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Introduction:
There’s a lot of regulation for landlords to be aware of in order to be successful in the property business. Unfortunately, it’s not just a case of getting to grips with it once as there are legislation changes regularly and new rules are introduced all the time, so unless you keep on top of that, you can easily fall foul of the law. As you’ll see by reading on, this can be incredibly costly, so it definitely pays to know your stuff.
This can be overwhelming though, especially in recent months where there’s been a whole host of new and sudden rules to deal with amid stamp duty changes and the property market boom.
But don’t worry, we’re here to help. For starters, we’ve put together some headlines on all the key recent regulations that you need to know about and if you need any particular advice at all, please get in touch and one of our property specialists will be happy to help.
Please note, some of the regulations below apply specifically to England and the rules may be different for other countries in the UK.
In a hurry? Here’s a quick summary
- Eviction ban – Prevented landlords from bailiff enforced evictions
- Electrical Safety Standards – Electrical installations in a property must be regularly inspected and signed off
- Stamp Duty – Thresholds are gradually reducing between now and October with new relief for first-time buyers
- Right to Rent – Changes in how to prove someone’s right to rent in the UK
- Anti-Money Laundering – Relevant estate agents must register with HMRC
- Notice period for tenants – How much notice tenants must be given before being evicted
- Client Money Protection – Legal requirement to protect customers’ money
Eviction Ban
What is it?
The eviction ban was introduced as part of the Coronavirus Act 2020 to stop tenants in both social and private accommodation from being evicted. Legislation preventing bailiff enforcement of evictions has now expired after being in place between November 17th, 2020 and May 31st, 2021.
This means that where landlords have a valid warrant of possession, evictions can now be enforced once more. However, bailiffs do currently need to provide 14 days’ notice of an eviction and are asked not to evict any tenants who have Covid or are self-isolating.
While the ban on enforcing evictions has expired, there are still provisions in the Act which increased the required notice period landlords must give when seeking possession of a property. Please see the section below on Notice to Tenants.
Key dates
May 31st 2021: Ban on enforced evictions ended
Electrical Safety Standards
What is it?
Introduced in June 2020, the new Electrical Safety Inspection Regulations legally require landlords to get the electrics in their rental properties tested and inspected by a qualified person every five years.
This work has to be verified with an Electrical Installation Condition Report, which will either sign the electrics off as being in good working order, or categorise the urgency of any remedial works needed.
The inspection focuses on the fixed electrics such as sockets, wiring, light fittings and fuse boxes. It will look for the condition of wires, overloading and any other potential dangers.
Depending on the nature of any work required, repairs have to be carried out within 28 days, or sooner if it’s more serious.
Copies of the EICR (and then proof of any work being completed) have to be made available to existing or prospective tenants, and the local council if they ask for it.
The rules apply to most types of private rentals, apart from a few exceptions such as new builds, student halls of residence, long leases and care and health settings.
More details on this can be found in our recent article on the Electrical Safety Inspection Regulations.
Key dates
June 1st 2020: New regulations came into force for all new tenancies.
April 1st, 2021: Deadline for all existing tenancies to have an inspection carried out
Stamp Duty Changes
What is it?
If you’re in the property business, the chances are you’re fully aware of the Stamp Duty ‘holiday’ that has caused the market to experience a huge boom in the first half of 2021.
This pandemic relief introduced by the Government meant that for many people, Stamp Duty didn’t apply at all.
While the ‘holiday’ has now ended, the threshold is reverting back to pre-pandemic levels in stages.
Currently, Stamp Duty only applies for residential properties above £250,000 and non-residential land and properties above £150,000. From October 1st, the threshold will reduce to £125,000 for residential and stay the same for non-residential. This is the same as it was before July 2020.
There’s also a new relief for first-time buyers introduced in July 2021 which means less or no tax applies when:
- Those buying are first-time buyers
- The property is £500,000 or less
- People who bought their first home before July 2020 will also be eligible for this discount
How much Stamp Duty is payable in all scenarios depends on a number of factors. For more details on how much would be payable, get in touch with one of our specialists.
