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Changes to SDLT Filing and Payment Time Limits

Stamp Duty Land Tax (“SDLT”) is a tax on land transactions payable on the purchase of land or property (including leases) over a certain price in England.

The time limit for filing an SDLT return with HM Revenue and Customs (“HMRC”) and paying any tax due to HMRC is being reduced from 30 days to 14 days for those property transactions in England with an ‘effective date’ on or after 01 March 2019.

The ‘effective date’ is the date of completion; however, it may be brought forward where a contract has been substantially performed, for example, when a tenant takes early occupation of a tenanted property.

Improvements will also be made to the information to be provided in the SDLT return, and these will be in place when the new time limit begins (01 March 2019).

The Welsh Land Transaction Tax (“LTT”) replaced SDLT in Wales in April 2018. Under the LTT, the time limit for filing the return and submitting a payment to the Welsh Revenue Authority is 30 days from the effective date of the transaction.

The SDLT rules and LTT rules are complex, with many exceptions, exemptions, and reliefs. If your transaction is not straightforward you should take specialist tax advice to ensure that you pay the correct amount of SDLT or LTT (whichever applies).

Fire Safety – Changes to Statutory Guidance – Approved Document B of the Building Regulations

Approved Documents are statutory guidance published by the Government on how to meet the Building Regulations for building work carried out in England only.

The Government has published changes to Approved Document B (Volumes 1 and 2) of the Building Regulations, which deals with fire safety. These changes come into force on 21 January 2019.

Approved Document B Volume 1 deals with dwellinghouses.

Approved Document B Volume 2 deals with buildings other than dwellinghouses.

The changes to Approved Document B seek to clarify the role of desktop fire safety assessments.

In the wake of the Grenfell Tower fire in 2017, a consultation took place in 2018 to consider whether the use of desktop assessments (in the absence of full fire safety tests) to assess fire safety regulatory compliance should be restricted or indeed banned entirely.

The amendments state that desktop assessments in lieu of tests are only to be used where necessary and are to be carried out in an appropriate way. Desktop assessments should not be used instead of tests where a test is necessary. Tests and assessments should be carried out by organisations with the requisite expertise and qualifications.

The Government has launched a Call for Evidence for a broader technical review on the guidance of fire safety (Approved Document B). Landlords, builders, developers, residents, and property managers are all invited to respond. The consultation closes on 1 March 2019.

Call for Evidence on Improving Building Safety

The Government has published a Call for Evidence – ‘Good practice on how residents and landlords/ building managers work together to keep their home and building safe’. Landlords, building managers, and residents are all encouraged to respond.

This Call for Evidence invites views on how residents and landlords/building managers work together to keep their buildings safe and ensure that all parties comply with their respective responsibilities.

The purpose of the Call for Evidence is to gather evidence to assess and examine the development of policy relating to resident and landlord/building manager engagement and collaboration in relation to fire and structural safety issues in the aftermath of the tragic event at Grenfell Tower. The aim is to ensure that there is a robust regulatory system for the future and to ensure that residential buildings are safe and remain so; however, it remains to be seen to what extent the Government will change the existing regime.

The questions are split into two sections, the first directed to residents, the second to organisations (landlords, building managers, and estate agencies, for example). Those who are both residents and landlords or managing agents should complete both parts of the questionnaire. Respondents are encouraged to respond through the online survey.

Responses must be given by 12 February 2019.

As a landlord or agent, do you find the existing regulations and arrangements allow you to manage fire safety risks in buildings effectively? Would greater collaboration between all parties involved make it easier to manage and ensure the safety of residential buildings?

Have your say in the Call for Evidence and share your thoughts with us below.

HMO Reforms From 1 October 2018

New rules relating to houses in multiple occupation (HMOs) apply from 1 October 2018. The key reform is the extension of mandatory licensing of HMOs. There are also new provisions regarding minimum room sizes and the management of household waste. Criminal and civil penalties can be imposed for non-compliance.

