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Welcome to Private Sector Residential Tenancies –Meeting the Legal Requirements

rics.org18 June 2020 | 5:15 – 6:15 PM

The seminar will begin shortly

© 2018 RICS© 2020 RICS

Private Sector Residential Tenancies - Meeting the Legal Requirements

Speaker:Jason HobdaySolicitorWomble Bond Dickinson – UK LLP

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• Assured Shorthold Tenancies• Energy Performance Certificates• MEES• Gas Safety Certificates• Fire Safety• Electrical Safety Standards• Licensing• Deposit Protection• Tenant Fees Act 2019• Covid-19

Content

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• Recovering possession

– Via s.21 Housing Act 1988 without having to prove grounds for possession (no fault)

– Via s.7 and a ground for possession in Schedule 2 Housing Act 1988

• Fixed Term AST

– S.21 Notice cannot be relied upon during the fixed term of an AST

– Possession via s.7 route only if forfeiture/re-entry provision references grounds for possession in Schedule 2 Housing Act 1988

• Periodic AST

– S.21 Notice cannot be relied upon if served within four months of the tenancy commencement day

– Possession via s.7 route and grounds for possession in Schedule 2 Housing Act 1988

Assured Shorthold Tenancies

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S.21 Notice cannot be relied upon at all (regardless of whether tenancy is FT or periodic) if:

1. Property is an HMO or is in a Selective Licencing area and LL does not have an HMO Licence/ Selective Licence

2. Tenancy started after April 2007 and deposit protection requirements have not been complied with

3. Prescribed Form of Notice (form 6A) was not used4. Does not give at least 2 months notice5. Prescribed Requirements have not been complied with by the LL 6. Council has served an Improvement Notice / Emergency

Remediation Notice in respect of the Property in last 6 months7. Landlord has charged Tenant fees which are a Prohibited

Payment under the Tenant Fees Act 2019 and these have not been repaid

8. It was served more than 6 months ago

• Uncertain future for ASTs

Assured Shorthold Tenancies

Energy Performance CertificatesWhat are the requirements?

• Duty to commission an EPC before marketing

• Duty to put the EPC letter (A-G) in advertisements

• Duty to produce EPC to a purchaser or tenant

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Where a property has an EPC rating lower than E it will be unlawful for a landlord to:

• 1 April 2018 – grant a new tenancy, extend or renew an existing tenancy of domestic or non-domestic PR property

• 1 April 2020 – continue to let a domestic PR property

• 1 April 2023 – continue to let a non-domestic PR property

MEES - reminder of key dates for LLs

• For MEES to apply the property must be required to have an EPC

• Voluntary EPC? – position not clear but best to assume it does trigger MEES

• Exemptions – various, lasting max 5 years

• Penalties - maximum £5,000 for domestic and £150,000 for non-domestic, plus publication penalties

• Enforcement action – little or none reported

• Due diligence on disposal/acquisition

Key points to remember

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Gas Safety CertificatesWhat are the provisions and key requirements?

Regulation 36, of The Gas Safety (Installation and Use) Regulations 1998.

Three main legal responsibilities under the regs:

1. Maintenance• Every LL must ensure that there is maintained in a safe

condition:(a) any relevant gas fitting; and(b) any flue which serves any relevant gas fitting

• so as to prevent the risk of injury to any person in lawful occupation of relevant premises.

• Applies to premises, or any part of a premises, occupied for residential purposes under a lease or licence

• Obligation to only use Gas Safe registered engineers

What are the provisions and key requirements?

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2. Gas safety checks• Annual inspection by Gas Safe registered engineer

3. Gas safety record• Copy of CP12 must be given to T within 28 days of inspection• New Ts – copy of up to date CP12 must be given to

tenant/licencee prior to the commencement of the tenancy/licence• Copy of CP12 must be retained for minimum of 2 years• Short lets *(AirBnB) the CP12 must be displayed in the property• Communal gas equipment – CP12 must be displayed in

communal area

• Gaining access for gas safety inspections

• Due diligence on acquisition

What are the provisions and key requirements?

