A lettings guide for landlords

With increased regulation of the private rented sector in England, it’s important to have all of your “ducks in a row” when it comes down to renting your property.

Here’s a quick guide:

  1. Deposit protection

If a deposit is taken, it must be registered with one of the government-approved deposit protection schemes and the initial requirements of the chosen scheme must be complied with, within 30 days of receiving the deposit.

  1. Prescribed Information

Prescribed Information must also be given to the tenant at the outset of a tenancy.

On 21 July 2021, the Government published an Easy Read version of How to Rent: the checklist for renting in England (How to Rent guide).

There is no guidance as to when it might be appropriate to provide the new Easy Read version; our advice would be to serve the current long version (the non-easy read) of the Guide. However, you could serve the Easy Read version in tandem.

  1. Gas Safety Certificate

If the property has gas appliances, the landlord must provide the tenant with a copy of the latest gas safety certificate before the tenant occupies the property; emphasis on “before” the tenant occupies. The landlord must also provide a copy of each annual gas safety certificate to the tenant within 28 days of the check.

  1. Energy Performance Certificate (EPC)

A landlord is obliged to provide a copy of an EPC to the person who ultimately becomes the tenant.

Consequences

A common question that tends to creep up is, what are the consequences for landlords who fail to comply with the pre-letting requirements?

A landlord could be prohibited from ending a tenancy or obtaining possession at the end of the term. As a result, it may impact the landlord’s ability to sell or refinance the property in the future - both a buyer and a lender will usually want to be sure that they have the means to obtain vacant possession of the property.

What happens if the landlord fails to protect the deposit in an authorised deposit scheme on time or at all?

A failure to protect the deposit with an authorised scheme cannot be remedied by protecting the deposit after the 30-day period has expired. Such a breach can only be remedied by returning the deposit to the tenant in full or with agreed deductions. However, the landlord will still be liable to pay a fine of up to three times the amount of the deposit.

A landlord will also not be able to recover possession of the property by serving a  section 21 notice, unless the deposit is repaid (as above) or following determination, settlement or withdrawal of any claim. Failure to properly register a deposit or provide the necessary information does not prevent the landlord serving a notice under section 8 of the Housing Act 1988.

What if the deposit has been protected in an authorised scheme, but the prescribed information in relation to it has not been given to the tenant?

If the landlord has not provided the prescribed information to the tenant, the landlord cannot serve a section 21 notice to recover possession of the property "until such time" as the prescribed information has been provided (section 215(2) HA 2004). In other words, the landlord must provide the necessary information and then it can serve a section 21 notice.

Notwithstanding the above, financial sanctions may still apply to the landlord.

As above, failure to properly register a deposit or provide the necessary information does not prevent the landlord serving a notice under section 8 of the Housing Act 1988.

What if the gas safety certificate hasn’t been provided and you want to evict your tenant using a section 21 notice?

In the case of Trecarrell House Ltd v Rouncefield [2020] the Court of Appeal held that a landlord who fails to provide the tenant with a copy of a gas safety certificate before the start of the tenancy can remedy that default by providing the certificate before serving a section 21 notice, so long as the certificate was in force at commencement of the tenancy.

A key point to note in this case is that there was a valid gas safety certificate in place when the tenant took occupation, it was simply an administrative error on the part of the landlord that it was not passed on to the tenant. We do not know if the outcome would have been the same, had the landlord not carried out the check, or if the check had failed and/or the landlord had not carried out the required repairs. We suspect the courts would take a dim view of the latter scenarios.

What if the EPC hasn’t been provided and you want to evict your tenant using a section 21 notice? 

There is currently no authority on whether providing an EPC to a tenant after the tenancy has already commenced will prevent the landlord from serving a section 21 notice. Arguably though, the courts may take a similar approach to Trecarrell.

Landlords should also remember that it is unlawful to grant a new tenancy (or continue to let) a property with an EPC rating of below E unless an exemption has been validly registered.

Is the inability to serve a section 21 notice the only sanction for landlords who do not comply?

Depending on the nature of the breach of the regulations there are both civil and criminal penalties that can apply, and compensation may be awarded to a tenant in certain circumstances if their landlord is found by the courts to be liable.

How can landlord’s protect themselves from attracting such draconian consequences?

Paper trail. The tenancy agreement should refer to the pre-letting documents along with an acknowledgement by the tenant that they have received those documents. Any letters sent to tenant should be kept safe and there should be proof of delivery. In other words, a strong paper trail showing compliance.

How has COVID-19 legislation affected a landlord’s ability to evict a tenant?

The rules around obtaining possession of residential property have been heavily affected by emergency COVID-19 legislation.

From 1 June 2021 until 30 September 2021, a section 21 notice must give tenants at least four months' notice to recover possession. Also, a section 21 notice cannot be served which specifies a termination date that is less than 6 months from the commencement of the tenancy and, unless there is a break clause, the notice cannot expire before the end of any fixed period of the tenancy has come to an end.

The default position, if there is no further legislation, is that the notice period for a section 21 notice will revert to two months on 1 October 2021, but it is impossible to rule out any last-minute changes to the current arrangements.

The courts are inundated with a backlog of possession claims following a stay on possession proceedings, which was lifted on 21 September 2020, and the government has asked bailiff associations not to enforce possession orders where anyone in the household has COVID-19 symptoms or is self-isolating

Debt Respite Regulations

The Debt Respite Regulations establish a number of protections for individual debtors who have obtained either a breathing space moratorium or a mental health crisis moratorium, which restrict a creditor's ability to take enforcement action in relation to a moratorium debt during the moratorium.

If the tenant has obtained a moratorium, this will not prevent the landlord serving a section 21 notice on the tenant and then commencing possession proceedings based on the section 21 notice. However, starting court proceedings may be prohibited under the Debt Respite Regulations if, in addition to seeking an order for possession, the landlord includes a claim for rent arrears in respect of a moratorium debt.

As to enforcement, it is not clear whether the Debt Respite Regulations prohibit enforcement of an order for possession obtained following service of a section 21 notice where the order for possession also requires payment of arrears that are a moratorium debt.

Conclusion

The above is not a comprehensive list of the “do and don’ts” of letting; it is merely a guide. There are a number of other additional obligations that come into play, such as, fire and electrical safety, right to rent checks, fitness for human habitation and the fees that can be charged in connection with a tenancy. As this area of law is not straightforward and is constantly evolving, we strongly recommend that you obtain legal advice on all of your tenancy/letting-related issues.

If you have any questions about the content in this blog, please contact a member of our Property Litigation team.

 

Who to contact

Priya
Sejpal

Associate , London

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