Do you know your MEES from your TEES & CEES?

EPCLetting agents should be aware that from 1st April 2018, new Minimum Energy Efficiency Standards (MEES) will prohibit the granting of new tenancies (or renewing/extending existing tenancies) for properties with an EPC rating of F or G.

The Government has now signalled their intention to toughen the regulations even further.

As it stands currently, landlords or their agents can register an exemption if there is no third-party funding available for improvement works as the regulations include a “no upfront costs” rule. This would have been fine if the Green Deal worked as intended when the regulations were made back in 2015 but its failure means a lot of otherwise affected properties could be made exempt due to lack of available finance.

Learn more about MEES here

The Government is well aware of this potential loophole, and had intended to amend the regulations earlier this year to replace the “no upfront costs” rule with a “cost cap”, whereby landlords would have to fund improvements themselves up to a certain level. This is the route being taken by the Scottish Government in their PRS energy efficiency plans.

Unfortunately for the Government, Theresa May called a snap election that put everything on hold and they ran out of time to make the changes. The new Minister of State for Climate Change, Claire Perry MP, recently wrote to our partners at the NLA confirming that the “cost cap” was very much still on the agenda, despite the minimum standards coming into force in less than 6 months:

“As you are ware, over the past year officials have been exploring options for a ‘lPRS cost cap’ as an alternative way of delivering a meaningful number of improvements in the absence of a nationally available Green Deal finance offer. No decisions have yet been taken on this proposal, but Ministerial colleagues and I are carefully considering the impacts on all parties, including landlords and tenants. I hope to be able to announce decisions shortly…”

Read the Minister’s letter in full here.

Last week the Government published its Clean Growth Strategy setting out an ambitious target to bring all private rented sector properties up to an EPC rating of C by 2030 “where practical, cost-effective and affordable.”

The Strategy also suggests an imminent changing of the regulations underpinning the minimum energy efficiency standards, with the Government stating they “will consult shortly on steps to make these regulations more effective.”

While we await a more definitive announcement regarding the Minister’s intentions, it seems likely that removing the “no upfront costs” rule from the regulations will form part of her plan to increase the effectiveness of the minimum standards.

For now, owners and managers of properties rated F&G should make sure they have read the guidance available here, and register any valid exemptions before 1st April 2018. Failure to comply with the regulations could leave you with a fine of up to £5,000.

The Case for Incentives

While energy efficiency in the PRS has improved, with properties in the F&G efficiency bands down from 20.5% in 2008, to 6.3% in 2015-16, the sector has unique challenges to overcome (not least because a third of PRS properties were built pre-1919).

UKALA called on the Chancellor to address the issue in the Autumn Budget last month – although this appears to have fallen on deaf ears..



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A quick guide to Scotland’s new private tenancy


This picture has nothing to do with the content of the blog; but I thought it might soften the blow a little…..

From 1 December 2017 the private rented sector in Scotland is changing. Landlords will no-longer be able to create Short Assured Tenancies (SATs), instead the new default residential tenancy will be the Private Residential Tenancy (PRT).

Existing SATs will not be affected, and may continue to run as before. However, upon renewal or change of tenancy a PRT will be created.

What’s different about a PRT?

Experienced landlords will find there is a lot that is familiar about the new PRT. On a day to day basis many of the obligations and responsibilities of landlords and tenants remain unchanged. However, there are some distinct and very important differenced.

The key features of the new tenancy are:

  • Tenancies will have no end date.
  • Statutory terms are mandatory
  • There will be no ‘no-fault’ possession procedure
  • Termination of a tenancy can only be effected in accordance with specific provisions made by the Private Housing (Tenancies) (Scotland) Act 2016.

In order for a PRT to be created, the tenancy must have started on or after 1 December 2017, the tenant(s) must be an individual, and the property must be used as their principal home.

Additionally the tenancy must not be of a type excluded from constituting a PRT by the2016 Act, for instance types of agricultural tenancy.

