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Landlords beware: new requirements for Assured Shorthold Tenancies ("ASTs")
The implementation of new legislation has imposed important obligations on landlords of residential property. Failure to comply with these requirements could have serious consequences.
This checklist is designed to provide a summary of the main steps which landlords need to ensure they consider before letting out their property under an AST:
Check whether the property is situated in an area governed by a Selective Licensing Scheme
In recent years, in accordance with the Housing Act 2004, local authorities have increasingly elected to introduce Selective Licensing Schemes. If a property falls within a selective licensing area, then the landlord must obtain a licence to permit them to rent out the property. It is, therefore, vital that landlords check whether their property is located in a designated area. The consequences for a landlord who fails to obtain a licence are serious and may include in certain circumstances: liability to a fine (previously limited to £20,000, but now uncapped), an order to pay rent received during the unlicensed period and the inability to serve a section 21 notice during any unlicensed period.
Tenant identification checks
Under the Immigration Act 2014, prior to letting a property on or after 1 February 2016 in England, private residential landlords must carry out identity checks on prospective tenants to confirm that their immigration status affords them the right to rent a property in England. This Act further provides that if a tenant is found to be renting in England without the right to do so and the landlord has failed to verify their status at the start of the term then the landlord could face being fined up to £3,000.
Since 2007, landlords have been required to protect tenants’ deposits adequately through use of a Deposit Protection Scheme and provide tenants with the “prescribed information” regarding the registration of the deposit. The Deregulation Act 2015 has now removed the need to re-protect the deposit and re-serve the prescribed information if the tenancy continues beyond the fixed term, provided the landlord did so correctly at the beginning of the tenancy.
Provision of additional documents
The Deregulation Act 2015 and the Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 made pursuant to the 2015 Act (“the Regulations”) require all landlords to provide their tenants with a valid EPC, a current gas safety certificate and a copy of the Government’s publication entitled “How to rent: the checklist for renting in England”. Importantly, a valid section 21 notice cannot be served whilst any of these documents are outstanding.
New form of Section 21 Notice
Should a landlord wish to regain possession of the property on or after the expiry of the fixed term then, for all tenancies created or renewed after 1 October 2015, a new form of Section 21 Notice (as prescribed by the Regulations) must be used. This does not apply to periodic tenancies created after 1 October 2015 which follow on from earlier tenancies. In addition landlords should note that they are unable to serve the new Section 21 Notice within the first four months of a tenancy and possession proceedings under Section 21 (if so required) must be brought within six months of service of the notice.
Clearly landlords and their agents need to ensure they are aware of, and comply with, these new provisions not only to avoid facing serious penalties and potentially even criminal sanctions, but also to enable them to rely upon the Section 21 procedure to recover possession of their property.
The above checklist provides a summary of some of the important aspects covered at our recent seminar entitled “New Restrictions and (De)regulation: What Landlords Need to Know”, delivered at Goodman Derrick LLP on 21 April 2016. It is not intended to comprise an exhaustive list of all areas which a landlord or agent must consider in relation to any residential letting in England. It is provided for the purposes of information and education only, and should not be relied upon as giving specific legal advice. Should you require further information or specific advice relating to this article, please contact Deborah Rider or Alexander Kingston-Splatt, or alternatively call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.