New Regulations for Residential Landlords
Published on May 1, 2017 by Sarah Mac
With every new tax year comes a raft of new regulations, and landlords are rarely left out of the equation. 2017 is no exception.
As of 6 April this year, the Housing and Planning Act 2016 kicked in, bringing with it new provisions affecting residential landlords. Even more regulations governed by other sections of the Act will come into force from October. Here we take a look at the key changes and what they mean for you as a landlord.
Rent Repayment Orders
At the moment, a Rent Repayment Order (RRO) can be made against a landlord should they fail to license a house in multiple occupation (HMO) or a property that falls under a selective licensing scheme. Such an order involves a landlord having to repay rent to a tenant or pay housing benefit to a local housing authority.
The scope of RROs is set to be expanded considerably. As of 6 April, an RRO will apply in situations where a landlord is guilty of offences relating to the letting of their property. A First Tier Tribunal will ascertain whether the landlord is guilty, with no need for a prosecution to have been made in the first instance. The Housing and Planning Act 2016 sets out the offences, which cover:
- Failing to comply with a prohibition order or improvement notice under the Housing Act 2004
- Evicting or harassing occupiers as per the Protection from Eviction Act 1977
- Securing entry with the use of violence, as per the Criminal Law Act 1977
- Managing or controlling an unlicensed property under the HMO or selective licensing regimes, under the Housing Act 2004
Local housing authorities or tenants are able to make applications for rent repayment orders and we await government guidance on the application of the new provisions. As soon as anything is released, we will post it here.
Banning Orders
As mentioned, further provisions are likely to be introduced as of October 2017. These include the addition of a breach of a banning order to the grounds for applying for an RRO.
Banning orders can be made against landlords, property managers and lettings agents. They act to ban that entity from letting a property or engaging in property management work or letting agency activities for a minimum of 12 months.
Local authorities will have the power to apply for a banning order against agents and landlords convicted of particular offences, which will be set out in the regulations. Where there is a breach of the banning order, the result could be a fine or even imprisonment.
Financial Penalties or Prosecution?
As of 6 April 2017, local authorities are able to impose financial penalties on landlords found to have committed offences under the Housing Act 2004 as an alternative to prosecution. The offences, which carry a maximum penalty of £30,000 per offence, are as follows:
- Failing to comply with HMO Management Regulations
- Failing to comply with an overcrowding notice
- Failing to comply with an improvement notice
- Committing licensing offences in regard to HMO and selective licensing regimes
The local authority cannot impose a penalty until it has served a notice of intent on the landlord. This notice must set out the amount of the proposed penalty and the reasons behind it. In response, the landlord has the right to make representations, and the local authority is required to consider these.
Where the local authority makes the decision to go ahead and impose the financial penalty, it will serve a final notice which will stipulate that payment is required within 28 days. Landlords have a right of appeal to the First Tier Tribunal.
What Landlords Should do now
Rent Repayment Orders are being expanded and financial penalties are being introduced: this is fact. The changes should prompt landlords to take stock of their portfolios and identify any potential breaches of the relevant housing legislation.
Bear in mind that local authorities are likely to be investing enhanced resources into the enforcement of housing law now that they can impose financial penalties, so you should be certain you are in compliance. Also consider that tenants could well be compelled to look into possible breaches with a view to applying for an RRO.