Policy commitment: Chris Huhne announced that the  Government will regulate to  drive-up the energy efficiency performance of the Private Rented Sector.

Legislative proposal: 

• From April 2016 landlords of residential properties will not be able to unreasonably refuse requests from their tenants for consent to energy efficiency improvements, where financial support is available, such as the Green Deal and/or the Energy Company Obligation (ECO).

• Following this, from April 2018, all private rented properties must be brought up to a minimum energy efficiency rating of ‘E’.  This provision will make it unlawful to rent out a house or business premise that does not reach this minimum standard.

• These requirements are subject to there being no upfront financial cost to landlords. Therefore, landlords will have fulfilled the requirement if they have either reached “E” or carried out the maximum package of measures funded under the Green Deal and/or ECO (even if this does not take them above a ‘F’ rating).

• The Energy Bill allows the Secretary of State to exempt certain types of properties from the Private Rented Sector requirements. These exemptions will be consulted upon as part of the secondary legislation ahead of 2016 and 2018.

Local Authorities will enforce the domestic minimum standard regulations, with the ability to impose a civil fine of up to £5000.  A Local Weights and Measures Authority will enforce the non-domestic minimum standard regulations; the level of civil penalty will be defined in secondary legislation

Background: 

The Green Deal offers the Private Rented Sector a real opportunity to improve the energy efficiency of its stock. Under the Green Deal, landlords will be able to make energy efficiency improvements at no upfront financial cost to themselves. Tenants will repay the cost of the measures through their energy bill savings, whilst enjoying warmer properties and lower energy bills. In this way the Green Deal is mutually beneficial to both landlords and tenants.

We expect landlords will respond positively to this offer, particularly as the Private Rented Sector has some of the biggest gains to be made. For example, the residential Private Rented Sector has the largest proportion of lowest-rated (EPC band G) properties of all tenures (5.8% compared with 3.4% in owner-occupier).

In the non-residential sector, approximately 62% of properties are rented. Currently around 18% of registered non-residential buildings have an EPC rating of F or G.

DECC has committed to working with the sector, in advance of regulations coming into force, to encourage take up of the Green Deal.  Landlords will be able to plan energy efficiency improvements effectively ahead of regulation, taking advantage of void periods and normal upgrade cycles.

Next Key Event:

Working with landlord organisations to unblock barriers and encourage uptake of the Green Deal ahead of the introduction of regulations in 2016 and 2018.

The proposed amendments included:

• Making it clearer that a deposit must be protected within 14 days (unlike currently where this is more akin to a period of immunity)
• Clarifying that a renewal after 2007 even though the deposit was received before TDP legislation took effect would require protection (which County Court has already ruled [Bihari v House Trader (UK ) Limited. 14 January 2010, Central London County Court])
• If a landlord takes over a tenancy (perhaps from purchasing a property for example) and the deposit is not protected, the new landlord would become liable for protection within 14 days.
• Instead of a flat fine of three times deposit regardless of circumstances, instead “The court must also order the landlord to pay to the applicant such additional sum of money as it shall consider reasonable being not less than the amount of the deposit nor more than three times the amount of the deposit within the period of 14 days …” “In determining the sum of money payable by the landlord …, the court shall have regard to all the circumstances, and in particular—(a) the landlord’s reasons for his failure to comply with his obligations …;(b) whether the landlord knew, or ought to have known, of his obligations; and(c) the length of time taken by the landlord in complying with his obligations.” “In considering the extent of the landlord’s knowledge … the court shall assume that the landlord knew, or ought to have known, of his obligations unless the contrary is proved“

However, the problem with these amendments, in particular because once 14 days has passed a fine is payable, it would also mean (as currently drafted and proposed) that a section 21 notice could NEVER be served. As Andrew Stunell pointed out:

As the Court of Appeal pointed out, under the tenancy deposit protection legislation as currently drafted, it could be argued that once a landlord has failed to protect a deposit, they would be unable to use section 21 in connection with that tenancy, even when they had subsequently protected the deposit and, where appropriate, paid the fine imposed by the court. That outcome is not the intention of the legislation, and we are therefore clear that any amendments aimed at tightening up the requirement to protect tenants within 14 days must also address that point.

Therefore, the proposed amendments in current form were withdrawn. Transcript available here

Nearly Legal has since reported (here) that Lord Best has reintroduced the same amendments into the House of Lords. We shall have to wait and see what amendments are made if any.

The changes all relate to the recent budget announcements namely the 30% reduction in LHA rates, the removal of five bedroomed properties and the capping of benefits.

There is no mention of the promise by Grant Shapps before the election to re-instate direct payments to landlords, so the consultation procedure might be a good time to bring this up (again), in particular as they have provided draft regulations.

