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New Lettings Regulations for Wales – Pre-Holding-Deposit Information

Traditional Houses in Cardiff

The Welsh Government has passed new regulations on the information to be provided before a holding deposit can be taken by a landlord or a letting agent to secure a tenancy.

Following on from our blog on the Welsh Government’s response to the consultation on the tenant fees ban in Wales (which can be found here), the Welsh Government made the Renting Homes (Fees etc.) (Specified Information) (Wales) Regulations 2019, which were due to come into force on 13 December 2019. These regulations have now been revoked and are replaced by the Renting Homes (Fees etc.) (Holding Deposit) (Specified Information) (Wales) Regulations 2019. These new regulations are due to come into force on 28 February 2020.

A holding deposit may be charged to a tenant to secure a property prior to signing the tenancy agreement. A landlord, or letting agent on their behalf, can still charge a holding deposit to reserve a property whilst suitability checks are carried out on the prospective tenants, but no more than one week’s rent can be charged.

Under the Renting Homes (Fees etc.) (Holding Deposit) (Specified Information) (Wales) Regulations 2019, landlords and/or agents in Wales must provide the following information to tenants before collecting a holding deposit on or after 28 February 2020:

  • amount of holding deposit;
  • address of the dwelling in respect of which the deposit is paid;
  • where a holding deposit is to be paid to a letting agent, the name and contact details of that letting agent;
  • where a holding deposit is to be paid to a landlord, the name and contact details of that landlord;
  • duration of the contract;
  • proposed occupation date;
  • amount of rent or other consideration;
  • rental period;
  • any proposed additional contract terms or proposed modifications to fundamental or supplementary terms or terms proposed to be omitted from the contract;
  • amount of any security deposit;
  • whether a guarantor is required and, if so, any relevant conditions;
  • reference checks the landlord (or letting agent) will undertake; and
  • information the landlord or letting agent requires from the prospective contract-holder.

The above ‘Specified Information’ must be provided in writing and may be given in person or sent electronically where the tenant consents to this.

If the holding deposit is collected without all the Specified Information being provided, the holding deposit must be repaid to the tenant, even where the tenant fails to take all reasonable steps to enter into the tenancy and where the tenant notifies the landlord that they do not wish to enter into the tenancy.

Here at Simply-Docs we will be producing new template letters for use by landlords and letting agents in Wales which set out the specified information and which can be sent to prospective tenants before a holing deposit is collected. We will also be updating our template Holding Deposit Agreements (Wales) and existing guidance notes.

Welsh Government Responds to Tenant Fees Ban Consultation

Modern Houses in Cardiff

Following our blog in July on the consultation on default fees and prescribed information relating to the tenant fees ban in Wales (which can be found here), the Welsh Government has now issued its response.

The response confirms that, following the responses given, the Welsh Government intends to bring forward regulations in two stages:

The first is legislation to set out the prescribed information which must be given by a landlord or agent to a tenant before a holding deposit can be taken. A landlord or agent will be prohibited from collecting a holding deposit if the prescribed information has not been provided. It is intended that these regulations are made before the end of this year.

The second is legislation to describe the default payments (and the limits of such payments) which a landlord or agent can charge where a tenant is in default of their tenancy agreement. If default fees are charged over and above the limits to be set, the excess will become a prohibited payment. The Welsh Government intends to make these regulations early in 2020.

Once the regulations have been passed, the Welsh Government will issue updated guidance to take account of the changes.

Here at Simply-Docs we will monitor the progress of the proposed legislation and will update the documents in our property portfolio following any legislation passed (as and where necessary).

Government Consultations on Energy Efficiency

Energy Efficient Housing

The UK is the first major economy to pass laws to stop all of its greenhouse gas emissions by 2050. In order to meet this target, the Government will need to take a number of steps. The Government has recently launched the following three consultations (with further consultations to follow) to advance the reduction of carbon emissions as soon as possible.

