How will new legislation affect letting agents?
Touchstone's Agent Solutions looks at new legislation relating to the PRS and explains how we can help your business mitigate the risks and keep pace with the changes.
The Private Rented Sector (PRS) continues to grow. In 2007, there were 2.8 million households in the PRS, and by 2017 this had increased to 4.5 million, a rise of 1.7 million households.
With more people renting, Government have turned their attention to the sector. Over the past two years they have introduced a number of new reforms and legislation aimed at improving the PRS. These impact on letting agents and landlords and how they operate their businesses.
As a result, agents must keep up with the fast pace of change in PRS legislation or face new fines and penalties for non-compliance, up to £30,000 in some cases, or the risk of being barred from trading.
Client Money Protection
Since 1 April 2019, it has become mandatory for all lettings and management agents to be part of a government approved Client Money Protection Scheme to protect landlord and tenants’ money. Agents who fail to comply with the scheme face a penalty of up to £30,000.
Tenant Fees Act
From 1 June, letting agents will no longer be able to charge lettings fees to tenants (apart from a small list of permitted payments). They must provide evidence of these costs before they can impose any charges.
The Act also ensures that tenants who have been charged unfair fees get their money back quickly by reducing the timeframe during which landlords and agents must pay back any fees they have unlawfully charged. The legislation also caps deposits at five weeks’ rent. The Act also provides increased funding for enforcement of the sector.
Fitness for Human Habitation Act
The Homes (Fitness for Human Habitation) Bill came into force on 20 March 2019. The Act intends to drive up standards in the private and social rented sectors by putting an obligation on landlords to keep their property fit for human habitation from the outset. Non-compliance with the Act will see agents open to being sued and being unable to gain possession of the property.
Other Government reforms for the Private Rented Sector
- Minimum Energy Efficiency Standards – The regulations have recently been updated, requiring landlords to bring more homes up to standard. All homes must now be an E rating EPC or above by 2020.
- Electrical safety - If penalties for non-compliance go along the same lines as gas safety, agents could face substantial fines and possible imprisonment.
- Extending mandatory licensing for Houses in Multiple Occupation, and tightening rules on smoke and carbon monoxide detectors – a fine of up to £30,000 for non-compliance.
- Allowing private tenants to apply for a refund of up to 12 months’ rent if their landlord/agent does not deal with health and safety hazards in their home.
- An independent regulator in England to oversee letting agents, setting standards and maintaining minimum training and qualifications – Following the models in Scotland and Wales, agents can expect to see extra costs for staff training and registration with a regulator.
Matthew Duckett of Agent Solutions, says:
“Agents are right to be concerned about the fast pace of change in legislation and how to stay compliant. If you’re worried by the risk or this feels like another burden to your workload, we can help. We’re experts in the private rented sector, offering best practice and compliance with the benefit of ARLA propertymark, RICS, SAFEagent and Client Money Protection.
“We understand what you do, and what your legal responsibilities are. We’ll protect your brand, offering your clients and tenants an experienced and professional service. You can select services to complement your existing in-house capability, or simply let us take responsibility for everything.”
Agent Solutions’ services include:
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- Client Accounts
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