The Smoke and Carbon Monoxide Alarm (England) Regulations 2015

• PRS Landlords have a number of legal responsibilities which include:

• at least one smoke alarm must be fitted on every storey of a building on which there is a room used wholly or partly as living accommodation

• a carbon monoxide detector and alarm must be fitted in every room used wholly or partly as living accommodation in which there is a ‘solid fuel burning appliance’ which includes wood burning stoves and coal fires among other things

• Regs apply to any PRS tenancy, lease or licence of residential premises in England that gives somebody the right to occupy all or part of the premises as their only or main residence for rent (need not be market rent)

• Exemptions

Fire Safety

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• Landlords also have a number of legal responsibilities stemming from Furniture and Furnishings (Fire Safety) Regulations 2010, Electrical Equipment (Safety) Regulations 1994, The Regulatory Reform (Fire Safety) Order 2005 and Housing Act 2004, which includes:

• appropriate fire detection and alarm systems;

• ensuring residents have access to escape routes at all times;

• providing adequate fire precautions and procedures;

• carry out fire risk assessments in common areas of HMOs, flats, maisonettes and sheltered accommodation;

• electrical systems and electrical appliances supplied are safe;

• ensure that all furnishings, fittings, furniture provided by the landlord are fire safe; and

• fire extinguishers and fire alarms if the property is a HMO.

• Due diligence on disposal/acquisition

Fire Safety

• The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020

• When will the Regulations apply?

• all new tenancies from 1 July 2020

• all existing tenancies from 1 April 2021

New electrical safety inspections for residential properties

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What will the Regulations require?

• Electrical Safety Standards must be met during any period when residential premises are occupied under a tenancy

• Electrical Safety Standards defined as the 18th edition of the Wiring Regulations published by the Institution of Engineering and Technology and the British Standards Institution as BS7671: 2018

New electrical safety inspections for residential properties

What will the Regulations require?

• Fixed electrical cables and fixed electrical equipment (includes wiring, circuit boards, fuse boxes, sockets, fixed or wired-in appliances) are tested every 5 years by a qualified person who must provide a written report

• Landlord must provide report to:

• new tenants before they occupy the property

• existing tenants within 28 days of the testing

• prospective tenants within 28 days of a request

• local housing authority within 7 days of a request

• Landlord must carry out further or investigative work recommended by the report within 28 days

New electrical safety inspections for residential properties

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• What are the penalties and who will enforce?

• Local housing authorities will be responsible for enforcement

• Remedial notice can be served

• With tenant’s consent, local housing authority can step in and undertake work and charge landlord

• Civil penalties of up to £30,000

• Due diligence on acquisition

New electrical safety inspections for residential properties

• Licensing was introduced in order to improve management and safety standards in the PRS

• Licensing is controlled by local authorities

• Licences usually last for 5 years and fall into three categories:

1. Mandatory

2. Additional

3. Selective

• Penalties for failure to obtain a licence – Fine or RRO

Licensing

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A HMO is:

• a house or flat in which three or more tenants who form two or more households and who share facilities (kitchen, bathroom or toilet)

• a house converted into bed-sits or other forms of non-self-contained accommodation which is let to three or more tenants who form two or more household

• a house converted into one or more flats which are not wholly self-contained and which is occupied by three or more tenants who form two or more households

• a building converted entirely into self-contained flats if the conversion did not meet the standards of Building Regs 1991 and more than one-third of the flats are let on short-term tenancies

• Where a residential property in England or Wales is occupied by more than one household, it may need to be licensed under the Housing Act 2004.