Extension of Mandatory Licensing

In simple terms, a house or flat is an HMO if it is occupied by three or more tenants who form two or more households and the tenants share some or all of the toilet, bathroom, or kitchen facilities.

Mandatory licensing applies to “large” HMOs, meaning those that are occupied by five or more people. A large HMO no longer needs to have three or more storeys to come within mandatory licensing.

Mandatory licensing will also now apply to purpose-built flats where there are up to two flats in the block and one or both are occupied by five or more people in two or more households. Each flat, if occupied as an HMO, will require a separate licence.

National Minimum Room Sizes

From 1 October 2018, HMO licences will specify which rooms in an HMO are suitable for sleeping accommodation, and by how many adults and children.

A room for a single adult or child aged 10 or over must have at least 6.51m2 of usable floor space. A room for two adults or children aged 10 or over must have at least 10.22m2 of usable floor space. A room with a usable floor area between 4.64m2 and 6.5m2 may be occupied as sleeping accommodation by a child under the age of ten.

Household Waste Management

For HMOs in England (but not in Wales), a licence granted on or after 1 October 2018 must include conditions requiring the licence holder to comply with any scheme provided by the local housing authority relating to the storage and disposal of household waste at the HMO pending collection. Schemes will vary from area to area but the idea is to require landlords to provide appropriate and sufficient refuse storage facilities for tenants.

Failure to Comply with HMO Legislation

There are serious consequences for landlords and letting agents who do not obtain licences for licensable properties, or who are in breach of licence conditions. These include unlimited fines for criminal offences, civil penalties of up to £30,000, rent repayment orders and, for persistent non-compliance, the possibility of a banning order being made against the landlord or agent. However, in relation to room sizes the local authority will allow landlords a period of time (up to 18 months) to rectify a breach.

How Do These Reforms Affect You?

Are you a landlord or tenant or local authority affected by these reforms? What steps have you had to take to prepare for 1 October? Will the new rules have the desired outcome of improving the standard of HMO accommodation? Please share your thoughts with us.

Reminder to Landlords and Agents – Section 21 Reforms Apply to All ASTs in England from 1 October 2018

On 1 October 2015 a prescribed form of Section 21 Notice was introduced for properties in England. Initially, use of the prescribed form was mandatory only for tenancies granted on or after 1 October 2015. From 1 October 2018, the prescribed form must be used to terminate all assured shorthold tenancies, regardless of when they were entered into.

Other rules were introduced on 1 October 2015 relating to the service of Section 21 Notices. These rules cover:

  • • Not serving a Section 21 Notice in the first 4 months of a tenancy
  • • Starting possession proceedings within 6 months of the date of service of the Section 21 Notice
  • • A ban on “retaliatory eviction”
  • • A requirement to provide tenants with a valid energy performance certificate, a current gas safety certificate and a copy of the publication “How to rent: the checklist for renting in England” published by the Ministry of Housing, Communities & Local Government.

Again, these rules originally applied only to tenancies granted on or after 1 October 2015. However, from 1 October 2018 they apply to all assured shorthold tenancies, even those granted before October 2015.

Landlords and agents should now ensure that all Section 21 Notices are drafted using the prescribed form of Notice and that the conditions mentioned above are complied with. For more information please refer to our Guidance on Section 8 and Section 21 Notices and our template Section 21 Notice for properties in England, available here on the Simply-Docs website.

Call for Evidence on Energy Performance Certificates

The government has published a Call for Evidence on Energy Performance Certificates for Buildings. Landlords, tenants and agents of both domestic and non-domestic properties are all encouraged to respond.

The government foresees an expanding role for Energy Performance Certificates (EPCs) as part of its drive to reduce building energy use. The Clean Growth Strategy 2017 set out an aim for homes in the private rented sector to be upgraded to EPC band C by 2030, and an aspiration for as many homes as possible to be upgraded to band C by 2035. In March 2018 the Green Finance Taskforce recommended that the government set a target for all commercial properties to meet EPC band B by 2035.

