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Are you ready? Regulatory reform continues in the Private Rented Sector
- AuthorLauren Fitzpatrick
Landlords in the private rented sector have seen a raft of regulatory changes following the introduction of the Deregulation Act 2015. Many landlords have adapted to those changes already but the regulatory landscape continues to evolve.
This article looks at some of the developments currently in the pipeline and signposts some very significant new rules that may come in to effect in the near future.
Some of the recent developments for landlords to be aware of are as follows:-
Gas safety certificates
The Deregulation Act 2015 established a number of important statutory obligations that must be complied with before a valid section 21 notice can be served. This has led to numerous traps for unaware landlords. Furthermore, the consequences of failing to comply can be severe.
This is demonstrated most starkly by the recent County Court case of Trecarrel House Ltd v Rouncefield 2019 in which it was confirmed that a failure to provide a tenant with a valid gas safety certificate at the outset of the tenancy would likely prevent a landlord from serving a section 21 notice to regain possession of the property.
It is understood that the Court of Appeal has granted the landlord permission to appeal this decision, so it is hoped that there will be further clarity on this issue in future months. However, this is not the first County Court judgment to determine that the provision of a valid gas safety certificate is an essential precursor to the service of a section 21 notice. Therefore, strict compliance with the requirements of the legislation is essential.
In addition to providing a valid gas safety certificate, landlords must also provide:
- A valid Energy Performance Certificate;
- The “How to Rent” Booklet;
- Registration of the deposit with a Tenancy Deposit Scheme within 30 days; and
- The Prescribed Information relating to the deposit within 30 days.
New version of the “How to Rent” booklet
An updated version of the “How to Rent” booklet was released in May 2019. As above, the booklet must be provided to tenants upon inception of the tenancy. The booklet is frequently updated so it is prudent to download a copy directly from the GOV.UK Website to ensure the most up to date version is always used.
Tenant Fees Act 2019
This legislation applies to all assured shorthold tenancy agreements renewed or entered into as from 1 June 2019. It limits the fees landlords and their agents may charge to tenants and caps the amount landlords are entitled to demand in respect of the tenancy deposit. Local authorities have been tasked with the role of enforcing the legislation. A breach of the Act may result in a financial penalty of up to £5,000, with higher fines and the risk of prosecution and banning orders for repeat offenders.
What may happen in the future?
The potential abolition of s21 notices
Only recently, the Government has announced its intention to abolish notices given under section 21 of the Housing Act 1988. This mechanism is commonly used and favoured by landlords as a means of getting their property back since it does not require reasons to be given to explain why possession is being sought. However, because these notices can be served on “no fault” grounds, this has led to reports of unscrupulous landlords exploiting the system. As a response to criticism of the present system and in order to provide enhanced housing security for private renters, the Government proposes to do away with the section 21 procedure altogether. If introduced, this will prevent landlords from being able to evict tenants without good reason and even where there is good reason for ending the tenancy, this will only be achieved after a potentially long and expensive Court process.
Proposed national registration of landlords
The Government has recently included proposals for a mandatory national register of landlords within a report commissioned to evaluate the current use of selective licensing. If introduced, landlords nationwide could be required to subscribe to the scheme and pay a fee. Rental properties may also be subject to a fitness inspection to ensure they are of a satisfactory standard. Concerns have been raised over the expense of administering such a scheme and if implemented, whether it could be adequately enforced by local authorities.
Whilst the Government is clearly making significant strides to crack down on sub-standard rental practices which is to be welcomed, by doing so even the savviest of landlords could inevitably find themselves unknowingly falling short of their statutory obligations.
Should you require advice on your statutory obligations as a landlord, please contact Goodman Derrick’s Real Estate Dispute Resolution team.
Goodman Derrick – Real Estate Dispute Resolution
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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.