Landlord Legislation (2024) – Everything you need to know about becoming legally compliant

Consent to Let

If a property is mortgaged on a normal residential product landlords must obtain ‘Consent to Let’ from their lender. Failure to do so could mean they are in breach of the mortgage Terms & Conditions. Be mindful that not all lenders offer this facility unless the product is a buy to let mortgage in the first place. Those lenders that do grant permission normally only do so for a certain period and will often also impose conditions on what type of tenant(s) the property is let to.

It’s important to ensure that this is confirmed in writing as failure to obtain consent could result in the full mortgage amount being claimed back by the lender.

Tenancy Agreement

Most residential Tenancy Agreements used in England are Assured Shorthold Tenancies (ASTs). An AST provides a written framework for both the Tenant and Landlord and works to protect both parties throughout the duration of the Tenancy.

ASTs can vary in their length and level of detail but ultimately should provide clear and concise information relating to the Tenancy. This will include the length of the fixed term, tenant and landlord contact details, the property address, the rent amount, when the rent should be paid, any deposit information and whether any bills are included.

A good AST will include a variety of clauses which protect both the landlord and tenant. It will clearly set out the rights and responsibilities of both parties and be available if the landlord or tenant have any queries during the Tenancy. The same AST can continue in force even if you are considering switching letting agencies at a later date.

It is important to note that the Housing Act would most likely take precedent in a court of law if there is a dispute over an AST. Some ASTs simply do not create a detailed enough framework to guide the landlord or tenant correctly. In these cases, a court of law would refer to the Housing Act for clarification.

Tenancy Set Up / Move in

Landlords are required to provide a range of legal documents to the Tenant(s) at the start of each Tenancy, whilst also ensuring that the property is fit for habitation from Day 1.

At the time of writing, the documents are as follows:

1. Tenancy Agreement
2. How to Rent Guide (note: this is regularly updated, and the most up-to-date version must be provided)
3. Deposit prescribed information
4. Energy Performance Certificate (EPC)
5. Electrical Installation Condition Report (EICR)
6. Gas Safety Certificate
7. Property Inventory (not a legal requirement, but best practice)

As well as ensuring that the documents above are provided, landlords are required to ensure that the property is safe for a Tenant to move into. This means checking that smoke detectors and carbon monoxide alarms are present and working and ensuring that the property is free from any safety defects.

Gas Safety

The Gas Safety (Installation and Use) Regulations 1998 dictate that landlords have a duty to ensure all gas appliances, fittings and flues/chimneys are safe. It is imperative that all gas equipment is maintained by a Gas Safe (previously CORGI) registered engineer. Landlords must also ensure that an annual check is carried out on each appliance and flue. Following the check, a record should be provided to the existing tenant(s) within 28 days of completion. New tenant(s) must also be provided with a copy of the gas safety certificate on the start date of their tenancy.

Landlords need to keep copies of gas safety certificates for a minimum of 2 years. However, we would advise these are kept hold of throughout the duration of owning the property.

Note: Legally, landlords are not able to move a tenant into a property without having an up-to-date gas certificate.

We would also recommend showing your tenants how to turn the gas on/off in case of a gas emergency.

Unsafe electrical systems contribute toward approximately 10% of house fires. They can also cause problems with electric shocks, burns, and even explosions in some cases. Are you prepared to run that risk?

Energy Performance Certificate (EPC)

An Energy Performance certificate (EPC) is required for all properties when being constructed, sold, or let. An EPC is a document providing details on the energy performance rating of a property. It relates to boiler efficiency, insulation standards, efficiency of doors/windows and several other factors. It also highlights what can be done to improve the energy efficiency rating of the property.

Once completed an EPC will cover a 10 year period and all valid EPC’s can be located on the national EPC register here. In April 2018 the Minimum Energy Efficiency Standards (MEES) made it unlawful to let a property with an energy efficiency rating of ‘F’ or less. The rules were further extended on 1st April 2020 and now apply to all existing tenancies too. In other words, landlords with properties which are not energy efficient are likely to face the costs of upgrading before being able to let or continue with the tenancy compliantly.

Deposit Registration

Where a security Deposit is taken in relation to a residential Tenancy that started after 6 April 2007, the deposit must be protected within a government approved tenancy deposit scheme. The maximum deposit amount is limited to the equivalent of 5 weeks rent, and a holding deposit is limited to a maximum of 1 weeks rent.

