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Landlords face hefty costs for not providing ‘How to Rent’ guide to tenants

A number of buy-to-let landlords who failed to provide tenants with a copy of a ‘How to Rent’ guide – a checklist for renting in England, now face the prospect of unnecessary and costly legal battles when trying to evict tenants.

The warning comes from law firm Furley Page, who says many landlords are failing to comply with new rules governing Section 21 Notices introduced on 1 October 2015.

If a landlord gives a new tenancy or a replacement tenancy from October 1st 2015 onwards, they need to comply with the prescribed information requirements for the new Section 21 form.

As part of this, landlords must provide at the outset of the original tenancy an up to date version of the How to rent: A checklist for renting in England booklet, which you can download by clicking here.

You can either provide renters with a printed copy, or send a digital version of the pamphlet by email.

Sarah Woolnough, a chartered legal executive at Furley Page, explained: “Many landlords are failing to comply with the requirements of the new rules simply because they are not providing tenants with the correct information at the right time. 

“For example, any landlord that fails to provide tenants with a copy of the Government's How to Rent leaflet are now in breach of the regulations, meaning they can't issue a Section 21 Notice to reclaim possession of their property.

“Thousands of landlords are incurring sizeable and unnecessary legal expenses when tenants challenge their eviction notice through the courts.”

Aside from provide the latest version of the government's How to Rent leaflet, it is important that, under the existing rules, landlords also provide tenants with an Energy Performance Certificate for the property and the current gas safe certificate (if the property has gas supplied). Failure to comply with the requirements means a landlord is unable to issue a Section 21 Notice to take possession of the property.

Woolnough added: “If landlords have not carried out all of the requirements, they are barred from serving a Section 21 Notice under the new rules. This means that unless their tenant is in breach of the terms of the tenancy, the landlord will not be able to evict the tenant and take back possession of their property. 

“After a Section 21 has expired, it is too late for the requirements to be remedied, and the landlord must either start the termination process again, which can take many months, or take their chances in Court.

“My advice to landlords is always to ensure that all the requirements have been met prior to serving a Section 21, and to retain proof in the event of a legal challenge by the tenant.”

  • Richard Tacagni

    A landlord cannot be fined for failing to issue the ‘How to Rent’ booklet. However, it would invalidate a section 21 notice of seeking possession for a tenancy started since 1 October 2015.

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    Download does not work.

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    • 02 May 2018 10:43 AM

    Looks like the rent increases I'm putting out for section 24 and extra costs of the abolition of letting agents fees that I will receive plus this latest attack are going to mean my rent increases will be pushed even higher. Tenants can expect incredible levels of poverty at this rate. And I have to do this to stand still. If I don't stand still, the model breaks and I'm force to sell my properties before I go bankrupt.

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    I am just doing my second rung of rent increases never ever done until s24 and have sold 4 houses with more to follow.

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    There are a lot of landlords out there for whom s24 will make little or no difference. Those paying the lower rate of tax will not be affected (the typical 1 property landlord owned in joint names which account for about half the rental market) as well as those who are well into or at the end of their repayment mortgage or who have a mortgage free/inherited property etc. They are, and will continue to, slightly undercut the market to attract the best tenants. IMHO landlords should never forget that they have 2 types of income - the rent and the capital gain. Rent should not be pegged to costs, it should be pegged to market value and if costs exceed that then it is a cost of achieving your capital gain not the tenant's cost. The deal is not that you are passing on your tax and mortgage costs to the tenant, they are pay a market rent.

    The landlords who will suffer are those who have built their portfolios on a low rate interest only and low equity basis and have income that takes them well into the higher rate tax band but are heavily mortgaged. They have invested, and are feeling bruised, but on the flip side had they chosen any other investment, for example the stock market, they would not have been able to borrow and offset the interest against their earnings ever. Their portfolios are at risk not only from s24 but also potential interest rate rises, which could be a serious flaw in that investment strategy and lead to a significant amount of distressed selling.

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    Yes but it’s not fair to change the goal posts on a business model mortgage Interest is a legitimate business cost and comparing running a portfolio to shares is like comparing apples and pears I run a decent size portfolio and it’s full on I can assure you. No matter who you are anyone telling me s24 and it’s retrospective nature is fair is deluded it is a cruel harsh tax that is goin to put many portfolio landlords out of business. How can u tax money that isn’t there that has been paid to a lender and justify 100% tax rates which some will face its bonkers. One final thing anyone who has built up a sizeable portfolio would have used the 75% mortgage model so to change it now is going to cause untold trouble for 100s of thousands if not millions of tenants.

