A guide for landlords to lettings rules and regulations

Are you thinking about becoming a landlord or are you one already? Below is our advice to help keep all landlords up to date with lettings legislation.

Deposits must be placed in a Tenancy Deposit Scheme

Any deposit funds must be placed in one of the three designated government backed Tenancy Deposit Schemes (TDS) 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 liable for a fine at court of up to three times the deposit sum. Putting 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.

TDS has launched a Code of Recommended Practice. This Code of Practice sets out the recommended requirements which letting agents and landlords should meet as members of the Tenancy Deposit Scheme.

Tenants can report poor housing conditions

Tenants can report poor housing conditions (eg no running water, excessive mould, etc) to their local authority. Under the Landlord and Tenant Act 1985, Section 11, the landlord has a legal duty to ensure the property is kept in repair and in working order unless damage is caused through tenant negligence. If a landlord does not carry out repairs under Section 11 of the Act within a reasonable time frame, in certain cases the tenant has the right to withhold the rent until work has been completed. Part 1 of the Housing Act 2004 risk assessment procedure – The Housing Health and Safety Ratings System (HHSRS) – assesses the risks to health and safety within residential properties and local authorities have the power to enforce action upon the landlord or letting agent to ensure the property is returned to a satisfactory condition.

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.

Tax evasion is illegal

Landlords who earn an income from their rental property must generally complete a tax return. Letting property is, in effect, running a small business and should be treated as such. HM Revenue & Customs can impose hefty fines on anyone discovered to be evading tax. Generally, the interest part of a buy to let mortgage can be off-set against the tax bill for the property along with various other concessions, however, following the recent Budget, this is set to change from April 2017. Check the HMRC website for full details.

Smoke alarms and carbon monoxide alarms

From October 2015 all privately rented properties must adhere to the changes outlined within The Deregulation Act 2015. Working smoke alarms are to be fitted to each property and carbon monoxide alarms are to be fitted in rooms that are classed as ‘high risk’.  

Legionnaires’ Disease

All residential properties which are rented out must now have a risk assessment undertaken to determine the risk of Legionella. This then allows landlords to implement a suitable control scheme. 

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 and not being adequately protected could be disastrous.

Safety requirements

Before letting out a property, a landlord should ensure that the property meets all current safety regulations, these include:

Gas Safety Regulations 1998
Furniture and Furnishings (Fire) (Safety) (Amendment) Regulation 1993

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 and the 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 to prove otherwise.

Immigration Bill

From the 1st February 2016, landlords and letting agents must check that their tenants and any other permitted adult occupiers have the ‘right to rent’. As from this date, all prospective adult occupiers over the age of 18 will need to provide acceptable documentation to prove that they have the right to reside and therefore rent within England. The new changes will only impact on tenancies that commence 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;

1. Check which adult occupiers will live in the property as their only or main home.
2. 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.

For more information on these measures known as ‘right to rent’, please give our office a call.