A PRT Agreement must include:

  • The agreement must be in writing, signed by the parties.
  • It must state the start date of the tenancy
  • It must state the statutory terms contained within the Private Residential Tenancies (Statutory Terms) (Scotland) Regulations 2017.
  • State the amount of rent due and when it should be paid.
  • Say who is responsible for decoration and repairs to the inside and outside of the property.
  • State if there are any conditions or restrictions to the use of the property.
  • Mention the responsibilities of the tenant, such as insuring their own personal belongings.

Written terms of tenancy must be provided to the Tenant(s) on the day the tenancy commences.

In addition to a written agreement, landlords in Scotland must provide certain prescribed information.

Landlords using a bespoke agreement, such as the NLA’s approved PRT must supply a copy of the ‘Private Residential Tenancy Statutory Terms Supporting Notes’.

Those who opt to use the Scottish Government’s model tenancy agreement must serve the tenant with a different document, the ‘Easy Read Notes for the Scottish Government Model Private Residential Tenancy Agreement’.

If a landlord fails to provide a valid written tenancy agreement and/or the associated supporting documents the tenant may apply to the First Tier Tribunal for redress – potentially amounting to a financial penalty of up to six months’ rent.

What about ending a PRT?

This is where the PRT really departs from the norms we are used to in relation to the SAT. As PRTs have no end date and there is no replacement for s33, and as such no ‘no-fault’ procedure, options for terminating tenancies are more limited.

In fact there are only three circumstances whereby a tenancy can be terminated:

  • By the Tenant. In these circumstances the Tenant must provide 28 days’ notice to leave (or such other period as agreed between the parties in writing).
  • Consensual Termination.  In these circumstances, the Landlord must serve a Notice to Leave giving either 28 or 84 days’ notice (whichever is applicable) and placing reliance on an eviction ground contained within schedule 3 to the Private Housing (Tenancies) (Scotland) Act 2016. Thereafter, the Tenant must vacate voluntarily.
  • Eviction Order. In these circumstances, the Landlord must serve a Notice to Leave giving either 28 or 84 days’ notice and placing  reliance on an eviction ground contained within schedule 3 to the Private Housing (Tenancies) (Scotland) Act 2016.

If the Tenant fails to leave the Landlord can apply to the First-tier Tribunal (Housing and Property Chamber) for an eviction order.

What are the grounds for regaining possession?

In total there are 18 grounds for evictions, eight are mandatory meaning that the Tribunal must grant possession.

Eight are discretionary, meaning that the Tribunal must use its own judgment to decide whether to grant an order or not.

Two are ‘mixed’, meaning that they may be mandatory or discretionary depending on the circumstances.

The Mandatory Grounds are:

  • Landlord intends to sell
  • Property to be sold by lender
  • Landlord intends to refurbish
  • Landlord intends to live in property
  • Landlord intends to use for non-residential purposes
  • Property required for religious purposes
  • Tenant not occupying let property
  • Tenant has relevant conviction

The Discretionary Grounds are:

  • Family member intends to live in property
  • Tenant no longer in need of supported accommodation
  • Breach of tenancy agreement
  • Anti-social behaviour
  • Association with person who has relevant conviction or engaged in relevant anti-social behaviour
  • HMO licence has been revoked
  • Overcrowding statutory notice served on landlord

The Mixed Grounds are:

  • Tenant is not an employee, the tenancy was entered into on the basis that accommodation was to be provided with employment.
  • Rent arrears.

 Why is Rent Arrears no-longer Mandatory?

Rent arrears remains a mandatory ground for possession is:

  • The tenant has owed rent for three or more consecutive months; and
  • Owes at least one month’s rent at the start of the day on which the Tribunal first considers the case

However, it is only discretionary if rent is not owed for three consecutive months, or the tenant owes less than one month’s rent on day one of Tribunal proceedings.

 Tribunal or Sheriff Court?

From the 1st December all possession cases will be heard by the First Tier Tribunal, not the Sherriff Court. This applies to existing SATs as well as newly created PRTs.

