Parliamentary Report Recommends Confiscation of Property & New Housing Court for the Private Rented Sector

Parliament(coalition)A new report published by the Housing, Communities and Local Government Select Committee has shown MPs want to review the laws surrounding private rental sector standards, as well as strengthening council enforcement measures to tackle the 800,000 privately rented properties with a Section One hazard “such as excess cold, mould or faulty wiring”. These include a specialist housing court, increased fines and more robust enforcement strategies from local councils.

Most importantly, the report recommends councils should have the right to confiscate buy to let properties from landlords “who commit the most egregious offences… whose business model relies on the exploitation of their tenants”, alongside empowering tenants to pursue complaints about repairs. This new range of recommendations comes from the consultations finding that 44% of tenants fear a retaliatory eviction from a landlord arising from making a complaint.

Consulting with lettings trade bodies and organisations such as Shelter, the committees report makes the following recommendations to tackle rogue landlords, tenants’ rights and weak enforcement measures by local authorities:

  • Tenants need further protections from retaliatory eviction, rent increases and harassment so they are fully empowered to pursue complaints about repairs and maintenance in their homes.
  • A specialist housing court would provide a more accessible route to redress for tenants and we urge the Government to publish more detailed proposals.
  • The Law Commission should undertake a review of private rented sector legislation.
  • Enforcement by local authorities has been far too low and inconsistent. They also do not have sufficient resources to undertake their duties.
  • A new fund and national benchmarking scheme should be introduced to support local authorities with enforcement. Councils should also publish their enforcement strategies online as well as being able to levy more substantial fines.
  • Councils should have power to confiscate properties from landlords committing the most egregious offences and whose business models rely on the exploitation of vulnerable tenants.
  • The Housing Health and Safety Rating System (HHSRS) should be replaced with a more straightforward set of quality standards.

Commenting on the new measures, committee chairman Clive Betts said: “The imbalance in power in the private rented sector means vulnerable tenants often lack protection from unscrupulous landlords who can threaten them with retaliatory rent rises and eviction if they complain about unacceptable conditions in their homes.

“Local authorities need the power to levy more substantial fines against landlords, and in the case of the most serious offenders, ultimately be able to confiscate their properties.

“Such powers are however meaningless if they are not enforced, and at the same time councils need more resources to carry out effective prosecutions.
“Stronger powers, harsher fines and a new commitment to cracking down on unscrupulous practices will go some way towards rebalancing the sector and protecting the many thousands of vulnerable residents who have been abused and harassed by a landlord.”

This government report highlights the ongoing push for greater powers and funding for local authorities, as well as regulation of the private rental sector. While the report agreed the vast majority of tenants in the private rented sector are satisfied with the quality of their homes, landlords and letting agents “there continues to be a significant minority of private rented accommodation which is shockingly inadequate”.

Read the full report here

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The Keys to MEES: Catchup Guide & FAQ

After all the build-up, MEES is finally in effect! EPC

In case you’ve been living under a rock for the last few months, we’ve compiled a handy catch-up guide for you to follow.

The Basics: 

In 2015, the Energy Efficiency (Private Rented Property)(England and Wales) Regulations set out the requirement for domestic private rented properties in England and Wales to have a minimum Energy Performance Certificate (EPC) rating of E.

On the 1st April 2018, landlords were prohibited from granting new tenancies for properties with an EPC rating below E. This includes extensions and renewals of existing tenancies, or a tenancy becoming a statutory periodic tenancy following the end of a fixed term shorthold.

From 1st April 2020, this restriction on landlords letting out sub-E rated properties will be extended to cover all existing tenancies for properties in scope of the regulations.
Landlords of properties with an EPC rating of F or G should read the guidance and take action as soon as possible.

Full details are available here.

There is currently an exemption available where the improvements cannot be wholly financed, at no upfront cost to the landlord, by means of funding provided by central government, a local authority, or any other person.
From 1st April 2020 this restriction on landlords letting out sub-E rated properties is extended to cover all existing tenancies for properties in scope of the regulations.
The Government has set out in their recently published Clean Growth Strategy that they will soon consult on plans to increase the minimum EPC rating to a D by 2025, and to C by 2030.
Whilst these basics and supplied guidance are crucial, we’ve also had a wide range of questions concerning other aspects of the legislation, notably regarding processes, fines, HMO exemptions and modifying the property to be more energy efficient, which are addressed in this all handy FAQ below.

