Lettings legislation and compliance can be a minefield, especially when you are unaware of the appropriate processes to ensure your tenant is cared for and secure. Landlords and Letting Agents alike need to ensure they have their ducks in a row, to ensure tenancies are conducted properly, professionally and without fault.
Fortunately, Bourne Estate Agents provide a complete management solution, which helps keep all tenants, landlords and themselves within the confounds of what’s appropriate and required to ensure complete compliance, before, during and after the tenancy. With the information below I would like to provide you with some of the legislation we abide by, to ensure our landlords and tenants have complete peace of mind.
Our professional, highly trained and diligent staff are on hand to provide support and guidance throughout the tenancy on all aspects of the process.
1. Deposits must be placed in one of the government backed schemes:
Any deposit funds must be placed in one of the designated government backed schemes within 30 working days of a tenancy commencing or the deposit being received, failure to do so is a criminal act and may make the landlord or their agent, liable for a fine at court of up to three times the deposit sum.
Transferring the money into a separate bank account doesn’t qualify. Failure to place a deposit fund within a scheme will invalidate any Section 21 Notice (eviction notice) which the landlord wishes to serve. The Tenancy Deposit Scheme (TDS), which Bourne Estate Agents are a member of, have launched a Code of Recommended Practice. This Code of Practice sets out the recommended requirements which lettings agents and Landlords should meet, as members of this scheme.
2. How to Rent Guide:
The guide was introduced by the Deregulation Act 2015 and must be given to tenants on the commencement of the tenancy. It is important to ensure your tenant is given the guide as failing to do so could mean any Section 21 Notice served is subsequently not valid.
The recent amendment to the How To Rents Guide has removed references to London Mayor’s London Rental Standard, which was abandoned by the Mayor in April 2017. We had hoped that other amendments, such as mentions regarding the introduction of the Rogue Landlords’ and Agents’ Database banning orders and Homelessness Reduction Ace would be included. However these have not been identified, which does mean that the Guide will no doubt be amended again. It is therefore vital to ensure that both landlords and agents are on top of these changes and are aware of any such amendments when they are released. A good starting place to ensure you are using the correct version of the guide is the government website. Bourne Estate Agents ensure all is provided to all tenancies as required.
3. Tenants are expected to keep a rented property in a ‘tenant-like manner’:
Tenants are expected to look after their rented property and carry out small jobs around the property – subject to health and safety considerations. A landlord is not expected to repair or maintain items that a tenant has broken through negligence or misuse; however the landlords have a duty of care to repair in line with section 11 of Landlord and Tenant Act 1985.
4. Tax evasion and changes to how much you need to pay:
Landlords who earn an income from their rental property must complete a tax return. Letting a property is, in effect, running a small business and should be treated as such. HM Revenue & Customs ca impose hefty fines on anyone discovered to be evading tax.
Higher-rate taxpayers can no longer offset all their mortgage interest against rental income before calculating the tax due. This will lead to high tax bills, even if investors have not seen their income increase. The reduction in relief is being phased in between 2017 and 2020 and will be replaced by a 20 percent tax credit. Landlords can currently offset only 75 percent of their mortgage interest against their profits. This falls to 50 percent in 2018, 25 percent in 2019 and zero in 2020.
5. Smoke alarms and carbon monoxide alarms:
From October 2015, all privately rented properties must adhere to the changes outlined within The Deregulation Act 2015. To reduce the risk of fire or carbon monoxide poisoning to tenants, Parliament introduced legislation, meaning from 1st October 2015, private sector Landlords need to have installed at least one smoke alarm on every storey of their properties and a carbon monoxide alarm in any room containing a solid fuel burning appliance, such as a coal fire wood burning stove.
Landlords must ensure the alarms are in working order at the start of each new tenancy. It’s also good customary practise to ensure the tenants agree and that all smoke alarms and carbon monoxide detectors are tested on the day the tenancy begins, to make sure they are in working order.
6. Insurance:
Landlord insurance is a growing area, with an increasing number of specialist policies covering a range of products from building insurance, contents, legal protection, rent loss and appliances. Having the correct insurance is vital as not being adequately protected could be disastrous for both tenant and for the landlord. At Bourne, we work with third party companies to provide bespoke and competitive policies to make certain tenants are well cared for and for landlords are covered to appropriate levels.
7. Safety requirements:
Before lettings out a property, a landlord should confirm that the property meets all current safety regulations, to ensure the health and safety of their tenants by keeping the property safe and free from health hazards.
These can include:
Gas Safety Regulations 1998 – Landlords of rented residential accommodation must have an annual gas safety check carried out on gas appliances (and related gas flues) which they provide. Tenants must be given copies of the certificate (which must be no more than 12 months old) prior to moving in and given a copy of the annual safety check certificate. Work must only be carried out by registered gas safe engineers.
Electrical tests – Government guidelines state that electrical installation condition reports (EICR) should be carried out every 5 years. We recommend that portable appliance testing (PAT) should be carried out every year or between tenancies, dependent on which is soonest.
Legionnaires Disease – There is a legal duty for landlords to assess and control the risk of exposure to legionella bacteria but health and safety law does not require landlords to produce or obtain, nor does HSE recognise, a legionnaires testing certificate.
Fire regulations – Any furniture left in the property must comply with the Furniture & Furnishings (Fire) Safety Regulations 1988 (as amended 1993). These relate to the provision of upholstered furniture. If any furniture does not comply with the regulations and carry an appropriate label, it should be removed and/or replaced.
8. Check-ins and check-outs:
Conducting a proper check-in and check-out is essential. These should include a full inventory check, condition report check and a full set of dated digital photographs. If the landlord or tenant can’t agree on what the tenant may be liable for at the end of the tenancy, then the check-in and check-out evidence is the only way the landlord can prove their case. In contested cases, TDS adjudicators start from a position of ‘the money belongs to the tenant’ and it’s up to the landlord and prove otherwise.
9. Immigration Bill – Right To Rent Checks:
From the 1st February 2016, landlords and letting agents must check that their tenants, and it’s up to the Landlord to prove otherwise. As from this date, all prospective adult occupiers over the age of 18 will need to provide acceptable documentation to prove they have the right to reside, and therefore rent, within England. The new changes will only impact on tenancies that commenced on, or after, 1st February 2016.
The responsibility for carrying out the checks falls on the landlord, agent or householder who is letting private rented accommodation. Where a managing agent has been instructed, the responsibility of checking the ‘right to rent’ of prospective tenants falls on them and not the landlord. If, however, a letting agent establishes that a person does not have the right to rent, and reports the matter to the landlord in writing, should a residential tenancy commence with the said parties, the landlord will then be liable to a penalty. Under the new rules, landlords who fail to comply could face penalties of up to £3,000.00 per adult occupier.
In order to comply with the new changes and in making right to rent checks, a landlord, letting agent or householder should check the following prior to creating a residential tenancy;
a) Check which adult occupiers will live in the property as their only or main home.
b) Verify and take copies of acceptable documents for each adult occupier. Record the date of verification and noting any expiry dates of a person’s right to be in the UK.
So, if you are thinking of becoming a landlord for the first time, and/or have a property which is currently let, but you are unsure of what’s right and what’s not, contact one of our local lettings experts today.