If you’re new to letting, have found yourself as an ‘accidental’ landlord, or are just forever reading news on the ever-changing legislation surrounding the private rented sector, it may seem like there are lots of rules and regulations that you need to stick to when letting a property.
Whilst it may seem daunting, the NLA are here to help. We’ve compiled a list of some landlord rules that you may not know but that could affect your ability to repossess if you need to in future, cause you to incur costly fines or even end up in prison. Please note that many of these need to be done before renting out a property, so even if you’re only thinking about letting it’s worth doing your research.
Are you a landlord worried about the latest news that government plan to end Section 21? Head over to our guide on how the latest Government changes to Section 21 will affect landlords and what you can do to counter the effects.
Protecting a Tenant’s Deposit
It is a legal requirement for landlords to protect deposits in government-backed schemes within 30 days of receiving the deposit, and to provide tenants with the tenancy deposit protection certificate and specified information about the scheme within 30 days in England and (and currently) Wales, or 30 working days in Scotland.
Carrying out Right to Rent check
Under the Immigration Act 2014 landlords in England have a duty to check their prospective tenant has the right to live in the UK before they let a property to them. These are known as ‘Right to Rent’ checks. NLA members can find out more on the NLA Online Library.
EPC for Landlords
- An (EPC) or Energy Performance Certificate indicates the potential energy efficiency and carbon footprint of a property. It rates properties based on a scale of A to G, with A being the most efficient and G being the least efficient.
- Since April 2018, landlords have an obligation to ensure that their properties achieve a minimum rating of E for all new tenancies unless a valid exemption is registered (and for all existing tenancies from April 2020) or risk a penalty of up to £4,000.
- An EPC is issued by an accredited domestic energy assessor after inspecting the property. NLA members can get discounted rates on EPC assessments via our Recognised Supplier.
GDPR for Landlords
Handling a tenants’ personal information (whether in hard-copy or electronically) means the law considers you a ‘data controller’, as you are in a position to decide what information is collected and then processed. As such, you are required to comply with General Data Protection Regulation (GDPR). This includes registering with the Information Commissioner’s Office (ICO), providing tenants and prospective tenants with a privacy notice, outlining how you will use their information, and storing and disposing of data securely. Full details and an exclusive webinar are available on the NLA Online Library.
Property licensing is a measure that can be used by local authorities to ensure that a landlord is a fit and proper person, the property is adequately managed, and for HMOs ensure it is suitable for occupation by the number of people allowed under the licence. Once in operation within an area, landlords must apply for a licence from their local authority before undertaking any rental activity. You should consult with your local authority to establish if licensing is in effect because operating with one may result in a financial penalty. You can also stay up to date with licensing requirements for your let properties with NLA Licensing 365, exclusive to NLA members.
A House in Multiple Occupation (HMO) is defined as a property rented by at least three people from more than one household, whose relation to one another is solely based on their shared tenancy. New regulations for England in 2018 introduced minimum room sizes of 6.51 Sq. metres for all HMOs, and no longer defined them based on having three of more storeys.
Large HMOs in England and Wales that meet all the following requirements could require a mandatory HMO licence:
- The property is occupied by five or more people from more than one household
- Some or all the tenants share toilet, bathroom and kitchen facilities
- At least one tenant pays rent
The rules above are only the tip of the iceberg of the legislation that governs a landlord’s business. Other pieces of legislation that have not been covered above include:
- Electrical safety
- Gas safety
- Fire safety
- Housing Health Safety Rating System
As a landlord, knowledge is power where the law is concerned – any changes the government introduce in the lettings industry can have far reaching consequences for your business model. For more information you can visit our Landlord Regulations, Obligations & Laws page, or our Landlord Responsibilities & Duties page.
What happens if I don’t abide by these rules?
To act as a deterrent, the government has come up with a range of disincentives to punish those who do not follow the laws governing the private rented sector.
- In England, for landlords in breach deposit protection laws, the court can order the landlord to pay the tenant back three times the deposit within 14 days of the ruling. More importantly, landlords will be unable to serve a section 21 notice
- For landlords in breach of Right to Rent laws, a landlord can be sent to prison for up to five years and/or be liable for a fine and potential recovery of rent paid via the Proceeds of Crime Act, for renting a property to someone who is not allowed to stay in England.
- For GDPR breaches, the fine can vary from 10 million euros or two percent of your total annual worldwide turnover up to 20 million euros or 4 percent of worldwide turnover. For a majority of private landlords, a ‘proportionate’ financial sanction may be more of a possibility. This would likely entail administrative fines for the data breach, with further compensation dependent on the amount of harm judged to have fallen on the ‘data subject’ – this would most likely be the tenant.
- For landlords in breach of licensing conditions they can be liable by being subjected to rent repayment orders, banning order, a financial penalty notice of up to £30,000 or an unlimited court fine.