As an experienced lettings agent, we can help to ensure that you meet all the necessary legal requirements for letting out your property. Feel free to come to us with questions and queries.
Why is buy-to-let legislation important?
Landlord legislation is there to protect both you, the landlord, and your tenants. While landlords must ensure that properties are let in a habitable state and let to individuals who can legally live and work in the UK, tenants must also make sure that they don't breach their contract or carry out illegal or anti-social behaviour within the property.
What are the penalties for landlords who don't follow the landlord legislation?
Because of the number of private landlords in the UK, the lettings industry is heavily regulated, with around 168 specific laws by which landlords and agents must abide. As such, there are hefty penalties should landlords break letting laws or ignore lettings legislation.
- Breaking letting laws in England can have a variety of consequences:
- Fire safety and other safety breaches that have the potential to cause harm could result in prosecution and unlimited fines.
- Renting out an HMO without a license could see you paying unlimited fines, plus repayment of up to 12 months' worth of a tenant's rent under the Rent Repayment Order Act.
- Failure to meet 'fitness for habitation' standards could result in tenants suing you for compensation, with awards at the discretion of the judge.
- If you illegally evict a tenant, they may be awarded compensation at the court's discretion.
- Electrical safety breaches come with a £30,000 fine.
- Not protecting your tenant's deposit in a government-backed scheme results in you having to pay back up to three times the amount.
- There is a £1,000 fine for letting to someone who doesn't have the legal right to live in the UK if it's a first offence – it’s £3,000 thereafter, and a potential custodial sentence.
What can landlords do to make sure that they adhere to new landlord legislation?
Because buy-to-let legislation is so vast and ever-changing, it can be difficult for landlords to comply with every area, so the best way to guarantee that you're compliant is to utilise the expertise and experience of a lettings management agent like Hunters.
However, it's important to understand that – while we can help you comply with new lettings legislation – ultimately, as the landlord, it is your responsibility for ensuring that your rental property is legally safe and properly let.
How can Hunters help?
Hunters is a well-known and well-respected letting agent. We help landlords throughout the UK to understand and comply with buy-to-let legislation. Because we work closely with local authorities, we keep abreast of any and all changes to lettings legislation and can pass on this information in an easy-to-understand manner.
Whether you need us merely to find your next tenants or to fully manage your property, we have a landlord package for you. If you'd like to know more about our services or require more detail or clarification on the new landlord legislation, visit our lettings homepage or find your local branch.
Landlord legislation includes requirements for:
- Central heating, boilers & gas appliances
- Checkout inspection
- Deposits and Tenancy Deposit Protection
- Electrical Equipment and PAT Testing
- Electrical Installations
- Electrical Safety in the PRS
- EPCs and MEES
- Furniture and Furnishing (Fire Safety)
- Homes (Fitness for Human Habitation) Act
- Prescribed Hazards
- Property Licensing
- Refundable Tenancy Deposit: tenancies before 01/06/2019
- Refundable Tenancy Deposit: tenancies from 01/06/2019
- Right to Rent
- Smoke and Carbon Monoxide Alarms
- Tenant Fees Act (2019)
- The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020
- The Renting Homes (Fees etc) (Wales) Act 2019
New European regulations now apply to the installations for raising and lowering blinds and the movement of curtains across windows. This means that new blinds and curtains being installed by a contractor will have fixed cords or ball-bearing pulls to prevent any danger of asphyxiation to a young child, as well as a warning notice with the purchasing material. Existing blinds and windows may need to be fitted with safety features to ensure compliance and to ensure safety. Throughout the agent’s period of management, it will check all blinds and curtains on a management visit and, if necessary, arrange for the relevant safety feature to be fitted at the landlord’s expense. If the agent is not managing the premises at any time, it will be your responsibility to make such checks and arrange the fitting of any necessary safety feature to ensure compliance of the lettings legislation.
Central heating, boilers and all gas appliances
The Gas Safety Regulations require all gas appliances to be inspected and a certificate (GSC) to be provided on an annual basis. We will normally arrange for these to be carried out. If you make your own arrangements, your property manager will require a valid copy of the GSC before the first tenancy can commence and then on an annual basis thereafter. If we are not provided with certificates and they expire, we will not be able to start a tenancy without a valid certificate if required.
At the end of each tenancy we will check the property carefully (fully managed only). We/you are required to agree deductions between landlord and tenant, and we will do everything we can to reach an agreement. If an agreement cannot be reached, the matter will be referred to the relevant body for arbitration. Both the landlord and tenant must accept the decision of the Independent Case Examiner (service included on Full Management only).
