InvestmentsOct 21 2020

What advisers need to know about the impact of BTL rule changes

  • How the law has changed for renters
  • How the law has changed for landlords
  • Identify where housing stock is coming from
  • How the law has changed for renters
  • How the law has changed for landlords
  • Identify where housing stock is coming from
pfs-logo
cisi-logo
CPD
Approx.30min
pfs-logo
cisi-logo
CPD
Approx.30min
twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
pfs-logo
cisi-logo
CPD
Approx.30min
What advisers need to know about the impact of BTL rule changes

1. Requirement for a ‘right to rent’ check which requires the landlord to check the tenant’s documents in their presence to expose any illegal immigrants.

2. Requirement for landlords to have an up to date gas safety certificate for any gas-fuelled appliance. 

3. Requirement for a valid energy performance certificate (EPC) for the property 

4. Proof of working smoke alarms and carbon monoxide detectors. 

5. Deposit monies given over by the tenant must be lodged with the Deposit Protection Service (DPS). Any disputes associated with a final settlement when a tenant is leaving a property will inevitably involve the DPS as the arbitrator but is considered by many BTL landlords to be in the tenant’s corner in a dispute. 

6. If your BTL is a House of Multiple Occupancy (HMO) or is in Scotland it is already the law to get all electrical appliances safety checked at least once every five years by a certified electrician and all appliances and plugs documented as passed in an electrical installation condition report.

These tend to cost about £150. 

Other rules around the requirement for fire risk assessments were also rolled out for any properties with communal seating areas and for HMOs.

Following the Grenfell Tower fire disaster other, more stringent requirements to prevent fire and ensure all electrical equipment has been safety checked came through. 

Many of these requirements seem sensible. They are, after all, protecting tenants and ensuring rental properties are safe to live in.

However, if any of these checks have not been carried out when required and are not properly documented and circulated in a timely way to the tenant, this prevents landlords from evicting tenants under Section 21 of the Housing Act 1985 if they want the property back. 

Section 21 to go

Further, Section 21s themselves are on the chopping block. Experts indicate that Section 21 Notices – one of two key legal levers landlords can pull to repossess their property in case of breakdown in agreement with tenants – will probably be no more within 18 months. 

In the meantime, Covid-19 has amplified what was already becoming a problem – getting repossession claims processed through the courts.

When lockdown happened, all existing repossession claims were staid (held up) and no new claims could be started as courts closed. 

Courts jammed up

There are now more than 10,000 Section 21 claims currently in process and a further 14,000 Section 8 claims and other private possession claims held up.

And that is before you get into the new ones which have not been started during lockdown. 

Experts predict that claims being started now are likely to take 12-14 months to process from here.

PAGE 2 OF 4