Category : Author / Iain Mackintosh

On 1 October 2015, significant changes were made to housing law in England (properties in Wales are not affected). The changes which are set out in the Deregulation Act 2015 increase the level of protection afforded to tenants, while placing extra burden on landlords.Buy-to-let investors are still coming to terms with the budget bombshell concerning the reduction of tax relief on mortgage interest payments. How much will these 1 October 2015 changes add to their woes?

What has changed on 1 October?

The most important changes affect landlords’ ability to recover possession of their premises at or after the end of the term of an assured shorthold tenancy. Section 21 of the Housing Act 1988 allows landlords to remove tenants on a ‘no fault’ basis, provided they serve notice correctly and there are no factors that serve to invalidate the notice.

From 1 October there is a longer list of invalidating factors – or, in other words, there are more obstacles in the way of landlords seeking possession. There are also changes to the timing of a Section 21 notice and the timescale for issuing possession proceedings. And there is a new prescribed Section 21 notice which landlords must use.

Readers should note that the changes referred to below only affect tenancies that start on or after 1 October 2015. Tenancies granted before that date are not affected. However, from 1 October 2018, the new provisions will apply to all tenancies, regardless of when they were granted.

Validity of Section 21 Notices

Until 1st October 2015, there were two factors that could invalidate a Section 21 notice: failure to protect the tenant’s deposit in an approved tenancy deposit protection scheme and failure to comply with HMO licensing requirements.

On 1 October, several more restrictions came into play. Landlords are now unable to serve a valid Section 21 notice if:

1. The tenant has made a valid complaint about the condition of the property and, instead of addressing the complaint, the landlord serves a Section 21 notice. This is known as ‘retaliatory eviction’. This restriction comes into play where the local authority has served an improvement notice or an emergency remedial action notice under the Housing Health & Safety Rating System (HHSRS).

2. The landlord has failed to provide the tenant with any of the following: a valid energy performance certificate, a current gas safety certificate or a copy of the publication ‘How to rent: the checklist for renting in England’, published by the Department for Communities and Local Government.

To clarify because this is important: failing to give your tenant a copy of the ‘How to rent’ document means you can’t serve a valid Section 21 Notice!

Timing issues

Prior to 1st October 2015, some landlords and agents liked to issue a Section 21 notice at the start of the tenancy. This was deemed to be unfair to tenants, so from 1st October it is not possible to serve a Section 21 notice in the first four months of a tenancy. Therefore landlords and agents will need to make and keep accurate records if they want to obtain possession at the earliest possible stage – i.e. after six months.

There is also a new deadline for starting possession proceedings if the tenant does not vacate of his or her own accord. Proceedings must be started within six months of the date of service of the Section 21 notice, otherwise a new Section 21 notice must be served.

Prescribed form of Section 21 Notice

A new prescribed form of the Section 21 notice needs to be used to terminate tenancies that start on or after 1 October. Use of the prescribed form is optional for existing tenancies but it is likely that landlords will adopt the new form for all tenancies. From 1 October 2018, the new form must be used for all tenancies.

Any other changes?

As well as the changes to the Housing Act discussed above, landlords and agents need to be aware of the new Smoke and Carbon Monoxide Alarm (England) Regulations 2015 which came into force on 1st October.

Carbon monoxide incidents are more common in rented property than in privately owned homes, and these new regulations are part of a wider effort to improve fire safety in the UK.

The regulations require a smoke alarm to be installed on each storey of premises on which there is a room used wholly or partly as living accommodation (this includes bathrooms and toilets). They also require a carbon monoxide alarm to be present in any room that is used wholly or partly as living accommodation and contains a solid fuel burning combustion appliance. On the first day of a new tenancy, the landlord or their agent must check that each alarm is in proper working order.

Local housing authorities have enforcement powers.

Many properties, particularly those built in recent years, will already be equipped with alarms that comply with the regulations. However, landlords and agents should carry out an audit of their properties to identify deficiencies and remedy as soon as possible.

What should landlords and agents do now?

Landlords and agents should familiarise themselves with the new rules relating to termination of tenancies. A range of new and updated template documents is available on the Simply-docs website.

What are zero hour contracts?

