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Three Important Updates for Residential Landlords and Agents

16 May, 2019

There have been a number of legal developments and landlord legislation that will affect residential landlords and agents over recent months.

But what does this mean in real terms? Property dispute solicitors Hannah Dare and Lauren Meade explains more about the recent developments.

Residential letting fees – The Tenant Fees Act 2019

From 1 June 2019, landlords and agents of assured shorthold tenancies, student leases and most licences to occupy will not be able to charge tenants fees unless such fees are expressly permitted under the Tenant Fees Act 2019.  Some permitted fees are also subject to caps. The Act will only apply to new tenancies at first, but from 1 June 2020 will apply to all.

The permitted fees and respective caps from 1 June 2019 are as follows:

Permitted fee Cap / Restriction
The rent There is no cap but the Act does prevent “spikes” in the rent to cover fees that can no longer be charged.
A refundable tenancy deposit Capped at no more than 5 weeks rent where the annual rent is less than £50,000 or 6 weeks rent where the total annual rent is £50,000 or above.
A refundable holding deposit (to reserve a property) Capped at no more than 1 weeks rent
Payments to change the tenancy Capped at £50 or reasonable costs incurred if higher
Payments associated with early termination of the tenancy Limited to the loss suffered by the landlord and the reasonable costs of the agent.
Default fees

  • A default fee for late payment of rent
  • A default fee for replacement of a lost key/security device
Only for rent that is more than 14 days late and must no exceed interest in the sum of 3% above base rate from the due date until payment.

Must be reasonable and reflect and reflect the cost incurred as a result of the loss

NB: In both cases the default fee can only be charged where required under the tenancy agreement.

Payments in respect of utilities, communication services, TV licence and Council tax Tenants are responsible for bills not included in the rent.

 

Any fee that is not on the list is a prohibited fee and should not be requested. Each request made for a prohibited payment is a breach and could attract a fine of £5,000 per breach.  Repeat offenders could be fined up to £30,000.

Tenants will be entitled to repayment of any unlawfully charged fees.

Importantly, Landlords will be prevented from recovering possession of their property via the section 21 eviction procedure until they have repaid any unlawfully charged fees.

Changes in the Minimal Energy Efficiency Standards (MEES) regulations

Since 1 April 2018 under the MEES rules landlord have been required to ensure the Energy Performance Certificate (EPC) rating for a property is at least an E before granting a  new lease.  Alternatively, landlords may be able to register an exemption on the exemptions register where one or more of the exemption criteria are satisfied.  The rules currently only apply to new tenancies but from April 2020 will apply to all existing lettings, meaning that such lettings cannot continue unless they meet the new standard.

Following a consultation certain amendments have been made and came into force on 1 April 2019.  In particular:

  • Landlord’s will now be expected to contribute up to £3,500 (including VAT) per property to raise the EPC to a minimum of an E. Where costs will exceed £3,500 landlords can register a “high cost” exemption.
  • The cost of improvements made since 1 October 2017 up to 31 March 2019 can be deducted from the £3,500 cap.
  • The “no cost to the landlord exemption” and “consent exemption” will no longer be available.

Possession proceedings – the importance of the gas safety certificate

For tenancies granted after 1 October 2015, landlords are required to provide to the tenant at the outset of the tenancy copies of a valid EPC for the property, the current version of the booklet “How to Rent” and a valid gas safety certificate.  A failure to do so will result in the landlord being unable to regain possession of the property under the section 21 eviction procedure.

There has been some uncertainty as to whether a failure to comply with the requirements at the outset of the tenancy can be rectified by providing copies during the tenancy.

Two recent county court cases decided that, so far as the gas safety certificate is concerned, the copy must be provided at the outset on the basis that it is a “once and for all obligation on a prospective landlord to a prospective tenant” and that a failure to comply cannot be rectified once the tenant is in occupation and will debar a landlord from serving a section 21 notice and

As these are County Court decisions they are not strictly binding on other courts but the decisions will be very persuasive given the decisions are very clearly and consistently safety-focused.  Tenants are likely to rely on these decisions to defeat section 21 possession claims.  It is unclear whether the same decision would apply to a failure to provide a copy of the EPC or “How to Rent” booklet.  Whilst tenants are likely to try and defeat section 21 possession claims on that basis, the cases could be distinguished on the basis that the EPC and “How to Rent” booklet do not have the same safety-focus.

Landlords and agents should ensure that copies of the relevant documents are provided to the tenants before they take occupation of the property and keep clear records of the date the documents were provided and obtain confirmation of receipt from tenants which will act as invaluable evidence if a subsequent possession claim is necessary.

If you are a residential landlord or residential agent and would like to discuss your legal options with our expert property solicitors in Bournemouth please contact Hannah Dare or Lauren Meade on 01202 294566 or email hannahdare@steeleraymond.co.uk or laurenmeade@steeleraymond.co.uk.

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