There are three approved tenancy deposit schemes that can be used, and they are as follows:

• Deposit Protection Service (DPS)
• Tenancy Deposit Scheme (TDS)
• MyDeposits

Landlords have 30 days to protect the security deposit within one of the approved schemes on either an insurance backed or custodial basis. Landlords must also issue prescribed documents to the Tenant(s) which provide further information on the Deposit, the scheme in which it is protected, and how the Tenant(s) can claim to get the deposit back at the end of the tenancy.

Failure to protect a Security Deposit can result in fines of up to 3 times the deposit amount and it is therefor vital that the landlord protects the deposit within the allotted timeframe.

Furniture and Furnishings (Fire) Safety

Under landlord rules, all furniture and furnishings supplied in rental accommodation must comply with The Furniture and Furnishings (Fire) (Safety) Regulations 1988. Some materials used to fill or cover furniture have been known to cause a fire risk. This is particularly common in older and second-hand furniture.

To comply, any furniture provided as part of the letting must carry a permanent and non-detachable fire safety label.

Legionella Risk Assessment

Guidance from the Health and Safety Executive outlines a need for Landlords to combat Legionnaires’ Disease in rental properties. This may involve carrying out risk assessments of the hot and cold-water temperature and plumbing systems. Dependent on the level of risk, control measures may need to be put into place to prevent the possibility of harmful bacteria forming.

Note: Legionella is more commonly discovered in properties which have been empty for longer periods of time.

If there is a dispute at the end of a Tenancy, then the landlord will need to be able to provide proof of the condition of the property at the start of the letting. This is imperative if a tenant disagrees with the funds that the landlord is trying to claim.

Hint: Ensure that the inventory document includes photographs and as much other detail as possible. We even go as far as documenting smoke detectors, meter locations, keys, and instruction manuals!

Housing Health and Safety Rating System (HHSRS)

The Housing Act 2004 places an obligation on landlords to identify risks and hazards within rental properties. As a result, The Housing Health and Safety Rating System (HHSRS) was introduced. This is a risk-based evaluation tool used to make sure that rental properties are safe for the people who live within them. Local authorities often refer to the HHSRS when inspecting properties for possible hazards to health and safety.

A scoring system is used and covers a wide range of areas within the property. This includes structural integrity, fire safety, trip hazards, excess cold and even the potential for noise disturbance. A report can then be created to outline any required remedial works.

The local authority may decide to do an inspection if the tenants have requested one or if they have other reasons to believe that the rental property may be hazardous. Upon completion, the local authority may impose sanctions on the landlord to carry out works dependant on each risk category.

Human Habitation

For many years, landlords in England have had to adhere to certain requirements to ensure all rental properties are fit for human habitation. On Wednesday 20thMarch 2019, the Homes (Fitness for Human Habitation) Act legislation came into force. This is an amendment to the Landlord and Tenant Act 1985, which has subsequently been introduced to further protect tenants in a rental property.

Local authorities use this framework to determine the feasibility of a property for human habitation. The Act gives tenants the opportunity to take their landlord to court if specific requirements are not met. Landlords can also be sued for damages covering the entire length of the contract.

Responsible landlords should consider increasing the frequency of their property inspections to minimise the risk of issues arising. Landlords should also ensure that any outstanding maintenance issues are fixed within a reasonable timeframe. An audit trail should then be kept as a record of all maintenance and condition reports. Click here to find out more.

Right to Rent Checks

Sanctions imposed as part of the Immigration Act 2014 mean that landlords must check that a tenant can legally rent their property before commencing with a tenancy. Unlimited penalties and even prison sentences can be issued to those found not adhering to the landlord legilsation and regulations.

Initial checks must be carried out and original identity documents must be verified by the landlord. Specific identification documents should be obtained to prove that the applicant is able to legally rent the property. These must adhere to specific government right to rent criteria which can be viewed here.

Landlords are also responsible for conducting follow up checks (where applicable) and ensuring that copies of original documents are held for at least 12 months following a tenancy.

Rent Reviews / Rent Increases

There are specific rules surrounding rent reviews and rent increases to ensure that Tenants are not being treated unfairly. A landlord cannot increase the rent on a property more than once per year, and the increased rental figure should not exceed an amount which would be deemed equal to the fair market rent for a comparable property.

A landlord must notify their Tenant(s) of a rent increase in the correct manner and using the relevant legal paperwork (a Section 13 notice). The rent cannot be increased during the fixed term of the tenancy, and at least one months’ notice must be given to increase the rent.

Tax on Rental Income

All landlords are required to pay Tax on rental income, and this is a far reaching and very detailed subject.

