Unless you have been living without a TV, phone or radio, I expect you have now heard about the Tenant Fees Act 2019, aka the “Tenant Fee Ban” (TFB).

So, what is it?

In short terms, the TFB is a piece of legislation introduced by the government which came into force on 1st June 2019. It specifically prohibits landlords and agents taking any form of payment (or forcing tenants to contract with a third party) in order to obtain or continue an Assured Shorthold Tenancy Agreement, unless that payment is specifically permitted by the ban (a “permitted payment“). All other payments are known as “prohibited payments” and carry heavy penalties, as I will discuss later in this article.

The TFB applies to all AST’s and licences (not common law, company or high rent tenancies) granted on or after 1st June 2019 and all AST’s and licences from 1st June 2020.

What payments are permitted?

There are several, including:

Rent (but this must be kept at the same level, or higher, throughout the duration of the fixed term. If it is decreased, the additional amount during the months prior to the increase will be seen as a prohibited payment.

Security Deposit (This is now capped at 5 weeks rent, and not a penny over, regardless of circumstances i.e. pets. Deposit calculators are widely available online, and the the following calculation must be used: (Monthly rent x 12/52 x 5). This cap is increased to six weeks rent for properties with an annual rent of over £50,000.

Holding Deposit (there are many regulations around the acceptance of a holding deposit, which I may need to go into further detail on a separate post. However the main points are that it is capped at 1 weeks rent, and it must be returned to the tenant save for four explicitly stated sets of circumstances .)

Change of tenancy Charge (a charge can be made when the tenant requests a change to the tenancy, such as the addition of a permitted occupier, or the change of a rent date. This charge is capped at £50 including VAT).

Late Rent Charge (this is one is pretty laughable and likely not worth even thinking about. You cannot charge for late rents, chasing letters, visits. The only charge you can make is an interest charge of 3% over the BOE base rate, after the rent is more than 14 days late).

Replacement keys/security device (Self explanatory, but you can only charge the cost of the replacement key or device, not for your time.)

Early Termination (If the tenant would like to leave a contract early, you can charge to cover your costs. However, if you are not using an agent, you are not permitted to charge them for re-referencing the new replacement tenants. They are also expected to pay rent and utilities up until the day before a replacement tenant moves in).

Breach of tenancy (If the tenant breaches any part of the agreement, you can seek to recover your costs from them, either directly or through the security deposit).

What payments are prohibited?

Anything not listed above is prohibited.

What are the penalties for breaching the ban?

Luckily for us Bristol folk, the government helpfully decided to place the central UK enforcement authority for the Tenant Fees Act within Bristol city council. They are a team who will be able to enforce the ban through penalties, and make no mistake, after reading the government guidance written for enforcement authorities it is very clear that they are being pushed to enforce this legislation to the letter. The reasons for this may become clearer to you if you allow me explain a little further about the penalties for breaching the ban.

If you purposefully or accidentally take a prohibited payment and do not return it to the tenant within 28 days, if reported it is likely you will be given a penalty charge. Ignorance is sadly no excuse so it is important you are aware of your obligations.

Any breach would render a Section 21 eviction notice invalid, so you would not be able to regain possession of your property until the prohibited payment was returned.

First breach: Up to £5000 penalty charge per breach (note: if you charge one fee that includes several items i.e. referencing, check in, tenancy fee: this could easily be seen as multiple breaches which would each attract a penalty charge in its own right).

Second or subsequent breach within 5 years: Criminal offence, or a penalty charge of up to £30,000 as an alternative to prosecution, per breach.

Common Errors

There are many people that believe the TFB only applies to letting agents, however this could not be further from the truth. As a self-managing landlord, here are a couple of scenarios which could easily catch you out if you are not making sure you are fully up to date with your obligations.

  • Your tenant is on a six month AST which renews on the 1st August 2019. You currently hold six weeks deposit. At their request, you supply another six month agreement as you normally do, and as the deposit is held in a custodial scheme, no action is needed.

WRONG. Prior to signing the new fixed term agreement (and effectively creating a new tenancy, you MUST return the portion of the deposit that is over the five week deposit cap. If you do not do this, that money will become a prohibited payment and you will be in breach.

  • You are advertising your property to rent as no pets, but someone phones and offers to pay a separate payment as protection against pet damage. This is fine, because it technically isn’t part of the security deposit.

