March 22, 2019

The slew of new legislation either in force or in the pipeline appears to be geared to driving from the market both rogue landlords and rogue agents the consequences of which is aimed at driving up living standards and improving conditions for tenants.

 

Tenant Fees Act 2019

The Chancellor of the Exchequer announced the Government’s intention to ban fees to tenants in the Autumn Budget 2017. It should, therefore, come as no surprise that Royal Assent has been granted and the Act is highly likely to come into force on 1st June 2019.

Section 1 deals with prohibitions on landlords. Section 2 introduces the ban for agents. The separation is deliberate as some of the rules are different, e.g. that landlord may still serve a section 21 even if the agent takes a prohibited payment.

All fees and payments required by the landlord or Agent are prohibited unless they are identified in Schedule 1. There are 10 permitted payments which mercifully includes rent, utilities and council tax. A 5 week deposit in the main is permitted as well as a 1 week holding deposit which is subject to strict treatment rules found in Schedule 2. Payments related to changes to the tenancy or early termination of the tenancy is also permitted subject to the regulations in Schedule 2.

Default payments are limited to the loss of keys or other security device and to interest on late payment of rent although. A payment for damages is also a permitted payment subject to there being a breach of the tenancy agreement or other agreement.

After the coming in to force of the Act, it will be an offence even to require a prohibited payment, for instance, putting it into a tenancy agreement.

Taking a prohibited payment will, of course, be an offence although there are transitional provisions for tenancies granted before the Act comes into force.

Rules around the repayment of prohibited payments and enforcement are set out in various sections through the Act. The penalty for a first offence in section 8 and is up to £5000 per offence. A second offence in section 12 is either a financial penalty up to £30,000 or a criminal conviction and an unlimited fine which may lead to a banning order. The consequences of getting it wrong are, as you can see, extremely serious.

The Act applies to all assured tenancies including assured shorthold tenancy agreements and licences, i.e. resident landlords looking for lodgers excluding long leases and by default contractual tenancies, e.g. a company let.

 

Homes (Fitness for Human Habitation) Act 2018 (the Act)

The vast majority of landlords are keen to ensure that their tenants are looked after and that the property is well maintained. When it goes wrong, however, the tenant has a limited and protracted route to get disrepair remedied.

This new Act which came into force on 20th March 2019 updates the Landlord and Tenant Act 1985 (L & T Act 1985) and gives the tenant the right to take a landlord to court directly for disrepair where they may seek specific performance, i.e. to get the work carried out and compensation. As action will be taken through the courts and compensation is available we can expect to see ‘no win, no fee’ lawyers chasing a share of any compensation awarded.

There is an implied covenant within each tenancy agreement, to which the Act applies that the property is fit for human habitation at the start and throughout the tenancy. There is a further implied covenant in each applicable lease by the tenant that the landlord, or someone authorised in writing by the landlord, may inspect the property to inspect its condition and state of repair. This covenant is subject to the tenant being given 24 hours written notice with the visit at a reasonable time of the day.

We expect that landlords will become responsible for disrepair upon notification although in the case of common areas, for instance in an HMO, the landlord will be responsible immediately the disrepair occurs. The property will be considered to be in disrepair and if not reasonably suitable for occupation if it is defective in any of the 9 matters within section 10 of the L & T Act 1985 and section 10 is amended to include the 29 hazards from the housing Act 2004.

As the Act is amending the L & T Act 1985, it applies to all tenancies where there are landlords and tenants and so excludes licences. The Act will apply to all new tenancies granted after 20 March including statutory periodic tenancies arising. A transition period of 12 months applies to existing statutory periodic tenancies unless a new tenancy arises.

Some exemptions are listed in section 9A(2) of the L & T Act 1985; however, the importance of maintaining a regular and documented inspection routine and responding promptly cannot be overstated.

This article is produced and distributed on a limited basis. Whilst the information researched and provided is believed to be correct, neither the sender nor anyone involved in the production of it, accepts responsibility for its accuracy. © Trading Places

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