2019 all wrapped up…
It is no secret that the private rented sector (PRS) has grown at such a rate that it has become a key target for increased regulation, with a growing emphasis on tenants’ rights. This year, more than ever before, legislation has been enforced and plans announced which will change the landscape of the lettings industry forever, meaning agents and landlords are under increasing pressure to ensure they are compliant.
Those that keep abreast of this fast-moving industry will have a chance to adapt and plan for success in a new era of lettings. So, here’s is a run down of what changes have occurred in 2019 and what we can expect from 2020.
Homes (Fitness for Human Habitation) Act
On 20 March this year, the new Homes (Fitness for Human Habitation) Act came into force. This means that landlords in England, or letting agents acting on their behalf, must ensure their rental property is fit for human habitation, both at the beginning and throughout the tenancy.
It aims to help drive up standards in rented homes (both social and private rented sectors), and to provide an alternative means for tenants to seek redress from their landlords if their rented property is not maintained to a ‘good condition’, presenting risk of harm to the health and safety of the occupants.
“The vast majority of landlords are already fulfilling their duties and will be unaffected by the Act as it has not introduced new standards or additional regulation. It simply gives tenants the ability to enforce existing standards that landlords are expected to meet.”
– Paul Shamplina, Founder of Landlord Action
Check you are compliant here.
Professional Indemnity Insurance premiums start from £9.33* a month
*Based on £100,000 worth of cover. Plus insurance premium tax (IPT) currently at 12%.
Mandatory client money protection
From 1 April 2019, it became a legal requirement for all letting agents and property management companies in England to be a member of an approved Client Money Protection Scheme.
CMP schemes protect client money (such as rent and deposit monies) which is received by agents and reimburses landlords and tenants should an agent misappropriate that money (rent, deposit or other client funds).
Sean Hooker, Head of Redress, Property Redress Scheme, reminds agents: “If you already have CMP membership, please ensure you are displaying your membership both in branch and on your website as you may also be liable for a £5,000 fine if you fail to do this.”
“Those who are not yet complying with their legal obligations under the Act could face a fine of up to £30,000, so we urge all agents to check that they are covered as a matter of urgency. Client Money Protect are currently turning applications around in 48 hours.”
– Sean Hooker, Head of Redress, Property Redress Scheme
Tenant Fees Act 2019
From 1 June 2019, the Tenant Fees Act came into force in England, meaning landlords and letting agents can no longer charge additional fees that are not considered “Permitted Payments” to tenants. Services which can no longer be charged to tenants include: Credit checks, inventories, cleaning services, admin charges, referencing and garden services.
As part of the Act, tenancy deposits have been capped at five weeks’ rent where the annual rent is less than £50,000 and six weeks’ rent where the annual rent is £50,000 or more. In addition, landlords or letting agents can only take a maximum of one week’s rent per property as a holding deposit. Read more about holding deposits here.
A breach of the fee ban is a civil offence with a financial penalty of up to £5,000, per breach.
Letting agents should remind landlords that the government has published an updated version of the ‘How to Rent’ guide to reflect the Tenant Fees Act 2019.
The ‘How to Rent’ guide is aimed at tenants and landlords in the private rented sector and has been created to help them understand their rights and responsibilities. Failure to issue tenants with the latest version of the guide means landlords will be unable to serve a Section 21 notice on their tenants.
“Although under the tenant fee ban tenancy deposits are capped, the legislation does not have any impact on how deposit deductions currently operate. However, agent invoices and estimates should give a clear breakdown of costs, for transparency, in the event of needing to calculate and negotiate a deposit deduction.”
– Suzy Hershman, Head of Dispute Resolution at mydeposits