Legislation for landlords: Everything you need to know
Legislation can be a minefield for landlords. Regulations and laws relating to the private rental sector are increasingly in a state of near constant flux, meaning changes can be easy to miss. And this can be costly for landlords who fail to comply.
The latest government survey into private letting found that many landlords are not compliant with basic legislation. For instance, 38 per cent of those questioned did not check a tenant’s right to rent, while 48 per cent did not issue tenants with the Government’s ‘How to Rent’ guide. Meanwhile, over 30 per cent of landlords failed to provide carbon monoxide alarms. A potentially deadly mistake.
As a landlord, you have to stay one step ahead of changes in the law. Every year brings more stringent legislation and 2020 is no exception. Here, we’ve put together a comprehensive guide to everything you need to know when it comes to legislation, updated for 2020.
1. Do you need a landlord licence?
At present, the only UK-wide ruling that requires a landlord to obtain a licence is if a property is let as an HMO (House in Multiple Occupation). A property is classed as an HMO if at least three tenants live there – forming more than one household – and the toilet, bathroom or kitchen facilities are shared.
Courts are known to hand out huge fines to HMO landlords, and agents, who do not obtain HMO licences. In a recent case, a landlord and agent were given fines totalling £120,000 after a fatal house fire at an unlicensed HMO in Southall. LandlordZONE also reports that there are calls for tougher action surrounding the enforcement of HMO regulations, highlighting the need for landlords to ensure that they have obtained the appropriate licence for their property.
Individual councils are also able to issue selective licensing, through schemes that tackle poor housing stock or anti-social behaviour. This includes a 2018 ruling that allows them to define what constitutes an HMO in their area. An estimated 160,000 more rented homes required a licence under these decentralised powers. It is therefore a good idea to check with your local council to see if your property is classed as an HMO to license it correctly.
For more information on the exact guidelines for owning an HMO, please check the GOV UK licence details.
Landlords should also be aware that there are differences between HMO properties and bedsits which will impact licensing regulations.
Get a landlord insurance quote
Get a quote online in under 4 minutes
2. Have you carried out right to rent checks on all tenants?
Landlords must check that any tenant or lodger over the age of 18 can legally rent residential property in England. A person will have the ‘right to rent’ in the UK provided they are in the country lawfully, in accordance with immigration laws.
Prospective tenants still need to be checked even if they are not named on the tenancy.
Original documents will be required to prove a tenant’s right to be in the UK, such as ID cards or passports.
Last year, the Government issued new guidance on right to rent and provided a factsheet to help landlords in England comply with the law and complete right to rent checks.
This followed a High Court ruling that measures aimed at preventing illegal immigrants from renting properties were ‘discriminatory’ and breached human rights laws. The Government challenged the High Court ruling in January 2020 at the Court of Appeal and the case is now with the judges for deliberation.
For now, the Government has confirmed that landlords and letting agents should continue with Right to Rent checks on EU nationals in the run-up to the introduction of a points based-system. The new immigration rules won’t affect right to rent until 31 June 2021.
Landlords can use the Government’s step-by-step online process to check their tenants. Be warned: failure to check can result in an unlimited fine or up to five years in prison, so it is important to get this right.
3. Have you protected your tenant’s deposit in a licensed government scheme?
Since 2007, landlords have been legally obliged to protect tenancy deposits in a government-approved deposit protection scheme.
There are three government-registered schemes in England and Wales eligible to protect a rental deposit. Hamilton Fraser is the parent company of mydeposits, one scheme that provides simple deposit protection for landlords, letting agents and tenants. Find out more at mydeposits.co.uk
These schemes ensure that the deposit is kept safe during the tenancy, and they also arbitrate over disputes between tenants and landlords. Deposits can be used to cover damage to the property (not including fair wear and tear) and cleaning issues at the end of the tenancy.
Take a look at our tenancy deposit protection guidance.
The private rented sector has seen significant changes over the last few years which have changed the rental landscape.
A number of ‘deposit replacement’ options have recently entered the market offering tenants an alternative to traditional tenancy deposit protection. Hamilton Fraser will be launching its very own deposit replacement product, Ome, in early 2020. Find out more about deposit alternatives, and how they could benefit you and your tenants.