2019 will see several critical changes for landlords with regards to new letting legislation coming into force. This article highlights three key legislation changes that, as a landlord, you need to know about and how best to prepare for them.
- Client Money Protection
From April 2019, all letting agents must register with an approved Client Money Protection Scheme (CMPS).
Membership of a CMPS protects the money of landlords and tenants against theft or misappropriation by the owners of a letting agent whilst it is in their custody. This could include monies such as tenants’ deposits and landlords’ rental payments, or funds held for repairs and maintenance to a property.
Many reputable letting agents, such as Wright Marshall, are already a member of such schemes, but in April 2019, they become compulsory and there is a fine of £30,000 for non-compliance.
Landlords should check whether their letting agent is a member of ARLA – the UK’s largest professional body for letting agents, as this will mean they already have a client money protection scheme in place.
- Longer Tenancy Agreements
The government want to incentivise landlords to offer longer-term tenancies for a minimum of 3-years. Rents can still increase during a tenancy, and break clauses can be put in place, but the consultation is part of the Government’s plans to increase security for tenants, whilst also allowing landlords to regain their properties when they wish to sell or their circumstances change.
Exemptions to the rules could apply to some types of tenant – for instance those in student accommodation.
Whilst longer tenancy agreements give landlords security of income for longer periods, it may also impact their ability to evict bad tenants. This means that when choosing a letting agent, it is vital that you ensure they are carrying out thorough and vigilant checks on all tenants to ensure they are reliable and will look after your property during longer tenancy agreements.
- Ban on tenant fees
Landlords and letting agents in England are set to be banned from charging tenants letting fees from 1 June 2019. Where tenants can sometimes be charged admin fees such as renewal fees, referencing checking and credit check fees, the new Bill will prohibit landlords and letting agents from charging tenants for anything other than:
• An administration fee when the tenant requests a change or early termination of a tenancy
• Utilities, communication services and Council Tax bills
• Payments arising from a default by the tenant, e.g. replacing a lost key
• Capping holding deposits at one week’s rent
• Capping tenancy deposits at 6 weeks’ rent
The Tenant Fee ban is obviously great news for tenants, but for landlords it could be a very different story.
Landlords should pay attention to the tenancy agreements drafted by their letting agent to ensure they do not contain unenforceable clauses.
Wright Marshall is committed to continuing to provide an excellent letting service to our landlords and are working towards mitigating proposed losses in preparation for the tenant fee ban.
If you need further advice, our lettings team can offer you professional advice on how best to comply with the new legislation coming into force this year and will ensure your rented properties are working within the new rules.