WRONG. You must not take any money over the five weeks rent as a security deposit. In this scenario, not only would you be in breach of the TFB, but you would also be in breach of the Tenancy Deposit Protection Legislation.

  • You are advertising your property to rent as no pets, but someone phones and offers to sign a contract that states they will have the property and carpets professionally cleaned and flea treated at the end of the tenancy. You agree to the tenancy on those terms.

WRONG. You must not make or allow the tenant to contract with a third party (that costs them money) as a condition of granting a tenancy. In this instance, the fact that they must pay for cleaning and flea treatment in order to have the tenancy would be a breach.

  • Your tenant calls you at 10pm to say they have locked themselves out as they have lost their keys. You visit the property to let them in and provide them with a spare, and they give you £20 for your trouble.

WRONG. You are not able to charge for your time when resolving issues like this. You are only able to charge them the cost of the key. Our advice in this situation would be to either ask them to come to you to collect the key, or for them to call a locksmith who they would need to pay directly.

As you can see, the TFB was created as a piece of legislation to protect tenants from unscrupulous landlords and letting agents. I am the first to acknowledge that historically there has been a huge amount of unfair treatment of tenants, particularly from city centre Letting Agents across the country. However, the way this legislation has been written goes above and beyond the job it was meant to do.

It is so convoluted and technical that it makes it difficult for the non-professional landlord to stay compliant without expert support. It is full of opportunities for mistakes, and this coupled with widespread ignorance around the true implications and requirements of the Act means I am expecting to see a large amount of prosecutions over the next few years.

That said, any piece of legislation is subject to interpretation and until we have case law coming through giving us better more conclusive guidance on how to interpret the Act, we all just need to keep our fingers crossed that doing our due diligence is enough to comply and ensure that we aren’t one of the unfortunate few who are involved in creating that case law that everyone else is awaiting to enable them to learn from.

As always, I hope this information was useful, and if you have any questions feel free to post them below. Please make a point of reading our disclaimer located on the privacy page of this website.

There is a lot of discussion around asbestos, particularly in recent years where Health & Safety has been pushed to the forefront of our minds – but what actually IS asbestos and why do we, as property managers and landlords, need to know about it?

All landlords and property managers must abide by the Health and Safety at Work Act 1974, hence they must be aware of anything that may impact the general health and safety of their tenants.

Asbestos was known as the “Magic Mineral” for many years given its versatility and properties as a construction product. It was used in many ways such as insulation, fire proofing, cladding, even roofing and floor tiles. It wasn’t until much later that the effects of asbestos on those who produced, shipped and used it became apparent. Unfortunately by this point, asbestos was so widely distributed and used that it was impossible to trace it and remove it from those buildings that had included it.

So WHY is Asbestos dangerous?

Asbestos is made of fibres, as you will see below. When the Asbestos is “friable”, meaning the edges are damaged or worn, these fibres can be released into the air, and inhaled or ingested. Once ingested or inhaled, they are difficult (if not impossible) to remove, and eventually cause disease, such as lung cancer or conditions known as Asbestosis and Mesothelioma.

What does Asbestos look like?

To keep things simple, there were three main types of Asbestos in use in this country – these are nicknamed after their appearance: “White Asbestos” (Chrysotile), “Blue Asbestos” (Crocidolite) and “Brown Asbestos” (Amosite).

Image courtesy of: https://www.merryhillenvirotec.com/types-of-asbestos/

The use of Blue and Brown Asbestos was banned in the UK in 1985 but large amounts remain. Blue is widely seen as the most dangerous type of asbestos due to its structure – the fibres are short and spiky, which cause the maximum damage to the lungs.
Blue asbestos was often used for products such as spray on pipe lagging, insulation or asbestos cement.

Image Courtesty of: https://www.ad-asbestosremoval.co.uk/

Just as a matter of interest, a lot of people think that the visible fibres of asbestos are what cause the problem. In fact, it is actually the fibres you can’t see with the naked eye that are more troublesome, as shown by this micrograph:

Similar to Blue asbestos, Brown asbestos was mostly used for cement sheets and insulation.

The most common type of asbestos, white, was banned in 1999 which means as a landlord or property manager you should be aware that it may be present in most properties built or converted before 2000. White asbestos is commonly found in areas like artex ceilings, insulation, cement, soffits, piping, fireproofing and ceilings but is so widespread the uses of this type of asbestos would take too long to thoroughly list.