1. Consultation on Changes to the Minimum Energy Efficiency Standards for Commercial Property

The Government’s preferred option is for all commercial properties to achieve a minimum energy efficiency rating of B by 1 April 2030 (if cost effective) or if this cannot be achieved, the alternative would be for all commercial properties to achieve a minimum energy efficiency rating of C by 1 April 2030 (if cost effective). The current minimum energy efficiency rating for commercial properties is E.  If the rating is changed in April 2030 as the Government currently proposes, landlords will not be able to let their properties which are below rating B or C (depending on the outcome of the consultation and subsequent legislation made).

For the improvements to be cost effective, the expected savings from these improvements over a seven-year period must be equal to, or outweigh the cost of, the improvements to get the property to the energy efficiency rating prescribed. If the seven-year payback test cannot be met, there will be an exemption (as there currently is for buildings which fail the seven-year payback test to achieve at least an E efficiency rating).

The consultation also asks for views on whether this should be a single change to the minimum energy efficiency rating or whether the change should be gradual so that the rating is improved in stages. The idea behind a gradual change is there is likely to be more incentive to carry out the works sooner instead of them being done just before the proposed deadline of April 2030.

The consultation applies to England and Wales only. Responses are welcome from property owners, landlords, and investors. A link to the consultation can be found here. The consultation closes on 7 January 2020.

2. Consultation on Increasing Energy Efficiency for New Builds by Amending Building Regulations to Achieve the New Future Homes Standard

The Future Homes Standard for new-build homes in England was proposed by the Government earlier this year and is to be introduced by 2025. The Future Homes Standard proposes that new homes must be future-proofed with low carbon heating and improved fabric standards (such as triple glazing) to limit heat loss.

The consultation sets out two options (Option 2 is preferred by the Government) to amend Building Regulations to raise energy efficiency in new homes as follows:

Option 1 – To achieve a 20% reduction in carbon emissions (from the current standard) by requiring new-builds to be constructed with very high fabric standards (e.g. triple glazing) to limit heat loss and to have a wastewater heat recovery system installed in the house; and

Option 2 – To achieve a 31% reduction in carbon emissions (from the current standard) by requiring the installation of low carbon heating, renewables (such as solar panels) and better fabric standards in new-builds.

The consultation is for England only and responses are welcome from property owners and occupiers, property developers, and builders. A link to the consultation can be found here. The consultation closes on 10 January 2020.

3. Consultation on Amendments to the Heat Network (Metering and Billing) Regulations 2014

This consultation sets out proposals to amend the Heat Network (Metering and Billing) Regulations 2014 to ensure, where cost-effective and feasible, that individual heat consumption meters are installed on heat networks and that customers are charged based on consumption.

‘Heat Networks’ are systems where heat for an area is produced centrally and is transported to end users through a network of underground and overground pipes. Heat Networks reduce carbon dioxide emissions.

The consultation also seeks views on the introduction of three building classes (which will determine whether heat consumption meters need to be installed or not). The suggested building classes are as follows:

  • the ‘Viable’ class (individual meters must be installed)
  • the ‘Exempt’ class (meters not required)
  • the ‘Open’ class (meters or heat cost allocators required if cost-effective)

A link to the consultation can be found here. Responses are welcome from landlords. The consultation closes on 12 December 2019.

Secretary of State Now Has Power to Make Regulations on Electrical Safety Checks

Electrical Checks

New regulations have been passed which give the Secretary of State for Housing, Communities and Local Government powers (from 25 October 2019) to impose duties on private residential landlords in England to carry out mandatory electrical safety checks when premises are occupied under a tenancy.

The Housing and Planning Act 2016 stated that if further regulations are introduced then the Secretary of State may impose obligations on private residential landlords in England to carry out mandatory electrical safety checks.  These powers have now been granted.

The electrical safety checks are likely to require that private landlords ensure all electrical appliances, fixtures and fittings, and installations for the supply of electricity meet a certain standard.  These checks may also require certification from qualified persons.

Now that the Secretary of State has the power to impose mandatory electrical safety checks on residential landlords it is likely that draft legislation will shortly follow once parliamentary time allows.

Here at Simply-Docs we will publish further details on this as developments unfold and will update our documents if necessary once any legislation on this is passed.

