5 Key Pieces of Legislation Hitting the Private Rental Sector

lost man in a boat

If you’re feeling a little “lost at sea” with the new legislation coming in to play this year, here are the important points to pay attention to:

1.Extension of the Homes (Fitness for Human Habitation) Act, in March

The association says that the original Act – which means landlords or agents acting on their behalf can be forced to carry out improvement works to properties or risk being sued – is being extended from March 20 this year to include existing statutory periodic tenancies.  Until that date it applies only to tenants who signed contracts on or after 20 March 2019.  The association says this legislation applies in England only – with responsibility for these standards in Wales falling under the scope of the Renting Homes (Wales) Act.  Under the Act, the Landlord and Tenant Act 1985 is amended to require all landlords (private and social) to ensure that their properties, including any common parts of the building, are fit for human habitation at the beginning of the tenancy and throughout. The Act states that there is an implied agreement between the tenant and landlord at the beginning of the tenancy that the property will be fit for human habitation.

The government wants to support the majority of good landlords who provide decent and well-maintained homes. Landlords who do not maintain safe properties prevent the operation of an effective and competitive rental market where all landlords operate on an equal footing. This Act provides an additional means for tenants to seek redress by giving them the power to hold their landlord to account without having to rely on their local authority to do so.

The government expects standards to improve as tenants will be empowered to take action against their landlord where they fail to adequately maintain their property. This will level the playing field for the vast majority of good landlords who are already maintaining homes fit for human habitation without serious hazards, by ensuring that they are not undercut by landlords who knowingly and persistently flout their responsibilities.

  1. Minimum Energy Efficiency Standards, in April

From April 1, ALL existing tenancies will fall in line with the existing law introduced in 2018, whereby landlords or their agents cannot let to new tenants unless it has an EPC rating of E or better.  This means that anyone whose rentals have F or G ratings will no longer be able to legally let them out.  The association says: Landlords will be expected to pay up to £3,500 towards energy efficiency improvement works. However, if work will cost more than that landlords can apply for an exemption.”  More details here:  https://www.arla.co.uk/media/1046302/minimum-energy-efficiency-standards.pdf

  1. Capital Gains Tax changes, in April

Until now, CGT has been paid on profits made through the sale of any property that isn’t the owner’s principal home; owners can also seek lettings relief (a tax break) if they once lived in the non-principal home themselves.  From April this is scrapped and landlords will only be able to claim lettings relief if they share the property with their tenant.  Currently if you sell a residential property which was at one time your main residence but has then been rented out, it is possible to deduct ‘letting relief’ up to £40,000 from any capital gain. However, from April 2020 – this relief will no longer be available unless the letting of the property occurred while the owner was living in the property.  More details here: https://www.bkl.co.uk/insights/capital-gains-tax-cgt-property-changes-april-2020/

  1. Mandatory CMP for agents, from April

New rules on money laundering have been extended to cover letting agents, with an April 2020 deadline for agents to join an official Client Money Protection scheme – this marks the end of a 12 month grace period agreed following technical problems over the original 2019 deadline.  More details here:  https://www.arla.co.uk/news/may-2018/cmp-mandatory-from-1-april-2019-heres-how-it-transpired.aspx

  1. Extension of the Tenant Fees Act, in June

 The Tenant Fees Act came into force in England in June 2019 and is extended to cover all existing tenancies in June 2020.

This means landlords and letting agents cannot charge fees other than rent, deposits, holding deposits and charges for defaulting on the contract – with additional restrictions on how much tenants must pay.

Deposits are already limited to a maximum of five weeks’ rent where the annual rent is below £50,000 for any new or replacement tenancy. If the annual rent is above this, the maximum is six weeks, with holding deposits limited to a week.

Charges for ‘extras’ such as cleaning, pets, referencing, inventories and admin are all off limits.

Where a banned fee has been taken, tenants will be able to get money back via the county court. Landlords could be fined up to £5,000 for a first offence, and £30,0000 for subsequent breaches.

More detailed information on the Act is available at www.rla.org.uk/feeban


References:  Letting Agent Today, ARLA, Menzies.co.uk, RLA.co.uk , bkl.co.uk


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