Any views must arrive no later than 10 September 2010.

Full details are available here.

I thought it worth while to compile everything together and have a quick summary of the latest announcements.

No further red tape

Of the three million private tenants in this country, the vast majority report they are satisfied with the service they receive from their landlords.

Speaking in Parliament, Mr Shapps confirmed that with the private rented sector already governed by a well established legal framework, the Government has no plans to introduce any further regulations.

Instead, he urged councils to use the wide range of powers they already have at their disposal to tackle the minority of rogue landlords that blight some communities, provide a poor service to tenants and damage the reputation of the private rented sector.

Council powers include:

• Powers to require landlords to take action to rectify hazards in their property;
• Where landlords resist, the ability to make and charge for improvements and to prohibit use of the affected parts of the property; and
• Discretionary licensing powers to tackle areas blighted by poorly managed privately rented stock.

National Register of Landlords, regulation of letting agents and written agreements

New regulations were proposed by the previous administration in response to the Rugg Review of the Private Rented Sector, but have been judged by the new coalition to introduce too much additional red tape. These included a National Register of Landlords, regulation of letting and managing agents, and compulsory written tenancy agreements.

Grant Shapps said:

“With the vast majority of England’s three million private tenants happy with the service they receive, I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords.

“So today I make a promise to good landlords across the country: the Government has no plans to create any burdensome red tape and bureaucracy, so you are able to continue providing a service to your tenants.

“But for the bad landlords, I am putting councils on alert to use the range of powers already at their disposal to make sure tenants are properly protected.”

HMO Planning requirements

Currently planning permission is required in England when changing use from a family home (class C3) to an HMO (class C4). See this article for full information

However, Housing Minister Grant Shapps has announced that councils will have greater flexibility to manage concentrations of shared housing in their area, without tying landlords in red tape.

A high concentration of shared homes can sometimes cause problems, especially if too many properties in one area are let to short term tenants with little stake in the local community.

So changes to legislation will give councils the freedom to choose areas where landlords must submit a planning application to rent their properties to unrelated tenants – known as Houses in Multiple Occupation (HMOs).

It is estimated that as many as 8,500 planning applications could be submitted each year if every landlord looking to turn their property into a HMO is first required to seek permission – instead, councils will be able to focus their efforts in particular neighbourhoods where HMOs present a problem, while landlords of HMOs in other areas will not be tied up in red tape.

Housing Minister Grant Shapps said:

“Councils know about local issues with shared homes, and don’t need top-down rules from Whitehall to deal with problems that don’t exist. Where too many shared homes are causing problems for other residents or changing the character of a neighbourhood, councils should be able to control their spread. But I’m not going to create unnecessary costs for landlords, which puts the supply of rented homes at risk.

“That’s why I’m giving councils the power to decide whether to use the planning system to control the spread of shared housing where it is a problem.  This will give them the flexibility to make decisions that are right for their communities, rather than stifling the rental market with unnecessary costs and red tape.

“Shared homes ensure people who want to live and work in towns and cities can do so, and are vital to the economy. These changes will safeguard the supply of shared housing where it is needed without burdening landlords with cumbersome red tape – but will also hand councils the flexibility they need to tackle problems where they occur.”

Liz Peace, chief executive of the British Property Federation, said:

“Grant Shapps has taken quick and decisive action after this law was rushed through in April without sufficient clarification. At a time when council resource is scarce and housing is needed it makes no sense to be forcing thousands of local landlords and planning officers to be engaged in unnecessary bureaucracy. The Minister said last week that deregulation would characterise his approach to the private rented sector and as with other moves to cut red tape, these are further welcome steps.”

Removing this one blanket requirement follows the Government’s commitment to scrap one size fits-all solutions in the planning system that create unnecessary bureaucracy and costs for councils and businesses.

Note: At the time this article is written, planning permission is still required, so a landlord must still obtain planning permission currently. Above are only proposals at the moment.

When will HMO planning change?

It has been reported that the changes discussed above will take place on 1 October 2010, however, it is unclear where this date comes from. The Communities website says “Consultation with interested partners on this issue will ensure that the new rules work effectively for local people without placing an unnecessary burden on landlords and local planning authorities.” It seems 1 October is rather optimistic (but perfectly possible) if there is to be a consultation process before the changes.

AST Threshold change

There are no plans to change the threshold from £25,000 to £100,000 for when a tenancy is an assured [shorthold] tenancy so this will still take effect from 1 October 2010. See this article for details on this change.

Under new plans, passed by the Council’s executive, landlords in an area of Cathays ward will need to register for an additional licence if they have three or more tenants in a property.

