There are so many new laws and changes in the world of buy-to-let, making it increasingly difficult for self-managing landlords to keep up with current legislation.
The Deregulation Act, which introduced new regulations on 1st October 2015, means that landlords and agents arranging new tenancies or renewals after this date now have more obligations to contend with prior to commencement of a tenancy.
A ‘How to Rent’ guide must be issued to tenants so that they understand their renting responsibilities. Landlords must also provide up to date Gas Safety, Energy Performance and Smoke Alarm certificates, and ask tenants to sign receipt of these.
My advice is to get this done at the same time as signing the tenancy agreement. If you fail to do so and the relationship with the tenant breaks down for any reason, a tenant may make it difficult for you to gain access, which could prevent an engineer carrying out the necessary inspections and providing relevant certificates. Landlords who do not do this WILL NOT BE ABE TO SERVE A SECTION 21 NOTICE if required at a later date.
We assisted the Government with advice, along with other industry heads, in the months leading up to the introduction of the Deregulation Act. The Act was pushed through to tackle rogue landlords who make tenants’ lives miserable. However, I do have concerns that some elements of this could have a negative impact on the majority of smaller landlords. As a result, some may feel buy-to-let is too much aggravation and decide to sell up.
Landlords can now only serve a section 21 notice after the first four months of the tenancy and not at the beginning, as many had previously done. The new section 21 notice will make landlords’ and agents’ lives a lot easier, combining the old section 21 fixed-term and periodic notices into one simpler form. You do not have to give a specific end date, just at least 2 months’ notice in writing. We thought this was a good idea when we participated in the drafting.
The new notice is for use with tenancy agreements granted after 1 October 2015. For any tenancies prior to the 1st October 2015, the old rules (and old notices) still apply. However, in October 2018 all tenancies (regardless of the date they were granted) will be subject to the new rules. It’s possible we may also see a lot of landlords leaving their agreements to go periodic rather than renewing their tenancies because they are worried about the new rules. In addition, I think letting agents will start charging landlords monthly management fees, as they may not be able to charge for the tenancy renewal if it is not being renewed.
The biggest change in my opinion is the ‘Retaliation Eviction’ rule, which is something I tried to oppose when giving evidence to the All Party Parliamentary Group last November. I was worried that some tenants would abuse the system and try to get away with not paying rent to landlords.
Tenants must now put their complaints of disrepair in writing to the landlord. The landlord then has 14 days to respond, setting out when they will arrange an inspection, how they are going to remedy the repair issues and timescales for these to be carried out. If the landlord ignores the tenant’s request, the tenant must make a complaint to the Environmental Health Officer (EHO) at their local Council. I have raised concerns all along about the staff shortages at councils and how quickly an EHO will be able to attend following receipt of a complaint from a tenant. Will the landlord still be receiving rent in the interim?
If the property is deemed in poor condition, the EHO can serve an Improvement Notice on the landlord. The landlord then has to attend to the works and is unable to serve a section 21 notice within 6 months from the date of the Improvement Notice. I’ve always worried about the fact that some unscrupulous tenants could damage the property on purpose, prevent the landlord from gaining access, and submit an argument regarding wear and tear. If there are not enough officers to carry out inspections, landlords will be subjected to even further delays in gaining possession. The tenant still has an obligation to pay the rent under their tenancy agreement.
My other concern is that not enough landlords will know about these recent changes. We now have something like 1.6 million landlords in the UK and 78% of them own just one property. I would encourage the Government to put some funds towards educating landlords, rather than just leaving it to the responsibility of lettings agents/landlord associations. Only last week I presented to about 70 landlords and agents in Manchester. I’d say at least half of the room were unsure about the Deregulation Act, highlighting the need for greater publicity promoting these changes.
As an example of the need to heavily promote any legislative changes, we still receive 5-10 calls a day from landlords who want to evict their tenants but have failed to protect their tenant’s deposit. Even worse, some have not even heard of the deposit scheme which came out in April 2007!
We must also bear in mind the Government has just announced that ‘Right to Rent’ will launch on 1st February 2016. This means landlords will be responsible for checking their prospective tenants’ documentation, including UK or European Passport status, to ensure the tenant has the right to residence in the UK or EU. If the prospective tenant turns out to be an illegal immigrant, then the landlord could be fined up to £3000 per tenant.
So landlords – please understand your obligations and if you do not have time to stay on top of changes and management, instruct a regulated legal advisor – it may be a lot easier.
Paul Shamplina of www.landlordaction.co.uk