Any proceedings already underway should continue in the courts, while new proceedings will be the responsibility of the First Tier Tribunal – which replaces the Private Rented Housing Panel (PRHP)


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Autumn Budget 2017 – What Letting Agents Need to Know

Budget 2 2017The Chancellor has today (22nd November) delivered the Autumn Budget. This briefing sets out the key policy announcements impacting on the private rented sector (PRS) and landlords’ businesses. Full details can be found here.

First and foremost, alcohol duties remained largely unchanged – although Mr Hammond did announce something akin to a “white-lightning’ tax for those with simpler tastes.

Likewise, fuel duty remains frozen.

However, company car driving letting agents will have little to celebrate as the Fuel Benefit Charge and the Van Benefit Charge will both increase by RPI from 6 April 2018.

Turning to housing and private rented sector related matters – this can be summarised as:

Private Rented Sector

  • Longer tenancies – The government will consult on the barriers to landlords offering longer, more secure tenancies to those tenants who want them.
  • Private rented sector access schemes – The government will provide £20 million of funding for schemes to support people at risk of homelessness to access and sustain tenancies in the private rented sector.
  • Empty homes premium – The government is keen to encourage owners of empty homes to bring their properties back into use. To help achieve this, local authorities will be able to increase the council tax premium from 50% to 100%.
  • Targeted Affordability Funding – To support Housing Benefit and Universal Credit claimants living in areas where private rents have been rising fastest, the government will increase some Local Housing Allowance rates by increasing Targeted Affordability Funding by £40 million in 2018‑19 and £85 million in 2019‑20. This will increase the housing benefit awards of approximately 140,000 claimants in 2018‑19, by an average of £280, in areas where affordability pressures are greatest.
  • Creditworthiness and rental payment data – The government will launch a £2 million competition, to support FinTech firms developing innovative solutions that help first‑time buyers ensure their history of meeting rental payments on time is recognised in their credit scores and mortgage applications.

Universal Credit Changes

  • From January 2018 those who need it, and who have an underlying entitlement to Universal Credit, will be able to access up to a month’s worth of Universal Credit within five days via an interest-free advance. The government will extend the period of recovery from six months to twelve months, making it easier for claimants to manage their finances.
  • New claimants in December will be able to receive an advance of 50% of their monthly entitlement at the beginning of their claim and a second advance to take it up to 100% in the New Year, before their first payment date.
  • From February 2018 the government will remove the seven-day waiting period so that entitlement to Universal Credit starts on the first day of application.
  • From April 2018 those already on Housing Benefit will continue to receive their award for the first two weeks of their Universal Credit claim.
  • The government will also make it easier for claimants to have the housing element of their award paid directly to their landlord. From December, new guidance will be issued to work coaches so they ask new claimants about their history with rental payments.


  • Personal Taxation – The Budget announces that in 2018-19 the Personal Allowance and Higher Rate Threshold will increase further, to £11,850 and £46,350 respectively.
  • SDLT – From 22 November 2017, stamp duty land tax will be abolished for first-time purchases up to £300,000 and the existing rate of 5% will apply between £300,000 and £500,000. The relief will not apply to properties above £500,000.
  • SDLT Higher Rate for Additional Properties – Minor amendments will be made to prevent abuse of relief for replacement of a purchaser’s only or main residence by requiring the purchaser to dispose of the whole of their former main residence and to do so to someone who is not their spouse.
  • Corporate indexation allowance – To bring the UK in line with other major economies and broaden the tax base through removing relief for inflation that is not available elsewhere in the tax system, the corporate indexation allowance will be frozen from 1 January 2018. Accordingly, no relief will be available for inflation accruing after this date in calculating chargeable gains made by companies.
  • Mileage rates for landlords – The government will extend the option to use mileage rates to individuals operating property businesses, on a voluntary basis, to reduce the administrative burden for these businesses.
  • Rent-a-room relief – The government will publish a call for evidence to establish how rent-a-room relief is used and ensure it is better targeted at longer-term lettings.
  • Capital Gains Tax (CGT) payment window – The introduction of the 30-day payment window between a capital gain arising on a residential property and payment will be deferred until April 2020.
  • VAT registration threshold – In response to the Office of Tax Simplification’s report Value Added Tax: Routes to Simplification, the government will consult on the design of the threshold, and in the meantime will maintain it at the current level of £85,000 for two years from April 2018.
  • Non-resident companies & UK property – From April 2020, income that non-resident companies receive from UK property will be chargeable to corporation tax rather than income tax. From that date, gains that arise to non-resident companies on the disposal of UK property will be charged to corporation tax rather than CGT