 
Frequently Asked Questions:

 
Q: Do all privately rented domestic properties need to be at EPC E by 1 April 2018?
A: No. All domestic private rental properties must be at a minimum of EPC band E by 1 April 2020 (or have a valid exemption registered for them). Between 1 April 2018 and 1 April 2020 properties will only need to meet the standard (or have a valid exemption registered) at the point at which a new tenancy is entered into. Where no new tenancy has been entered into, a private rental property may be lawfully let below EPC band E up until 1 April 2020.

 
Q: Are there any recommended or required materials which should be used to undertake the improvement works?
A: There are no specified materials or improvement measures; a landlord is free to do whatever they like with their property so long as the EPC rating can be raised to meet the minimum energy efficiency standard.
The most assessable source of advice would be the recommended measures section on EPC for the property, but landlords can seek advice from other suitably qualified experts if they wish.

 
Q: Are Houses in Multiple Occupation (HMOs) excluded from the PRS Regulations?
A: HMOs are not excluded from the Regulations. The Regulations apply to all privately rented properties that are legally required to have an EPC, and where rooms are let on one of the qualifying types (most likely assured tenancies). An HMO will be in scope where it meets these criteria.
However, individual rooms within HMOs are not required to have their own EPC, so a property which is an HMO will only have an EPC if one is required for the property as a whole (typically this will be if the property has been build, sold or rented as a single unit at any time in the past 10 years). If an HMO is legally required to have an EPC, and if it is let on one of the qualifying tenancy types, then it will be required to comply with the minimum level of energy efficiency.

 
Q: How can I register an exemption?
A: Domestic landlords can register valid exemptions from 1 October 2017. The Register is an online platform and can be accessed from the Private Rented Property Minimum Standard page on gov.uk at: http://www.gov.uk/government/publications/the-private-rentedproperty-minimum-standard-landlord-guidance-documents

 
Q: What is the amount I could be fined for non-compliance with these regulations?
A: Each individual infringement is penalised in the following manner:
Renting out a non-compliant property and the landlord is less than three months in breach: up to £2,000 and/or publication penalty;
Three months or more in breach: up to £4,000 and/or publication penalty;
Providing false or misleading information the PRS Exemption Register: up to £1,000 and/or Publication Penalty;
Failure to comply with a compliance notice: up to £2,000 and/or Publication penalty. There is a maximum level of penalty which applies to each property. This is set at £5,000. This means that if, for instance, a landlord is fined £2,000 for being in breach of the regulations for less than three months, and they continue to let the property below the minimum standard after three months, the most they can be fined for a three months or more breach, will be £3,000. £5,000 in total.

 
If you would like further guidance, or have any other concerns with the legislation, we’ve released an all-knowing and in-depth guide which you can read here.

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Happy Commencement Day!

birthday-celebration-1322480

Happy common commencement day everyone!

It comes but twice a year, but commencement day is a real highlight of the legislative calendar when fledgling new laws come into force and everyone scrambles around to make sure that they aren’t inadvertently committing any brand new crimes.

In that respect 2018 is a relatively quiet year for ‘new laws’ but this 6 April we have a few of note, for which the Government has provided ‘handy’ guidance:

Banning Orders:

From 6 April 2018 those landlords and agents convicted of certain crimes may be banned from continuing to operate in the PRS.

Ministry Guidance

Database of rogue landlords and letting agents:

For those not guilty of sufficient offences to warrant a banning order a ‘rogues database’ is now live. This will not be publically available, but will allow enforcement agencies to monitor – potentially facilitating and informing future prosecutions.

Ministry Guidance

Housing & Planning Civil Penalties:

As an alternative to prosecution local authorities may now opt to impose civil penalties in relation to certain offences, or failure to comply with some notices.

Ministry Guidance

Extension of Rent Repayment Orders:

Finally rent repayment orders (RROs), long associated with licensing offences have been extended to cover illegal eviction, the breaching of a banning order and certain over serious offences.

Ministry Guidance

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Easter Sunday is Fun-day for the Ministry

 

easter-chickens-5-1403338Government responses to policy consultations are a little like buses, you wait around for ages and then three turn-up together.

Of course the way in which they differ from buses is that you can absolutely guarantee that government statements will turn-up, like clockwork, every significant bank-holiday – and this Easter was no exception.

No sooner had everybody switched off and gone home to enjoy a rare Friday with their loved-ones when the Ministry woke up and started warning that announcements were coming – most probably on Sunday!

