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Residential landlords - staying on top of the recent changes to residential property regulations
- AuthorChloe Benson
The last three months have been challenging for residential property landlords, many of whom are juggling uncertain income with rapidly changing residential property regulations, most of which have been designed to protect residential tenants.
This article provides an update on the key regulatory changes that residential landlords need to be aware of.
As ever, it is important that you take early specialist advice if a dispute seems possible, especially so as the new regulations that cover residential property landlords provide plenty of opportunity to make a mistake. Our specialist real estate dispute resolution team remain on hand to put you in the best possible position should a landlord and tenant disagreement crystallise into a full blown residential property dispute.
1. Ban on evictions extended to 23 August 2020
As a recap, in March 2020, the Government announced that it would:
- Suspend all housing possession claims for 90 days (commencing from 27 March); and
- Extend the notice period in eviction notices to a minimum of 3 months.
The Government’s aim was to ensure that tenants who may be experiencing financial difficulties as a result of the pandemic could not be evicted from their homes. These restrictions protect all private and social renters as well as those with mortgages and those with licences covered by the Protection from Eviction Act 1977.
On 5 June, the Government announced that it will extend the ban for a further 2 months (from 25 June) meaning that no possession hearings will be heard until the end of August. This takes the moratorium on evictions to a total of 5 months.
Landlords should note that the restrictions do not preclude the issue of possession claims.
2. The Tenant Fees Act 2019 (TFA 2019) to apply to all tenancies from 1 June 2020
The TFA 2019, which came into force on 1 June 2019, bans landlords and agents from charging fees to tenants other than those which are “Permitted Payments”.
The Permitted Payments under the TFA 2019 are set out within schedule 1 and include:
- Tenancy deposit (capped at either 5 or 6 weeks' rent, depending on whether the annual rent is above £50,000;
- Holding deposit (capped at 1 week’s rent);
- Payment in the event of a default (for example, for late payment of rent or for loss of a key);
- Payment on termination of a tenancy (e.g. if the tenant wishes to leave before the end of the term and the landlord suffers loss);
- Payment on variation, assignment or novation of a tenancy;
- Payment of utilities (such as council tax or a television licence)
The TFA 2019 also sets out the prohibited payments and these include:
- Tenancy set up fees;
- Viewing fees;
- Fees for credit checks
- Inventory check fees and check out fees;
- Professional cleaning fees.
From 1 June 2020, the TFA 2019 is to apply to apply to pre-existing agreements entered into before 1 June 2019. Any provision in a pre-existing tenancy agreement, pre-existing letting agency agreement or relevant statutory periodic tenancy requiring a prohibited payment is not binding. From 1 June 2020, if a tenant is asked to make a prohibited payment in error it should be returned to them within 28 days.
Landlords and agents should be aware that if a breach of the TFA 2019 occurs, it could be liable for fine up to £5,000 per breach.
In addition, a landlord will be unable to serve a notice under section 21 of the Housing Act 1988 until any prohibited payments are repaid to the tenant. It is therefore crucial to check compliance with the TFA 2019 before a section 21 notice is served.
If you are experiencing difficulties with your residential property portfolio then our specialist real estate dispute resolution are available to help, we do not charge for initial calls and enquiries.
This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article, please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.
Real Estate Dispute Resolution at Goodman Derrick
Our Real Estate Dispute Resolution team has a wealth of experience in both the commercial and residential property sectors.
Our lawyers work closely with the firm’s non-contentious Real Estate group to provide dispute resolution support and assistance when it is required. Our advice is focused on facilitating practical and commercial solutions.
Our approach ensures that problems are resolved in the most cost effective way and at the earliest stage. We know that our clients will want to avoid litigation in the courts but if matters need to be hard fought then we are highly experienced at dealing with cases at all levels of the court system.
We advise our commercial clients on every type of landlord and tenant dispute in relation to both freehold and leasehold property. We have become well known for advising in relation to complex developments such as shopping centres and large mixed use sites.
Our commercial clients include nationwide retail chains, property developers, investors and managers of substantial portfolios as well as international organisations with UK property interests.