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    all businesses should worry as this may be extended to all businesses

     
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    Unfortunately rule one is that life doesn't have to be fair. It is for sure irritating though. However property is an investment just like any other and tax and legislative changes impact all investments at one time or another, it's just not quite so 'personal' usually.

    The landlords that will be affected are those who have built up their portfolio recently and quickly. Those that have held property for a couple of decades or more will have low mortgages even if they started with the 75% model. There are plenty of such landlords, plenty also of the mortgage free variety, and I suspect they account for a very sizeable percentage of the market, especially if you take into account corporate landlords. The impact on tenants I suspect will be small.

    I am a landlord of a sizeable portfolio built up over a couple of decades on the 75% or 60% model with repayment mortgages. I haven't increased any of the rents this year apart from 2 properties which are currently still catching up with market rate, and have some way to go. I am also a letting agent and across a few hundred properties we have barely increased any rents this year as the market rent in the area is drifting slightly downwards. The number of landlords that we have that are potentially going to struggle is very small indeed. Off the top of my head I can only think of one, but I could be wrong.

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    My property portfolio is a business I employ people do my own accounts it’s not an investment it’s a business I have Incorporated anyway I just can’t understand how u are trying to down play it as you are in the industry saying life isn’t fair is ridiculous what that weasel osbourne has done is immoral and an abuse of power end of Story

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    I'm not trying to downplay it, I'm simply putting forward my observations. The vast majority of our landlords are either unaffected or minimally affected. We may be unrepresentative but recent stats are that over 50% of landlords own only 1 rental property and they will generally be unaffected unless they are high earners. Your assertion that millions of tenants will be affected is likely therefore an over statement. Whether your portfolio is an investment or an investment business is moot. I also looked at incorporation but the CGT implications were horrific and by far a bigger bullet than the one it would have dodged.

     
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    U need to look into BICT where in a partnership u claim SDLT relief and roll over any capital gains

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    I have, but the jury is out on whether they will work long term, or indeed short term, or whether that particular veil will be lifted. HMRC have a penchant for veil lifting so I would guess sooner or later they will have a go. In my case the cost of doing it would be greater than the s24 cost at least for the next couple of years and after that it may be irrelevant so it's a high risk to take for me, that BICT doesn't work in the longer term compared to the potential s24 saving vs the CGT. There are other implications which may or may not crystalise which would also be financially irritating.

     
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    I had no choice and seems to be working fine i agree though about the government dont trust them so am starting to sell and diversifying last two years have been horrible and this PRA is making things even worse. Do you think I’m a couple of years S24 will be revoked ?

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    My best guess is no - s24 is here to stay. Any government's history of revoking a change of tax legislation that earns them any decent amount of money is poor no matter how fair or unfair it is. The landlord is way too popular a target for them to about turn. Reversal of s24 is not a vote winner because a lot of landlords won't care as they are not affected, new landlords are pre-warned and will factor it in, and tenants would be unhappy if they perceive that their landlord just got a tax break and they didn't get a rent reduction. It isn't going to happen IMHO.

    Sorry re-read my comments and now understand why you thought I might think it would be revoked - in a couple of years various financial factors will change for me and at that point it is possible that I will sell some of the portfolio to render the others mortgage free, or more likely tax plan to make s24 irrelevant.

     
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    The 'How to Rent' guide is the most pointless piece of paper ever written. The vast majority of it advises a tenant on choosing a letting agent and finding a property. All of which has already been done by the time we see them.

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    I really hate how this government is making Landlords do their work; like checking for immigration and handing out booklets on how to rent. I don't think it should be up to Landlords to give tenants booklet on how to rent. Tenants should get it for themselves from places like library or CAB; they are after all the renters. Government should pay agents to check immigrants and those here legally should be given a card.

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    I agree with most of Wendy’s comments but at the sa
    E time businesses have responsibility to let the customer know how they operate and the rights of the tenant. I am also of the view that checks on immigration status should not be imposed on landlords. It should be legislated that the tenant must pay financial penalty if it does not vacate/ leave the rented property on the expiry of the term. The state should also prosecute the tenants for criminal damage to the landlords’ property

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