Graham Faulkner Branch Director, EweMove Dorking

Graham Faulkner Branch Director, EweMove Dorking
Lettings Update Graham Faulkner Branch Director, EweMove Dorking

Tenant Fees Bill Homes (Fitness for Habitation) Act

Tenant Fees Bill Tenancy deposit cap to be cut to 5 weeks

Tenant Fees Bill Tenancy deposit cap to be cut to 5 weeks
The government confirmed last month that the Tenant Fees Bill stipulates that the total deposit that can be taken from a tenant paying up to £50,000 in rental over a 12-month period is being capped at a maximum of 5 weeks’ rent.

The government confirmed last month that the Tenant Fees Bill stipulates that the total deposit that can be taken from a tenant paying up to £50,000 in rental over a 12-month period is being capped at a maximum of 5 weeks’ rent. The introduction of this cap will mean that landlords or their representative letting agents must not request more than 5 weeks’ rent as a deposit from tenants.

The government confirmed last month that the Tenant Fees Bill stipulates that the total deposit that can be taken from a tenant paying up to £50,000 in rental over a 12-month period is being capped at a maximum of 5 weeks’ rent. The introduction of this cap will mean that landlords or their representative letting agents must not request more than 5 weeks’ rent as a deposit from tenants. However any property with an annual rental value of over £50,000 will have a maximum deposit of 6 weeks rent.

Tenant Fees Bill Other amendments to the Tenants Fees Bill

Tenant Fees Bill Other amendments to the Tenants Fees Bill
The Tenants Fees Bill also sets out other fees that will be banned going forward including any payments over and above the capped security deposit of 5 weeks’ rent and a capped holding deposit of one week’s rent.

The Tenants Fees Bill also sets out other fees that will be banned going forward including any payments over and above the capped security deposit of 5 weeks’ rent and a capped holding deposit of one week’s rent. There is, however a ‘default fees clause’; this will cover additional fees that can be incurred by the tenant and these, for example, may well include late fees for late payment of rent and cleaning charges that may be applicable. These default fees must be clearly defined within the tenancy agreement.

The Tenants Fees Bill also sets out other fees that will be banned going forward including any payments over and above the capped security deposit of 5 weeks’ rent and a capped holding deposit of one week’s rent. There is, however a ‘default fees clause’; this will cover additional fees that can be incurred by the tenant and these, for example, may well include late fees for late payment of rent and cleaning charges that may be applicable. These default fees must be clearly defined within the tenancy agreement. Fees that will be affected going forward will include any fees for extending tenancy agreements, charges for property inspections and for bank transfers and reference and credit checking.

Tenant Fees Bill Fines for non-compliance

Tenant Fees Bill Fines for non-compliance
The maximum penalty fine for a breach will be £5,000; however repeat offenders may have criminal proceedings brought against them and could be fined up to a maximum of £30,000.

Tenant Fees Bill The Implications

Tenant Fees Bill The Implications
The implications for landlords of these changes will be that they will no longer have the security of taking a bigger deposit than has been set down in the new legislation.

Tenant Fees Bill The Implications
The implications for landlords of these changes will be that they will no longer have the security of taking a bigger deposit than has been set down in the new legislation. This will be problematic if landlords have tenants who leave properties in a state of ill repair leaving the financial burden for them to deal with. If a landlord has reason to believe that a tenant might struggle to pay rent, it might be worth considering having a guarantor agreement in place.

Homes (Fitness for Human Habitation) Act
Summary of the main provisions

Summary of the main provisions At present there is no legal requirement for landlords to keep or maintain rental properties in a condition fit for habitation. Many will be familiar with a landlords s.11 repairing obligations and the local authorities’ powers under the Housing Health and Safety Rating System (HHSRS). However, there is nothing in law which specially addresses fire safety, inadequate heating or poor ventilation which leads to condensation or mould growth or which deals with defects that pre-dated the tenancy or are inherent in bad property design.

Summary of the main provisions At present there is no legal requirement for landlords to keep or maintain rental properties in a condition fit for habitation. Many will be familiar with a landlords s.11 repairing obligations and the local authorities’ powers under the Housing Health and Safety Rating System (HHSRS). However, there is nothing in law which specially addresses fire safety, inadequate heating or poor ventilation which leads to condensation or mould growth or which deals with defects that pre-dated the tenancy or are inherent in bad property design. When the Bill becomes law, landlords will be subject to broader responsibilities which go beyond s.11 including:

Stability Freedom from damp Internal arrangement Natural lighting Ventilation Water supply Fire safety Drainage and sanitary conveniences Facilities for preparation and cooking of food and for the disposal of waste water

The Bill aims to give tenants the power to take action where properties are not in a condition fit for habitation. Landlords will be under an implied duty to ensure that rental properties are in a condition fit for human habitation at the time of the grant of the tenancy and kept in that condition throughout the term. Where a landlord fails in this duty tenants will have the right to take landlords to court and apply for an injunction to compel them to carry out works or claim damages for the failure to keep the property in repair.

