Alerts

Government legislates to ban Letting Agent Fees and Damp Houses: All change in 2019 for Residential Landlords

For landlords of residential properties, 2019 is gearing-up to be a year where the balance of power between the landlord and the tenant, shifts. Until recent times, much of the power lay with a landlord – ease of “no fault” possession in the ‘section 21 procedure’, limited security of tenure afforded to residential tenants, and little recourse available to tenants of properties in disrepair.

Change began with the introduction to the Deregulation Act 2015 (“DA 2015”). The DA 2015 restricted the landlord’s power to serve a section 21 notice (in accordance with section 21 Housing Act 1988), without first satisfying a number of statutory requirements relating to deposits, compliance certificates, etc.

Change has ratcheted up in 2019. Shortly to land onto the statute book is the Homes (Fitness for Human Habitation) Act 2018 (“HA 2018”), which comes into force on 20 March 2019 and The Tenant Fees Act 2019 (“TA 2019”), coming into force on 1 June 2019.

Landlords should be live to the implications of the new laws, act in good time to restrict their exposure to potential claims by tenants and going forwards decide how they will absorb those costs soon to be banned.

The HA 2018: What it means for landlords

  • There will be an implied covenant in all relevant tenancies that a home is fit for human habitation at the time a lease is granted or created, etc. and that it will remain fit for human habitation during the term of the lease. The covenant will apply also to all common or retained parts of a building.
  • Tenants may pursue their landlord for any failure to meet the “fitness test” laid down in the HA 2018.
  • In determining whether a house or dwelling is unfit for human habitation, regard shall be had to its condition in respect of: repair; stability; freedom from damp; internal arrangement; natural lighting; ventilation; water supply; drainage and sanitary conveniences; facilities for preparation and cooking of food; for the disposal of waste water; and, in relation to a dwelling in England in particular “any prescribed hazard” i.e. a risk of harm to the health and safety of the occupiers.
  • Examples might include: damp and mould growth, excess cold or heat, crowding or lack of space, entry by intruders, lighting, noise, pests, refuse, electrical hazards, falling elements, etc.

The TA 2019: What it means for landlords

All letting fees are banned, save for those detailed within the TA 2019 defined as “permitted payments”. A tenant will not be required to pay any banned fees; and a landlord will be prevented from serving any section 21 notice until it has paid back any banned payments first. Payments permitted under the TA 2019 are:

i. Any fee charged to hold the property for a prospective tenant to be no more than 1 week’s rent.

ii. The first rent charged is not be more than the future rent charged (to prevent charges being disguised as rent).

iii. Deposit limited to the equivalent of 5 weeks’ rent (where the annual rent is less than £50,000 or 6 weeks’ rent if more than £50,000).

iv. A fee of not in excess of £50 may be charged for providing consent to a variation, assignment, etc. of the tenancy agreement or the reasonable costs of the landlord or managing agent for considering for arranging the transaction.

v. May charge for the loss of a key or security device and for failure to pay rent in full within fourteen days of the due date, only if the tenancy agreement expressly permits.

vi. May only charge the tenant an amount equivalent to the “loss suffered” by the landlord due to a tenant’s early termination of the tenancy agreement.

vii. May only charge for utilities, TV and communication services if the tenancy agreement expressly requires the tenant to pay.

The consequences to a landlord for failure to comply with the TA 2019 could be severe. The TA 2019 allows for a penalty of up to £5,000 in respect of a landlord or agent’s first breach. It will be a criminal offence if the same breach is repeated within 5 years and a financial penalty of £30,000 may be imposed or the landlord be liable on summary conviction to a fine.

We can help by:

  • Providing advice as to the legal remedies available to you when seeking possession of your property.
  • Providing advice and respond to claims brought by tenants under the HA 2018 and TA 2019.
  • Providing advice and drafting of assured shorthold tenancy agreements.
  • Serving of notices under section 8 and section 21 of the Housing Act 1988
  • Helping with the recovery of rent and other arrears.
  • Issuing and defending court proceedings.
  • Advising generally regarding residential property portfolio management.

If you have any queries please contact our Property team on 01228 552600 or 01524 548494.

 

Email Alerts

Baines Wilson LLP send our clients and contacts legal updates by way of short email alerts. If you would like to receive our regular alerts, please follow the link below.

Sign up for Alerts

Awards & Accreditations