Time to get your House(s) in order
As I write this article, the Renters Rights Bill has yet to become law but the noise surrounding its journey onto the statute books suggests that there may be turbulent times ahead for Landlords.
Whilst there is existing legislation which can fine landlords for various matters, the level of prosecutions has been relatively low, considering the 4 million rental properties in the UK, however there is evidence that this has increased over recent times and I believe this is a trend which is set to accelerate. Indeed the number of issues that fines can cover will also increase with the likely incorporation of Awaabs Law to address health and safety issues within rented property.
Notably, and perhaps due to an increase in their general popularity, there has been a significant increase in fines levied against HMO properties, often due to non compliance with licensing conditions. Fines in excess of £100,000 are starting to become more common for several breaches at the same property, with one fine of almost £50,000 being issued by a London Council for a single unlicensed HMO.
Fire Safety, following the Grenfell Tower fire, is also a definitive focus of enforcement and those who refuse to take fire safety in their properties seriously are likely to be soundly punished. A landlord in Ipswich was fined £29,000 for 10 fire safety breaches including a lack of fire doors whilst a London landlord was recently fined £61,000 for fire safety breaches across multiple properties.
Another penalty which appears to be on the increase is the Rent Repayment Order. Initiated by the 2016 Housing Act, the law states that the tenant can claim for a rent repayment order if the landlord has committed an offence during the tenancy. With wider knowledge of the law and with the assistance of no win no fee lawyers, these claims are on the increase with one London Borough issuing fines of over £1m in a single year in respect of 299 tenant claims. There was also a case where a Landlord was fined £1.44M for continual breaches.
I wonder whether the new Renters Rights law will bring with it a renewed enthusiasm to punish landlords who fall foul of regulations to bring in some much needed revenue and to provide demonstrable proof that a new piece of legislation was required.
I believe compliance issues will likely be dealt with more swiftly and that penalties will become more punitive. Further criminal sanctions are also proposed and this could result in a criminal record and unlimited financial penalties in serious cases.
Given the Renters Rights Law will likely include a landlord register, any convictions in the landlord and tenant environment will be advertised to all and could significantly harm your property business. Currently some local authorities publish details of fines they have handed out and in London there is already a London Rogue Landlord Checker which anyone can access. This is publicity you really want to avoid!
Bear in mind that if an offence is considered serious enough you could also receive a banning order preventing you from being a landlord. A seldom used law since it was introduced in 2018 but with draconian implications as the near 50 people who have received such an order will be able to attest.
Given there are already around 200 pieces of legislation which impact the rental sector, with the advent of the Renters Rights Bill you should have at the forefront of your mind how you are going to successfully navigate this new environment.
My advice is to review your current tenancy documentation and processes and consider whether the ongoing management of your portfolio would be better undertaken by a professional managing agent. Consider this objectively as it is critical that you put yourself in a position which ensures that you are fully compliant. Be aware that if the Local Authority find issue with one of your properties, they will invariably focus their attention on the rest of your portfolio. It is therefore crucial that there is no chink in your property armour!
Alternatively or perhaps even in addition to, you should consider membership of one of the national landlord associations which provide regular legislative updates to their members. You could also subscribe to some of the landlord information websites as well as attending property networking meetings. Some local authorities have a landlord engagement group and I would encourage you to join and attend any meetings that they host.
Being a landlord is likely to become more challenging at least in the short term but it will hopefully lead to a more professional environment which could ultimately benefit us all.
Back