Why 1st June 2020 is an important date for landlords

Why 1st June 2020 is an important date for landlords

1st June 2020 marked an important date for the lettings industry, particularly for landlords. Here’s what landlords need to know and what Vision are doing for their clients…

TENANT FEES ACT

The Tenant Fees Act 2019 came into force on 1 June 2019 which set out rules to ban letting agents and landlords from charging fees to tenants in England as well as setting a cap for tenancy deposits, with any breach incurring a penalty up to £5,000. Importantly, the Act also provided for a 12-month transition period for tenancies which started before June 2019 and ended on 31 May 2020, meaning any tenancy clauses in existing contracts that charge fees are now unenforceable.

Key things for landlords to be aware of are: check-out fees, end of the transition period, tenancy deposits and the effect on Section 21 Notices. Where we manage properties for our landlord clients, we have these changes in hand and have amended our processes accordingly.

Check-out fees – Landlords should be aware that tenants on existing contracts which involved paying check-out fees up front, become Prohibited Payments as of 1 June 2020. Landlords will have 28 days in which to repay these fees to tenants or they will be in breach of the legislation.

End of transition period – During the transition period fees written into existing contracts could continue to be charged. However, with the 12-month transition period now ending 1 June 2020, the ban applies to all tenancies (both Fixed Term and Periodic) regardless of when the tenancy started.

Tenancy deposits – The Act set a cap (five or six weeks rent dependent on the amount of rent paid annually) for how much could be charged as a security deposit on a tenancy. This will apply to all relevant tenancies (ASTs and Licenses to occupy) from 1 June 2020.

Landlords do not need to immediately refund any part of an existing Tenancy Deposit that exceeds the cap of five or six weeks’ rent and can hold this for the duration of the existing tenancy. However, where a tenant renews their tenancy by signing a new Fixed Term agreement on or after 1 June 2019, any amount of their existing deposit which exceeds the applicable five or six week limit must be refunded to ensure the new tenancy complies with the tenancy deposit cap.

Section 21 Notices – A Section 21 notice cannot be issued in relation to the tenancy if Prohibited Payments or Holding Deposits need to be repaid.

ELECTRICAL SAFETY GUIDANCE

Following the introduction of the Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020, important guidance was released by Government on 1 June 2020 to assist landlords in complying with the regulations.

The rules apply to new tenancies entered into (signed and dated) on or after 1 July 2020 and for all existing tenancies from 1 April 2021. It will cover all private tenancies including licenses to occupy and non-Housing Act tenancies such as Company Lets.

Click here for the Government guidance.

Landlords must ensure that the electrical safety standards are met when the property is occupied during a tenancy and every fixed electrical installation at the property is inspected and tested at least every five years by a qualified person.

The guidance includes details on who is competent and qualified to do the checks as well as new build property and remedial works.

The UK Government has previously outlined that where checks can’t be carried out due to the restrictions introduced because of Coronavirus, as long as landlords can demonstrate they have taken reasonable steps to comply, they would not be in breach of the rules.

For clients who use our Management Service, our Property Management software flags up well in advance when tests are due, which gives us plenty of time to plan the checks with landlords, make access arrangements and line up contractors. Our system also records all correspondence with tenants so they can easily be referred back to and used as evidence of trying to arrange the works should this be necessary.