Proposed Regulation of Property Agents

Row of Houses

The Government has now received its report from The Regulation of Property Agents (RoPA) working group, which the Government had commissioned last year. The Government asked the RoPA to advise them on whether “Property Agents” in England (which includes letting agents, managing agents, estate agents, online agents, and auctioneers) should be regulated by an independent regulator, with mandatory qualifications and a code of practice and how these proposals would operate in practice.

The working group was made up of members from various institutions and associations, including the Royal Institution of Chartered Surveyors (RICS), the Association of Residential Letting Agents (ARLA), and the National Landlords Association (NLA).

Any person can currently operate as a managing agent, letting agent, or estate agent in England without having any qualifications and without having a licence. This has resulted in bad practice within the industry and a distrust in Property Agents.

Whilst statute does regulate estate agency practices in England to an extent, there are no regulations in force in England which regulate letting agents and managing agents, although some letting and managing agents do follow voluntary codes of practice by virtue of being members of associations such as ARLA and NLA. The report concluded that property agency is an imperfect market for two reasons: 1) Residents do not choose and cannot easily remove an agent; and 2) owners do not have the information to negotiate effectively or hold agents to account. As a result, change is needed.

The RoPA’s report recommended the following:

1) There should be a new proposed regulatory framework for all Property Agents in England. The Government should create a list of ‘reserved activities’ which can only be performed by licensed Property Agents at a regulated firm.

“Property Agents” does not include property portals such as Rightmove or Zoopla or the short-let sector (Airbnb), but the report recommends that legislation should allow for future regulation of landlords and developers.

The regulator should be a new public body which would have the power to enforce the new regulatory framework and take action against Property Agents who fail to comply.

2) All property and qualifying agents should be required to hold and display a licence to practise from the new regulator. Before obtaining a licence, the agents would need to comply with their legal obligations and be subject to a fit-and-proper person test.

3) There should be a single, high level code of practice which sets out the principles applicable to all Property Agents which is set in statute.

4) There should be mandatory qualifications for all licensed agents carrying out ‘reserved activities’ and different qualification levels for those in the industry with compulsory training to continue professional development for all staff levels.

Draft legislation is likely to be introduced to regulate Property Agents, which will incorporate the RoPA working group’s recommendations once parliamentary time allows. A copy of the full report can be found here.

Are you a Property Agent? Do you welcome the recommendations set out in the report? Your comments are, as ever, welcome.

Law Commission Report on the Electronic Execution of Documents

Electronic Signature

Following our blog back in September 2018 on the Law Commission Consultation (available here), the Law Commission has now issued its report on the electronic execution of documents.

The report confirms that current laws permit electronic signatures, but that the law is not very accessible to non-lawyers and businesses. The aim of the report is to clarify concerns as to whether electronic signatures are admissible and to ensure that the law governing this area is sufficiently certain. The Law Commission has set out an option for reform – that the Government may wish to consider codifying the law on electronic signatures in order to improve the accessibility of the law.

It is important to note that this report excludes two categories: 1) documents that are to be registered at the Land Registry; and 2) wills. The issue of whether electronic signatures can be used in these two instances is being considered separately.

The report affects England and Wales only.

Key Conclusions

1. The Law Commission report confirms that an electronic signature can be used to execute a document (including a deed) provided that the person signing the document intends to authenticate the document and that they comply with any execution formalities. The Commission’s view is based upon legislation and court decisions which relate to both non-electronic and electronic signatures.

2. An electronic signature is admissible in legal proceedings.

3. In terms of executing deeds in the presence of a witness, the physical presence of that witness is still required even where both the person executing and the person witnessing are both doing so electronically.

The Law Commission concluded that parties could not be confident that the current law allows for “remote” witnessing (where the witness is not physically present when the signatory signs the deed).  The Law Commission considered two potential options to address this issue:

a. Witnessing by video link and witnessing through a signature platform; or
b. The use of digital signatures or other form of technology to replace witnessing.

Next Steps

The report recommends that:

1. An industry working group be set up to produce guidance for the use of electronic signatures in different commercial transactions;

2. The industry working group consider practical issues concerning the electronic execution of documents, provide solutions to the practical and technical obstacles for video witnessing of electronic signatures on deeds, and provide for legislative reform to overcome these obstacles if required; and

3. There should be a future review of the law of deeds and consideration as to whether the current requirements for executing a document as a deed are still relevant today.