The exploitation of workers through the use of zero hour contracts was a hot topic in the General Election and it’s easy to see why.  Zero hour contracts are contracts that do not guarantee a minimum number of hours’ employment and, as of August 2014, a staggering 1.8 million workers were employed on these controversial contracts. This figure, from the Office for National Statistics (ONS) shows that the number of workers on zero hour contracts has increased by more than a quarter from 2013, when figures were first collected.

Who uses zero hour contracts?

Zero hour contacts are particularly popular in the hotel and catering industries where they are used by more than half of businesses. According to the ONS, most workers on zero hour contracts are students or women, and one-third of these workers would like more hours of work compared with just 10% of other people in employment.

It’s easy to see the appeal of zero hours contracts for employers who are afforded greater flexibility in their work force in order to cater for seasonal or fluctuating demand. However, some employees (especially students) like them too and find that zero hour contracts enable them to pursue other interests or commitments alongside a flexible working pattern.

There is general agreement, however, that some employers do not use zero hours contracts in a fair and equitable way. One of the biggest bugbears in this regard is the use of exclusivity clauses in zero hour contracts and a key part of the Conservative Party’s election campaign was a promise to ban such clauses.

Why the fuss about exclusivity?

An exclusivity clause is a contractual clause that prevents workers on zero hour contracts from being able to take work elsewhere, even though the employer does not guarantee any hours of work. As of 26 May 2015, the government finally took some action, bringing into force the much-trailed ban on exclusivity clauses in zero hour contracts.

According to the government, an estimated 125,000 workers in the UK have exclusivity clauses in their zero hour-contracts and so this change could have far-reaching effects.

A proportionate response?

The government’s thinking in banning such exclusivity clauses is that these clauses undermine choice and flexibility for the employee and could constitute an abusive practice on the part of the employer. Neil Carberry of  Confederationof British Industry (CBI) commented: “Banning exclusivity clauses in zero hours contracts is a proportionate response to tackling examples of poor practice”.

As of 26 May, therefore, exclusivity clauses in existing and new contracts will be unenforceable and employers will not be able to rely upon them.

Anti-avoidance measures

The new legislation has, in addition, a section giving the government power to take additional steps to prevent workers on zero hour contracts from being stopped from working for other employers. The law, however, does not give protection from detriment to workers on zero hour contracts and so there are no anti-avoidance measures in place as yet. Watch this space!

A range of consumer protection laws apply to estate agents, lettings agents and property managers. In this blog post we look at the laws that apply and the steps agents and managers can take to ensure compliance.What are the relevant consumer protection laws?

The Consumer Protection from Unfair Trading Regulations 2008 prohibit businesses (including estate agents, lettings agents and property managers) from engaging in unfair commercial practices in their dealings with consumers.

Other relevant legislation includes the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999 (both of which outlaw unfair terms in contracts with consumers) and the Supply of Goods and Services Act 1982 (requiring services to be provided with reasonable care and skill).

Agents and managers who breach these laws can face:

•   Criminal penalties (fines or in serious cases imprisonment)
•   Unfair contract terms being unenforceable in the civil courts
•   Action by the Advertising Standards Authority
•   Disciplinary action by their professional body
•   A complaint being made to a redress scheme (Ombudsman)

What do I need to do?

Remember that the laws are relevant to every aspect of the agent’s service, including face-to-face interactions and the preparation of written materials. Therefore estate agents, lettings agents and property managers should take the following practical steps to ensure they are compliant with consumer protection legislation:

•    Make sure written information given to sellers, prospective buyers, landlords and prospective tenants is expressed clearly in plain English and is not capable of misleading them. This applies to contracts with sellers/landlords, particulars provided to buyers/tenants and tenancy agreements and related documentation.
•    Make sure that no relevant information is omitted from contracts, particulars or other documents.
•    Have draft particulars approved (in writing) by sellers and landlords. Draw their attention to the need for particulars to contain complete and accurate information.
•    When handling enquiries, ensure that the information given is clear, complete and accurate.
•    Ensure that sellers, buyers, landlords and tenants are given full details of any fees that will be payable. Make sure this information is provided in an accessible format. Ideally, quote the VAT-inclusive amount.
•    Make sure tenants are fully appraised of all fees, charges and other sums that are payable in addition to the rent (e.g. agent’s fees, cleaning costs, tenancy deposit).
•    Give material information at the appropriate time rather than waiting for the person to request it. For example, if you become aware of new information about a property, tell prospective buyers/tenants at the earliest opportunity.
•    If you spot a problem or a potential problem, e.g. you have concerns about the legal rights of access to a property you are marketing for sale, or there is a maintenance issue at a property you are managing, ensure it is investigated and that appropriate action is taken.
•    Do not act aggressively, e.g. when dealing with difficult tenants.
•    Be professional and act in accordance with the rules of your professional body.
•    Advise sellers, prospective buyers, landlords and prospective tenants of your complaints procedures, including details of any redress scheme to which you belong.

