Bulletins

Housing and Planning Act 2016 - more changes on their way for landlords

October 12, 2016

The Housing and Planning Act 2016 (“the Act”) received Royal Assent on 12 May 2016. Various parts of the Act will come into force in stages through commencement orders.

1. Recovering Abandoned Property - how does it work?

The Act makes it possible for landlords of assured shorthold tenancies to recover possession of abandoned properties in England without a court order. These provisions are NOT YET in force. However, it is anticipated that the procedure will work as follows:

Under Section 57, you will be able to serve notice to end the tenancy on the same day if ALL of the following apply:

  • The tenanted property is in England;
  • Rent has not been paid (Section 58); and
  • You have given a series of warning notices (Section 59) and no tenant, named occupier or deposit payer has responded in writing before the date specified within each notice.

Section 58: If rent has not been paid
Section 58 sets out the rent arrears that must have accumulated before the second notice can be served. This depends on the rental period. For example, if rent is payable monthly, the tenants must be at least 2 consecutive months in arrears before you can serve a notice.

If your tenant makes a rent payment before service of the notice to end the tenancy, under Section 57 the unpaid rent condition ceases to apply.

Section 59: If 3 warning notices have been given
Under Section 59, a landlord has to give 3 warning notices prior to the notice to end the tenancy. The first and second notice must be addressed to the tenant, the deposit payer and any other person named on the tenancy, explaining that the landlord believes the premises to have been abandoned and that someone must respond in writing before a specified date in order to disprove this.

These notices should also set out that the landlord intends to terminate the tenancy if no response is received before the deadline.

The proposed tenancy end date specified in the notices must be at least 8 weeks after the date of service of the first warning notice.

The Secretary of State may make Regulations prescribing the form which the third notice must take:

  1. The first warning notice may be given before the arrears reach the levels required by Section 58.
  2. The second warning must be given between 2-4 weeks after the first notice, by which time the arrears must have reached the levels set out in Section 58.
  3. The third warning notice must be given at least 5 days before the response deadline given to the tenant (or other addressee).

Section 61: The service of notice
There are further provisions under Section 61 relating to the service of notices on tenant, in person, by email or by post. These must be complied with in order for the notices to be effective. The third warning notice must be affixed to a part of the premises where it will be clearly visible, such as the front door.

New recovering abandoning property regulations - immediate potential problems

  1. Under Section 60, a tenant may apply to reinstate their tenancy within 6 months of the notice bringing the tenancy to an end if they can provide a good reason for failing to respond to the warning notices. If the Court is satisfied with their explanation, it will have wide powers to make “any order it thinks fit for the purpose of reinstating the tenancy”. A landlord would not want to leave their property empty for 6 months and, in most cases, they will have re-let the property by this time.
  2. Requiring the third warning notice to be affixed to somewhere visible is to tell all and sundry especially vandals that the property is vacant.

  
2. New Fitness Test for HMO Licences

New criteria will be added under Section 125 to the existing HMO licence application fitness test. (This refers to those with properties in multiple occupation i.e. a property rented out by at least 3 people who are not from one 'household' (e.g. a family).

  • You will not satisfy the fitness test if you are insolvent or bankrupt.
  • Applicants will be required to demonstrate that they are entitled to remain in the UK.
  • A previous failure to comply with duties under the Immigration Act 2014 concerning the immigration status of a prospective tenant may also be taken into account.

You may like to revisit our February and May 2016 bulletins on your obligation to make “Right to Rent” checks and ensure you are compliant.

  • Feb 2016 Landlord update
  • May 2016 Landlord update


3. New 'banning offence' for Rogue Landlords and Letting Agents 

Part 2 of the 2016 Housing & Planning Act permits local housing authorities to apply to the First Tier Tribunal for a 'banning order' to prevent landlords or letting agents who consistently flout the law from operating. What amounts to a “banning offence” is not yet defined.

Consequences of a banning order: 

  • A banning order will last for a minimum of 12 months, during which time those who are 'banned' will not be able to let property in England or engage in letting agency or property management work (defined in Sections 54 and 55 respectively).
  • Anyone in breach will be liable to imprisonment for up to 51 weeks or a fine of up to £30,000 or both.
  • The First Tier Tribunal can also make orders for rent repayment, requiring a landlord who has committed housing offences to repay rent received up to 12 months preceding the offence.
  • Those subject to a banning order will be named in a new database of rogue landlords and agents maintained by local housing authorities. HMRC will also have access to this database to ensure that landlords are complying with their tax obligations. 
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