Employment Tribunal: Vegetarianism is Not a Philosophical Belief

Image - Waiter Serving Food

A recent employment tribunal, in Conisbee v Crossley Farms Ltd and others, has found that vegetarianism is not a “philosophical belief” under the Equality Act 2010. Interestingly, however, the tribunal suggested that veganism is more likely to be protected under the Act.

Mr Conisbee, who is vegetarian, resigned from his position as a hotel waiter after he was shouted at in front of customers for wearing an un-ironed shirt. Mr Conisbee could not bring a claim for constructive unfair dismissal as he had not worked for his employer, Crossley Farms Ltd, for long enough, but instead claimed that his employer had discriminated against him for being vegetarian. He brought an employment tribunal claim for religion or belief discrimination under the Equality Act.

In support of his claim, Mr Conisbee claimed that he had been bullied by colleagues who gave him snacks and later told him they contained meat, such as a croissant that had been basted in duck fat and pistachio sponge pudding that contained gelatine powder.

As a vegetarian, Mr Conisbee claimed that he should have the same rights as employees who suffer discrimination over their religious beliefs or sexual orientation, which are characteristics protected by the Equality Act.

Mr Conisbee’s argument was that many vegetarians feel that: “it is wrong and immoral to eat animals and subject them and the environment to cruelty and perils of farming and slaughter”. He said that, for many vegetarians, this is not a mere “opinion or viewpoint”, but is a “serious belief integral to [their] way of life”. Mr Conisbee cited a Wikipedia article from 2010 stating that 21.8% of the world’s population are vegetarians. He argued that vegetarianism has attained a high level of cogency, seriousness, and importance, and is certainly worthy of respect in a democratic society.

In response, Crossley Farms claimed that Mr Conisbee’s belief is simply an “opinion or viewpoint” that is not capable of protection under the Equality Act.

Mr Conisbee’s claim was rejected by the tribunal who decided that vegetarianism was a “lifestyle choice” but not a “philosophical belief” capable of protection under the Equality Act 2010.

The employment tribunal did, however, suggest that veganism may qualify for the legal protection as there was “a clear cogency and cohesion in vegan belief”, as vegans all shun meat, fish, and dairy products because they believe it is “contrary to a civilised society and against climate control”.

Renting Homes (Fees etc.) (Wales) Act 2019 Now in Force

New Houses

The Renting Homes (Fees etc.) (Wales) Act 2019 (‘the Act’) came into force on 01 September 2019 and applies to Wales only. The aim of the Act is to reduce the “hidden” costs that a tenant can face at the start of their tenancy.

This Act is similar to the Tenant Fees Act 2019 (which affects England only), but there are key differences. Landlords and/or agents that have properties in both England and Wales must make sure that they are aware of both acts and that they comply with the regimes in their respective countries. The Act has less detail than the Tenant Fees Act 2019, with provisions granting ministers to make further regulations in the future.

Residential landlords and letting agents in Wales must ensure their business models, internal practices and procedures are compliant with the Act.

Which Tenancies are Affected?

This Act applies to Assured Shorthold Tenancies (ASTs) granted on or after 01 September 2019, or ASTs renewed on or after 01 September 2019.

This Act does not apply to Company Let Tenancy Agreements and Contractual (Non-Assured Shorthold) Tenancy Agreements nor does it apply to licences.

What Payments are Permitted Under the Act?

  • Landlords can make payments to a letting agent in respect of lettings work or property management work; and
  • A tenant can be charged:
    • Rent (although rent fluctuations are not permitted unless an exception applies);
    • A refundable tenancy deposit (these are not currently capped, but ministers have the power to introduce limits in the future);
    • A refundable holding deposit (capped at no more than one week’s rent). Strict time frames have been introduced for repayment;
    • Payments in the event of default. An AST may require a payment to be made in the event of a breach of the AST by the tenant. These payments will be subject to prescribed limits if further regulations are made;
    • Council Tax;
    • Utilities / communication services / TV Licence, if the payments are required under the AST and relate to the property.