View Cathays ward additional licencing in a larger map

Councillor Simon Pickard, Cathays, who has led the campaign for additional licensing in the ward was pleased with the decision. He said:

“This should improve standards for all tenants across Cathays as well as make landlords more responsible.

“I hope this scheme will treat all landlords equally and allow the better landlords to get an improved market for their properties.”

Landlords have to apply for an additional licence, which will include an inspection, for every property that they have at the cost of £500 per property.

Douglas Haig, chair of Cardiff Landlords Forum, was not impressed with the decision. He said:

“It’s very disappointing. It looks as though all the good landlords are going to have to stump up again, while the bad landlords will get off the hook.

“This is yet more beaucracy that increases the barrier to entry to becoming a landlord and puts people off.

“It’s likely that many landlords will choose to raise rents based on these extra costs.”

The council’s plans include a £100 discount if a landlord is accredited.

The area affected contains many student properties and Cardiff Students’ Union say their biggest issue is with housing.

Ed Dolding, welfare, campaigns and communications officer, said:

“The problems surrounding substandard private sector accommodation are the single biggest issue faced by students in Cardiff within at least the last decade.

“Additional licensing however, if fully resourced and enforced, would force all landlords to bring their properties up to the minimum standard students’ deserve.”

Dolding revealed that of the many thousands of cases dealt with the Union’s advice centre deals with some 45 per cent, are housing related.

The Council are proposing additional licensing will be self-financing and it will start from 1st July 2010.

The full report is available here

The proposals set out include:

• introducing a national register of private landlords;
• regulation of private sector letting agents and managing agents;
• written tenancy agreements;
• increase in threshold for assured short-hold tenancies; and
• improving the information base on the private rented sector in Wales.

Responses must be submitted by 14 May 2010.

Further information and the consultation paper is available here

Once finalised it will form a detailed guide to the legislation for local housing authority practitioners, private landlords and tenants. It will provide the Department’s interpretation of the provisions in Parts 2, 3 and 4 of the Act, but will not constitute a definitive legal interpretation of the legislation.  Comments are welcomed on this document by Friday 12 March, email: licensing@communities.gsi.gov.uk.

The Work and Pensions Committee have announced an inquiry into “Local Housing Allowance”  The Committee welcomes submissions, in accordance with the guidelines set out below, with reference to areas such as:

• The objectives of LHA and whether they are met in practice;

• Whether LHA is understood by claimants and landlords;

• The impact of direct payments to claimants on both claimants and landlords;

• Whether adequate and consistent mechanisms/processes are in place to help Housing Benefit Departments identify and assess vulnerable claimants;

• The boundaries and rent officer regulations which underpin  Broad Rental Market Areas (BRMAs) and their impact on LHA rates and access to affordable rental properties for claimants in all communities including access to transport and work;

• Whether LHA incentivises landlords to raise their rents to the BRMA median rate;

• The £15 excess entitlement policy and the potential impact of its removal;

• The 5 bedroom cap, and;

• Whether advice services have the capacity to adequately support LHA claimants.

The Committee seeks written contributions on this issue from interested organisations and individuals. The deadline for written evidence is Monday 16 November 2009. Oral evidence sessions will take in the autumn.

Please note

Each submission should:

• begin with a short summary in bullet point form;

• have numbered paragraphs; and

• be in Word format with no use of colour/logos.

A copy of the submission should be sent by e-mail to workpencom@parliament.uk and marked ‘Local Housing Allowance’.  If you do not have access to email, a paper copy should be sent to:

Work and Pensions Select Committee, House of Commons, 7 Millbank, London, SW1P 3JA.

It would be helpful, for Data Protection purposes, if individuals wishing to submit written evidence send their contact details separately in a covering letter. You should be aware that there may be circumstances in which the House of Commons will be required to communicate information to third parties on request, in order to comply with its obligations under the Freedom of Information Act 2000.

A guide for written submissions to Select Committees may be found on the parliamentary website at: http://www.parliament.uk/commons/selcom/witguide.htm

Please also note that:

• Material already published elsewhere should not form the basis of a submission, but may be referred to within a proposed memorandum, in which case a hard copy of the published work should be included.

• Memoranda submitted must be kept confidential until published by the Committee, unless specifically authorised.

• Once submitted, evidence is the property of the Committee. The Committee normally, though not always, chooses to make public the written evidence it receives, by publishing it on the internet (where it will be searchable), by printing it or by making it available through the Parliamentary Record Office.  If there is any information you believe to be sensitive you should highlight it and explain what harm you believe would result from its disclosure. The Committee will take this into account in deciding whether to publish or further disclose the evidence.

Click here to for the consultation document from communities website