UK: Lettings Update

Three interesting updates from the world of lettings.

Rent Smart Wales

Residential landlords in Wales are subject to a new registration and licensing regime known as 'Rent Smart Wales'. Landlords will have to comply before certain provisions of the Housing (Wales) Act 2014 are brought into force, which is currently timetabled for 23 November 2016.

Requirement to register

Landlords will need to register in respect of every property they own that is subject to a residential tenancy. This requirement will also be triggered by marketing or offering a residential tenancy. Exceptions include a grace period of 28 days from the landlord's interest being created, during which the requirements will not apply. If the landlord attempts to recover possession within that period, the immunity will be extended for as long as the pursuit of possession continues.

Licensing requirement

Landlords will need to be licensed before carrying out either:

  1. Lettings activities (such as arranging viewings, or checking a tenant's references); or
  2. Property management activities (such as collecting rent, arranging for repairs, and serving notice to terminate a tenancy)

Landlords may instruct a letting or management agent as an alternative to obtaining a licence themselves, provided they are certain that the agent is licensed.

The relevant landlord or agent may apply to Rent Smart Wales for a licence online. The process involves taking a training course, and declaring that they are a 'fit and proper person'. Training may be completed either online or in person through Rent Smart Wales or an approved provider. Before an applicant may declare themselves a 'fit and proper person', several factors are considered, including previous convictions and non-compliance with housing legislation.

Licences last for 5 years and may be renewed. Licensed landlords and agents will be required to follow the Code of Practice for Landlords and Agents licensed under Part 1 of the Housing (Wales) Act 2014. This sets out mandatory 'Requirements' and optional 'Best Practice' sections to be followed.

Failure to comply with the scheme may result in a fixed penalty of £150-£250, a fine on summary conviction. Further penalties include orders to stop further rent being received, or to repay rent. Landlords would be well advised to ensure they comply before the scheme becomes mandatory.

Right to rent

Landlords in England are required to check the immigration status of tenants. The relevant sections of the Immigration Act 2014 came into force on 1 February 2016.

When do the requirements apply?

The requirements apply to any agreement which permits a person to occupy a property in return for payment, whether in written form or otherwise. This includes leases, subleases, licences as well as preliminary agreements for those. Notable exceptions to these include long leases made for a definite duration of 7 years or more, together with student residence agreements. Landlords may also delegate their responsibility to agents, provided a written agreement sets out the agent's obligation to carry out the checks.

Extent of checks

The provisions apply to all adults who are to have a right to occupy the property as their main home. This applies whether or not they are named in the documentation. In the scenario that a tenant intends for their parents to move in, checks would have to be made on both the proposed tenant and the parents. If a tenant is permitted to reside in the UK for a limited period which expires, and they continue to rent the property, an offence will also be committed.

To comply with the legislation, landlords must check which adults are to live at the property as their main home. Indicators could include the belongings being moved into the house, or being registering to vote at the address. Landlords should then make copies of the occupier's nationality and residence documents and note the date they were copied. These should be kept until one year after the tenant moves out. In instances where the Home Office has these documents or the tenant's case is pending, the landlord checking service on www.gov.uk may be used.

Non-compliance with the legislation could result in a fine of up to £3,000 per occupier. Furthermore, landlords should be wary of rejecting applicants without making sufficient checks, as this could constitute discrimination under the Equality Act 2010.

Prudent landlords should make the necessary checks themselves, or alternatively delegate the responsibility to an agent in a suitable written agreement.

Procedure preventing agricultural workers under Assured Shorthold Tenancies from gaining security of tenure

Landlords should be aware that the form served in order to prevent an agricultural worker with an Assured Shorthold Tenancy from gaining a protected tenancy has changed. Since 6 April 2015, the correct form prescribed by the regulations is Form No. 9.

The procedure remains the same as that before the changes. The landlord should complete and date the notice and serve it on the tenant before they take occupation of the property. For evidential reasons this should be done one day before occupation is entered into, but a form served immediately before occupation taking place is legally valid. As a matter of best practice, landlords should ask the tenant to acknowledge receipt of the notice by returning a signed and dated copy. Landlords should consult a legal adviser if they are unsure about any part of the applicable procedure.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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