With these aims in mind, the Call for Evidence aims to collect evidence on the effectiveness of EPCs, to gather information on the suitability of the current system of EPCs for both their current and emerging uses, and to obtain feedback on suggestions for improvement.

The consultation document is 53 pages long and sets out the government’s take on how the EPC system is currently working and how it might be improved. Respondents are asked to answer 26 questions (on pages 44-46). Responses must be given by 19 October 2018.

As a landlord, tenant or agent, how are you finding the current EPC system? Have the new Minimum Energy Efficiency Standards had an impact on your business? What do you think about the proposals for the minimum standards to be higher? Have your say in the Call for Evidence and share your thoughts with us below.

Longer Terms for Residential Tenancies?

Time is running out for landlords and agents to respond to the government’s consultation on its proposal to introduce a three-year minimum term for residential tenancy agreements in the private rented sector in England. The consultation closes on 26 August 2018.

Responses are sought to 29 questions. They include questions about respondents’ current practices and attitudes and questions about the new proposed framework of three-year tenancies with a six-month break clause and a yearly rent review.

The private rented sector in England doubled in size between 2002 and 2017. In 2016-17 it provided accommodation to 4.7 million households, 20% of all households. 38% of households in the private rented sector include dependent children. Providing these households with a long-term home is one of the government’s key objectives.

Reaction to the government’s proposals has been mixed. Longer tenancies have obvious benefits for tenants in terms of security and stability. They may also benefit landlords by providing a more certain income stream, reducing rental voids and reducing letting fees. It is also suggested that longer term tenants tend to look after properties better, reducing repair costs for landlords. However, many landlords are resistant to the idea as it will reduce their ability to sell or re-occupy a property and there may be issues with mortgage lenders’ rules which usually require tenancies to be granted for 6 or 12 months.

So, what do you think? Have you responded to the consultation? Are longer term tenancies desirable and can the current barriers be overcome? Let us know by commenting below.

April 2018 Legal Changes for Residential Landlords and Tenants

The Government is on a mission to drive up standards in the private rented housing sector. More new rules and regulations apply from April 2018 with the introduction of new Minimum Energy Efficiency Standards (MEES), Banning Orders and the Rogue Landlord Database.

Minimum Energy Efficiency Standards (MEES) – England and Wales

From 1 April 2018 it will be unlawful for a landlord to enter into a new letting (or extend or renew an existing letting) of a property with an F or G energy efficiency rating unless an exemption has been registered. From 1 April 2020, it will be unlawful to continue to let a residential property with an F or G-rating.

Landlords who let F or G-rated properties without having registered a valid exemption will be liable to financial penalties of up to £4,000 as well as “publication penalties”. A publication penalty means that the local authority will publish details of the landlord’s breach on a publicly accessible part of the National PRS Exemptions Register.

By now landlords should have taken steps to ensure that their properties are up to standard or, alternatively, have claimed an exemption. Detailed information can be found on the gov.uk website, here.

Banning Orders – England Only

Banning orders are to be introduced in England from 6 April 2018. They can be made against landlords, letting agents and property managers and will ban that person from letting property or engaging in letting agency or property management work for a period of at least 12 months.

Banning orders are intended to be used for landlords and agents who deliberately and persistently fail to comply with their legal obligations. Local authorities will be able to apply for a banning order against a person who has been convicted of one of the offences listed in The Housing and Planning Act 2016 (Banning Order Offences) Regulations 2018. The offences are, in summary:

  • ● Using violence to secure entry (Criminal Law Act 1977)
  • ● Eviction or harassment of occupiers (Protection from Eviction Act 1977)
  • ● Failure to comply with an improvement notice or prohibition order (Housing Act 2004)
  • ● Control or management of an unlicensed property under the HMO or selective licensing regimes (Housing Act 2004)
  • ● Fire safety offences (Regulatory Reform (Fire Safety) Order 2005)
  • ● Gas safety offences (Health and Safety at Work etc. Act 1974)
  • ● Landlord and agent offences under the Immigration Act 2014
  • ● Various serious criminal offences committed by a landlord or agent against or in collusion with the tenant of the landlord’s property or committed at the property

A landlord who breaches a banning order may face a prison sentence of up to six months or a fine. As an alternative, the local authority may impose a financial penalty of up to £30,000.

