Landlord's Corner (Basic Compliance)
When letting out your property, you will need to decide whether to engage a professional managing agent or take the DIY route. Here we briefly look at some of the basic elements of compliance, and each month we will focus on a different topic to help landlords understand more about this important subject.
Over the last twenty years, the rise of the professional and accidental landlord has been a sight to behold. Many people who never thought they could be residential landlords, entered the market due to access to cheap finance or because of changes in their personal circumstances.
However, the obligations of being a landlord are onerous and not complying with the legislation comes with serious consequences. Many a landlord will use an agent to undertake the initial tenant find, and some will pay a little extra to ensure that they have created the tenancy correctly and provided the right information at the start of the tenancy. However, there are many landlords who think that letting a property is as simple as finding the right tenant.
The Potential Traps
There are numerous obstacles, which any landlord self-managing will need to consider when creating a new tenancy and during the tenancy itself. The following are some of the more common issues regularly overlooked by a self-managing landlord:
Data Protection
A simple requirement, and in truth a simple registration but many landlords are not aware of their obligation to be registered with the Information Commissioners Office (ICO). In recent years, the media have highlighted the changes made by the General Data Protection Regulations 2018 but very few landlords are aware that such requirements applied to them, when they are handling tenants and other people’s personal data. Not being registered with the ICO, and/or misusing such personal data could come with a significant financial penalty.
Deposit Protection
This has been a legal requirement since 2007 for any landlord who has taken a monetary deposit. However, it is noticeably clear with the plethora of court decisions in the public domain, that many landlords are either ignorant of the rules or have a complete misunderstanding of what is legally required to comply. A recent county court decision awarded the tenant over £80k in compensation for a landlord failing in their duty to register and protect the deposit correctly. The process required in protecting the deposit is not as simple as paying the money into an approved Government deposit scheme. There are numerous obligations to follow when first taking the deposit, then registering the deposit and finally with the provision of the prescribed information.
General Property Safety
All landlords will fall under the scope of the Health and Safety of Work Act 1974 which states the following:
"It shall be the duty of every self-employed person to conduct his undertaking in such a way as to ensure, so far as is reasonably practicable, that he and other persons (not being his employees) who may be affected thereby are not thereby exposed to risks to their health or safety.".
This places great emphasis on a landlord to ensure that a property is let out, in a condition as safe as possible which will include for example, the appliances, the furnishings and the structure and exterior of the property. If the landlord cannot show due diligence then they could be held liable in the event the tenant or any of the occupiers injure themselves. An example would be undertaking a legionella risk assessment to ensure that the water system is as safe as possible. Failure not to comply could come with a criminal prosecution by the Health and Safety Executive
Qualified Contractors
Building on the above section, a landlord will also be obligated to ensure that any contractor to undertake works was competently qualified. For example, anyone working on the gas supply at the property would need to be Gas Safe Registered and an electrician would need to be evidenced that they belong to one of the professional bodies such NICEIC or NAPIT. In truth the more high-risk contractors such as roofers and gardeners would be more of a concern to the lay landlord. As above, failure to comply could result in a significant fine and a criminal prosecution.
Check in and Check Out Report
If the landlord takes a monetary deposit, then they will need to undertake a professional check in and check inventory/report to have any realistic prospect of a deduction through one of the Government approved deposit schemes. If a landlord is found to have written the condition and standard of the property on the *back of a fag packet* it is highly likely this will get short shrift from any adjudicator or judge. Using a professional to undertake these tasks reduces that risk.
Other Considerations
· Permission to let
· Local Council Licensing
· Planning Permission and Article Four Direction
· Insurance/Rent Guarantees
· Fitness for Human Habitation Test
· Repairing Obligations
· Section 8/21 Possession Notice Requirements
Summary
The knowledge and competence required to be a self-managing landlord is never ending, with continued changes in legislation and good practice. With the inevitable move towards mandatory licensing for all those working in the private rented sector, it is becoming even more important for landlords to have a higher degree of knowledge when managing properties. A landlord may want to consider letting a property professional manage their portfolio moving forward, as this can considerably reduce their risk and stress in an ever-changing compliance world. A good and knowledgeable letting agent can be worth their weight in gold.