This article was first published in Farmers Guardian in July 2022 as part of a media partnership.
There have been two major shifts in the world of residential tenancies over the last 20 years since Harry Flanagan, solicitor and senior legal adviser, joined CLA.
Firstly, an increasing number of the CLA’s farming members have diversified into letting out former farm buildings or workers’ cottages for residential use and, as the private rented sector has grown, so has its regulation by successive Governments.
Harry says: “There has been a constant and, for many, a bewildering increase in legislation affecting residential landlords. “Where, in the past, it might have worked to let someone rent your property on a relatively informal basis, sadly those days are over, as the penalties for breaching the lettings legislation are eye-watering and traps for the unwary abound.”
As the regulation of residential tenancies is now so complicated, no single article could detail all landlords’ responsibilities but here Harry has summarised the key requirements when granting residential tenancies in England, though it is worth remembering that the law for landlords in Wales is increasingly diverging as major reforms are implemented. It is also important to remember almost all the obligations summarised here will also apply when housing an agricultural employee using an assured shorthold tenancy (AST) and some of these legal obligations will also apply to the residential element of agricultural tenancies, such as Farm Business Tenancies or Agricultural Holdings Act agreements, so the legislation can extend beyond the ambit of purely residential ASTs.
“Always seek professional advice before setting up any kind of occupation arrangement, especially if seeking to house an employee, so as to avoid the risks of granting permanent security of tenure,” adds Harry.
Farmers and land managers should be aware there is much to be done ahead of granting a tenancy these days, so it is key to get organised well in advance. CLA members can access guidance notes containing a checklist of the key issues – a summary of which is set out here to flag up the many pitfalls for the unsuspecting landlord.
Right to rent checks
Private landlords are required to ensure prospective tenants are in the UK legally before the start of a new tenancy. As such, landlords need to see, copy and retain evidence that any new adult tenant has the right to rent in the UK – for example, by providing a valid passport. There are serious penalties, both financial and criminal, for failing to comply.
Landlords must serve all new tenants with a hard copy of these current documents:
- Gas Safety Certificate (GSC).
- Energy Performance Certificate (EPC).
- Government booklet: ‘How to Rent: the checklist for renting in England’.
Unless landlords can prove these documents have been served as required, they will not be able to use the section 21 (notice only) route to regain possession of their property.
General Data Protection Regulation (GDPR)
Landlords who hold their tenant’s details (e.g. email addresses or telephone numbers), should already be registered with the Information Commissioner Office which enforces the Data Protection rules. Registration is on the ICO website where a template privacy notice can also be found.
Landlords should contact their local housing authority (LHA) to check whether a licence is required to let the property, for example because it is a licensable house in multiple occupation (HMO) or because it is in an area that has an additional or selective licensing scheme.
While these are generally more common in urban areas, this is important as the rules governing which HMOs require mandatory licences have changed to include more properties. Landlords of HMOs falling within the new definition who fail to apply for licences will commit a criminal offence and there are stringent financial penalties for failing to obtain a licence, including rent repayment orders (for up to 12 months’ rent) or fixed penalty notes of up to £30,000. This is in addition to not being able to serve a section 21 notice.
Energy Performance Certificates (EPC) and Minimum Energy Efficiency Standards
All let properties which legally require an EPC must have a rating of ‘E’ or above or register a valid exemption. In addition to publishing guidance notes on this topic, the CLA often gives bespoke advice as it causes much consternation for members whose properties might struggle to make the grade. For this reason, the CLA has been at the forefront of lobbying Government on behalf of owners of rural properties.
There is now an obligation on all private landlords to check compliance (at least every five years) with the new electrical safety standards, in order to ensure that electrical installations are safe and to have an Electrical Installation Condition Report.
Letting out old farm buildings can be a profitable venture, provided the correct steps are taken beforehand. Landlords must ensure the correct paperwork is in order before signing any tenancy agreement. This must be given to each tenant within 28 days of inspection and also to prospective tenants who request a copy. Remedial work can be required by the local housing authority. With fines of up to £30,000 per breach, landlords need to check they are fully compliant.
Gas Safety Gas appliances (mains and LPG) must be serviced every 12 months by a Gas Safe engineer and a copy of the safety certificate given to the tenants within 28 days of inspection, and to each new tenant before the start of a tenancy. Penalties include imprisonment and fines of up to £20,000 or both,
Smoke and carbon monoxide alarm regulations
Smoke alarms (battery or mains-powered) must be fitted on every storey and carbon monoxide alarms fitted in any room with a working solid fuel appliance, including open fires. Landlords must ensure all alarms are in working order on the first day of each new tenancy. The CLA guidance notes on this will be updated as the regulations are being amended again and are expected in October 2022.
Legionella risk assessments
Residential landlords are required to carry out risk assessments to demonstrate they have assessed and taken steps to mitigate the risk of Legionnaires’ disease within the property. The CLA guidance notes set out simple control measures to ensure the risk remains low.
Checklist once the tenancy is granted
Tenancy Deposit Protection
Since 2007, Assured Shorthold Tenancy deposits must be held in accordance with one of three Government-backed schemes. Landlords have 30 days from receipt of the deposit to protect it and issue tenants the ‘prescribed information’. Failure to comply can result in a fine of three times the deposit’s value and the inability to serve a section 21 notice to regain possession.
Tenant Fees Act 2019
Deposits for new tenancies are now capped at five weeks’ rent – or six weeks’ rent where the annual rent is above £50,000. Also, landlords can no longer charge tenants any fees associated with the tenancy, including for chimney sweeping. Again, a landlord in breach will not be able to serve a valid section 21 notice.
Housing Act 2004 – The Housing Health and Safety Rating System (HHSRS) and Homes (Fitness for Human Habitation) Act 2018
Landlords have many ongoing responsibilities in respect of repairs and maintenance, but we mention these acts as it is likely that enforcement action will increase. Under the HHSRS, the general condition of property should be safe and without unacceptable risks to the health of the tenants – such as damp and mould, excess cold, or an unsafe water supply. Additionally, a property must be ‘fit for human habitation’ at the start of the tenancy and this standard maintained throughout. As set out in CLA guidance notes, landlords could face enforcement by the local housing authority under the HHSRS or directly by the tenant under the 2018 act.
Looking to the future
The Government has recently recommitted to bringing forward a Renters’ Reform Bill which proposes the biggest changes to the regulation of the private rented sector in a generation. The CLA has been meeting with ministers and officials to ensure the rural context is not overlooked. We have stressed the vital role farmers exercise in providing housing in rural areas for their employees and others.
We have also cautioned that Government proposals could have a seriously detrimental impact on the availability of rural housing and also on the efficient working of the rural economy and, indeed, the sustainability of rural communities.