We interview Andrew Culverwell, Lettings Technical Director at Countrywide, on lettings compliance and regulations.
Andrew shares his thoughts on the regulatory landscape for landlords – what key legislation they need to comply with, what the current situation is for proposed changes and what landlords need to keep an eye on as we move further into 2022. If you'd like to listen to this as a podcast, you can do so here.
How are the mechanics of possession proceedings working now that COVID-19 extensions to notice periods have come to an end in England & Wales?
In practice, the road to possession is not without delays as an already challenged court service continues to deal with a backlog in cases. The listing of possession claims will naturally vary from court to court; however, it is not unusual for courts to work through any pre-pandemic backlog before listing more recent cases. In more positive news, waiting times are gradually reducing and not getting any worse. Bailiff services are reportedly back to normal in most parts of the country.
The Queen’s speech in May 2021 confirmed that Government: “…will help more people to own their own home whilst enhancing the rights of those who rent” in England. Highlights of the proposals include:
- A consultation paper on reforming tenancy law through the abolition of possession notices under Section 21 of the Housing Act.
- Reforms to improve standards in rented accommodation. This might include a right to redress and targeted enforcement.
- Plans for a new “lifetime” tenancy deposit.
- Strengthening grounds for possession where a landlord has a valid reason.
The Department of Levelling Up, Housing and Communities announced back in October that the long-awaited Rental Reform White Paper would be published this year, with the extra time allowing for a “balanced package of reforms”.
So, there is a real focus by Government on strengthening tenants’ rights, but also generally reforming possession terms. What are the practical implications of these potential reforms?
In practice it is widely expected that tenancies in England will have no fixed term, instead being ended either when a tenant is in default or where the landlord has a genuine reason for requiring possession. Examples might include needing to take up occupation or to sell the property. Obvious concerns around such an approach centre on the practical steps involved in obtaining possession and how an already stretched court system might be involved in the process.
That covers England, what could happen in Wales?
Turning to Wales, The Renting Homes (Amendment) Bill, which amends the Renting Homes Act 2016, comes into force on 15th July 2022. Whilst much detail remains to be confirmed, information on fundamental changes to the way in which tenancies are created and how they can be terminated has already been provided. We are busy assessing how this will impact our clients and how best we can support them. This includes support in meeting increased obligations around electrical safety and the provision of smoke and carbon monoxide alarms. Please contact your local office in Wales for further information.
What else is a hot topic that landlords are looking at?
For landlords with apartments, building safety concerns will certainly be in their minds. Hardly a week goes by without further news on how replacement and upgrading of external wall systems (cladding) and fire prevention works might be supported.
In practical terms, what approach should landlords take?
As safety improvement works are scheduled and commence it is important that landlords carefully consider and communicate with their tenant and agent what impact, if any, this will have on prospective tenants. Under the Consumer Protection Regulations, landlords should declare at the outset details of scheduled works which might have a material effect on a tenant's decision on whether or not to proceed. With works on many buildings likely to be invasive and include the erection of scaffolding, transparency is all the more important.
In related news, the Building Safety Bill continues its passage through parliament. Strengthening obligations under various pieces of regulation, including the Regulatory Reform (Fire Safety) Order 2005, the bill intends to implement more stringent oversight over higher-risk buildings. We will need to wait and see how this will impact landlords away from their leaseholder responsibilities, but structured communication with tenants around building safety plans and who they contact in the event of any problems/questions look likely to feature.
So, landlords need to be practical, keep open lines of communication with tenants and keep an eye on regulatory developments. What else do landlords need to be mindful of?
In November 2021, Government responded to a consultation on extending rules in England on smoke and carbon monoxide alarms in rented property. Once parliamentary approval has been given the Smoke and Carbon Monoxide Alarm (England) Regulations 2015 will, amongst other things, stipulate that any room where a fixed combustion appliance is fitted (including gas boilers) will need a carbon monoxide alarm. Previously the requirement included appliances such as wood burning stoves and rooms with an open fire, but excluded gas boilers which, under the changes, are now firmly in scope. Gas cookers are excluded, however. Once advised of a fault, landlords will be required to repair or replace the alarm.
Of course, alongside the pandemic, the climate crisis has rarely been out of the news as well. But what affect will this have on the lettings business?
No regulatory update would be complete without mention of energy efficiency. Long held expectations are that the current minimum “E” energy rating will be increased, rising to a minimum “C” rating by 2025. Notwithstanding that detail and time frames are still to be confirmed, landlords are advised to build an understanding of what steps can be taken to improve their property’s energy rating and to make provision for the cost of the improvements, including what financial support is available.
Landlords should look now to future-proof their properties, to help spread the costs of any changes they need to make to comply with energy efficiency requirements. It’s definitely worth reviewing what help may be available. For instance, from April, the Government will offer £5,000 to people in England and Wales to encourage them to replace their gas boilers with heat pumps. Private rented accommodation may be eligible so it’s worth checking the further detail available, for instance through the Government website.