New Legislation for landlords

Another year, another raft of legislation it seems – and landlords have not escaped the brunt of it. If you are one of them, it might be helpful to review some of the latest additions to landlord legislation.

Tenants’ deposit protection scheme

• with effect from the 23^rd of June 2015, all landlords of so-called assured shorthold tenancies face legal action if they fail to comply with the law to place tenants’ deposits in one of three officially approved deposit protection schemes.

• as the name suggests, the scheme is designed to give some security for tenants’ deposits, especially in the event of a dispute over how much needs to be returned at the end of a tenancy.

• although the rules were introduced a number of years ago, there are details which may trip up the unsuspecting landlord:

• not least is the hazard of a fine if a tenant’s deposit is not duly registered;

• the amount of the fine depends on the size of the deposit taken and may be up to three times the value of the deposit – a story in the Telegraph newspaper on the 27^th of April 2015 suggested that the average fine is likely to be £3,600;

• only if you pay for the registration of the deposit taken are you able to earn interest on it – as you were able to do formerly;

• the landlords most likely to be caught out and hit with the hefty fine are those with long-term tenants, on agreements that may have rolled over from one term to the next, when the deposit was taken many years ago – such deposits still need to be registered with one of the three government sponsored schemes;

• notice of a fine of several thousand pounds, therefore, may come right out of the blue;

Dispute resolution

• the tenants’ deposit protection scheme has a free dispute resolution service – if there is failure to agree on the proportion of any deposit to be returned to the tenant at the end of a tenancy, for example;

• however, tenants may also have the right to refer any other dispute over the terms of their tenancy agreement to a so-called Alternative Dispute Regulations (ADR) scheme which came into force on the 9^th of July 2015 and upon which the Guild of Residential Landlords has recently commented;

• ADRs are an established way of resolving disputes without the parties – in this case landlord and tenant – having to go to court for an adjudication;

• typically, the process is one of mediation, where both parties are encouraged to reach a solution but where there is no outside agency to impose any decision – the simple agreement between the two parties to the resolution of any differences forms the legally binding contract;

• this differs somewhat from the dispute resolution service offered under the deposit protection scheme, where a decision by the third party is final;

Right to Rent

• recent changes to immigration legislation have also already imposed a burden on landlords with let property in the Midlands – and, pending a decision on the trial scheme, is expected to be rolled out across the rest of the country during 2015;
• the so-called Right to Rent scheme imposes on landlords the legal obligation to check the immigration status – hence right to rent – of any tenant, or indeed other occupants, taking up a tenancy in his let property;

• letting the property to someone whose immigration status does not confer any right to rent leaves the landlord liable to a fine of up to £3,000;

Smoke and carbon monoxide alarms

• new legislation also means that since March of 2015, landlords are legally obliged to install smoke alarms and in certain cases carbon monoxide alarms in any property they let;

• the legislation is designed to reduce the number of deaths and injuries in all homes – a tragic total of 26 deaths and 670 injuries each year – although private sector landlords might be seen to be taking the brunt of such legislation;

• in this way, landlords of properties of any age are being asked to comply with building regulations that apply only to newly-built owner occupied homes

• if you are the owner of such let property, you may be penalised in civil action for up to £5,000.

The introduction of new legislation may have the effect of substantially moving the goal posts, therefore, for the commercial viability of your buy to let enterprise. Ignorance of the changes being made is of course no defence in law, but it is almost certain to add to the day-to-day difficulties of maintaining your property fit to let to needy tenants.