 Business Rates

  • The government will provide an additional £435 million in support for businesses facing increased Business Rates bills as a result of the 2017 revaluation.
  • The planned switch in indexation from RPI to CPI will be brought forward to 1 April 2018
  • The government will legislate to address the ‘stair-case tax’. Draft legislation will be published shortly.
  • Following the next re-valuation exercise, the interval between valuations will be reduced to three years.

 House-building Investment

The Budget makes available over £15 billion of new financial support for house building over the next five years, bringing total support for housing to at least £44 billion over this period. It introduces planning reforms to ensure more land is available for housing and that the country is maximising the potential of its towns and cities to build new homes:

  • Investment Home Building Fund – loans to SMEs to build homes £1.5 billion
  • Small Sites: infrastructure and remediation –grants for remediation and infrastructure to accelerate the building of homes on small and stalled sites £630million
  • Local Authority house building: additional investment – more borrowing for Councils to build new council homes £1billion
  • Housing Infrastructure Fund: extend – grants to local authorities for strategic infrastructure that unlocks new housing £2.7 billion
  • Land Assembly Fund – assembling fragmented pieces of land into ready to go sites for developers to build homes on £1.1billion
  • Estate Regeneration – transform run-down estates and provide more housing £400mIllion
  • New financial guarantees – to support private sector house building £8 billion

To download this for later reading, click here: UKALA Briefing – Autumn Budget 2017

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Local Council tries to Ban all but the most Energy Efficient homes!


Walsall Council has proposed a discretionary licensing scheme intended to ban the letting of energy inefficient properties.

The plans, which are currently being consulted on, would mean that all licensees of private rented properties in Willenhall and Town Centre (& adjoining areas) will need to apply and secure a licence for each dwelling.

Licence holders will be required to comply with certain conditions, including undertaking a training course within 12 months, explaining to tenants how to store and dispose of waste properly, and explaining to their tenants how to use the property’s facilities such as gas and electrical appliances.

Continuing to let a property without a valid licence in the designated areas will be a criminal offence.

Proposed Fee Structure

None of which is (unfortunately) too unusual, an increasing number of local authorities are opting to go down the licensing route. However, what separates this proposal from the pack is the fact that a property’s energy efficiency rating will play a part in determining the cost of obtaining a licence.

The regular fee will be £714 and if you apply within the first 3 months there is a 25% discount. There is also an additional £100 discount for landlords accredited with the NLA, as well as a £50 discount for online applications.

Further discounts are available for properties with an A, B or C rating. In contrast, properties rated E, F and G face penalty charges of up to £300.

The full proposed fee structure can be found here.

Prohibiting Energy Inefficient Properties

It gets worse!

The Council is not only looking to impact on energy efficiency through the costs of licencing fees. As part of the licence conditions, all properties must be brought up to and kept up to the Selective Licensing Property Standards (viewable here).

These property standards include the requirement for all properties to not only have an EPC, but to be in the top half of Band E. From 1st April 2018, the Council will refuse to licence any property with an EPC rating of F or G.

These clauses go above and beyond the national Minimum Energy Efficiency Standards (MEES) that will come into force from April 2018. For more information about MEES please see UKALA’s FAQs.

Although we all want to see property owners encouraged to improve the efficiency of their stock where it is possible, these clauses look likely to be detrimental to tenants who will face eviction, and landlords will be left with properties they can no longer rent out due to no fault of their own.

For example, some energy efficiency work requires third party permissions such as from the freeholder, mortgage lender, planning permission from the council or even consent from the tenants themselves. If this consent cannot be secured then under the MEES regulations they would be exempt.

