In February this year the Housing White Paper was published, heralding changes of both a welcomed and controversial nature, affecting the UK private rented sector. Designed to raise standards by enabling and implementing measures in the Housing and Planning Act 2016, the white paper was entitled ‘Fixing our broken housing market’.
Subject to consultation processes, we estimate many of the proposed changes will come in to effect as early as October this year. The key areas of change are:
Banning fees to tenants
One of the most controversial measures, the fee ban is not supported by ARLA (Association of Residential Letting Agents) whose research indicates that rents will rise to compensate. Ironically, this will inevitably penalise tenants (the very people the ban is meant to help) if agents are forced to pass on costs to landlords.
There is likely to be a cap on deposits – consultation on this closed on 2nd June this year and the Queen’s speech included mention of capping at one month’s rent. We await the draft Bill for clarification.
Enforcement of rogue agents and landlords
Councils will be given far greater powers including banning the worst offenders for breaches of housing, immigration and general criminal law. A rogue agent/landlord database will be created for access by local authorities and government.
This is in addition to enhanced enforcement measures that came into effect in April this year giving local authorities the power to choose court action with higher fines, or fixed penalty notices (of up to £30k) for offences, and now also rent repayment orders can be applied to private landlords (previously only affected housing associations). For very serious cases, courts can even enforce possession orders to take the property. Tenancy deposit schemes now share data with councils.
Previously, council enforcement involved restricted fines, with the funds raised going into a central ‘pot’ and redistributed across the spectrum of council functions. The new measures allow councils to set much higher fines and then ring fence the funds raised for channelling back into further enforcement activity.
Client Money Protection (CMP)
Another very welcome change – CMP is set to become mandatory. Howland Jones have been registered with CMP since March 2014. There’s a consultation process again and we expect a long lead time before this kicks in, but still great news.
Currently, the law says rented properties must have ‘safe’ electrics but doesn’t define what ‘safe’ means in practice. The changes stemming from a working group last year are likely to bring about the compulsory requirement for landlords to have an EICR (Electrical Installation Condition Report) carried out at least once every 5 years. This is already a legal requirement for HMOs in England and for all rented properties in Scotland, so we have been expecting this for a while. The working group’s report was sent to the Housing Minister just before the general election and received cross party support. Again though, we expect a long lead time for new regulations to come in to force.