Image courtesy of: https://job-prices.co.uk/asbestos-in-the-home/
Image courtesy of: https://job-prices.co.uk/asbestos-in-the-home/
Image courtesy of: https://job-prices.co.uk/asbestos-in-the-home/

How can I tell it is asbestos?

To only way to confirm the prescence of asbestos is by testing it. There are many companies that will offer a sampling and testing service, often with a 24 hour turnaround. They will take a look at the sample under a microscope to identify the type of fibres it contains, and therefore confirm the presence of asbestos in the sample.

What do I do if I have asbestos?

The first step in the sucessful management of asbestos is the identification of the location and type of asbestos, and the assessment of the current condition.
We would always recommend using a professional company to carry out an “Asbestos Management Survey” and if necessary, an “Asbestos Management Plan and Asbestos Register”.
This survey will review the property non-invasively to identify the location of asbestos on site, as well as giving recommendations for its management and/or removal.
Should there be extensive works being carried out at the property, it is important to take this further and arrange for a “Refurbishment/Demolition Survey” which is much more invasive.

Both types of survey will provide information on how to manage the asbestos, which is likely to be either complete removal, encapsulation (covering to prevent the release of fibres) or regular checking of the condition.

If you would like further information, the Health and Safety Executive website is a fantastic resource, in particular the booklet titled “Asbestos Essentials“.

References:

https://www.hse.gov.uk/asbestos/

http://ibasecretariat.org/lka-paper-asbestos-from-magic-mineral-to-killer-dust-apr-28-2013.pdf

https://ehs.oregonstate.edu/asb-when

https://ehs.oregonstate.edu/asb-when

Guidance has now been produced by the government relating to the upcoming Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020. Originally included in the Housing and Planning Act of 2016, this is now a standalone piece of legislation. We have been aware that this particular piece of legislation was coming for several years and it is actually very welcome. Most landlords are very keen to ensure their properties are safe, but there are the minority that are not.

There will now be a legal obligation and not just a moral obligation to ensure that your rental property is safe and to the standards contained in the 18th edition of the ‘Wiring Regulations’, which are published as British Standard 7671.

So, what do the regulations mean for landlords?

If you love reading legislation, you can review the actual legislative document by clicking here. If not, read on to read a summarised version of what is required.

  1. For all new tenancies starting on or after 1st July 2020, the landlord must obtain, and provide to the tenant within 28 days, a satisfactory DEICR (Domestic Electrical Installation Condition Report) – also known as a “Fixed Wire Test”.
  2. This requirement will be rolled out to ALL tenancies from 1st April 2021.
  3. The certificate must be carried out by a qualified and competent electrician. Further information relating to qualification of electricians is available by clicking here to visit the NICIEC website.
  4. The certificate will last for 5 years, and therefore must be repeated prior to expiry.
  5. Where remedial work is required, this must be carried out within 28 days, or sooner if deemed necessary by the qualified electrician carrying out the test.
  6. The certificate must be provided to the tenant prior to moving into the property, similar to the Gas Safety Certificate.
  7. You must retain a copy of the report to provide to the electrician prior to the next test.

What parts of the property are included under the test?

The ‘fixed’ electrical areas in the property, starting with the RCD board (also known as a fuse board) and including the wiring, the plug sockets, the light fittings and any hard wired items such as showers, extractor fans or ovens.

How is remedial work classified?

Within the report, remedial work is classified into the following groups:

C1 = Danger present. Risk of injury. The electrical inspector may make any C1 hazards safe before leaving the property.

C2 = Potentially dangerous.

FI: Further investigation required without delay.

C3 = Improvement recommended. Further remedial work is not required for the report to be deemed satisfactory.

A test with any C1, C2 or FI observations will be deemed unsatisfactory.

When the remedial works are complete, the landlord must supply written confirmation to the tenant within 28 days.

What type of properties does the new law apply to?

Any property where the tenant lives as their primary residence will be covered by the legislation. This includes agreements such as Assured Shorthold Tenancies (AST’s), licences to occupy and company lets.

Social housing, lodgers, those on a long lease of 7 years or more, student halls of residence, hostels and refuges, care homes, hospitals and hospices, and other accommodation relating to healthcare provisions are not included.