And so it came to pass, appropriately, that Easter Sunday was the day that the Ministry chose to resurrect its many, many letting agent policies

Of course this also meant that the Government had chosen April fools’ day to confirm its most wide-ranging package of letting agent regulation in decades – this may or may not be seen as significant in hindsight.

You could have been forgiven for missing the press release, published as it was on a bank-holiday, preceded and followed by other bank holidays, but never the less the news was significant.

Client Money Protection

The writing as been on the wall for some time in respect of client money protection insurance, or CMP. The majority of the industry, including UKALA, accepts that although sometimes costly, CMP is a beneficial safeguard in an industry with a less than stellar reputation. The long-standing problem has been that the responsible amongst us pay for insurance, while others skip CMP and use the financial savings to undercut the rest.

Fortunately, UKALA members are well covered in this respect with comprehensive client money protection cover.

Code of Practice

The announcements also reiterated the Government’s commitment to a single, mandatory and legally enforceable code of practice for letting agents.

The code will provide minimum standards for:

  • Transparency of potential conflicts of interest
  • Transparency of current and future financial commitments to which clients are agreeing
  • Service charges
  • Communication and customer service
  • Handling of clients’ money; and
  • Dispute resolution

Regulator

Perhaps the biggest single new commitment to create, through primary legislation, an independent regulator of letting agents  with powers to:

  • Ban agents
  • Impose financial sanctions; and
  • Inspect properties

It will become a criminal offence to continue to operate when banned by the regulator, and the regulator is expected to act as a consumer champion – in a manner to be determined.

Training

Finally, the Ministry announced that a ‘nationally recognised’ qualification would be mandated in the future, although exactly what form this will take seems to be up for discussion.

The announcements stipulated that there is to be a requirement to obtain an entry requirement of sorts, backed up by continued professional development, but the details are yet to be determined.

What now?

Well, none of the announced regulation is in place yet, or likely to come into force in the immediate-term.

It is quite likely that the mandation of CMP will come about first, potentially as early as October 2018.

A lot of work has already taken place within the industry on a potential code, which could be adopted in fairly short order. However, the creation of a regulator will require primary legislation; so is most likely a year or more away.

Training requirements may well stem from the code, but would require some form of enforcement – presumably courtesy of the new regulator.

In the mean time?

Just because……

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Scottish Government Launches a Compliance and Enforcement Framework for Monitoring Letting Agents

A new regulation framework has been launched by the Scottish Government with the purpose of providing clear information and supporting compliance among letting agents, as well as outlining the powers of Scottish ministers in enforcing the new standards.
The new framework will apply to: Those required to apply to join the Register of Letting Agents; determining an application to join the Register; and of registered letting agents.

 

The proposed code of practice also includes:

• A mandatory register for letting agents with an associated ‘fit and proper’ person test;
• A training requirement that must be met before an applicant can be admitted to the register;
• A statutory code of practice all letting agents must follow;
• A way for tenants and landlords to resolve complaints against letting agents for breaches of this Code through a new specialist First-tier Tribunal;
• Powers for Scottish Ministers to obtain information and of inspection to monitor compliance and enforce regulatory requirements.

Regulations for Applicants and Registered Letting Agents

 
For applicants to the register, the framework also makes clear the range of powers that Scottish ministers can enforce, notably to refuse or the removal of letting agent registration, which can prevent agencies from undertaking work in the future. Ministers also have the power to issue a refusal notice at any point in the process.

 
For registered agents that do not meet the code of practice, ministers will work with the letting agent to resolve any issues that have arisen, requiring them to submit an improvement plan to ensure greater compliance.
In the event a registered letting agent refuses to work with or comply with the framework, government ministers can make an application to the Tribunal in relation to non-compliance with the Code of Practice, including;

 
• Take action to remove them from the Register of Letting Agents; any removal will be noted on the public register for twelve months.
• Report them to Police Scotland and any other relevant authorities (this will apply to unregistered letting agents, or agencies who still carry out work after being issued a refusal notice).

 
Any unregistered agents applying to the register will be subject to a late application fee. If the unregistered agent refuses compliance with the framework, they will be reported to Police Scotland. Undertaking letting agency work without being registered is a criminal offence, liable on conviction to a fine of up to £50,000, up to 6 months imprisonment or both.