Deposits & tenancy deposit protection
The deposit will equal five weeks’ rent per the Tenant Fees Act 2019. The purpose of the deposit is to cover damage to the property over and above normal wear and tear and/or any rent arrears or costs incurred as a result of breach of contract.
The 2004 Housing Act prevents landlords from holding unregistered/unprotected deposits. All Hunters branches are members of a tenancy deposit service. All deposits relating to Assured Shorthold Tenancies will be dealt with under the rules of the Tenancy Deposit Regulations. Deposits relating to tenancies which are not Assured Shorthold Tenancies are not part of the scheme, although they will be dealt with along the principles of the scheme.
Electrical equipment and PAT Testing
It is recommended that all portable electrical items are tested before each tenancy. We can arrange for this to be done with a suitably qualified external contractor. The cost will be the landlord’s responsibility.
The safety of the electrical installations must be tested before the beginning of the first tenancy to ensure the system is safe. This type of safety check generally should be carried out every five years or sooner on the recommendations of the electrician. This regulation applies by law to England only but we always strongly advise that all safety checks are carried out where possible.
The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 (the Electrical Safety Regulations) came into force on 1 June 2020:
for new tenancies in the private rented sector with effect from 1 July 2020 (residential only); and
for existing residential tenancies in the private rented sector with effect from 1 April 2021.
It means that landlords have to ensure that electrical installations are inspected, and that BS7671:2018 standards are met, at the outset of a tenancy and at least every five years and also issue a copy of the inspection report to the tenants within 28 days of the inspection, and to carry out any remedial work within 28 days of the inspection (or sooner if the report requires). You can read the Landlord Guide here and also the Electrical Safety Roundtable & NAPIT Q&A.
You can contact your local Hunters office to discuss this and our recommendation is to commission your safety check sooner rather than later due to demand.
EPCs & Minimum Energy Efficiency Standards
Energy Performance Certificates (EPCs) are needed whenever a property is built, sold or rented and are valid for 10 years. EPCs present the efficiency of dwellings on a scale of A to G. The most efficient homes – which should have the lowest fuel bills – are in band A. The certificate uses the same scale to define the impact that a home has on the environment.
Better-rated homes should have less impact through carbon dioxide (CO2) emissions. Buy-to-let legislation effective from 1 April 2016 state that a tenant can apply for consent to carry out energy efficiency improvements in privately rented properties, subject to approval.
From April 2020, new lettings legislation states that there is a requirement for any properties rented out in the private rented sector to normally have a minimum energy performance rating of E or higher on an Energy Performance Certificate (EPC). The regulations are in force for all tenancies with effect from 1 April 2020. It will be unlawful to rent a property that breaches the requirement for a minimum E rating, unless there is an applicable exemption. A civil penalty will be imposed for breaches to the landlord legislation.
Furniture & Furnishings (Fire & Safety) Regulations 1988
Any soft furnishings in a let property must comply with the above regulations. Generally, soft furnishings manufactured after March 1990 will comply although they must have the relevant labels. Any unlabelled furniture is deemed non-compliant (unless it is antique horsehair filled and has not been reupholstered). Letting a property with non-compliant furniture is a serious offence which could lead to prosecution of the landlord and agents.
Homes (Fitness for Human Habitation) Act
The Homes (Fitness for Human Habitation) Act 2018, known as the Homes Act, replaces Section 8 of the Landlord and Tenant Act 1985 (LTA 1985) in England, with the purpose of improving living standards in the private and social rented sectors.
A property unfit for human habitation is ‘so far defective in one or more of those matters that it is not reasonably suitable for occupation in that condition’ such as: any prescribed hazard(s), repair; stability; freedom from damp; internal arrangement; natural lighting; facilities for preparation and cooking of food; water supply; drainage and sanitary conveniences; ventilation; and facilities for the disposal of waste water.
Under the Homes Act 2018, landlords and letting agents acting on their behalf must ensure that properties, including common parts where they have an estate or interest, are fit for human habitation at the beginning and throughout the duration of a tenancy. Tenants will now be able to take direct legal action if their agent or landlord does not comply with the Act. NB: Agents should be aware that property checks will no longer be needed by local authority enforcement office. This law applies to ALL domestic tenancies (England only).
NB: Section 8 of the LTA 1985 now only applies to tenancies in Wales. The new section 9C applies to Agricultural Tenancies, substituting ‘house’ with ‘dwelling’. The Act does not cover those with ‘Licences to Occupy’. This includes – but is not limited to – lodgers, those living in temporary accommodation and some property guardians.
All should ensure that their property/dwelling is fit for human habitation; your local agent can help with this.