However, under Walsall Council’s plans if this consent cannot be secured then the property cannot be let without being in breach of the licencing scheme and the tenant would have to be evicted.

Full details of the proposed selective licensing scheme, including how to respond, can be found on Walsall Council’s website here. The consultation is open until 8th January.


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Could agent serving s21 notices to UC tenants have a point?

It is not every day that the practices of a letting agency in Grimsby attracts the attention of the Leader of Her Majesty’s Opposition and becomes the focus of Prime Minister’s Question time – but that is exactly what happened on Wednesday 15 November 2017.

The agency in question, so concerned by the potential impact of Universal Credit in its local area, had apparently sent section 21 notices to more than 300 tenants ‘warning’ them that they should begin making preparations to pay their rent during the implementation of the controversial benefit.

According to local media, the company’s director has defended the action, saying:

“The letters have been sent out pre-emptively to warn residents, and also include information to help them understand the new benefits system, because if we wait until the new year to serve the notices when people have fallen behind with rent, it could put us in a position where we have missed out on payments for up to six months, and it will be my business the bank are repossessing, not just tenants being evicted.”

All of which actually sounds quite sensible.

Unfortunately for those involved, the letters also included a copy of form 6A – aka s21 notices – which the firm plan to ‘exercise’ if rent goes unpaid while tenants await the processing of their UC claims.

Understandably, this has caused a great deal of concern for those involved and the Prime Minister has pledged to look into the matter.

Most would agree that issuing blanket possession notices is the wrong way to run a business. But equally, many will understand the frustration of letting agents and landlords facing the prospect of rapidly increasing areas as the Universal Credit experiment visits their respective towns.

The tenancy dilemma?

When faced with the high likelihood of extensive arrears and lengthy possession procedures the strict business choice may well be to cut one’s losses and move to end tenancies before the damage is done – although this case is certainly unusual in the fact that there is no evidence that these households are in arrears at the moment.

However, as human beings we all also want to be able to sleep at night knowing that we have operated morally, and in a way in which we would like to be treated ourselves.

This single action seems at once financially understandable, yet wholly unpalatable. Not to mention risky, since I imagine a fair number of reliable tenants will feel a lot less happy about renting from this company in the future.

From a strictly personal point of view, I find the speculative service of s21 notices ethically dubious at best – and legally unwise since such a notice cannot technically be rescinded.

What about you?


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Draft Tenant Fees Bill – the low-down…

draft tenant fees billSince the announcement, over a year ago, of the Government’s intention to ban fees to tenants there has been a lot of speculation about what the necessary legislation will actually look like when it arrives.

Well…. Now it has arrived – sort of – in the form of a draft bill outlining the prohibitions, enforcement actions, and amendments to other related pieces of legislation likely to be contained in the bill proper at some point in the future.

So it’s about time we discussed what the Government is actually trying to do.


Broadly, there are three areas of this draft bill, which will be of immediate interest to letting agents.

  • Prohibitions
  • Enforcement; and
  • Consumer rights

So let’s take them one at a time.

(1) Prohibitions

The draft bill breaks the prohibitions it wants to introduce into those specific for landlords, letting agents, specific payments, and holding deposits.

The provisions for landlords and letting agents are essentially the same; neither party will be able to require payment as a condition of the ‘grant, renewal or continuance of a tenancy of housing in England’.

Likewise such a payment cannot be required to a third party, nor can it be required that tenants contract with another provider of services.  i.e. no requiring the use of a referencing agency in lieu of charging.

Finally, loan agreements can’t be used to circumvent the prohibition on fees.

What is, and isn’t, allowed by way of payment gets a little more complicated. In fact it takes two full pages of draft legislation to outline the specifics.


  • Rent is allowed (phew!); but
    • Don’t think that you can front load the rent with a high initial payment, followed by 11 reduced payments to make up for any shortfall. This is prohibited.
  • Tenancy deposits are allowed; but
    • Don’t go charging more than the equivalent of six weeks rent. That will no longer be permitted.
  • Holding deposits are allowed; but
    • It can’t exceed the equivalent of one week’s rent and the way that you handle holding deposits is the subject of an additional page and a half of legalese.
  • Default payments will be permitted. That is to say payments required as a result of a tenant’s breach of tenancy conditions – as long as you don’t require anything prohibited as a condition of the tenancy.