Database of Rogue Landlords – England Only

Also on 6 April, a database of rogue landlords and property agents will be established. This will be maintained by local housing authorities in England. Only central government and local authorities will be able to access the database.

Local authorities must add to the database the details of any landlord or agent against whom a banning order has been made. The entry will be maintained while the banning order is in force and must then be removed.

Local authorities may also add the details of any person who has been convicted of a banning order offence (even if a banning order has not been made) or who has at least twice within a period of 12 months received a financial penalty in respect of a banning order offence. Government guidance will be issued in relation to these discretionary entries in the database.

Advice for Landlords

The residential tenancy sector is subject to ever greater levels of regulation. Whilst some of the new provisions, such as banning orders, are designed to catch the worst “rogue” operators, even “good” landlords and agents need to make sure they don’t inadvertently fall foul of the law. Sensible steps to take are:

  • ● Keeping up to date with legislative changes
  • ● Engaging with the local authority on matters such as licensing and health & safety
  • ● Regularly reviewing your business: are there any issues with the properties, the tenants or your paperwork that need attention?
  • ● Networking with other landlords and agents
  • ● Taking professional advice from lawyers, surveyors, accountants and others as appropriate.

Minimum Energy Efficiency Standards (MEES) for Commercial Properties from April 2018

From 1 April 2018 it will be unlawful for a landlord in England or Wales to enter into a new letting (or extend or renew an existing letting) of a commercial property with an F or G energy efficiency rating unless an exemption has been registered. From 1 April 2023, it will be unlawful to continue to let a commercial property with an F or G rating.

Landlords who let F or G-rated properties without having registered a valid exemption will be liable to financial penalties based on the rateable value of the property. The minimum fine is £5,000 and the maximum £150,000. There will also be “publication penalties”. A publication penalty means that the local authority will publish details of the landlord’s breach on a publicly accessible part of the National PRS Exemptions Register.

By now landlords should have taken steps to ensure that vacant properties, and those about to become vacant or be re-let, are up to standard or, alternatively, have claimed an exemption. Landlords need to have plans in place to bring all properties up to standard (E or above) by April 2023 or ensure that exemptions are registered.

Detailed information can be found on the gov.uk website, here.

Fitness for Human Habitation – New Rights for Tenants

The Government is committed to improving standards for tenants in the private and social rented sectors. It is therefore supporting a Private Members’ Bill tabled by Karen Buck, a Labour MP: the Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill. (visit the Parliament website here to track the Bill’s progress.)

New Duty for Landlords and Remedies for Tenants

The Bill obliges landlords to keep rental properties in good condition by implying into a tenancy agreement a covenant by the landlord to ensure that the property is fit for human habitation at the beginning, and for the duration of the tenancy.

If a landlord fails to keep a property in good condition, the tenant will have the right to sue the landlord for breach of contract on the ground that the property is unfit for human habitation.

What are Landlords’ Current Obligations?

Landlords already have a statutory duty to keep their properties fit for human habitation. Relevant factors include damp, ventilation, lighting, and facilities for food preparation. This duty is enforced by local authorities using the Housing Health and Safety Rating System (HHSRS). An offence is committed if a landlord fails to comply with an enforcement notice.

However, there is currently no means for a tenant to take direct enforcement action against a landlord. They are reliant on the local authority doing so on their behalf.

How will Tenants Benefit from the New Law?

If the Bill is enacted (which is expected to happen) tenants will be able to take their landlord to court. The court may order the landlord to take action to make the property fit for human habitation and/or to pay compensation to the tenant.

How does this Affect You?

Are you a residential landlord, tenant, or agent? Do you welcome this legislation or are you worried about vexatious claims? As ever, we are keen to know your views.

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