Further Information

The Competition and Markets Authority has published guidance for lettings agents on compliance with consumer protection legislation. See https://www.gov.uk/government/publications/consumer-protection-law-for-lettings-professionals.

Simply-Docs offers a range of professionally drafted template documents to help meet the needs of your estate agency business. Please click here for template terms and conditions, agency appointment forms and complaints handling documents.

New shared parental leave and pay rights apply to the parents of babies due, or children matched for adoption, on or after 5 April 2015.  As of that date, eligible parents of children due to be born or adopted on or after this date, are entitled to a maximum of 52 weeks’ leave and 39 weeks’ statutory pay upon the birth or adoption of the child, which can be shared between both parents.What are the new rights for adopters?

 As a result of this, employees who adopt now benefit from increased rights.

These are:

• Removal of the requirement for 26 weeks’ service before employees become entitled to adoption leave – it becomes instead a ‘day one’ right for which there is no qualifying period

• Both single and joint adopters have the right to attend adoption appointments (paid time off for up to five adoption appointments for the main adopter and unpaid time off for up to two appointments for the secondary adopter) and will be protected from suffering a detriment or being dismissed in relation to exercising that right

• Statutory adoption pay will be brought into line with statutory maternity pay –  the first six weeks will be paid at 90% of the employee’s normal earnings

• Some surrogate parents will become eligible for adoption leave

• Current adoption rights will be extended to couples adopting a child from outside the UK and couples fostering children as part of a Fostering for Adoption placement.

What does this mean for employers?

The changes in respect of legislation relating to adoptions are likely to have a significant impact on employers, who will be required to allow adoption leave in a greater range of circumstances and will also be required to pay their employees more during any period of adoption leave. It is, therefore, particularly important for employers to have detailed policies and procedures in place to deal with these situations fairly and consistently.

For Simply-Docs’ full range of documents for managing the adoption process please click here.

Changes to unpaid parental leave

At the same time as the introduction of Shared Parental Leave and enhanced adoption rights, legislation regarding unpaid parental leave was also changed in favour of the employee.

From 5 April, the right to unpaid parental leave was extended to the parents of any child under the age of 18 years (this was previously available up to the age of five; 18 years in respect of disabled children).

Again, this is likely to have an impact on employers who are now required to allow their employees to take unpaid parental leave for a longer period of time. For the employer, this can be managed more effectively through the use of comprehensive policies that outline the requirements and obligations for unpaid parental leave.

Click here for Simply-Docs’ range of documents on unpaid parental leave.

The new Construction Design and Management (CDM) Regulations 2015 are now in force. Statistically there are more injuries and fatalities on smaller, previously unregulated building projects than on larger ones. The Health and Safety Executive (HSE) has decided to address this issue by requiring all projects to have someone overseeing health, safety and welfare in both the pre-start and construction phases.What does the Builder need to know?

From 6th April 2015, every job, including domestic work, will now require a CDM Principal Contractor (PC) who will take overall control for the day-to-day running of the project. This is the same whether you are a building company with in-house tradesmen or a one-man band that brings in traders as needed. Someone will have to be appointed by the client as Principal Contractor.

The builder – now called the Principal Contractor has a range of duties to fulfil on all projects, large or small, including:

•  The builder must prepare a Construction Phase Health and Safety Plan.The builder needs to be certain that the contractors they employ are competent, not only to do their job, but from a health and safety perspective as well. Price is always an important factor, but the Principal Contractor will need to be happy that the chosen subbie is able to carry out their works safely without making shortcuts.

