We have been observing some of the major legal changes that could affect property investors and landlords in the future and reviewing current important safety regulations for rental properties. From minimum energy efficiency standards to changes with tax relief rules, there are a number of things that landlords should be fully aware of, and we have created this useful guide to try and highlight those we feel are important.
Our recommendation to any Landlord or investor reading this guide, is to familiarize yourself with the regulations, (and any recent changes) and take further professional advice where needed in order to safeguard the profitability of your investments and keep on the correct side of the law.
We hope this information will be useful and if you have any queries, please feel free to contact us at any time.
These regulations came into force on 31st October 1998 and replaced all previous gas safety regulations. These regulations place legal duties on landlords, agents and contractors who are dealing with the rental of the property. There must be a valid gas safety certificate in place during the whole duration of the tenancy which covers all gas appliances which are within the property. This certificate must be carried out by a Gas Safe registered engineer.
The following items must be safe:
Complying with the regulations is a legal requirement and failure to do so is a criminal offence.
The penalty for noncompliance is an unlimited fine and/or imprisonment. Should a tenant or occupant die as result of the regulations not being adhered to, a more serious charge may be brought.
These regulations came into force on the 1st October 2015. It is the Landlord’s responsibility to ensure that working smoke alarms and carbon monoxide alarms (if applicable) are installed at the property.
Private sector landlords are required to install at least one smoke alarm on each story of the premises, and a carbon monoxide alarm in any room containing a solid fuel burning appliance.
If battery operated smoke alarms are fitted to the premises, the Landlord must ensure that they are in working order at the start of the tenancy. The tenant is responsible for testing the alarms periodically and changing batteries as required.
Whilst carbon monoxide alarm regulations apply only t solid fuel appliances, it is good practice to install a CO alarm where there is a gas appliance.
If a landlord does not install the appropriate alarms, the local authority can impost a fine of up to £5,000.
New regulations were introduced in 2020 for England and came into force from 1st July 2020. These regulations set new standards of electrical safety as well as legal requirements on the service of documents to relevant people. It is the landlord’s responsibility to meet these requirements and also make sure that all electrical appliances left at the property are safe to use.
Landlords must ensure every fixed electrician installation is inspected and tested at least every five years by a qualified person. The Regulations also state that a landlord is required to obtain a report of the results of the inspection and test, supply it to each tenant within 28 days and retain a copy until the next inspection is due.
Proven breaches of the Regulations can result in the local housing authority imposing a financial penalty of up to £30,000.
Whilst the above regulations do not cover electrical appliances, where a landlord provides an electrical appliance as part of the tenancy, the law expects the appliance will be maintained in a safe condition that will not cause harm to the tenant. Failure to do so could lead to the landlord being sued for negligence. With this in mind, a PAT (portable appliance testing) is always best practice for landlords but it is not a legal requirement.
From 1st October 2008 all Landlords letting a property need to provide a valid EPC certificate to any prospective tenant. The EPC must be accessible to prospective tenants from the point that the property starts to be marketed.
There is no need to obtain a new certificate for each tenancy and once obtained, a certificate remains valid for up to 10 years regardless of the number of tenancies in that period.
MEES regulations (The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015) state that from 1st April 2020 all landlords of privately rented domestic and non-domestic properties in England or Wales must ensure that their properties reach at least an Energy Performance Certificate rating of E.
In certain circumstances, exceptions can be granted (listed buildings etc).
The Penalty for renting out a property for a period of fewer than three months in breach of the MEES Regulations will be equivalent to 10% of the property’s ratable value, subject to a minimum penalty of £10,000 and a maximum of £150,000.
The Housing Act 2004 states that a house in multiple occupation (HMO) is a property rented out by at least 3 people who are not from 1 ‘household’ (for example a family) but share facilities such as the bathroom and kitchen.
If you want to rent out your property as a house in multiple occupation in England or Wales you must contact your local council to check if you need a license and what specific requirement they stipulated.
You must have a license if you’re renting out a large HMO if all of the following apply:
A license is valid for a maximum of 5 years and you must renew your licence before it runs out.
You could get an unlimited fine for renting out an unlicensed HMO.
Please note that certain local councils require the landlord to obtain a license to rent out their property.
It is important that landlords contact their specific council to confirm whether a license is needed before renting out their property. Penalties are severe for non-compliance.
Legionnaire’s is a pneumonia-like disease commonly caused by the inhalation of small droplets of contaminated water.
Landlords must assess and control the risk of exposure to tenants to legionella to ensure the safety of their tenants. This is typically done by undertaking a risk assessment.
Tenants should be kept informed of any control measures in place and tell the landlord of problems occur with the water system of if the water is not heating properly.
The hot water should be set accordingly, and tenants should be advised to not interfere with the settings on the boiler or hot water system.
On returning to the property after a period of absence (such as a holiday or student accommodation left empty) tenants should run all taps for at least two minutes. Where showers are installed at the property and used regularly the risks are reduced. However, tenants should be advised to regularly clean and disinfect showerheads.
Most landlords can assess the risk themselves and do not need to be professionally trained. However, landlords can arrange for a competent person to carry out the assessment if they wish. There are companies who offer this service and we can refer a contractor if needed. NOTE: the Health and Safety Executive (HSE) does not recognize a ‘Legionella test certificate’ and health and safety law does NOT require landlords to obtain or produce one.
Records of any assessment should be kept and follow up checks need to be carried out periodically, such as when undertaking annual gas safety checks or routine maintenance visits.
Landlords who provide residential accommodation have a legal duty of care to ensure that the risk of exposure of tenants to legionella is properly assessed and controlled. It is recommended that every 2 years, Landlords of domestic properties appoint a professionally trained and accredited body to carry out a Legionella Risk Assessment survey then implement any recommendations.
These regulations were introduced in 1988 to protect furnished goods against fire. It is the landlord’s responsibility to ensure that any furniture left at the property complies with the regulations.
These tests mean that if a lighted cigarette or match is held up to the furniture, it will not burst into flame.
New upholstered furniture must also be properly labelled with set information and a fire safety warning. These can usually be found on labels which are attached to the item.
Non compliance is a criminal offence and may lead to a fine of up to £5,000 and/or a prison sentence of up to sex months. The trading standards office is responsible for seeing that the regulations are complied with.
Previously private and individual Landlords could claim tax relief on mortgage interest payments and fees, as well as fees incurred on loans to buy furnishings. In 3025 the government confirmed that this would be phased out and introduced a number of new measures. From 2017-2018 the process began with claimable tax relief reduced to 75% and the reduction continued through to 2019-20.
In 2020-2021 landlords will not be able to claim any tax relief on mortgage interest payments at all. Instead from April 2020 landlords will receive a 20% tax credit on their interest payments which could be bad news for anyone in the higher tax bracket and now include landlords who will have to declare rental income they previously used for interest payments. Some landlords are setting up limited companies when buying new rental properties to try and avoid higher individual rates.
From April 2020, changes to private residence relief means that landlords will lose mime month’s-worth of Capital Gains tax relief when they come to sell. Up until April landlords have been able to claim private residence relief for all the time they lived in their property before letting it to tenants, plus a further 18 months after moving out. This final exemption period will be reduced to the time they lived in their property, plus nine months post moving. Also, landlords who rent out a property that was once their main home will see the £40,000 worth of letting relief currently enjoyed scrapped as from April, and only landlords who share occupancy with their tenants will be able to claim.
We believe the above information to be correct at the time of writing and given in good faith. Landlords and investors should consult an Accountant or Tax Advisor to obtain the latest professional advice, based on their own personal circumstances.
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