Common landlord mistakes #7 Not keeping up to date with lettings legals

With the Renters (Reform) Bill currently making its way through Parliament, there are numerous changes to lettings legislation on the horizon - including the scrapping of Section 21 notices, an end to fixed-term tenancies and new requirements for landlords and their properties to be registered.

There are already around 170 different laws governing the PRS and many of them comprise several separate rules, so there’s a huge amount to know and stay up to date with. In just the five years since April 2018, there have been 23 legal changes in England alone, including:

• Updates to the MEES, raising the minimum rating on the Energy Performance Certificate (EPC) for rented properties to ‘E’
• The introduction of banning orders for landlords who breach certain regulations
• Changes to mandatory licencing requirements for Houses in Multiple Occupation (HMOs)
• New minimum property standards under the Homes (Fitness for Human Habitation) Act
• Passing of the Tenant Fees Act
• Mandatory 5-yearly electrical checks
• An update to the smoke and carbon monoxide regulations
• New building and fire safety rules

Keeping up to date with the rules in England is further complicated for landlords by the fact that each local authority has the power to set its own licensing laws for both Houses in Multiple Occupation (HMOs) (additional licensing) and any other type of rented property (selective licensing). So if landlords aren’t proactive at finding out what the local policies are, it’s very easy to fall foul of their legal obligations without even knowing it.

Breaching lettings laws can have serious consequences for landlords. They can be:

• Fined up to £30,000 by their local council
• Issued with a rent repayment order for up to 12 months’ rent
• Prosecuted in court and given a potentially unlimited fine and/or face jail time
• Issued with a banning order, preventing them from letting property altogether

For more on some of the recent fines that have been handed out to landlords, see our article from last month.

Here are five of the most common mistakes we see landlords making in relation to lettings legals:

1. Not protecting their tenant’s deposit in a government-approved scheme and giving the tenant the required ‘prescribed information’. This means they can’t issue a valid section 21 notice if they want to regain possession of their property, and the tenant can sue them for up to three times the deposit amount.
2. Adding unenforceable terms to an Assured Shorthold Tenancy (AST). It is possible to make changes and additions to a tenancy agreement, but if you want to do that, you should take legal advice. Tenants have statutory rights that you can’t violate, and if a clause is deemed to be unfair, it won’t stand. Just because you’ve put something into a rental contract and the tenant has signed it, that doesn’t mean it’s enforceable!
3. Not providing the tenant with a copy of the current Gas Safety certificate. This must be provided to the tenant before the tenancy begins and within 28 days of each annual check during the tenancy, otherwise a section 21 notice is likely to be declared invalid by a court.
4. Thinking they have the right to enter the property. We often hear about landlords who go into the property without the tenant’s permission, and sometimes even without their knowledge. Under the law, landlords must give tenants at least 24 hours’ notice, ideally in writing, if they (or their contractor or representative) wants to enter the property, and they must have a genuine reason for wanting to do so.

And although tenants are expected to give access for repairs, maintenance and periodical inspections, they aren’t obliged to. The only time you can go into the property without your tenant’s permission is if there’s an emergency, such as the smell of gas. Otherwise, if they repeatedly refuse to let you in, the only options are to either serve an eviction notice or seek a court injunction order.

5. Assuming the tenancy automatically ends once a fixed term expires. Quite a lot of landlords, particularly ones who are new to letting, are surprised when their tenant doesn’t leave at the end of a fixed term. But under s5 of the Housing Act 1988, a new periodic tenancy is automatically created at the end of all ASTs, so if you want to legally regain possession at the end of a fixed term, you must issue a section 21 notice giving your tenant two months’ notice.

And it’s not just tenant and property-specific laws that landlords get wrong - many still don’t fully understand what tax they should be paying on their rental income. That means they’re either under-reporting their profits or going the other way and paying more tax than they need to!

The best way to make sure your buy to let business stays on the right side of the law is to use the services of a professional letting agent that has membership of ARLA Propertymark, like Your Move. Our people are trained and qualified through ARLA and we have legal support to ensure we stay right up to date with all legislative changes.

If you’d like to discuss our Fully Managed service or you have any questions about recent or upcoming changes to legislation, just speak to the team in your local Your Move branch.