All hot- and cold-water systems in residential properties are a potential source for legionella bacteria growth. All landlords and agents in control of private rented properties are now required to protect their tenants against the risk of contracting Legionnaire's Disease. Hunters can arrange the necessary assessments.
The Housing Act 2004 defines a ‘hazard’ as ‘any risk of harm to the health or safety of an actual occupier of a dwelling or HMO which arises from a deficiency in the dwelling or HMO’. The hazards used in the Homes Act are the 29 as listed in the Housing Health and Safety Rating System (HHSRS).
The 29 HHSRS hazards are: damp and mould growth; excess cold; excess heat; asbestos and manufactured mineral fibres; biocides; carbon monoxide and fuel combustion products; lead; radiation; uncombusted fuel gas; volatile organic compounds; crowding and space; entry by intruders; lighting; noise; domestic hygiene, pests and refuse; food safety; sanitation and drainage problems; water supply; falls associated with baths; falls on level surfaces; falls associated with stairs and ramps; falls between levels; electrical hazards; fire; flames, hot surfaces and materials; collision and entrapment; explosions; ergonomics; and structural collapse and falling elements.
Since the Housing Act 2004, local authorities have had powers to regulate standards in the private rented sector by introducing property licensing schemes. Licensing schemes are designed to address issues within the private rented sector and mandate minimum standards within certain types of rental properties.
There are currently three types of licensing schemes in the UK:
Mandatory licensing applies to large HMOs (Houses in Multiple Occupation) throughout the country.
Additional licensing schemes can be introduced by councils at their own discretion. They typically apply to smaller HMOs of three or four occupants and can implemented across an entire local authority or a specific area.
Selective licensing schemes can also be introduced by councils at their own discretion. Selective licensing will apply to all private rented properties no matter the makeup of the tenancy.
The penalties for operating an unlicensed property are significant; councils will issue civil penalties of up to £30k per breach and tenants can claim back up to 12 months’ rent.
At Hunters, we understand that the licensing process can be daunting and that the new landlord legislation can be very difficult to keep on top of. That’s why we offer services to landlords to ensure that the correct licence is acquired and that protection is guaranteed for both landlord and tenants. To achieve this we’ve partnered with Kamma, who provide tools that enable our franchises to remain fully compliant with the changing regulation and ensure that all landlords are fully licensed.
Tenancy Deposits: Tenancies from 1 June 2019
From 1 June 2019, a refundable tenancy deposit is capped at no more than five weeks’ rent where the total annual rent is below £50,000, or six weeks’ rent where the total annual rent is £50,000 or above. You may ask a tenant to pay a tenancy deposit as security for the performance of any obligations or the discharge of any liability arising under or in connection with the tenancy – for example, in case of any damage or unpaid rent or bills at the end of the tenancy (England only).
You are not legally required to take a deposit. In any case, you must not ask for a deposit which is more than five weeks’ rent where the annual rent is less than £50,000. If the annual rent is £50,000 or greater the tenancy deposit is capped six weeks’ rent. Any amount above this will be a prohibited payment.
Right to Rent
From 1 February 2016, all private landlords (and their agents) in England must check that new tenants have the right to be in the UK before renting out their property (Immigration Act 2014). If the Right to Rent check is acceptable, an agent can proceed with the normal full referencing procedure but, should a Right to Rent check fail, by law we will be unable to allow a tenancy to commence. We cannot agree a let until the applicant(s) have provided the agent with the correct documents. If a tenant has a time-limited right to remain, landlords and letting agents will need to conduct follow up checks; normally 12 months from the initial check or at the expiry of the individual’s right to be in the UK (whichever is the later).
Right to Rent was introduced in the Immigration Act 2014 as part of the government’s reforms to build a fairer and more effective immigration system.
Smoke & Carbon Monoxide Alarm (Amendment) Regulations (1 October 2022)
From 01 October 2022, all rental properties must continue to have at least one smoke alarm fitted on each storey of property as well as a carbon monoxide detector in all rooms that are used as living accommodation which contain a fixed combustion appliance such as gas boilers but excluding any room where there is only a gas cooker. You must keep clear records showing that the alarms and detectors were checked at the commencement date of any new tenancy beginning after 01 October 2022.
Tenant Fees Act (2019)
The Tenant Fees Act bans most letting fees and caps tenancy deposits paid by tenants in the private rented sector in England. The ban on tenant fees applies to new or renewed tenancy agreements signed on or after 1 June 2019.
The government guidance on the Act for tenants, landlords and letting agents helps explain how this legislation affects them. You might also find the ‘How to Rent’ and ‘How to Let’ guides useful.