The Bill aims to give tenants the power to take action where properties are not in a condition fit for habitation. Landlords will be under an implied duty to ensure that rental properties are in a condition fit for human habitation at the time of the grant of the tenancy and kept in that condition throughout the term. Where a landlord fails in this duty tenants will have the right to take landlords to court and apply for an injunction to compel them to carry out works or claim damages for the failure to keep the property in repair. However, the Bill does propose exemptions to the fit for habitation condition which are:

The Bill aims to give tenants the power to take action where properties are not in a condition fit for habitation. Landlords will be under an implied duty to ensure that rental properties are in a condition fit for human habitation at the time of the grant of the tenancy and kept in that condition throughout the term. Where a landlord fails in this duty tenants will have the right to take landlords to court and apply for an injunction to compel them to carry out works or claim damages for the failure to keep the property in repair. However, the Bill does propose exemptions to the fit for habitation condition which are: a tenant’s failure to use the dwelling in a tenant-like manner; and

The Bill aims to give tenants the power to take action where properties are not in a condition fit for habitation. Landlords will be under an implied duty to ensure that rental properties are in a condition fit for human habitation at the time of the grant of the tenancy and kept in that condition throughout the term. Where a landlord fails in this duty tenants will have the right to take landlords to court and apply for an injunction to compel them to carry out works or claim damages for the failure to keep the property in repair. However, the Bill does propose exemptions to the fit for habitation condition which are: a tenant’s failure to use the dwelling in a tenant-like manner; and as a result of a natural disaster e.g. a flood.

It has been suggested that the Bill is introducing the HHSRS for tenant use. This is not correct. The HHSRS is only used by local authorities to deal with property standards. The Bill uses the same 29 categories as the HHSRS when assessing property for fitness, but it is not introducing the full HHSRS assessment mechanism. That said, an HHSRS report which makes findings as to the fitness of the property is likely to be important in considering its fitness under the Bill. There is also a key difference in that the HHSRS assesses property based on a notional occupier of the most vulnerable type, usually an elderly person or young child whereas the Bill uses the actual person occupying the property. So there are links between the Bill and the HHSRS but no direct connection.

It has been suggested that the Bill is introducing the HHSRS for tenant use. This is not correct. The HHSRS is only used by local authorities to deal with property standards. The Bill uses the same 29 categories as the HHSRS when assessing property for fitness, but it is not introducing the full HHSRS assessment mechanism. That said, an HHSRS report which makes findings as to the fitness of the property is likely to be important in considering its fitness under the Bill. There is also a key difference in that the HHSRS assesses property based on a notional occupier of the most vulnerable type, usually an elderly person or young child whereas the Bill uses the actual person occupying the property. So there are links between the Bill and the HHSRS but no direct connection. We are likely to see an improvement in rental properties managed by a minority of landlords who currently shirk their responsibilities. The vast majority of landlords will no doubt have nothing to fear.

Update

Update This Bill received Royal Assent on 20 December 2018 and will come into force on 20 March 2019.

Update This Bill received Royal Assent on 20 December 2018 and will come into force on 20 March 2019. It is hoped that the Act will help to boost standards in rental properties as well as give tenants powers to hold landlords to account where those standards are not met.

Update This Bill received Royal Assent on 20 December 2018 and will come into force on 20 March 2019. It is hoped that the Act will help to boost standards in rental properties as well as give tenants powers to hold landlords to account where those standards are not met. Under the Act landlords will be under a legal obligation to ensure that their properties meet certain standards at the beginning and throughout a tenancy. Where landlords fail to meet these standards tenants will have the right to take legal action in the courts for breach of contract.

Any claim by a tenant against their landlord will be on the basis that their landlord has failed to meet their obligation to keep the property fit for human habitation from the outset of the tenancy. This obligation is met by the large majority of landlords however, for the small minority that fail to ensure their properties are fit for human habitation court action and other sanctions such as the Rogue Landlords database and banning orders will follow.

Any claim by a tenant against their landlord will be on the basis that their landlord has failed to meet their obligation to keep the property fit for human habitation from the outset of the tenancy. This obligation is met by the large majority of landlords however, for the small minority that fail to ensure their properties are fit for human habitation court action and other sanctions such as the Rogue Landlords database and banning orders will follow. Given the severity of the sanctions the Ministry of Housing, Communities & Local Government has confirmed that they will be providing guidance for landlords and tenants in the New Year, ahead of the Act coming into force.

Any claim by a tenant against their landlord will be on the basis that their landlord has failed to meet their obligation to keep the property fit for human habitation from the outset of the tenancy. This obligation is met by the large majority of landlords however, for the small minority that fail to ensure their properties are fit for human habitation court action and other sanctions such as the Rogue Landlords database and banning orders will follow. Given the severity of the sanctions the Ministry of Housing, Communities & Local Government has confirmed that they will be providing guidance for landlords and tenants in the New Year, ahead of the Act coming into force. The legislation applies to England only and will only be in force initially on 20 March 2019 for tenancies which are new or actively renewed after that date. It will apply to all existing tenancies as from 20 March 2020.

Graham Faulkner Branch Director, EweMove Dorking

Graham Faulkner Branch Director, EweMove Dorking

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