10 March 2020
Residential property - March 2020 – 4 of 4 Insights
While the main impact of the Tenant Fees Act 2019 (the TFA) will have been felt by private landlords and letting agents in the run up to 1 June last year (when it came into force), the transitional period provided by the TFA is now approaching its end, which brings further considerations for those operating in the industry.
Private landlords and letting agents will need to be alive to this, as well as to some other upcoming deadlines and legislative changes that impact their market from both a compliance and budgeting perspective.
Landlords and letting agents will be very well versed by now on what fees can and cannot be levied against tenants, given the push to ensure that all new AST agreements were TFA compliant as of early last summer.
From 1 June 2020, the ban on prohibited payments – such as inventory checkout fees and late payment interest exceeding 3% above the Bank of England's base rate – will extend to tenancies entered into prior to 1 June 2019, rendering the collection of prohibited payments outlawed across the board, not just new tenancies.
The ban on prohibited payments may be enforced by the local trading standards authority or the district council. As a reminder, the penalties for taking prohibited payments from tenants are:
Section 21 notices cannot be served where a prohibited payment has been taken by the landlord and not returned.
The TFA applies only to ASTs so, for example, common law tenancies (commonly seen where the tenant is a company or the annual rent exceeds £100,000) are not caught by the prohibited payments regime under the TFA.
1 April 2020 is the date from which the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (MEES) will apply to existing private residential tenancies, meaning that it will be unlawful to continue letting out 'sub-standard' property (ie with an EPC rating of F or G). This extends the existing prohibition, whereby the grant of new tenancies of sub-standard properties was banned from 1 April 2018.
There are exemptions, summarised briefly below, available to landlords in limited circumstances where, if applicable, continued lettings of sub-standard properties are permitted:
Landlords will need to apply (with supporting evidence) to be registered on the Private Rental Sector (PRS) Exemptions Register when seeking to rely on an exemption.
Enforcement responsibilities fall to local authorities, who can:
In view of these changes, we recommend that those involved take the following steps:
Due to come into force on 1 July 2020, and to apply to all tenancies granted after that date, is a draft statutory instrument that has been laid before Parliament (the Regulations) which would impose new electrical safety standards on private landlords.
The Regulations would be two-fold in terms of landlords' responsibilities where a property is let to a tenant that uses that property as their primary residence in exchange for rent (regardless of whether it is a market rent or not):
The Regulations do not apply to certain tenancies, such as where the landlord is a registered provider of social housing, long leases and student halls of residence.
The proposals put potentially far reaching enforcement powers in the hands of local housing authorities. In addition to being able to impose fines of up to £30,000, they can step in and carry out works at the cost of the offending landlord.
Now would be a good time to start lining up inspections and checking portfolios for compliance. Where portfolios are held across various different locations, we recommend getting in touch with your local letting agents and lining up qualified persons to carry out the required inspections.
by Lisa Bevan