• The Principal Contractor will need to make sure that someone responsible is on site at all times, for example, a trusted sub-contractor foreman. No matter who is left in charge – the Principal Contractor is responsible if they allow shortcuts to   be taken or the agreed procedures to be bypassed.

For more detailed information on the Principal Contractor’s duties please click here for our Simply-Docs information page on Construction (Design & Management) (CDM) Regulations 2015 for Builders.

What does the Client need to know?

Under the regulations, non-domestic clients will have much more direct responsibility than before.  In addition, some building works that you may have assumed would be regarded as “domestic” will now fall within the scope of the regulations. A “non-domestic client” is a person or a company who is having the works done as part of a commercial enterprise. That could be a business building, a new factory or office extension, or a residential or commercial landlord refitting some of their rental properties. Building an office at the end of your garden in order to work from home would make you a non-domestic client. As a rule: if the client will get a business income from the works, they are a non-domestic client.

The practical impact of these regulations is that non-domestic clients will now have even more legal duties in respect of health and safety on-site and more clients will fall into the non-domestic category.

The non-domestic client’s new duties include:

•  The client is now required to make sure that health and safety has been factored into the project, and that sufficient funding has been allowed in the budget for this.

•  The client must appoint, in writing, a Principal Designer (PD) to oversee the design and planning of the project, to put in place all the health and safety procedures, and to create (or at least organise) the Health and Safety File.

•  The client must ensure that both the PD and PC are competent to carry out their role.

If the client doesn’t appoint either a PD or PC, the duties of both will become the client’s by default, so it really is in the client’s best interest to surround themselves with suitably qualified professionals to help them through the process.

The client has many additional duties, for more information on these duties, please click here for our Simply-Docs information page on What Duties Does The Client Have Under The CDM Regulations 2015?

On 15 April The Town and Country Planning (General Permitted Development)(England) Order 2015 came into force, introducing new permitted development rights. The changes are designed to promote growth in the economy by allowing land and buildings to be put to the most appropriate use.

 What are the new permitted development rights?

The following changes of use may now be made without the need to obtain planning permission:

• A change from Class A1 (retail) to A2 (financial and professional services)
• A change from Class A1 or A2 to A3 (restaurants and cafes)
• A change from Class A1 or A2 to D2 (assembly and leisure uses)
• Until 15 April 2018, a change from Class B8 (storage and distribution) to C3 (residential).

Do any conditions apply to the exercise of these rights?

Whilst planning permission is not required for these changes, most of them are subject to conditions and require prior notification of the details to the local planning authority. So the right to make a change of use is by no means unfettered.

You can read more about the permitted use of land and buildings and how to change the use on our Property Information Pages here:

http://simply-docs.co.uk/Commercial_Property_Overview/Different_uses_of_commercial_property

Troublesome Tenants: What can Landlords Do?

Sometimes even the most careful Landlord will encounter a “Problem Tenant”. If this happens, the Landlord needs to take prompt action. Leaving an issue unresolved will usually only make matters worse. For the purposes of this post, we are looking at a short-term letting of residential property on an Assured Shorthold Tenancy basis.

Common problems

Problems typically relate to:
• Money – such as late payment or non-payment of rent
• Treatment of the Property – for example, the Tenant is causing damage or neglect
• Behaviour towards other people – leading to complaints from housemates or neighbours.

Rent arrears

If the Tenant is late with rent payments, or is failing to pay rent altogether, the Landlord should issue a written reminder. If payment is still not forthcoming, the reminder can be followed up with a more strongly worded letter which raises the prospect of legal action being taken. See our Landlord Management Letters for a selection of templates.

Unacceptable behaviour 

If the Tenant is behaving in a way that causes concern to the Landlord or to other people, this again needs to be documented. The Landlord should write to the Tenant describing the unacceptable behaviour and reminding the Tenant of the relevant terms of the Tenancy Agreement. A follow-up letter can then be sent if the offending behaviour does not stop. There are useful templates in our Landlord Management Letters.

Legal action

If the problem persists despite the Landlord raising the issue via a series of letters, the Landlord can consider taking legal action to evict the Tenant and obtain payment of any sums owing. The position is different according to whether the fixed term of the Tenancy is still running or has expired.

