Residential Property update- Rogue Landlords, Banning Orders, Abandoned Premises and more
The Housing and Planning Act 2016 (the Act) introduces a range of housing and planning reforms, including provisions dealing with rogue landlords and agents, the recovery of abandoned properties without the need for a court order and local authorities having access to tenancy deposit information.
Many of the provisions have not yet come into force and will do so on various different dates to be appointed by regulations, however its implications will be of interest to residential landlords and property letting agents. This update focuses on the property aspects of the Act. Save where indicated, the below measures relate to dwellings in England only.
Rogue landlords and letting agents
Local housing authorities in England (LHAs) will be able to apply to the First-tier Tribunal for banning orders of at least 12 months against a residential landlord or property agent who has been convicted of a “banning offence” (to be defined in further regulations). Banning orders will be used to prevent a person from (1) letting housing in England; (2) engaging in English letting agency work and (3) engaging in English property management work. A banned person will not be permitted to hold a licence for a house in multiple occupation (HMO) and a breach of a banning order is punishable by imprisonment or a fine of up to £30,000.
LHAs will maintain a database of persons convicted of a banning order offence and every LHA will have access to information in the database. HM Revenue & Customs will also be able to access information held to ensure that residential landlords comply with their tax obligations.
Rent Repayment Orders
A tenant or LHA will be able to apply to the First-tier Tribunal for a rent repayment order against a landlord who has committed an offence of unlawful eviction under the Protection from Eviction Act 1977, violent entry under the Criminal Law Act 1977, breach of a banning order or breaches of improvement orders, prohibition notices and licensing requirements under the Housing Act 2004 (Housing Act).
Recovering abandoned premises
The Act sets out a procedure that a landlord may follow to recover possession of a property let under an assured shorthold tenancy (AST) where it has been abandoned, without the need for a court order.
A private landlord will be able to give a tenant notice under section 57 of the Act bringing the AST to an end on the day on which the notice is given if (1) the tenancy relates to premises in England and (2) rent has not been paid (in accordance with section 58) and (3) the landlord has given a series of three warning notices (in accordance with section 59) and (4) no tenant, named occupier or deposit payer has responded in writing to any of those warning notices before the date specified in the warning notices.
The tenant will be able to apply to court within six months of the day on which the termination notice is given for their tenancy to be reinstated if they had a good reason for failing to respond to the warning notices.
Local authority access to tenancy deposit information
The Act will allow LHAs access to data from tenancy deposit scheme administrators relating to nearly 3 million tenancy deposits, which is estimated to cover over 70 per cent of private rented sector properties, to enable them to take action to review housing conditions. Where multiple deposits are registered against a single address which does not hold an HMO licence, for example, a LHA will be able to investigate the property to identify whether any action needs to be taken.
Licences for HMOs and other rented accommodation: additional tests and financial penalties
The Act amends the fitness test applied to persons who apply for licences to let residential accommodation in an HMO and in premises subject to selective licensing under the Housing Act. It adds additional criteria that applicants should be entitled to remain in the UK and should not be insolvent or bankrupt. Past failure to comply with duties under the Immigration Act 2014 concerning the immigration status of prospective tenants may be taken into account.
The Act also amends the Housing Act to allow a LHA to impose financial penalties as an alternative to prosecution where a person has not licensed an HMO where required or has failed to comply with an HMO licence, or where a person has contravened an overcrowding notice or failed to comply with an improvement notice.
Other provisions in the Act relate to:
- the supply of “Starter Homes” in England;
- the ability for a tenant to apply to court or tribunal for an order restricting the recovery of the landlord’s costs of legal proceedings through an administration charge;
- a review of minimum energy performance requirements under building regulations (in force 12 May 2016);
- the Secretary of State being made the lead enforcement authority for the purpose of the Estate Agents Act 1979 (this provision applies in both England and Wales and comes into force on 1 October 2016);
- the amendment of the valuation formula for certain leasehold interests in leasehold enfranchisement and long residential lease extension cases and amendment of the formula for calculating the amount needed to redeem a rentcharge under the Rentcharges Act 1977. These provisions came into force on 12 May 2016 applying to both England and Wales but no regulations for the valuation and statutory formula have been made as yet; and
- the Secretary of State’s power to make regulations: (1) imposing duties on private residential landlords to ensure their properties comply with electrical safety standards; (2) requiring property agents to be a member of a client money protection scheme to protect money of landlords and tenants in the event of an agent going into administration and to safeguard against theft or misappropriation of funds; and (3) imposing duties on a landlord to provide the secretary of a tenants’ association with information about other leaseholders (in force 12 July 2016).
For a number of the above provisions, the Secretary of State will still need to make regulations setting out further requirements. We have yet to see when the various provisions will come into force and what further regulations will be made and we will be looking out for further developments in this area. Should you require any advice in respect of the above, please do get in touch.
08 Aug 2016