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The Problem of Security Deposit Caps

moneyhouse1Plans announced by the government to cap security deposits for tenants in the Autumn Budget 2016 have raised concerns of higher rates and an increase in rental disputes from the National Landlords Association.

The cap, which was originally set at four weeks’ rent , was amended to six weeks’ after the NLA lobbied the Government during the consultation period.

The NLA has previously argued that imposing an arbitrary cap on security deposits would have unintended consequences such as decreasing the housing supply to certain groups of tenants, as well as leaving tenants with smaller deposits when moving on to other properties.

There is also the risk that if security deposits are capped at one month’s rent, tenants will view the deposit as the last month’s rent, leaving landlords with no protection against property damage at the end of a tenancy.

Adding to the concern over the effect of security deposit caps, Emma Glencross, Chairperson of the Association of Independent Inventory Checks argues:

“We hope the lower sums involved don’t encourage renters to take less care of their rental properties. This government initiative could, in some cases, have unintended consequences”.

Analysis of similar measures imposed in Scotland of a maximum cap of two months’ deposit have seen additional fees put on to tenants, with rent increases in Scotland averaging 4.4% a year on the average two bed property, the highest annual increase since 2010.

This rate of increase in rents has led the Scottish government to consider rent cap policies to mitigate the increase such as the establishment of rent pressure zones in Glasgow, giving the Scottish government the power to cap rises at the consumer price index (CPI) plus 1% for up to 5 years.

The new Scottish Labour leader Richard Leonard has also proposed a ‘Mary Barbour’ law, a private member’s bill that utilises a points based system linked to average wages to enforce fairer rents.

The main measures contained in the draft Tenant Fees Bill will:

• Ban letting agents or landlords from charging fees for the granting, renewal or continuation of a tenancy.
• Cap holding deposits at no more than one week’s rent and security deposits at no more than 6 weeks’ rent. The draft bill also sets out the proposed requirements on landlords and agents to return a holding deposit to a tenant.
• Create a civil offence with a fine of £5,000 for an initial breach of the ban on letting agent fees and a criminal offence where a person has been fined or convicted of the same offence within the last 5 years. Civil penalties of up to £30,000 can be issued as an alternative to prosecution.
• Require Trading Standards to enforce the ban and to make provision for tenants to be able to recover unlawfully charged fees.
• Appoint a lead enforcement authority in the lettings sector.
• Amend the Consumer Rights Act 2015 to specify that the letting agent transparency requirements should apply to property portals such as Rightmove and Zoopla.

The NLA argues that there are legitimate reasons a landlord seeks a security deposit, namely to protect themselves against the financial risk that property damage or rent arrears could cause. An Our recent NLA quarterly survey panel found that almost a third (32%) of landlords had experienced property damage due to a tenant in the last 12 months. This was higher for LHA claimants (53%) and recipients of other benefits (56%).

Will the government address these concerns?

In reaction to the concern expressed by industry bodies, the government is also constructing a response to its consultation on making membership of client money protection schemes mandatory for letting and managing agents that handle client money, with feedback expected to be published shortly.

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End is Nigh for Small Bedrooms

MHCLG LOgoThe Ministry of Housing, Community and Local Government has published yet another SI for landlords and letting agents to worry about, albeit only a draft one this time around.

Draft or not this looks should come into force on 1 October 2018.

The regulations, which were expected earlier this month,  confirm that from October HMOs licensed in England under part 2 of the Housing Act 2004 will be required to have a floor area no-smaller than 6.51 square metres.

Specifically, licenses issued from 1 October will have to contain the following conditions:

  • to ensure that the floor area of any room in the HMO used as sleeping accommodation by one person aged over 10 years is not less than 6.51 square metres;
  • to ensure that the floor area of any room in the HMO used as sleeping accommodation by two persons aged over 10 years is not less than 10.22 square metres;
  • to ensure that the floor area of any room in the HMO used as sleeping accommodation by one person aged under 10 years is not less than 4.64 square metres;
  • to ensure that any room in the HMO with a floor area of less than 4.64 square metres is not used as sleeping accommodation.

Where a breach is found to exist, local authorities will be able to grant a period not exceeding 18 months to rectify the situation.

Additionally, a condition will be included to mandate that landlords of licensed HMOs comply with any relevant local authority waste scheme – although no further details or minimum requirements are specified.

The full draft SI may be found here: The Licensing of Houses in Multiple Occupation (Mandatory Conditions of Licences) (England) Regulations 2018

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