Licensing

• Mandatory HMO licensing applies where the property:

• has 5 or more unrelated people living in it

• has 2 or more separate households living there

• Landlords of HMOs must make sure that:

• proper fire safety measures are in place, including working smoke alarms

• annual gas safety checks are carried out

• electrics are checked every 5 years

• the property is not overcrowded

• there are enough cooking and bathroom facilities for the number living there

• communal areas and shared facilities are clean and in good repair

• there are enough rubbish bins/bags

Licensing – Mandatory

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• Addition licensing

• Selective licensing

• range of exempt properties

• Licenses are non-transferrable

• Due diligence on disposal/acquisition

Licensing

• From 6 April 2007, any LL who grants an AST and takes a deposit from a T, must ensure the deposit is protected in accordance with S.212 - S.215 of the Housing Act 2004

• Deposit must be protected in an authorised scheme:• custodial scheme – LL passes the deposit to the scheme administrator, who will deal with the

arrangements for repayment at the end of the tenancy.

• insurance scheme - LL retains possession of the deposit but pays a premium to the scheme administrator. This premium pays for an insurance policy to cover the risk the LL does not return the deposit to T in circumstances where the deposit should be returned.

• Three authorised scheme providers

Tenancy Deposits (and deposit alternatives)

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Tenancy deposit protection

• Strict requirements for deposit protection• LL must protect deposit in authorised scheme within 30 days of

receipt of deposit• LL must serve upon the T prescribed information in respect of the

deposit protection scheme within 30 days of receipt of deposit

• Penalties for non-compliance• Section 21 notice• Refund of deposit and penalty

• Due diligence on disposal/acquisition

Tenancy Deposits (and deposit alternatives)

Deposit alternative

• Deposit replacement insurance• Non refundable fee at start of tenancy – pays for insurance policy

• Policy offers LL financial protection

• LL claims against policy at end of tenancy for any arrears or costs associated with damage or cleaning

• Deposit replacement company will have a dispute process – with losing party usually being required to pay fee of dealing with dispute

• If deposit replacement company finds in favour of LL they chase Tenant for reimbursement

• T cannot be compelled to go for zero deposit option

• Due diligence on disposal/acquisition

Tenancy Deposits (and deposit alternatives)

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• TFA came into force on 01.06.19

• Prohibits LLs and agents from charging any fees to Ts, other

than those ‘permitted’ by the Act

• Applies to all new applicable tenancies and licences entered in to on or after 01.06.19

• Applies retrospectively to all applicable tenancies and licences from 01.06.20

• Applicable tenancies and licences:• assured shorthold tenancies

• student accommodation tenancies

• licences to occupy housing in the PRS

Tenant Fees Act 2019

Only identified ‘Permitted Payments' can be charged to tenants. These include:• rent• refundable deposit not exceeding 5 weeks' rent (or 6 weeks' rent if annual rent is £50k or

more)• holding deposit (capped at 1 weeks' rent)• payment for certain default events such as loss of keys/security device, late payment of rent

(restricted to interest at 3% above BoE base rate)• payment on early termination of the tenancy by the tenant (must however reflect loss

incurred by landlord)• payment for the variation, assignment or novation of the tenancy (capped at the greater of

£50 or reasonable costs)• utilities, TV licence, council tax and communications services ie telephone/internet costs• damages for breach of contract

What restrictions are imposed by the Act?

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• Prohibited payments to be repaid to Ts and any interest awarded by the enforcement authority.

• The term(s) which breach the Act will not bind the T or T’s guarantor

• Section 21 notice cannot be served until prohibited payment has been repaid

• Trading Standards/district councils can impose a fine of up to £5,000 for breaches

• If a second breach is committed within 5 years, a criminal offence is committed. The LL agent could be subject to an unlimited fine and possible banning order (in the most serious cases). A local authority may also add a LL or letting agent to the database of rogue LLs

• Company directors can have personal criminal liability under the Act

What are the consequences of breaching the Act?

• Coronavirus Act 2020

• Possession notices

• 26.03.20 – 30.09.20

• Civil Procedure Rules – moratorium on possession proceedings and evictions

• Pre-Action Protocol for residential possession claims

• Other measures?

Covid-19

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Any questions?

Jason Hobday (Associate, Residential)

jason.hobday@wbd-uk.com

01752 677562

Contact

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