Letting Agents Cambridge - Landlord Obligations
One of the key reasons for appointing a professional agent to manage your rental property is the ever increasing implications of Legislation and Regulation faced by Landlords. It is our job to keep abreast of changes in requirements affecting Landlords ensuring they are fully informed and able remain fully compliant.
Apart for the general requirements to keep your property is a good state of repair there are a number of specific legal obligations that Landlords must comply with in order to ensure your property provides a safe environment for a tenant. Failure to comply with these obligations brings serious consequences including the potential for substantial financial penalties and in some case imprisonment. Particular statutory obligations that affect Landlords are:
Landlords are obliged to ensure that all Gas installations, including Boilers, Pipes and Flues and Appliances are maintained in a good order so as to prevent risk or injury to any persons. The Regulations require for all Gas Installations and Appliances to be checked and certified annually by a GASSAFE registered Engineer.
The written report (The Landlord’s Gas Safety Certificate or CP12) must be made available to the tenant prior to the commencement of the tenancy and be kept at the property at all times. The Landlord or The Agent must also keep a copy for a minimum of 2 years.
Revisions to the regulations in April 2018 provide some flexibility over the timing of subsequent certificate provision with full 12 month coverage being provided when the check is completed any time between 10 and 12 months from the previous certificate issue.
Where Award Property Management Ltd is instructed on a Full Management basis, we will ensure compliance with this obligation by arranging the annual safety check on the Landlord’s behalf. Usually this will be combined with an annual service of the boiler and any appliances at the same visit. If a Landlord fails to provide an LGSC at least 48 hours before a first tenancy is due to commence, The Agent will arrange this to ensure the Landlord is compliant.
A Landlord is required to ensure that all electrical appliances and the electrical supply are ‘safe’ and will not cause risk or danger. This requirement includes both second-hand and new appliances including items such as immersion heaters, toasters, washing machines and kitchen appliances, cookers and showers. From the 1st January 1997 all new electrical appliances must carry a ‘CE’ mark.
Landlords are also responsible for providing instructions in the use of appliances at a rental property and for ensuring there are maintained or replaced when included within the terms of the rental agreement.
Award Property Management Ltd recommend that in order to ensure electrical safety is assured, rental properties should be checked by a qualified electrician regularly. For the supply and property wiring this should be through the provision of a Domestic Electrical Installation Certificate prior to the first tenancy and every 5 years subsequently. For appliances provided as part of the rental agreement, Annual Portable Appliances Testing should be undertaken. In this way Landlords can demonstrate appropriate risk management to ensure safety. Award Property Management Ltd will normally undertake these checks on a Landlord’s behalf on a rolling basis whilst the property is under Full Management.
These Regulations cover all upholstered furniture that is included in the rental agreement or supplied with the property, including beds, mattresses, padded headboards, suites and chairs/sofas and items with loose or fitted covers. Children’s furniture, cots, cushions and pillows and garden furniture that can be used indoors are all also included. Most furniture manufactured after 1983 will probably comply and carry the relevant label ‘Carelessness causes fire’. Genuine antique furniture made before 1950 is exempt in most cases.
If in doubt whether an item is compliant then it is better to remove it from the property prior to letting. If in any doubt Award Property Management Ltd can inspect and advise accordingly.
These regulations require private rented sector landlords, from 1 October 2015, to have:
- at least one smoke alarm installed on every storey of their rental property which is used as living accommodation, and
- a carbon monoxide alarm in any room used as living accommodation where solid fuel is used - after that, the landlord must make sure the alarms are in working order at the start of each new tenancy.
The regulations require landlords to ensure alarms are installed in their properties with effect from 1 October 2015. After that the landlord (or someone acting on behalf of the landlord) must ensure all alarms are in working order at the start of each new tenancy.
We will ensure compliance with a landlord’s responsibility to ensure the correct provision of required alarms and to satisfy the obligation to test all alarms on the first day of any new tenancy.
Tenants should then take responsibility for their own safety and test all alarms regularly to make sure they are in working order. Testing monthly is generally considered an appropriate frequency for smoke alarms. If tenants find that their alarm(s) are not in working order during the tenancy, they are advised to arrange the replacement of the batteries (tenant’s responsibility) or the alarm itself with the relevant landlord.
Landlords of residential accommodation have responsibilities for combating Legionnaires Disease. Health and safety legislation requires that landlords carry out risk assessments for the Legionella bacteria which cause Legionnaires Disease and thereafter maintain control measures to minimise the risk. Most rented premises will be low risk but it is important that risk assessments are carried out and control measures introduced.
The requirement for a valid Energy Performance Certificate (EPC) to be provided in order for a rental property to be marketed to let has been in place for some time.
In 2015, regulations for minimum energy efficiency standards (MEES) were put in place with the effect that from April 2018 no ‘new to market’ property can be offered to let if it carries an EPC level below Band E. Properties under existing tenancies can continue to be let whilst the tenancy continues, however from April 2020 all rental property will be subject to the requirements including both new and existing tenancies.
Some minor exceptions are permitted under specific circumstances subject to registration and in 2019 additional obligations have been introduced in respect of the process for exemption and landlord’s contribution towards costs of upgrades.
This Act came into force on 20 March 2019. It is designed to ensure that all rented accommodation is fit for human habitation and to strengthen tenants’ means of redress against the minority of landlords who do not fulfil their legal obligations to keep their properties safe.
There are no new obligations for landlords under this Act; the legislation requires landlords to ensure that they are meeting their existing responsibilities with regards to property standards and safety.
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. The Act states that there is an implied agreement between the tenant and landlord at the beginning of the tenancy that the property will be fit for human habitation.
