New Property Management Laws Explained

At the Surrey Property Exchange meet, which we sponsored, we had the pleasure of meeting Peter Littlewood, from ‘iHowz‘ (formerly known as ‘The Southern Landlord Association’). Peter provided us with a refresher of the new laws that came in regarding landlords/tenants and a rundown on current government reviews, which could potentially translate into new laws within the coming year or two. We always aim to keep abreast of any changes in regulations for our property management services throughout the UK.

Let’s take a look at what has happened so far since 2018:

• Tenancy Fees Act the abolition of tenant fees, which came in on June 1st and prevented agents from charging tenant fees for referencing/starting the tenancy/checks/ending the tenancy.
• Minimum Room Sizes: The new law, which came into effect in October 2018 and relevant for HMOs, establishes that a single adult room needs to be over 6.51 sqm; and where there are two adults, the room must be at least 10.22 sqm.
• Data Protection: All Landlords must inform their tenants of the data they hold for them.
• New Section 21: This is now called Section 6A and makes it harder to evict a tenant if the correct paperwork has not been served by the landlord/agent at the start of the tenancy.
• Client Money Protection: every agent must be signed up to the client money protection scheme; The Client Money Protection (CMP) protects tenants and landlords against agencies going into administration and inappropriately misusing their funds.
• Fitness for Human Habitation Act: Under the Act, the Landlord, and Tenant Act 1985 is amended to require all landlords (private and social) to ensure that their properties, including any common parts of the building, are fit for human habitation at the beginning of the tenancy and throughout.
• Right to Rent Checks: these checks need to be conducted before granting a tenancy, and a tenant must have the right to reside in the UK at the start of the tenancy for this to be legally granted.
• Minimum energy efficiency standards: properties with an EPC lower than an E can no longer be rented out until the EPC is brought back to at least an E (at the landlord/owner). The regulations came into force for new lets and renewals of tenancies from April 1st, 2018, and all existing tenancies on April 1st, 2020.

The Government is currently going through several proposals that may translate into new legislation after the consultation period ends.

Here are a few of them:

• Property Redress Scheme for Landlords: currently, all agents need to belong to a redress scheme, where the clients (landlords and tenants alike) have recourse should things go wrong. Last year the Conservative Government announced that all buy-to-let landlords be required to join one of the schemes. However, no date has yet been set for this. There are also general questions about whether ‘hands-off’ landlords, that outsource the full management to agencies, would need to sign up to this if their agent is already a member. Their involvement with the tenants is little to none.
• 5-Year Electrical Checks: At the start of the year, the Government committed to introducing 5-year mandatory electrical checks for the private rented sector. Not only will each property need to be checked every 5 years, but it will also have to be done by someone within the competent person scheme. Despite not having announced a start date for this yet, once it has kicked off, landlords who are found to have failed in their duties will be fined up to £30,000.
• Selective Licensing Review: This is generally seen as a useful tool for improving standards across the property industry. A significant portion of local authorities are considering joining the selective licensing scheme. A 2007 review into this by DCLG found that while local authorities saw the benefits of having a particular licensing scheme, they also felt that it would be resource-intensive and were concerned about the quality of support services they could offer landlords.
• Housing Courts: With disputes/evictions and other property matters taking up a high portion of the County Court cases, the Government is looking into creating a new Housing Complaints Resolution Service which would only focus on housing-related matters and speed up the process for all involved. County Court judges are not housing experts, so if a housing-related court were created, these judges would be fully knowledgeable of the property law’s ins and outs, and it may mean less waiting time and a quicker resolution.
• 3-Year Tenancies: This is being looked at as a measure against retaliation evictions. Retaliation evictions are where, for example, the tenant complains about something in the property not working, and instead of fixing it, the landlord evicts them for complaining. While the number of ‘rogue’ landlords who act in such a way is minor, it has come to the Government’s attention that tenants may want more security – and that’s where the 3-year tenancies come in. This naturally brings whether all tenants want 3-year tenancies, with some preferring more flexible shorter time options.
• Leasehold Properties: The Government has proposed abolishing leasehold properties with claims that many were mis-sold. The full consultation document can be found here.
• Tenancy Deposit Schemes: If it a wide known fact that tenants who are renting and have a deposit with their current landlord/agent struggle when it comes to moving to another property, as they need to save up and pay for their next deposit, before getting their current one back. There are talks about streamlining this so that a deposit can be automatically passed from one landlord/agent to another, so the tenant(s) do not have to fit the enormous bill upfront each time; from a practical perspective, however, this is easier said than done. Questions such as ‘what happens if a tenant owes rent or damages the property before leaving’ are key here, as there would need to be some protection in place for landlords where they could ensure their damages get repaid, even when a deposit moves over to a new agent/landlord.
• Band A Council Tax for HMO Rooms: Over the last 5-10 years, there has been a widespread trend of converting properties into HMOs, with landlords in areas where demand for rooms is high, buckling in on the trend; what is happening now is that many councils are turning around and re-classing these properties as stand-alone units, therefore making them eligible to pay council tax. On a practical aspect,, this translates into the landlord’s bill being much higher as a property that says it had 5 bedrooms and a council tax of £1200 per annum now has 5 bedrooms, with each of these having a council tax of £600 per annum; this translates into £3000 per annum for the landlord as opposed to the £1200 it was previously. While currently, this is only happening in certain parts of the country, there is talk of these changes being implemented in the country.

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