Having attended the Training For Professionals (TFP) legal update earlier this month I have produced a thorough overview of the latest legal developments in the rental property market.
Renters reform bill
This is the main legal change happening in the residential property rental market. The bill is currently at its second reading in the commons and this is stage 2 of 12 so the earliest expected date for implementation is currently October 2024 when the legislation will apply to all new tenancies, with transitional provisions for existing tenancies not expected to be effective until 2025. Be aware the main issues are removal of the section 21 no fault eviction, and removal of fixed term tenancies so only periodic monthly tenancies will be allowed. We have already done an FAQ section on the website but please watch this space for more updates.
Overseas Entities and Sanctions register
The economic crime (transparency and enforcement) act 2022 is now fully in force and this means all overseas entities (companies or trusts NOT individual people) are now compelled to be entered in the register of overseas entities. The idea is that beneficial owners of overseas entities can no longer be anonymous and if they do try this it would have implications for registering land and could therefore create resale issues. There are also daily fines of £2500 per day for non-compliance!
What this means for us is that we need to be even more careful with due diligence around our clients so please excuse any requests we may make to check your ownership of any properties and our KYC (know your client) procedures. Clearly, we cannot act for people on the sanctions list 🙈
The Fire Safety (England) regulations 2022 and the Building Safety Act / High rise buildings
Most of these regulations will not apply to many of our clients as freeholders or leaseholders of houses or apartments in smaller blocks. However there will be a significant number of clients where these regulations will apply, when owning a property in a taller high-rise building. Taller high- rise buildings are defined as more than 11 metres or 18 meters and there are now more strict requirements for these buildings. The new regulations also set out a definition of the responsible person in these taller buildings, which will generally be the block managers, and there are more strict requirements now for buildings over 11 or 18 metres; don’t be surprised to be asked by block managers to be available to have your front door checked to ensure it provides fire protection because this is now happening on a regular basis for these buildings, and seems to be the first physical evidence of the implementation of the regulations after Grenfell.
The main change for us under these regulations means that the responsible person I.e., the block managers, for high rise buildings must now provide to leaseholders and residents copies of fire risk assessments and fire evacuation plans; so, for flats we will need to ask for these documents and make sure they are given to the residents/tenants on move in. High rise buildings are over 18 metres (Approx. 7 storeys) if measured from the ground to the floor level of the top storey. Although these regulations are not yet in force, they are expected to apply from October 2023 so are imminent. We are also advised that a demand for rent must include the Building Safety Information “BSI” to include when chasing rent arrears. The BSI is currently proposed to include confirmation that the property is
1 - a higher risk building
2 - the name of the principal accountable person to include email, phone, and postal address
3 - the name of the regulator to include address and contact details of the Health & Safety executive
4 - Details of the special measures manager
We are currently preparing for these new regulations and watching for further information.
Smoke and Carbon Monoxide alarms
From 1st October 2022 all smoke alarms and CO2 alarms must be checked on the first day of a tenancy - after this it is the tenant’s responsibility to regularly check and test the alarms- however also from 1st October 2022 if a tenant reports a fault with a smoke alarm or CO2 alarm it is now a requirement for the landlord to repair or replace the alarms.
It is also noted that the building regulations guidance approved document requires alarms to be in the same room as the appliance on the ceiling at least 300 mm from any wall, or if located on a wall as high up as possible, but not within 150 mm of the ceiling AND between 1 metre and 3 metres horizontally from the appliance.
At Rocket we carry around with us new Smoke alarm and CO2 detectors so where possible we will react quickly and replace any alarms not working at minimal cost for clients I.e., just recharging the cost of the alarm.
Advertising of properties
Coming up will be changes to the material information required under the National trading standards. Phase A guidance was issued in July 2022 and is easy to comply with, requiring the council tax band, the deposit and rents in any advert for a rental property. We already provide this information anyway, however the proposed changes for Autumn 2023 will be much more onerous with the potential to have to provide information about the fabric of the building, utility providers, and broadband speeds. No idea at this stage how anyone is expected to comply! However, we will watch the new regulations and prepare for the new requirements.
Making Tax Digital
The requirements for a Landlord to have to register for a digital tax returns gets closer all the time so if you are still doing paper returns you must start to think about how to comply with Making Tax Digital “MTD”. Landlords' who have an annual income, including rental income, over £50,000 must use self-assessment for the tax year 2024 to 2025 and must be registered for MTD before April 2024. Even those in the range £30,000 to £50,000 only have one more year to register so must have the records available digitally for 2025 to 2026 and must register for MTD by April 2025. MTD is coming for ALL landlords so best to be preparing with your accountant.
To stay current with any upcoming legal updates, be sure to continue following my blog, where I’ll provide you with the latest information.