(2) Enforcement

Enter Trading Standards.

The local Trading Standards authority – whether they like it or not – will have responsibility for enforcing the ban in England.

They will be able to impose a financial penalty of up to £5,000 if satisfied beyond reasonable doubt that a tenant has been required to make a prohibited payment.

The same penalty may be imposed for failure to return a holding deposit.

Repeat offenders (within a five year period) could see these penalties escalate to £30,000 and the actions may be treated as a criminal offence.

Of particular note for letting agents, company directors may be held responsible for offences committed by the company and its officers.

(3) Consumer Rights

That old letting agent favourite, consumer rights, also plays a part in this draft bill as it seeks to amend the Consumer Rights Act 2015.

Letting agents’ duties under the Act are reinforced, requiring the publication of fee tariffs, client money protection credentials, and redress scheme memberships, on third party websites when they are used (property portals etc.).

Furthermore, when publishing the details of client money protection insurance an agency will need to include the name of the relevant provider.

What now?

There will no doubt be an enormous amount of debate concerning the provisions, some of which may change for better or worse.

This draft bill will be considered by a parliamentary committee, after which the Government will (probably) publish a ‘proper’ bill to be considered and debated by both houses of parliament, before finally being enacted – most likely at some point in 2019.

For the time being – no change.

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“You maniacs. You blew it up” Rates back to 0.5%

Charlton Heston may have been mid-realisation that he was back home on Earth all along, and the ape dominated world he was trying to escape was really the ruins of post-apocalypse USA – but i’m sure he was none to fond of uncertain monetary policy announcements either. 

So it is perfectly reasonable that he would have reacted just as strongly to Mark Carney et al.’s recent announcement of the first Bank of England interest rate hike in more than ten years (that’s my opinion and i’m sticking to it).

Of course in reality rates remain historically low, only returning to half of one per cent – the rate at which they stood until post-referendum fever saw the MPC introduce a 0.25 per cent cut last year.

What does this mean?

It means that rates remain very low, and therefore borrowing is likely to remain relatively cheap.

At the same time some savers may benefit from a heady rise of one quarter of one per cent interest against their savings – if banks choose to pass on the hike.

More importantly for the private rented sector mortgages, those which track the Bank of England base rate, will see their rates increase by that same amount. As illustrated below:

  Monthly Interest Payment Increase
Loan Outstanding (£) 0.25% 0.50% 0.75% 1%
£50,000 £10.42 £20.83 £31.25 £41.67
£75,000 £15.63 £31.25 £46.88 £62.50
£100,000 £20.83 £41.67 £62.50 £83.33
£125,000 £26.04 £52.08 £78.13 £104.17
£150,000 £31.25 £62.50 £93.75 £125.00
£175,000 £36.46 £72.92 £109.38 £145.83
£200,000 £41.67 £83.33 £125.00 £166.67
£225,000 £46.88 £93.75 £140.63 £187.50
£250,000 £52.08 £104.17 £156.25 £208.33
£275,000 £57.29 £114.58 £171.88 £229.17
£300,000 £62.50 £125.00 £187.50 £250.00
£350,000 £72.92 £145.83 £218.75 £291.67
£400,000 £83.33 £166.67 £250.00 £333.33
£450,000 £93.75 £187.50 £281.25 £375.00
£500,000 £104.17 £208.33 £312.50 £416.67

In real terms this will equate to just under £21 per month for every £100,000 borrowed.

Or for the average private landlord around £1,160 per year (the ‘average’ landlord has around £465,000 in mortgage debts according to the NLA).

All in all this is likely to equate to another squeeze on rental margins, exacerbating the impact of incipient changes to the destructibility of finance costs – including BTL mortgage interest.

Hands up who’s looking forward to the Budget on 22 November?

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