There are three major legal changes that are due to be implemented in 2019 which will impact on letting agents.
Homes (Fitness for Human Habitation) Act 2018
This is an important piece of legislation which is likely to have little effect on the ‘good’ landlords.
This legislation received Royal Assent on 20th December 2018 which means that it will come into force on 20th March 2019.
The Act amends the existing Landlord and Tenant Act 1985 by extending the obligations in that legislation. The basic requirements are that a property should be fit for human habitation at the start of the tenancy and should be kept in that condition throughout the tenancy.
What ‘unfit for habitation’ involves will include issues relating to: repair; stability; damp; internal arrangement; natural lighting; ventilation; water supply; drainage and sanitary conveniences; facilities for food preparation; hazards.
The new law makes provision for the tenant to seek remedy through the civil courts. The courts can issue a specific performance order that will require the landlord to make repairs to the property.
It will apply to all new and renewed tenancies from 20th March 2019. For existing periodic tenancies at that date the provisions will come into force one year later – i.e. 20th March 2020.
This topic will be covered in our in-house courses, see the ‘Courses’ page on our website by clicking here
In addition an Advice Sheet will be available on the Buddy section of our website shortly.
Client Money Protection
You will already be aware of the powers to require all agents to belong to an approved Client Money Protection (CMP) scheme were introduced in the Housing and Planning Act 2016 but so far those powers have yet to be implemented.
It is now extremely likely that those powers will be used to bring the requirement into force in 2019 (probably on 1st April).
However the current Tenant Fees Bill (see below) contains amendments to those powers. Assuming it is implemented the amendments mean that money already protected through a government approved tenancy deposit scheme will not need to also be protected by a CMP scheme. In addition, there will be limits to individual claims and; agents will be given a transition period – in certain circumstances – of 12 months to join a scheme.
The legislation requires that the level of protection is sufficient to cover all the client money held by the agent; that the certificate of the money protection must be displayed in every branch of the letting agent’s offices where it can easily be seen by the public coming into the office; that a copy of the certificate must be displayed on the agent’s website. Failure to do this could lead to a fine not exceeding £5,000.
Tenant Fees Bill
This legislation is in the later stages of its passage through Parliament but is likely to become law before the end of January. As yet there is no indication when the provisions will actually come into force but it would seem that it will be sooner or later in 2019.
It will have a major impact in the way that most agents run their businesses.
The basic provisions of the bill are that agents will not be allowed to charge any fees to the tenant with certain very limited exceptions. Although subject to final amendments this will include virtually all pre-tenancy fees (e.g. reference checks, inventories, guarantor fees etc ) and end of tenancy fees (e.g. renewals, check out fees etc.). Where a fee is allowable (e.g. change of sharer) it will be capped at ‘reasonable costs’.
In addition tenant deposits will be capped at a maximum of five weeks’ rent for tenancies where the rent is under £50,000 per annum and six weeks’ rent for tenancies where the rent is higher.
The implications for agents are that:
• Your current income stream is likely to be heavily affected
• You can either replace this by passing on some or all costs to the landlord OR looking for alternative sources of income OR a combination of both.
• There are likely to be requirements for changes in your processes.
• Your marketing and advertising material (including office displays) will probably need amending. In addition so will your website.
• You will almost certainly need to amend your client Terms of Business
• You will almost certainly need to amend your standard Tenancy Agreement.
We are currently offering a seminar on the major implications of this new legislation, please click here for further details.
Once the legislation is confirmed we will be adding an Advice Sheet to the Buddy page of our website.
Minimum Energy Efficiency Standards
Don’t forget that the final provisions of The Energy Efficiency (Private Rented Property (England and Wales) Regulations 2015 will come into force on 1st April 2020.
This means that existing tenancies must comply with the requirement to have an EPC with a current minimum rating of ‘E’.
While still a long way off landlords (and agents) should start making plans for those tenancies that will be affected. If, for example, a schedule of improvement works is required, planning for this needs to begin as soon as possible especially if it would involve major disruption to the tenant
The Ministry of Housing, Communities and Local Government has announced that it will shortly be announcing the findings of two consultations that have been under way for some time.
The suggestion is that the existing redress schemes for property should be revamped and extended. The plan would be for a single Housing Ombudsman to replace the existing two schemes. All those participating in the housing market including landlords and house builders would be required to join.
Longer Tenancies and a Housing Court
A plan to introduce longer tenancies as standard and to establish a specialised Housing Court to consider all property matters.
Electrical Installation Checks
Government sources have been talking recently about the possibility of the requirement for insisting on regular electrical checks for rented property.
The legislation is already in place (Housing and Planning Act 2016) and merely requires implementation.