Originally published at: https://blog.openrent.co.uk/essential-landlord-update-september-2018/
Hi there! Welcome to the first in a new series of monthly updates, bringing landlords essential property stories and updates on regulations each month. Simply read the Essential Landlord Update once a month, and sleep easy knowing you’ll be up to date with the fast-changing world of UK property! Let’s get right to it.
New HMO Rules Remove the Storeys Criterion
On 1st October, new rules come in that change which HMOs need licensing. Basically, it doesn’t matter anymore how many floors your property is spread across.
From 1st October onwards, mandatory HMO licensing will apply to properties:
- Occupied by 5 or more people
- Forming two or more separate households
And that’s it! No mention of floors or storeys. So if this is you, then you will need to apply for an HMO license before 1st October. You can do this on your local council’s website.
It’s also worth reviewing your Local Authority’s licensing requirements since you may require additional or selective licensing.
Mandatory Three-Year Tenancies in Doubt
Plans to force landlords to offer three-year tenancies solidified this summer as new(ish) Housing Minister James Brokenshire invited stakeholders to submit their views to a policy consultation.
But then, when Parliament recommenced after the August recess, the policy was thrown into severe doubt. The Treasury has indicated concerns that three-year tenancies would put off investment in the sector.
A typical policy compromise, three-year tenancies didn’t seem to please anyone. Landlord groups and the lettings industry were dead set against the idea, while pro-renter campaigners thought that it didn’t go far enough. Groups like Generation Rent have been arguing for unlimited tenure, which makes three years seem like small bear.
Amid the hysteria, all sensible landlords will remember that under the original three-year tenancies plan, all tenancies must include a six-month break clause. That means you won’t be stuck with nightmare tenants for three whole years with no escape route.
Tenant Fee Ban’s Gaping Loophole (but not what you think!)
The Tenant Fees Bill had its third reading in parliament this week. At a UCL Law meeting of great housing-law minds, OpenRent heard that the general opinion of some leading solicitors is that the bill has a gaping loophole .
Law boffins all agreed that the bill’s wording around ‘optional’ fees is a blatant way for landlords and agents to continue charging tenants fees after the ban.
The wording says landlords can get away with charging fees if:
1.7. …the landlord gives the person the option of doing any of those things as an alternative to complying with another requirement imposed by the landlord or a letting agent.
So far, the permitting of ‘default fees’ (e.g. charging £100 to replace a lost key) was thought to be the bill’s main weakness, and the main focus of much of the campaigning from Shelter et al.
This worry seems to have been met by an amendment to the bill which requires landlords to demonstrate the actual cost of any contract defaults (e.g. how much it cost them to cut a replacement key) and only charge a ‘reasonable’ amount.
Needless to say, the Tenant Fee Bill looks sure to pass during this parliament, and is predicted to be law by summer 2019. How this clause will be utilised by landlord and agents determined to charge tenant fees is yet to be seen.
Many industry figures think any ban will raise costs for landlords, as agents stop charging tenants, and pass on the charges to landlords.
Of course, as OpenRent landlords, this will hardly affect you, since we already don’t charge tenants admin/agency fees!
It’s Getting Harder to Serve Section 21 Notices
The Deregulation Act 2015 changed the rules on Section 21 evictions. They came into play immediately for tenancies granted after 1st October 2015. But on 1st October this year, they will apply to all tenancies . Even ones that have been running since before 1st October 2015.
Most landlords will have created new tenancies since then, and will be fully up to date on what they need to do. But if you’re a little fuzzy on what those new rules were, here’s a reminder.
- Landlords need to supply an EPC to tenants to issue a Section 21 notice
- Retaliatory eviction became much harder
- Section 21 can’t be served in the first 4 months of an AST
- Tenants can recover rent paid in advance for any period after a section 21 ends their tenancy
RICS say Rents to Rise 15%: (but it’s Not Good News for Landlords)
The Royal Institute of Chartered Surveyors think rents will go up by 15% by 2023 due a lack of property supply to the Private Rented Sector.
Time to crack the bubbly? Unfortunately not.
The hike, they argue, is expected to merely counter the increasing costs landlords will face as Section 24 plus other tax changes begin to bite.