Properties are typically owned either within the Landlord’s name or a Ltd Company and the rules surrounding tax differ between each of these entities. Income obtained from property owned in the Landlord’s name will be subject to Income Tax whereas property owned within a Ltd Company will be subject to Corporation Tax.

There are several deductible expenses allowed for rental income, but controversially there are other expenses, such as Mortgage Interest, which are not deductible in many cases.

We recommend instructing the services of a reputable Accountant or Tax Advisor to fully understand the tax due on rental income.

Illegal Eviction / Harassment

There are specific procedures to follow for landlords who wish to evict their tenant(s). Failure to follow the procedures to the letter can result in a judge dismissing any case which ends up in court. Initially – and depending on the type of tenancy agreement used – specific prescribed documents must be issued to the tenant and the correct notice period given.

Should a tenant decide not to leave a property following service of the relevant document(s) a court order is required. Once obtained, the only way for a landlord to then evict their tenant legally is by arranging for bailiffs to attend the property.

Under no circumstances is a landlord able to harass their tenant(s). Landlords cannot throw a tenant out for being in arrears or even for breaking the terms of their tenancy. This can be a tricky process to navigate without the correct guidance.

Landlords are unable to carry out revenge or retaliatory evictions. This means that if a tenant has justifiably complained about the condition of the property or required works, the landlord cannot ask them to leave without proving that this has been handled correctly. It is therefore important that landlords respond to legitimate maintenance requests in a timely manner and keep audit trails throughout the process.

Non Resident Landlord (NRL) scheme – overseas landlords

A landlord with a rental property in the UK but with their usual home outside of the UK will need to sign up to the Non-Resident Landlord (NRL) scheme. This applies to all landlords who live outside of the UK for 6 months or more per year.

Following new landlord legislation, all landlords have two options for obtaining rent under the scheme:

1) in full and by paying tax via a self-assessment if HMRC allow this
2) by having tax deducted at source by the letting agent or tenant, and subsequently paid to HMRC on a quarterly basis.

Option 1 requires the landlord to first complete and submit form NRL1i. Once approved, HMRC will send a notice to the letting agent or tenant which gives authorisation for rent to be transferred to the landlord in full.

Option 2 requires the letting agent or tenant to deduct tax at the basic rate and subsequently pay this to HMRC on a quarterly basis. An annual return must then also be completed and sent to HMRC.

Failure to comply with overseas landlord tax regulation can result in significant fines.

Planning Permission

In most cases, planning permission is not required to rent out a property. Landlords that choose to create a House in Multiple Occupation (HMO) may however be required to obtain planning permission to do so, dependant on the size and location of the property.

Nottingham City Council for instance, have implemented a citywide Planning policy known as an Article 4 Directive. Any landlord wishing to rent a property to more than 2 unrelated parties within the Nottingham City Council jurisdiction is required to obtain planning permission to do so.

Obtaining the planning permission to operate a HMO within an Article 4 location can be a very difficult task, and in most cases this request will be declined by the Councils planning department. Whilst obtaining planning permission isn’t an impossible task, we advise all landlords that wish to create a HMO to contact us in the first instance for advice before purchasing or converting the property.

Tenancy Fees

The Tenant Fees Act was introduced in 2019 to prevent Landlords and Letting Agents from charging unfair fees to Tenants. The act contains specific new landlord rules surrounding what fees can and cannot be charged. Ultimately, the only payments that landlords and letting agencies can charge to tenants are as follows:

1. Rent
2. Security Deposit (capped at 5 weeks rent where the total annual rent is less than £50,000)
3. Holding Deposit (capped at 1 weeks rent)
4. Payments relating to the earlier termination of the Tenancy (for instance re-letting fees)
5. Payments relating to the variation of a Tenancy (capped at £50 or a ‘reasonably incurred’ figure)
6. A default fee for late payment of rent (there are further rules surrounding this)
7. A default fee for replacement of a lost key or security device (there are further rules surrounding this)

A breach of the legislation can result in a fine of up to £5,000 or a banning order in more serious cases.

Summary

It’s becoming quite clear that UK government aren’t taking things lightly when it comes to professionalising the rental sector. Gone are the days when landlords can simply buy a property and draw up a tenancy agreement. Instead, dedicated enforcement teams and savvier tenants are cracking down on those who don’t obey the rules.

Landlords simply cannot be too careful when it comes to ensuring that regulations are met. Did you know that there are over 100 individual pieces of legislation currently?