What Payments are Prohibited?

Landlords, or letting agents on their behalf, are prohibited from charging tenants any fees which are not permitted payments (described above). For example, letting fees (such as administration fees, obtaining references, preparation of inventories, credit checks) cannot be passed on to a tenant and must be fronted entirely by the landlord.

What are the Penalties and Consequences for Non-Compliance?

Any breach of the Act is an offence and is prosecutable in the magistrates’ court. Offenders will be liable to a fine (not subject to a statutory limit). The enforcement authority may offer offenders a civil fixed penalty of £1000 for certain offences as an alternative to prosecution, but this is entirely at its discretion.

Landlords and letting agents will not be able to evict a tenant using the section 21 eviction procedure until they have repaid any unlawfully charged fees or returned an unlawfully retained holding deposit.

A local housing authority must notify the licensing authority as soon as reasonably practicable after it becomes aware of an offence. The licensing authority will take account of any offence notified to them when determining whether a person is fit and proper to hold a licence under the Housing (Wales) Act 2014.

To find out more about the Renting Homes (Fees etc.) (Wales) Act 2019, why not take a look at our all-new Guidance Note? This new document is available here.

New Laws on Non-Disclosure Agreements – What Will They Mean for You?

NDAs in Employment

Non-Disclosure Agreements or ‘NDAs’ have become something of a touchy subject in recent years owing to their increasingly frequent appearances in high-profile cover-ups and abuse scandals. In particular, NDAs are said to be widely used to cover up allegations of unlawful discrimination and sexual harassment in the workplace and have featured in a number of major news stories, not least those involving figures such as Sir Philip Green and Harvey Weinstein.

Settlement agreements also feature significantly in this area and are used to resolve workplace disputes without recourse to an Employment Tribunal. Settlement agreements can cover matters other than harassment and discrimination and may even be used in cases where an employee leaves without any trouble. They can also be used to impose obligations of confidentiality on both parties to a dispute, meaning that neither party can discuss the circumstances leading up to the agreement. Despite their obvious use as a legitimate tool for dispute resolution and for the protection of employers and employees alike, however, such agreements also fall prey to misuse.

In light of such issues, last month, Business Minister, Kelly Tohurst, announced plans for new legislation designed to stop NDAs from being misused in this way. The proposed reforms would:

  • Require employers to clearly explain the limitations of confidentiality clauses in plain English, within settlement agreements and written statements from employees. This should ensure that individuals properly understand what they are signing and what their rights are.
  • Build on existing legislation so that individuals signing NDAs get independent legal advice on the limitations of confidentiality clauses. This would include making it clear that information can still be disclosed to the police, legal professionals, and other regulated health and care professionals (e.g. doctors and social workers), irrespective of the NDA.
  • Introduce new enforcement measures to deal with confidentiality clauses that do not comply with the law, such as voiding those not following the new legislative requirements.

Critics of the proposals have said that they do not go far enough. Employees entering into NDAs would not be permitted to disclose matters covered by the NDA to their friends and relatives, and detail relating to permitted disclosure to regulations such as the Financial Conduct Authority also appears to be lacking.

Implications for Employers

For many businesses, this should not make a significant amount of difference. When announcing the proposals in July 2019, Ms Tolhurst stated that:

“The vast majority of businesses comply with the law and use NDAs legitimately – from protecting commercially sensitive information to preventing information being shared with competitors.”

“We will not tolerate the use of NDAs to silence and intimidate victims from speaking out. The new legislation will stamp out misuse, tackle unacceptable workplace cultures, protect individuals, and create a level playing field for businesses that comply with the law.”

At present NDAs and confidentiality clauses are barred from preventing individuals from reporting wrongdoing in the public interest (also known as ‘whistleblowing’). Such disclosures could include a criminal offence, danger to health and safety, or failing to comply with legal obligations. NDAs and confidentiality clauses are also unable to prevent individuals from taking matters to an employment tribunal.