• During the fixed term – the Landlord would need to use the procedure in Section 8 of the Housing Act 1988. The Landlord must prove fault on the part of the Tenant, such as rent arrears or another breach of the Tenancy Agreement. Our Guidance on Section 8 and Section 21 Notices has more information.
• When the fixed term has expired – the Landlord can use the “No Fault” eviction procedure in Section 21 of the Housing Act. See our new Residential Possession Proceedings folder for detailed Guidance Notes and Template Forms.

The new Construction Design and Management Regulations 2015 (CDM) are expected to come into force from 6th April 2015.  Previously, if you were a domestic client having building work done, this would have little impact on you, as you would probably expect the builder to take responsibility for health and safety on the project. Now, once the new legislation is in place, more clients are likely to fall under the banner of “non-domestic client” and subject to a raft of additional health and safety responsibilities.For example, if you are contemplating having a workshop or garden office built at the end of your garden, or perhaps you are a residential landlord refitting a rental property, then under this new legislation you will be a “non-domestic client” and subject to the increased health and safety duties that that entails.

As a rule – if you are getting a business income from the works, then you will be having the works done as part of a commercial enterprise and you will be deemed a non-domestic client.

CDM Regulations Explained: Why Are the Changes Being Made?

Statistically there are more injuries and fatalities on smaller, previously unregulated building projects than on larger ones. The HSE has decided to address this issue by requiring all projects to have someone overseeing health, safety and welfare, in both the pre-start and construction phases.

Accordingly, the aim of the CDM Regs. 2015 is to place increased responsibility on the three main parties in a building project – the client, the designer and the builder. The practical impact of these regulations is that non-domestic clients will now have even more legal duties in respect of health and safety on site and more clients will fall into the non-domestic category.

One of the new duties is that the non-domestic client will be required to make sure that health and safety has been factored into their project, and that sufficient funding has been allowed in the budget for such health and safety considerations – and there are many more.

For more information on the CDM Regs. 2015 please see the Simply-Docs information pages.

Are you aware that, following a Court ruling in December 2014, Residential Tenancy Deposits must be protected in an approved Tenancy Deposit Scheme even if they were received before the Tenancy Deposit legislation came into force in April 2007? Landlords will be unable to serve a valid Section 21 Notice to obtain possession of a property if the Deposit has not been protected.What do Landlords need to do with Deposits?

When a Landlord receives a Deposit from an Assured Shorthold Tenant, the Deposit must be protected in an approved Tenancy Deposit Scheme within 30 days. This protects Tenants by keeping Deposits safe and ensuring that Landlords act fairly when making deductions from the Deposit.
There are two types of Scheme: Custodial (where the money is held by the Scheme) and Insured (where the Landlord retains the deposit and pays an insurance premium to the Scheme).

What happens if a Landlord fails to protect a Deposit?

If a Landlord fails to protect a Deposit there are financial penalties and, perhaps more significantly, the Landlord will be unable to serve a valid Section 21 Notice to obtain possession of the property.

What does the new Case Law say?

Prior to the recent Court ruling in Charalambous v Ng it was understood that the requirement to protect Deposits applied to:

Deposits received since April 2007 and Deposits received before April 2007 which have been retained because, in or after April 2007, either a new tenancy was granted or the original tenancy became periodic.

In December 2014 the courts confirmed that there is a further situation in which Deposits must be protected: Deposits received before April 2007 in respect of a tenancy that became periodic before April 2007. In such a case, a Landlord is unable to serve a valid Section 21 notice if the Deposit has not been protected. (However, no financial penalty applies in this case.)

What should Landlords do?

Landlords affected by this Court ruling should either protect the Deposit before serving a Section 21 Notice or return the Deposit to the Tenant. To refresh your mind on the subject of Tenancy Deposit Protection, have a look at our Guidance on Tenancy Deposit Protection for Assured Shorthold Tenants and our Guidance on Section 8 and Section 21 Notices which reflect the new law.

The Housing Health & Safety Rating System (HHSRS) applies to residential properties in England and Wales. Under the HHSRS, local authorities must identify “hazards” affecting properties in their area and take enforcement action as necessary. The HHSRS has been in place since 2006 but a government survey of private landlords in 2010 found that 85% of landlords had not heard of it. Click here to find out more about the HHSRS and how it is covered in our template documents for letting agents and property managers.