The aim of the Act is to reduce the costs that tenants can face at the outset of and throughout a tenancy. Tenants will be able to see, at a glance, what a given property will cost them in the advertised rent with no hidden costs.
From 1 June 2019, the only payments that landlords or letting agents can charge to tenants in relation to new contracts are:
· A refundable tenancy deposit capped at no more than five weeks’ rent where the total annual rent is less than £50,000 or six weeks’ rent where the total annual rent is £50,000 or above.
· A refundable holding deposit (to reserve a property) capped at no more than one week’s rent.
· Payments associated with early termination of the tenancy, when requested by the tenant.
· Payments capped at £50 (or reasonably incurred costs, if higher) for the variation, assignment or novation of a tenancy.
· Payments in respect of utilities, communication services, TV licence and council tax.
· A default fee for late payment of rent and replacement of a lost key or security device giving access to the housing, where required under a tenancy agreement.
The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020
As of 4 May 2021, the Debt Respite Scheme (Breathing Space) allows people in England and Wales with unsustainable debts to arrange to enter a ‘breathing space’. Once someone enters a breathing space, their creditors (for our industry, this means landlords and their lettings agents) are not allowed to contact them directly to request payment of the debt, charge interest, fees or penalty charges for that debt or take enforcement action to recover the debt (including by taking possession of a property) while the breathing space is ongoing. This is designed to provide people in debt with enough time to find a solution for their financial problems. Formal government guidance can be read here direct from the government’s website.
The Renting Homes (Fees Etc.) (Wales) Act 2019
Sections 2 and 3 of the Renting Homes (Fees Etc.) (Wales) Act 2019 create offences for a landlord or agent to require a person to make a payment which is prohibited, or to enter into a contract for services, or to require the grant of a loan in consideration of the grant, renewal or continuance of a standard occupation contract, or pursuant to a term of a standard occupation contract from 1 September 2019.
What does this mean?
1. Any payment that a contract holder is required to pay, unless permitted by the Act, is banned and is a "prohibited payment". This is referred to in this guidance as "the ban".
2. Landlords and agents cannot require the grant of a loan to them, or require a person to enter into a contract for services with them as a condition of a tenancy.
From 1 September 2019, the only payments that landlords or letting agents can charge to contract holder in relation to new contracts are:
· A refundable tenancy deposit.
· A refundable holding deposit (to reserve a property) capped at no more than one week's rent.
· Payments in respect to utilities, communication services, TV licence and council tax.
· A default fee, where required under a occupation contract.
Renting Homes (Wales) Act
The Renting Homes Act is the biggest change to housing law in Wales for decades. From 1 December 2022 the Renting Homes (Wales) Act 2016 will change the way all landlords in Wales rent their properties. It will improve how we rent, manage, and live in rented homes in Wales. All social and private tenants will see some changes covering the way their contracts are provided, how homes are maintained and how they communicate with their landlords. All social and private landlords, including those who rent their properties through management companies or agents, will need to comply with the new law and make the necessary updates to their properties and paperwork.
What does the new law mean for me?
Tenants - Under the new law, tenants and licencees will become 'contract-holders'. Tenancy agreements will be replaced with 'occupation contracts'.
Landlords - For landlords this will mean:
- A simpler system, with two types of contract: ‘Secure’ for the social rented sector and ‘Standard’ for the private rented sector.
- Ensuring homes are fit for human habitation (FFHH). This will include, electrical safety testing and ensuring working smoke alarms and carbon monoxide detectors are fitted.
- Abandoned properties can be repossesed without needing a court order.
You can read more about this here; https://gov.wales/housing-law-changing-renting-homes
The Fifth Money Laundering Directive (5MLD)
On 10 January 2020, 5MLD took effect in the UK. 5MLD makes changes to the previous UK regulations and brings letting agents into the scope of the Money Laundering Regulations. This means that letting agents are required to assess certain tenancy agreements for their potential to be used as a mechanism for the proceeds of crime.
All tenancy agreements with a rent in excess of €10,000 per calendar month now form part of the regulations. This means that lettings agents are required to carry out ‘Know Your Customer’ checks on landlords and tenants. ‘Know Your Customer’ requires the checking of identification documents and confirmation of residency status, as well as verification that the tenancy is genuine and not set up to assist either the landlord or tenant to launder the proceeds of crime.
Tenancies that fall within the scope of the regulations will require ongoing monitoring to check that the initial conclusions regarding the money-laundering risk assessment remain unchanged throughout the whole term of the business relationship. Landlords and tenants who fall into this category of tenancy should therefore prepare themselves for additional questions and administration requirements. More information on the Fifth Money Laundering Directive can be found on the government’s website.