Category: Updates

Property management: Legal changes landlords need to know about

8th February 2019

Major legislative changes are set to enter the statute books, with far-reaching implications for landlords. James Pyrah examines the salient issues.

Tenancy deposits

Under the Housing Act 2004, all deposits must be held in a government-backed tenancy deposit scheme. These schemes ensure that deposits are dealt with fairly and determine if a landlord can retain a deposit if a dispute arises.

Deposits can be registered with the Tenancy Deposit Scheme (TDS), Deposit Protection Service and MyDeposits – including deposits previously held by Capita.

As a landlord, you must either use an agent or set up your own account with a scheme to ensure all deposits are registered within 30 days of receiving them.

You have to repay your tenants’ deposit if they meet the terms of the tenancy agreement, do not damage the property and have made all payments up to date.

Cap on tenants’ deposits

Until now, deposits have not been capped – but this will change. Current government proposals suggest a cap equal to five weeks’ rent for properties with an annual rent under £50,000. This cap would rise to six weeks’ rent for properties with an annual rent of £50,000 or more.

This new measure is part of the Tenant Fees Bill 2017-2019, which passed its final reading in the House of Commons on 23rd January 2019 and is set to impact all new tenancies from 1st June 2019 onwards.

Ban on tenant fees

This same legislation will also ban tenant fees which means tenants will pay nothing other than their rent and deposit when they sign up to a new lease.

As a result of this change, most additional fees will be outlawed, for example charges for carrying out an inventory or checking references of applicants.

Landlords will still be able to charge for replacing keys lost by tenants, damage to the property and late payment of rent. However, most costs will no longer be chargeable to tenants, and landlords may look to increase rents in order to maintain revenues.

Minimum Energy Efficiency Standards (MEES)

MEES are already in force under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015. For residential properties this means a property must have a minimum Energy Performance Certificate (EPC) rating of an E or higher, or be eligible for exemption. This applies to all new residential lettings from April 2018, and will apply to all residential lettings from April 2020.

Required paperwork at commencement of the tenancy

This requirement has already been implemented. Under the Deregulation Act 2015, from October 2018, all landlords must provide new tenants with the necessary paperwork to prevent potential security of tenure. These documents include: an Energy Performance Certificate (EPC), a copy of the gas certificate where applicable, a Tenancy Deposit Scheme certificate, a ‘How to Rent’ guide, and a copy of the Tenancy Agreement.

Finally, an effective Tenancy Agreement is essential to protect the landlord’s (and, indeed, the tenant’s) interests. A professionally drawn agreement should address key items such as rent payable, term of the tenancy, rent review procedure, and the obligations of both the landlord and tenant.