Private rental sector legislation October 2018 – are you compliant?

From increasingly stringent rules around energy efficiency to reductions in tax relief on buy to let mortgages; GDPR regulation to banning orders and the rogue landlord database, 2018 has already been a bit of a bumper year for private rental sector legislation. And with proposed mandatory three year tenancies, increased regulation of managing agents and mandatory client money protection all in the pipeline, there is more to come.

Sticking with the short term, October 2018 is a particularly busy month for private rental sector legislation coming into force. Yet it is likely that many landlords and managing agents will not be aware that they are affected or will be affected going forwards. So, what are the key changes you need to know about that are coming into force in October 2018?

The Deregulation Act 2015 will be extended to all tenancies from 1 October 2018 – England only

The Deregulation Act 2015 covered a number of sectors, including housing, and was aimed at reducing burdens resulting from legislation. It came into force on 1 October 2015 and included provisions that applied to both landlords and tenants in relation to deposits, retaliatory evictions and section 21 notices for new or renewed tenancies.

What many landlords don’t realise is that, from October 2018 the provisions outlined in the Act will apply to all tenancies, not just new tenancies or renewals.

What will change on 1st October 2018?

  • In relation to retaliatory evictions, landlords will be prevented from serving a Section 21 notice in certain circumstances if the landlord has received notice requiring the landlord to carry out repairs.
  • Landlords will not be able to serve a Section 21 notice in the first four months after the start of an AST. This change will obviously not affect ASTs that were previously exempt as they will have already passed the four month period. However, a time limit change that will impact older ASTs is that landlords will have only six months from the date the Section 21 notice was given in which to act on it.
  • Until 1st October 2018 a landlord has had the option of using a non-prescribed form of notice if the AST was granted before 1 October 2015. After 1st October 2018, landlords will need to use the prescribed Form 6A for all ASTs, no matter when they were granted.
  • The change that will have the most impact on landlords and managing agents is that they will have to give tenants prescribed information on the condition of the property for all ASTs. This may require landlords to carry out surveys in between tenancies. Most importantly, landlords will not be able to serve a Section 21 notice on tenancies unless they have provided tenants with the following information at the start of the tenancy and before the tenant moves into the property:
  1. The property’s Energy Performance Certificates (EPC), except where a property is not required to have an EPC such as where the landlord is letting a room on a single AST in a House in Multiple Occupation (HMO).
  2. A gas safety certificate covering all fixed as well as portable gas appliances provided by the landlord for the tenants’ use. For more detailed information on the requirement to provide a gas safety certificate at the start of a tenancy, read Hamilton Fraser Director and Founder of Landlord Action, Paul Shamplina’s article, ‘Gas safety certificates and Section 21 – be compliant or you may pay the price,’ in which Paul highlights the impact of the Caridon Property Ltd v Monty Shooltz case which took place in February 2018.
  3. The Ministry of Housing, Communities & Local Government’s (MHCLG) How to rent guide: This can be provided digitally or as a hard copy if the tenant requests it. Agents and landlords should not simply supply a link to where the document can be found. The requirement to provide the ‘How to rent’ checklist is not obligatory for tenancies before 1 October 2015 unless they have been renewed after that date, but landlords may wish to consider providing a copy of the guide as good practice regardless, so that this can be noted on the claim form if possession proceedings are required at a later date. The ‘How to rent’ guide is periodically updated so it is important to ensure that you provide the latest version (currently 9 July 2018).

Up until October 2018, a landlord wishing to issue a Section 21 notice could serve all the correct documents one day and issue the Section 21 notice a few days later. The key change coming into force in October 2018 is that these documents must be provided at the start of the tenancy, before the tenant has moved in.

Paul Shamplina advises that, in a case where the gas safety certificate, EPC and ‘How to rent’ guide were not served at the start of the current tenancy and a replacement tenancy is being contemplated, ensure that the latest documents are served before the replacement tenancy begins. He also suggests keeping a detailed record of the date and time of issue of the documents, signed and acknowledged to confirm the time and date. This can then be used as evidence in any subsequent possession action.

HMO licensing reform comes into force 1st October 2018 in England only

Due to new guidelines relating to HMOs agreed earlier this year, from 1st October 2018 thousands of additional landlords will fall into the HMO landlord category and will therefore be required to apply for an HMO licence.

Many landlords and managing agents will be unaware that they are affected, yet when a rental property is unlicensed, whether by a mandatory HMO licence or if the property comes under a local authority additional licensing scheme, a valid Section 21 notice cannot be served. Furthermore, landlords and managing agents who have not applied for a new licence by 1st October could face criminal prosecution and fines of up to £30,000. It is therefore important that landlords and agents responsible for management are aware of the changes.

But what exactly is changing? Currently only those HMO properties with three or more storeys and shared by five or more persons from two or more households require an HMO licence. They must also be sharing facilities such as kitchens and bathrooms.

From the 1st of October 2018 the “three or more storeys” criteria in England will cease to exist.  This means that all those landlords housing multiple occupants – five or more people in two or more households sharing facilities – regardless of the configuration of the property – will need to have a mandatory HMO licence.

In addition to scrapping the ‘three storey’ rule for a mandatory HMO licence, the new regulations change the definition for a home needing a licence to one where five or more residents who are not all related to one another share kitchen and bathroom facilities.

Basically, an HMO can be defined as any property (house or flat) occupied by three or more people comprising two or more households who share facilities (kitchen, bathroom and/or toilet), even when they occupy the property on a single tenancy.

The new rules also come with two other changes for licensed property:

  • Minimum bedroom sizes are revised – rooms for a single adult must measure at least 6.51 square metres and those for two adults must have a floor area of at least 10.22 square metres.
  • Bedrooms for children under 10 are slightly smaller at 4.64 square metres.

The other change makes landlords responsible for providing bins and storage for household waste.

There are three types of property licensing schemes operating in England:

  • Mandatory HMO licensing
  • Additional licensing
  • Selective licensing

Whereas mandatory HMO licensing applies when required throughout England, additional and selective licensing schemes only apply in certain areas, where the local authority has implemented such a scheme.

Landlords and agents should always check with their local authority, where the rental property is based, to see if there is a scheme in operation, as it will have serious implications for letting a property.

For more information on the Licensing of Houses in Multiple Occupation (Mandatory Conditions of Licences) (England) Regulations 2018 see the government website: The Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018.

 

 

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