notice termination date, otherwise a new notice must be served.
Section 21 Requirements:
These are the things which you MUST now have complied with in England and Wales for all new tenancies since 1st October 2015 before you can serve a valid section 21 notice:
- The tenancy deposit rules have been fully complied with, and
- If the property is a licensable HMO or is within a selective licencing scheme area, then, failing a temporary exclusion certificate, you will need to produce this license.
The following prescribed legal requirements will also apply where the tenancy (or renewal) started after 1st October 2015:
- Service of the Gas Safety Certificate (served when the tenancy started), and
- Service of the EPC certificate
- Service of the government’s “How to Rent” guide, the issue which was current at the time the tenancy started. See the LandlordZONE® How to Rent Guide archive here – now on the forth issue
- The correct prescribed information was issued and served for the tenancy deposit scheme.
Note: it is important that there is proof that these documents have been served, and the general advice here is to attach all these documents to the original tenancy agreement and have them signed for at the start of every tenancy.
For older tenancies, where there is no proof that the gas certificate was issued prior to the tenant entering the property, it is importance that the tenancy is not renewed; it should remain periodic maintaining its older tenancy status.
Some of the other documents can be served late, providing they are served before service of a Section 21 notice.
Retaliatory Eviction Rules
If a tenant has complained (in writing) about a condition in the property which represents a safety hazard you have 14 days in which to respond. If the local authority should subsequently issue an improvement notice as a result of a complaint from your tenant, then any Section 21 notice already served, or any new one you serve, would be invalid. A new valid one cannot then be served for 6 months after this.