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Critical changes to Section 21 Notices

As The Negotiator hits your desks, says lettings guru Frances Burkinshaw, major changes will come into force for the residential lettings industry.

Frances Burkinshaw

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SECTION 21 NOTICES

The first is that the changes introduced by the Deregulation Act 2015 will apply to all tenancies from 1st October 2018. The new rules have applied to new tenancies for some time but from 1st October landlords and agents must ensure that they use the new style prescribed Section 21 Notice for all tenancies. Any old style Section 21 notices will be invalid.

Many additional requirements introduced by this legislation now apply to all tenancies. Most, however, require items to be given to the tenant prior to entering into the tenancy. Of course this is not possible for a pre-existing tenancy.

I suggest, however, that it would be best practice to still ensure that the following are given to the tenant forthwith:

  • Gas safety record
  • Valid EPC
  • Latest version of the Government’s ‘How to Rent’ Guide
  • An HMO licence – if required

The law now says that a Section 21 notice will be invalid if these items have not been given to the tenant prior to the tenancy. By ensuring compliance at the earliest possible moment, a good defence could be mounted should the matter land up before the Courts.

Frances Burkinshaw image

Frances Burkinshaw

Remember also that a Section 21 Notice can now expire on any day providing a full two months’ notice is given. (Different rules apply if the tenancy was a periodic tenancy from day one.) It is obvious to me, but is now law, that any overpayment of rent must be repaid when the tenant vacates the property.

The notice cannot, however, be served until four months of the tenancy have elapsed and it only has a ‘shelf life’ of six months – ‘use it or lose it’.

An Improvement Notice served by the Local Authority will mean that Section 21 notices will be invalid for six months.

HMO LICENSING (HOUSES IN MULTIPLE OCCUPATION)

From the 1st October 2018 the definition of a licensable HMO as defined under the Housing Act 2004 is changing. The definition now will be:

‘A property occupied by five or more people who form two or more households’.

The previous requirement of 5 storeys has been removed. There will now be many more licensable HMOs in the country and agents should ensure that they advise clients accordingly.

Minimum room sizes have also been introduced in the hope of stamping out overcrowding.

Local Authorities are becoming more and more interested in Standard HMOs. This is a property let to two or more households i.e. two unrelated people, but in the case of sharers the number is three. Many people would say that they do not have an HMO and never would have. People also say that they certainly would never have a licensable HMO – really?

If a family decides to let a room in their rented house they could easily be creating an HMO and not have any idea they had done so.

But… What about the family (father, mother and three children) who rent a house; mother or father has their hours cut and they struggle to pay the rent, so they decide to sublet a room in the house. They have created a licensable HMO! Scary?

This would probably be unbeknown to the landlord or agent. For whatever reason the Local Authority could be alerted to the fact that this is now a licensable HMO. There is now the potential for the landlord to be fined up to £30,000 for not having a licence. There is also the possibility that the First Tier Tribunal could order the refund of up to 12 months’ rent!

AVOIDING DISASTER

We have mentioned the importance of House Visits in previous articles. They have now become even more vital to monitor the number of people living in a property. Ignorance is not and never has been, an excuse for breaching regulations.

Along with licensing comes more safety measures and thus more cost for the landlord. The landlord could be expected to install far more elaborate fire precautions including perhaps firewalls, doors and escapes.

The landlord could (once the shock of having to licence the property wears off) apply for a Temporary Exemption Notice (TEN) but this only last for three months with only one extension being allowed.

The tenant, by sub-letting a room, would of course be in breach of the tenancy agreement. Swift action should be taken to remedy this breach to bring it back to normalcy including the service of a Section 8 notice, if appropriate.

The message here is visit, visit and visit yet again. Know what and who is living in the rented property and do not assume – we all know what can happen when we assume!

October 11, 2018

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