Key dates
September 31st, 2021: £250,000 residential Stamp Duty threshold
October 1st, 2021: £125,000 residential Stamp Duty threshold
July 1st, 2021: New Stamp Duty relief for first-time buyers
Right to Rent Checks
What is it?
Landlords are legally obliged to check that anyone they let a property to has a legal right to rent in the UK. Checks must be carried out on all prospective tenants over the age of 18, even if they’re not going to be named on the tenancy agreement or there is no tenancy agreement, or it’s not in writing. It’s against the law to only check people who you might think isn’t a British citizen – everyone must be checked, or it could be viewed as discrimination.
The Brexit process has changed how the right to rent status can be proven for citizens of the EU, EEA and Switzerland. All citizens of these countries residing in the UK were asked to apply for settled status in the UK prior to a deadline of June 30st this year.
As a result of that application’s success and depending on how long they have lived in the UK, these citizens might have either ‘settled’ or ‘pre-settled’ status. As this possibly can’t be evidenced through physical documents, landlords can ask for a ‘share code’ which can then be input into a Government portal to check a person’s right to rent.
Key dates
June 30st, 2021: New online ‘share code’ to check right to rent.
Anti-Money Laundering Rules
What is it?
Estate and letting agents who receive rental payments equivalent to £10,000 euros or more for a single property now have to be registered with HMRC, to comply with anti-money-laundering legislation. This in turn protects our clients from being exposed to money laundering or associated risks.
The new rules required relevant agents to register with HMRC by June 10th. The property sector can be a target for criminals using house purchases and rental properties to ‘clean’ their proceeds of crime by giving the appearance of a legitimate source of funds.
Key dates
June 10th 2021: Deadline for relevant agents to register with HMRC
Notice Period for Tenants
What is it?
Between August 2020 and May 31st, 2021, landlords were required to give tenants six months’ notice before starting any possessions in all but the most serious cases, such as anti-social behaviour or arrears of over six months.
From June 1st, those notice periods were reduced to four months, including where a tenant is less than four months in arrears.
From October 1st, this will change again to two months’ notice where there are less than four months of unpaid rent. Although, for cases that are a little more serious, notice periods will require two to four weeks’ notice.
These are the headlines, but there’s a lot more detail to be aware of around the eviction process currently, so if you need any further advice or guidance, please get in touch.
Key dates
June 1st-July 31st 2021: Four months’ notice requiring possession.
October 1st 2021: Two months’ notice requiring possession.
Client Money Protection
What is it?
Letting or property management agents in England must now join a client money protection scheme if they hold clients’ money.
At Readings, we are members of the Government approved RICS and ARLA Propertymark scheme so we have full client money in protection in place. We are also members of TDS. This means that we are fully compliant with up to date deposit protection legislation.
You can read all about our accreditations and the rigid standards we sign up to in our previous article on what the logos on our website mean.
Client money protection schemes ensure that landlords and tenants are compensated if for any reason we were unable to pay their money back, such as going into administration. It involves maintaining robust client money handling procedures and holding money in FCA authorised accounts.
Any agencies not complying with this could be fined up to £30,000. This law also serves to provide you with added reassurance that you’re dealing with a professional and responsible business.
Key dates
April 1st 2021: Deadline for letting agents to join a client money protection scheme. If your Agent is not a member of an accredited body, there’s a good chance that they don’t have CMP in place protecting YOUR money!
To conclude
There’s a lot to be aware of if you’re a landlord and it can be tricky to get to grips with and remember all the relevant legislation.
It’s our job to help and advise you with all of it, so you can just relax and get on with other parts of the job. We’ll make sure you’re fully compliant.
It’s also our job to be up to date and compliant with any rules and regulations applicable to us, so that you get as much protection as possible for your investments. In addition to any legal requirements, we also go over and above by signing up to various standards and organisations which makes sure we’re always the best we can be.
If you have any questions or need any advice at all, please get in touch.
