Honourable and personal residential letting experts

26Jul Landlord Legal Update July 2019

Landlord Legal Update July 2019

You would be forgiven for thinking the Government is only dealing with that little tiny thing called Brexit! There is actually a great deal of potential change and review being considered when it comes to the lettings world.

The Government are addressing what they consider to be some challenges and imbalances in the legal relationship between agent/landlords and tenants.  As the Government has a slim majority and there are many more tenants than landlords, any actions to improve things for tenants, who are obviously voters, seems understandable. There are 4.5 million households living in rented properties – 19% of all properties.

It is also worth noting that the other main political parties want greater changes than those proposed. In other words, the current political climate suggests some changes are going to happen.

So what is being proposed? Well, there are six separate reports, consultations or calls for evidence!

Consultation on abolishing Section 21 ‘no fault’ notices

The Government have decided that in future landlords must provide a reason to end a tenancy, which would end the ‘no fault’ Section 21 notice. They speculated about this in April, and we bravely made some predictions about what would happen next – so farm, these appear to have been pretty close!

The formal consultation is now underway to establish the issues and design how the new system would work. We will be making a submission, focussing on the need to ensure the court process is profoundly improved.

This change comes on the back of their 2018 consultation on longer tenancies, to which we made a submission.

Our view is Section 21 notices are used by agents and landlords due to their reliability and ease when compared with the court process to prove breach of tenancy, which is expensive and uncertain. Other than to sell or reuse the property clearly no landlord wants to end a tenancy where the tenant is meeting their obligations. Happily, the overwhelming majority of tenancies work well for both landlord and tenant, where they do not we want to see improvements to ensure court action for breach of tenancy is simple and effective.

Even so, we fully expect court action will be more costly and time-consuming than the Section 21 notices, therefore we are strongly recommending all landlords take out Legal Expenses and Rent Protection Insurance to cover the legal costs of any tenancy breaches.

 

Call for evidence on reform of deposit protection

The call for evidence seeks to understand the problems tenants face providing a second tenancy deposit when moving from one tenancy to the next. It will also be looking at what can be done to speed up the return of deposits to tenants at the end of the tenancy.

We know tenants can struggle to find the funds for the overlapping deposits when moving house. There are some “no deposit” products available – you can get more details here. Given we have yet to see the full impact of the Tenant Fee Act plus the various “no deposit” options available, we think it will be several months before we can know the impact on tenants. However, the consultation closes in September. Obviously, it will take time before we hear the results of this review and what happens next.

Government selective licensing review backs landlord register

The UK Government has released its review of selective landlord licensing which, along with other recommendations, backs the need for a national register of landlords. This is so local authorities can choose whether to require landlords to be licenced and also to have a register of landlords to help enforce the licencing.

On a linked subject there is a consultation about a database of rogue landlords and agents, so people can see if they are dealing with a banned person.

The detail will doubtless be amended as this review and the results of the consultation are converted into action.

There is no doubt some areas have problems with rogue landlords. Our view is the rogues would still be rogue if there was landlord licensing. Happily, there are increasing numbers of convictions of the rogue landlords. We do welcome the rogue database, but it would need to be publicly accessible.

Regulation of Letting Agents

On 18 July 2019, the “Regulation of Property Agents Working Group” (RoPA) released a report recommending a number of changes and proposing a new regulatory framework. This would cover estate agents across the UK and letting and managing agents in England.

In essence, it says all agents and their customer-facing staff should be licenced, follow a clear Code of Conduct, and all staff need to be appropriately trained. There is some suggestion that they may also require some form of training for landlords who do not use agents.

This report will need to be converted into Law, which will probably take a couple of years.

Our view is this is long overdue and should be welcome. There are around 180 pieces of legislation involved when letting a property (and this list is constantly growing!), sadly too many agents do not know their legal obligations. As Agents act on behalf of the landlord, if the agent does not know the rules, the landlord is at risk.  We already have 7 of our staff with the recommended qualification, and a further 5 studying, and we are fully compliant with the current Codes of Practice. We have a plan to get all staff trained.

Review of the Housing Health and Safety Rating System (HHSRS)

Following consultation last year there has been an independent review of how the Housing Health and Safety Rating System (HHSRS) could be improved. The Government have confirmed they will be adopting their recommendations to make the system work better.

The HHSRS is an important measure to establish the degree of risk in a property. It covers significant risks and, happily, rarely applies to most residential letting properties. However with the general drive to improve standards, we will watch with interest to see if the system is altered in a way that encompasses more properties.

In addition to these six items, there was an announcement last year to say the Government wants to make Electrical Installation Condition Reports (EICR) mandatory, probably every 5 years. Currently, it is only “best practice” to complete an EICR, which many landlords interpret as ‘not needed’. Given the number of fires caused by faulty wiring, combined with the fact most insurers will only settle a claim where the landlord has followed “best practice”, we believe landlords should be doing this anyway.

Other than that, it has been quiet!

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