If you have a property that was built in the last 5 years (or completely re-wired) it should have a current Electrical Installation Certificate (EIC). This will last for 5 years, at which point it must be re-tested. However, you must make sure that the EIC includes all installations within the property, not just one area.

What happens if remedial works are not carried out?

The local enforcement authority may serve upon the landlord a remedial enforcement notice legally requiring them to carry out remedial works. If they do not comply with the notice, the enforcement authority may proceed with the work and charge the landlord for the works, and their costs in administering them.

In addition to this, a fine of up to £30,000 may be given to the landlord for the breach. Should a tenant be injured or killed due to an uncertified and faulty electric installation, the landlord may find criminal charges are applied against them.

What about tenancy renewals?

If your tenancy expires after the 1st July 2020 and you provide the tenant with a new tenancy agreement (also known as a fixed term renewal or extension), just must ensure that you have a certificate in place and it is provided to the tenant prior to this document being signed.

If your tenancy expires after 1st July 2020 and it turns into a contractual periodic tenancy (it is written into the agreement that after the fixed term, the agreement will turn into a monthly tenancy) you do not need a certificate until 1st April 2021, however, if you do not have one, it is advisable to get one as soon as possible.

If your tenancy expires after 1st July 2020 and it turns into a statutory periodic tenancy (nothing is written into the agreement), you will need a certificate in place and provided to the tenant prior to the end of the current tenancy. This is because the change of tenancy type from fixed term to statutory periodic constitutes a “new tenancy” in law.

For further information or help with this new legislative requirement, please do not hesistate to get in touch with us. We can arrange for you to have a DEICR carried out by local, trusted electricians at the following cost:

1-4 Bedrooms: £210 including VAT

4+ Bedrooms: £234 including VAT

Communal Areas of Leasehold Apartments (Landlord Supply): By Quote

If you don’t know what the Tenant Fees Act 2019, or the “Tenant Fee Ban” is – then I suggest you go to THIS POST first and a have a read through.

This piece of legislation came into force on 1st June 2019, and applied to all tenancies signed on or after that date.

However, included in the legislation was the provision that the requirements would be rolled out to ALL tenancies on 1st June 2020 – something that has now taken place.

Regardless of what is contained in your current tenancy agreement (and if created in the last 12 months, it should really be “fee ban” compliant, from last Monday (1st June 2020) landlords or agents are not allowed to charge tenants for anything other than the following:

Rent (but this must be kept at the same level, or higher, throughout the duration of the fixed term. If it is decreased, the additional amount during the months prior to the increase will be seen as a prohibited payment.

Security Deposit (This is now capped at 5 weeks rent, and not a penny over, regardless of circumstances i.e. pets. Deposit calculators are widely available online, and the the following calculation must be used: (Monthly rent x 12/52 x 5). This cap is increased to six weeks rent for properties with an annual rent of over £50,000.

Holding Deposit (there are many regulations around the acceptance of a holding deposit, which I may need to go into further detail on a separate post. However the main points are that it is capped at 1 weeks rent, and it must be returned to the tenant save for four explicitly stated sets of circumstances .)

Change of tenancy Charge (a charge can be made when the tenant requests a change to the tenancy, such as the addition of a permitted occupier, or the change of a rent date. This charge is capped at £50 including VAT).

Late Rent Charge (this is one is pretty laughable and likely not worth even thinking about. You cannot charge for late rents, chasing letters, visits. The only charge you can make is an interest charge of 3% over the BOE base rate, after the rent is more than 14 days late).

Replacement keys/security device (Self explanatory, but you can only charge the cost of the replacement key or device, not for your time.)

Early Termination (If the tenant would like to leave a contract early, you can charge to cover your costs. However, if you are not using an agent, you are not permitted to charge them for re-referencing the new replacement tenants. They are also expected to pay rent and utilities up until the day before a replacement tenant moves in).

Breach of tenancy (If the tenant breaches any part of the agreement, you can seek to recover your costs from them, either directly or through the security deposit).

If you would like help or advice on anything relating to the Tenant Fee Ban/Tenant Fees Act 2019, please do not hesitate to get in touch.

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Here at SWR, our business model is not to undercut or price match other agents. We offer you the most comprehensive and personalised service to protect your valuable and important investments whilst making the journey of being a landlord as “stress free” as possible.

Come and visit us at The Stables and let’s discuss how we can help you with your property management needs.