In the realm of employment, written confidentiality clauses are a common (and, indeed, perfectly normal and acceptable) feature in employment contracts. Not only that, but some employees actively prefer NDAs in the form of settlement agreements as, when used properly, they can alleviate the stresses of an acrimonious departure, legal action, and tribunals. Moreover, the courts have established that all employment contracts contain an implicit expectation of confidentiality with respect to information which has a necessary quality of confidence. This cannot, however, be used to cover up immoral or grossly unfair conduct.

The proposed reforms will not, therefore, have a negative impact on those businesses using NDAs and confidentiality clauses properly, and they will continue to have an important and valid role to play. It is nevertheless good practice to ensure that your documentation complies ahead of time, making sure that the boundaries of such provisions are clearly defined and clearly explained, and making sure that you do not attempt to prevent individuals from making disclosures that should be permissible.

What About Commercially Sensitive Information?

Not all NDAs are created equal. Indeed, many have very little to do with terms of employment. With so much talk in the media of new laws to clamp down on NDAs, however, it is easy to become concerned that all NDAs are being targeted.

It is important to understand that the proposed reforms are specifically targeted at those NDAs and confidentiality provisions that seek to supress evidence of wrongdoing in the workplace. NDAs which are rightfully used to protect commercially valuable information, for example, when sharing confidential information with another business for limited purposes in a joint project, should not be affected.

As is often the case in such matters, if you are using NDAs as the law and good practice dictate, there is no reason to believe that business will not simply continue as usual.

When Will the Reforms Take Effect?

At present, there is no parliamentary timetable for the new law, but we will update you as and when more precise information becomes available. In the meantime, your comments are, as ever, welcome.

Do you use NDAs in your business? Do you include confidentiality provisions in employment contracts? How do you limit the scope of such provisions to balance the fair and lawful treatment of your employees with the protection of your commercially sensitive information?

Government Publishes Section 21 Consultation

Signing Property Documents

Earlier this year, the Government announced that it was outlining plans to abolish ‘no-fault evictions’ permitted under Section 21 of the Housing Act 1988 in England. Under the current law in England, landlords can evict tenants (giving them eight weeks’ notice) at any time after the fixed-term contract has come to an end, without specifying a reason. This procedure is known as a s21 eviction procedure.

The Government has now published its consultation which can be found here. This is an open consultation and views are invited from any interested parties. Responses can be submitted online or by post. Further details of the consultation and how to respond are addressed in the consultation.  The consultation closes on 12 October 2019. The consultation considers proposals for England only.

The Government has reaffirmed its commitment to repealing Section 21 to make the rental market fairer and more secure for tenants, as more people turn to rented accommodation in the private rented sector.

The abolition of Section 21 will mean that landlords will only be able to evict tenants under the Section 8 eviction procedure to obtain possession of their property. The Section 8 eviction procedure can only be used if certain statutory grounds (set out in the Housing Act 1988) are proved, such as non-payment of rent or anti-social behaviour.

This consultation therefore considers what improvements need to be made to possession proceedings through the court, and to the existing Section 8 eviction procedure to make it more efficient.

The Government want to speed up the court process and hope that this can be achieved by introducing an online system.

The consultation discusses a range of changes to the statutory grounds for evicting tenants under the Section 8 eviction procedure. These include:

  • Widening the current ground for possession for re-occupation by the landlord, to also apply if a family member wishes to use the property as their home, however, notice would need to be given at the beginning of the tenancy that the landlord may want to rely on this ground, and it could not be relied upon during the first two years of a fixed term;
  • Adding a new ground for possession for sale (again, notice would need to be given at the beginning of the tenancy that the landlord may want to rely on this ground, and it could not be relied upon during the first two years of a fixed term); and
  • Amending the ground for possession for rent arrears, which would permit the landlord to serve a two-week notice seeking possession once the tenant has accrued two months of rent arrears.

If the proposals set out in the consultation become law, the effect will be that assured shorthold tenancies (ASTs) will be abolished and all future tenancies will be assured tenancies (which can only be terminated by the landlord if they gain possession through the courts).  This is because once Section 21 is abolished, there will be little to distinguish ASTs from assured tenancies.

Landlords are concerned that these proposals will make it harder to evict tenants. Landlords may stop renting out their properties altogether or be more selective about who they let their property to. This is likely to decrease the supply of rented properties and increase rents.

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