Three years to end the three storeys rule?

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Is this loft a storey? Doesn’t matter anymore!

Letting agents with long memories will remember that David Cameron (remember him?) announced three years ago plans to register and licence landlords.

It turned out he didn’t mean anything of the sort, but it got a lot of us in the industry quite hot under the collar for a little while – and I won’t repeat exactly what some of the less diplomatic members of the civil service said about it at the time – what he actually meant was that rules concerning mandatory licensing of HMOs were to be changed.

We then endured contributed to a ‘technical discussion’, following by a consultation. Not to mention a referendum, and then a general election after which Mr Cameron was no-longer in charge and some thought the policy may be residing in the long-grass just behind Number 10’s infamous Rose Garden.

But no, three years on it’s not only back, but Heather Wheeler MP has laid regulations for the change to be implemented in October 2018. You can read them here: http://www.legislation.gov.uk/uksi/2018/221/pdfs/uksi_20180221_en.pdf although I wouldn’t necessarily recommend it.

So after all this time, the net effect looks to be that from October landlords will need a licence if their HMO houses five or more people, forming two or more households – regardless of the number of storeys in the property.

It will also bring flats above or below commercial premises into the scope of licensing.

Interestingly, regulations regarding minimum room sizes, which were included in the succession of consultations, and other new mandatory conditions on waste are still to be passed.

As per the Government’s response to the consultation, it intends for the new requirements to be introduced in two phases.

There will be a 6 month grace period where licences will be required but enforcement action will not be taken. However, Section 75 of the Housing Act 2004 will remain in force meaning that any Section 21 notices issued will be invalid if the HMO is unlicensed.

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Pets Win….. Elections?

No petting signLabour has today launched a new action plan on animal welfare, which includes a proposal to give tenants the default right to keep pets, unless there is evidence the animal is causing a nuisance.

Under the 2015 Consumer Rights Act, a landlord should only be refusing permission if it is reasonable to do so, for instance on grounds of the animal’s size, the damage it could cause and its impact on future rental prospects.

Many tenancy agreements will be worded to reflect this position. For example, the NLA and UKALA AST includes the clause:

Not to keep any animals, reptiles, insects, rodents or birds at the Property without our written permission (which will not be unreasonably withheld). For the avoidance of doubt, this clause does not apply in connection with registered guide and assistance dogs.

There are no actual policy details yet as Labour have only said they will consult with landlords on the proposal.

Ultimately what must be avoided is a one-size-fits-all approach that treats the whole private rented sector as a giant uniform monolith. Unfortunately, politicians of all persuasions have been guilty of this, not least Labour.

Damaging Costs

The first port of call for Labour’s consultation with landlords should be to try and reach an understanding of why some landlords are reluctant to allow pets in their properties. The policy could then, hopefully, include plans to solve this reluctance.

Luckily, our friends at the NLA have previously researched this with our members and the results will not surprise you.

This research showed that over half (55%) were unwilling to allow tenants to keep pets in their properties:

pets allow question

Of those that were unwilling to allow pets, 41% of landlords cited the main reason as potential property damage:

why not pets

The obvious answer to the risk of pet-related property damage is increase the security deposit taken. Alternatively, clauses could be inserted into the tenancy agreement such as one requiring the tenant to professionally clean the property on move-out. The Dogs Trust’s Lets with Pets scheme advises landlords to take these approaches.

However, these approaches will soon be outlawed by the ban of letting fees likely to come into force sometime in 2019. While deposits will be capped at 6 weeks’ rent under the draft Tenant Fees Bill, Labour would like to see this reduced to 4 weeks’ rent. On top of that, the Bill would ban landlords and letting agents from requiring tenants to pay for third-party services, such as a professional cleaner.

This leaves no room for landlords to seek some extra financial protection against pet damage, which could see some unintended consequences. Perhaps landlords who currently supply furniture would stop, or decrease the amount or quality of the furniture or fittings provided.

While more costs for landlords does not automatically increase rent, it adds to the cumulative upwards pressure and could exacerbate the effects of Section 24 tax changes that are starting to impact on landlord finances.

Consequential?

 There are likely other consequences of a “default right” that need to be addressed by any consultation the Labour undertakes with landlords. While not an exhaustive list, here are just some issues that we hope are taken into account before any policy details are decided:

  • Landlords will likely face other increased costs as a result of the tenant’s “default right” to a pet. For example, landlord insurance premiums are already likely to rise if tenants have pets (if the policy even covers pet damage). What will the effect be in premiums if all tenants have the default right? What impact will this have of rents?
  • Some properties may not even be suitable for pets (depending on the animal and the property) such as high-rise flats, so would not automatically improve animal welfare,
  • In the case of many leasehold flats, permission for pets may not be within the gift of the landlords as the lease itself bans them. They would then need an exemption from the “default right”,
  • Houses in Multiple Occupation (HMOs) also need to be look at, so that sharers are not forced to live with pets they do not want to live with, or possibly to which they are allergic,
  • How could landlords evidence that a pet is, or would cause a nuisance, and what legal routes would be open to landlords to rectify the problem or seek redress?

We welcome Labour’s promise to consult with landlords on the development on this policy, and while we may not agree on its necessity, we will endeavour to work constructively to ensure any outcome is workable and more than just another financial burden on landlords.

Have any thoughts on how this could affect how you operate?

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Planning for a fee hike!

