The Renters’ Rights Bill finally became law in October with improved property standards in the private rented sector (PRS) at its heart. Yet the PRS revamp comes at a price. As landlords await the implementation timescale for the new act, one of their most urgent questions is who will pay?
The government has still to clarify the full details of the improvements expected, its timescales and whether it will offer funding assistance. Having insurance to cover unexpected bills has become even more important, yet 15% of UK landlords don’t have policies in place.
How property standards will be improved under the Renters’ Rights Act
Two of the major improvements to property standards in the new Renters’ Rights Act include the introduction of the Decent Homes Standard (DHS) and Awaab’s Law to the PRS.
Private landlords will have a legal duty to ensure they meet the basic requirements of the DHS, which is currently under review. The government recently completed a consultation into a revised five criteria that rental properties in which would need to be compliant. These include meeting the current statutory minimum standard (free of any serious Category 1 hazards); being in a reasonable state of repair; comprising reasonably modern facilities such as bathrooms and kitchens and services (although revisions would put less emphasis on age of facilities and more on condition); offering adequate insulation and heating (to be revised to meet MEES Minimum Energy Efficiency Standards and include programmable heating) and finally a new criterion of being free of damp and mould.
Landlords would need to upgrade insulation and energy efficiency where required and schedule timely maintenance and repairs.
This may feel like a costly investment. However, it avoids the risk of legal action and financial penalties as well as ensuring properties will be more saleable in the future, increasing long-term ROI.
Awaab’s Law, meanwhile, will be introduced to the PRS after coming into force in the social housing sector in October. It sets legal expectations for the speed at which private landlords must resolve serious hazards, such as damp and mould, in their properties.
In the social housing sector, emergency hazards such as dangerous electrical faults, damaged external doors or windows and major leaks must be investigated and made safe within 24 hours of the landlord being informed. Meanwhile, damp and mould that poses a significant risk of harm to tenants must be investigated within 10 working days and made safe within a further 5 working days. The timelines are likely to be similar for the PRS.
Private landlords should take a proactive approach to recognising the potential for hazards to resolve risks before they become a reality. Repair and maintenance schedules and inspection timetables may need to be revised, especially in properties where damp and mould is a particular risk. Processes regarding reporting and responding to hazard complaints may also need updating.
The consequences of non-compliance
You may feel these changes are starting to sound expensive. We can’t pretend that they don’t require investment. However, non-compliance will be damaging both financially and reputationally, with landlords facing fines, rent repayment orders, banning orders and claims.
Local authorities will have greater investigatory powers and can issue improvement notices as well as civil penalties of up to £7,000 for initial or minor non-compliance with the DHS. This rises to a maximum of £40,000 for serious, persistent or repeated non-compliance or criminal prosecution with an unlimited fine. Tenants or local councils can also apply to the First-Tier Tribunal for rent repayment orders, with the maximum amount payable doubled from one to two years’ rent.
Failure to comply with the requirements of Awaab’s Law, meanwhile, will allow tenants to take landlords to court for breach of contract, at which point the court can order the landlord to take remedial action, pay compensation or both.
Ensuring you are adequately covered
The role of landlord insurance will become even more vital as a result of the new legislation. Rental protection insurance will help cover the void in rental income if a tenant has fallen into rental arrears, for example. The Renters’ Rights Act has doubled the notice period for eviction for rental arrears from two weeks to four, while the time spent in arrears before eviction has also increased, up from two months to three.
Similarly, legal expenses cover will assist landlords who face increased risk of legal action – whether over proving their right to evict under Section 8 or tackling discrimination claims from tenants with children or on benefits – both additional changes within the Renters’ Rights Act.
Proactive risk mitigation
With landlords’ budgets already stretched, ensuring cover in all eventualities remains essential. Proactive risk mitigation is also important. Property audits and compliance checklists will ensure you know what needs doing and when. Investment will be necessary, but hopefully we can help reduce the risk of unexpected costs.
InsureMy has been providing specialist insurance for more than 25 years. Our landlord insurance gives you the peace of mind that unexpected costs are covered with affordable quotes tailored to your needs.
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