Once the Act came into force on 20 March 2019, landlords with properties let on existing tenancies had 12 months to comply. For any new tenancies that start on or after 20 March 2019, the Act will apply immediately. If a landlord fails to comply with the Act, tenants may have the right to take court action for breach of contract.
If the court decides that the landlord has not provided their tenant with a home that is fit for habitation, then the court can:
- make the landlord pay compensation to their tenant
- make the landlord do the necessary works to improve their property
If the tenant seeks redress through the courts, this does not stop their local authority from using its enforcement powers. Local authorities have a range of powers which allow them to tackle poor and illegal practices by landlords and letting agents, including when landlords do not carry out necessary works that have been brought to their attention.
What are the criteria for ‘Fitness for Human Habitation’?
The courts will decide whether a property is fit for human habitation by considering the matters set out in section 10 of the Landlord and Tenant Act 1985. These are whether:
- the building has been neglected and is in a bad condition
- the building is unstable
- there’s a serious problem with damp
- it has an unsafe layout
- there’s not enough natural light
- there’s not enough ventilation
- there is a problem with the supply of hot and cold water
- there are problems with the drainage or the lavatories
- it’s difficult to prepare and cook food or wash up
- or any of the 29 hazards set out in the Housing Health and Safety (England) Regulations 2005
This legislation effective from 1st June 2019 bans the charging of fees and charges to tenants by private landlords and letting agents. With minor exceptions known as ‘permitted payments’ all charges made to a tenant will be considered a ‘prohibited charge’ and will be outlawed. The Act contains 35 sections and principally (but not exhaustive), the charges/fees prohibited will include:
- Application / Administration fees charged to a tenant when arranging a tenancy
- Referencing fees
- Check in / Check out fees or any kind of inventory fee
- Any renewal fees for renewing or extending a tenancy
- Any ‘in tenancy charges’ with specific exceptions
All of the above elements are seen by government as charges associated with ‘running’ a rental property and so are considered to be landlord costs.
In addition, further specified implications are:
- Tenancy Deposits will be capped at no more than 5 weeks rent equivalent (for tenancies with an annual rent value of less than £50,000).
- Holding Deposits will be capped at a maximum of 1 week’s rent (refundable in some circumstances)
- No additional Deposits can be charged for pets
- Tenants cannot be required to contract with or make payment to a specified third party (insurer, referencing agent etc) by a Landlord or Agent.
‘Permitted payments’ are few and include:
- Reasonable costs incurred for replacement key provision where keys are lost (no charge for time etc. only the actual cost of replacement keys is permissible).
- Interest is chargeable in respect of late rent payment. This is capped at 3% above UK base rate pro-rata and only chargeable after the rent falls 14 days in arrears.
- A reasonable fee for amended or change to a tenancy made by the tenant (e.g. change of name or change of sharing tenant). This is capped to the actual cost of administering the change or £50 whichever is lower.
Alongside these changes, strict process changes in relation to how a tenant is secured and a tenancy commenced are specified. Defined timescales have been determined within which an application has to be processed with a tenancy agreed and signed.
Award Property Management staff are able to administer the requirements and provide guidance to landlords on the full implications of this legislation.
The Immigration Act 2014 introduced the concept of 'right to rent' to the private rented sector. Right to rent requires landlords and agents check the immigration status of their prospective occupiers at the outset of the tenancy. Failure to do so could result in fines for landlords and letting agents as of February 1st 2016 across England. From December 1st 2016, the government has introduced additional penalties and offences relating to right to rent. Landlords now face potential imprisonment for failure to check the occupier's right to rent status, so it is even more important that they do it correctly every time.
ADDITIONAL LANDLORD RESPONSIBILITIES
Consents to Let
There are a number of potential implications to consider prior to letting your property and these include:
Mortgage Provider or Lender
If your rental property is subject to a mortgage or other loan, then it is important to advise your lender and obtain their consent prior to letting the property. It is also important where a lender imposes any covenants or restrictions over the letting that we are notified so that these can be incorporated in to the tenancy agreement as necessary.
Head Leaseholder or Freeholder
If your rental property is owned under a leasehold agreement, then you should obtain the permission of the head leaseholder or freeholder prior to letting and ensure any restrictions are complied with.
Insurance considerations for rental properties are quite different than those for an owner occupied dwelling, as well as ensuring buildings cover is in place, contents, accidental damage, rent guarantee, legal expense and public liability cover are all important things to consider. Most Insurance providers require that you inform them if the property is to be let or if it is likely to remain vacant for any period of time.
Award Property Management Ltd can offer cover for all these aspects. Please talk to us for further information.
Under the Housing Act 2004 certain properties that are used by ‘sharers’ or where individuals are living as more than one household are defined as Houses in Multiple Occupation (HMOs). In some instances HMOs will also require mandatory licensing by the Local Authority and Award Property Management Ltd can advise on the implications of complying with this requirement, please speak to us for assistance.
Taxation and Overseas (non-resident) Landlords
A Landlord must notify the HMRC that they are letting a property as any rent received is likely to be considered for taxation. We would advise that you speak to a qualified accountant or financial adviser to ensure you properly address the tax implications of rental income.
In particular under the Finance Act 1995 agents are required to make arrangements for rent received where a Landlord resides overseas, including deducting tax at the basic rate from rental income and forwarding this to the Inland Revenue on a quarterly basis.
Within this Act there is a scheme for overseas (or non-resident) landlords to self-assess and apply for an exemption under the Non-Resident Landlords Scheme (NRL). Award Property Management Ltd would advise Landlords to make an application under this Scheme and we can provide relevant forms for you to complete to obtain your exemption reference number.