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Article 4 Directions have long been the scourge of landlords who offer property to rent both to single households and small groups of sharers.

Since 2010 in England (and much more recently in Wales) the introduction of the C4 Planning Use Class for small HMOs has meant that letting a house or flat to two or more households has represented a material change of use – technically requiring planning permission. Fortunately, in England at least, this is covered by general permitted development meaning that no application is required.

Unless the local authority has designated an Article 4 Direction removing all permitted development rights, and subsequently requiring landlords to apply for planning permission before letting to sharers instead of a single household or family.

The only saving-grace has been that where permitted development rights have been removed – no planning application charge could be levied.

Until now!

Thanks to an easily missed statutory instrument tabled before Christmas 2017, a landlord may now have to pay a fee (increased to £462.00) for applying for a change of use in an area where permitted development has been withdrawn.

Under the new law a landlord in ‘Council area A’, where there is permitted development will not have a fee to pay – as no application is necessary. Yet in ‘Council area B’, where permitted development rights have been removed through an Article 4 Direction, a fee of £462.00 may be demanded.

This change encourages local authorities to remove permitted development so they can gather a fee from landlords.

The likely impact of the policy will be a further entrenchment of those properties that are already in shared usage; as if a landlord wishes to change the use where permitted development has been removed, even for a short period, and then convert back a fee will be applicable.

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New statutory code of practice for letting agents comes into force today!

letting agent register site

From today (31 January 2018) all letting agents operating in Scotland must comply with  the Statutory Code of Practice for Letting Agents.

Agents also have until 1 October 2018 to apply to register with the Scottish Letting Agent Register, if they want to avoid facing significant financial penalties.

Full details of the requirements and regulation are available from www.mygov.scot

Launching the code Housing minister Kevin Stewart said:

“We are committed to ensuring the highest quality private rented sector, which empowers tenants.

“These reforms, and the need for the sector to meet key standards and expectations, are an important step in achieving our ambitions.

“Many letting agents already do a great deal to improve standards and inspire confidence amongst landlords and tenants.

“The introduction of the code means a level playing field for all and ensures clarity on rights, responsibilities and expectations.”

The code of practice can be downloaded and read in full at: Letting Code

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Gas Safety Changes Confirmed

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Way back in 2016 we asked readers of this blog, and UKALA members, to take part in a short survey about their experiences of getting access to property to carry out gas safety checks. The reason was simple, we were trying to pull together enough evidence to change the law to provide A degree of flexibility  for the timing of landlords’ mandatory annual gas safety checks.

Well…… partly as a result of the information provided via this blogconsultation on the issue last year the Health & Safety Executive has now confirmed amendments to the Gas Safety (Installation and Use) Regulations 1998 (GSIUR).

Great. What happens now?

Subject to Parliamentary approval, the Gas Safety (Installation and Use) (Amendment) Regulations 2018 will come into force on 6 April 2018. This MOT-style change will allow landlords and their appointed agents to carry out their annual gas safety check in the two months before the due date and retain the existing expiry date.

For example, if your gas safety check is due 15th May, but it is carried out on the preceding 29th of April, the new certificate will retain the 15th May expiry date and there will be no foreshortening of the inspection period.

This avoids having to wait until the last minute and risking not gaining access, or having to shorten the annual cycle check to comply with the law.

There is no change to the legal requirement for an annual gas safety check or for maintenance to be carried out.

The current legislation will continue to apply up to and including 5 April 2018, along with the Approved Code of Practice and guidance supporting it. The changes will not  relax regulatory requirements or reduce safety standards.

Landlords and agents must ensure that an annual gas safety check is carried out within 12 months of the installation of a new appliance or flue which they provide and annually thereafter by a Gas Safe Registered engineer. A record must be kept of the safety check for 2 years and a copy of the certificate given to each existing tenant within 28 days of the check being completed and a copy issued to any new tenants before they move in.

The Health & Safety Executive has published a draft copy of the updated Approved Code of Practice and guidance which will apply from 6th April 2018, if approved by Parliament.

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Regulation Ahead for Agents in Scotland

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Following the launch of the new Private Residential Tenancy regime last month, which replaces the previous tenancy system and ends “no-fault” repossessions, more changes are ahead for the Scottish PRS this year, focusing on the regulation of letting agents.

From early 2018 the Scottish Government will commence the regulation of letting agents by bringing into force:

Going forward, the Scottish Government is also looking at amending the repairing standards to bring it closer to the standard required in social rented housing, as well as introducing a minimum standard for energy efficiency in the PRS. These plans were recently consulted on and you can read more about that consultation here.

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Important: Mandatory “How to Rent Guide” Updated

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The Government’s How to Rent Guide, which landlords need to give to their tenants has been updated.

The Deregulation Act 2015 requires landlords to give their tenants the latest copy of the Government’s How to Rent Guide at the start of a tenancy. Along with the Prescribed Information in relation to the deposit, a valid Energy Performance Certificate (EPC) and Gas Safety Certificate where required, the guide needs to be provided to the tenant before a valid Section 21 notice can be served.

The update to the guide is not a major revision as it only removes reference to the ‘London Rental Standard’ which ended last year.

However, tenants must be provided with the most up-to-date version at the start of a tenancy in order for any subsequent Section 21 notice to be valid.

The updated guide does not need to be re-served to existing tenants.

The latest version of the guide can always be found on the Government’s website here.

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