Residential landlords face an unprecedented challenge when it comes to complying with their obligations. With a recent judgment relating to the legality of right to rent checks (see Right to rent and racial discrimination revisited, 16 May 2020), the introduction of new regulatory regimes, and the impact of the Covid-19 pandemic, the current landscape is challenging. We look at some of the most important obligations residential landlords owe, and how these have been altered by the pandemic.
Right to rent checks
The right to rent scheme requires all private landlords to check the immigration status of a tenant or lodger to ensure they can legally rent a residential property in England. The checks must be carried out before the start of a tenancy, on all people aged 18 or over who will live at the property as their main home, whether they are named in the tenancy agreement or not. Landlords can be fined up to £3,000 or face criminal charges for acting in contravention of the scheme.
In March last year, in R (on the application of Joint Council for the Welfare of Immigrants) v Secretary of State for the Home Department with [2019] EWHC 452 (Admin), the High Court found right to rent checks cause discrimination on grounds of race and nationality, in breach of the Human Rights Act 1998. However, in April 2020, the Court of Appeal reversed this decision ([2020] EWCA Civ 542; [2020] PLSCS 70), holding that right to rent checks are lawful under the 1998 Act. The Court of Appeal agreed that the scheme has caused some discrimination on the basis of prospective tenants’ actual or perceived nationality. However, it departed from the decision of the lower court, finding that the scheme was a “proportionate means of achieving its legitimate objective”, and was therefore justified.
The finding that the scheme has caused some discrimination is likely to have political ramifications and will inevitably lead to calls for reform. In a statement made following the judgment, home secretary Priti Patel stated that the government was “carefully reviewing and reflecting on the recommendations in the Lessons Learned Review report, including those relating to the compliant environment”. It remains to be seen what, if any, changes might be proposed for the scheme or whether a final appeal on this issue will be made to the Supreme Court.
Covid-19 has made these checks more problematic, as documents become more difficult to obtain or check in person. However, landlords still need to comply with the scheme. The Home Office suggests (for example) carrying out checks remotely, using video calls, and sending documents by e-mail.
Possession proceedings
Provisions in the Coronavirus Act 2020 aim to protect tenants from eviction during the current period of uncertainty. These provisions are in force during the “relevant period,” currently from 26 March 2020 until 30 September 2020. This period is subject to modification.
These provisions apply to a wide variety of residential tenancies and have the effect of extending the notice period that a landlord must give to a tenant before commencing possession proceedings to three months. The Act has also introduced new prescribed forms of notice for use during the relevant period.
The courts have suspended housing possession actions for a period of 90 days from 27 March 2020. As such, even possession proceedings falling outside the relevant period have been significantly affected, and there are likely to be severe delays once cases are relisted.
New electricity checks
Landlords in England also need to be aware of the new Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 which come into force on 1 June 2020. These regulations apply to most new residential tenancies from 1 July 2020, and all existing residential tenancies from 1 April 2021.
Under the regulations, landlords must have qualified persons test whether their electrical installations comply with safety standards. The first test must be carried out before a new tenancy starts, or by 1 April 2021 where the tenancy is already in place. Testing must then be repeated every five years. If the report finds that remedial works are required, the landlord has up to 28 days from the date of the inspection in order to carry out the works. Otherwise the local housing authority may carry out the works and/or the landlord could face a financial penalty of up to £30,000.
This short timeframe to carry out remedial works will put pressure on landlords and, while the impact of Covid-19 may make it more difficult for landlords to comply, the regulations will still come into full force on 1 June. The message from the legislature is therefore clear: if minimum standards cannot be met, then landlords should refrain from letting the property.
MEES compliance
Since 1 April 2018, landlords of “domestic private rented property” have been unable to grant new leases without a valid EPC rating of at least E. From and including 1 April 2020, existing lettings of sub-standard domestic private property will be prohibited.
Landlords of sub-standard properties can either make sufficient improvements to the property to improve its EPC to ensure it is no longer sub-standard or seek to rely on (by registration on the PRS Exemptions Register) a limited number of exceptions. One such exception is that all relevant energy efficiency improvements have been made to the property and it continues to be sub-standard. In such cases, landlords will be able to continue to let sub-standard property for a period of five years.
If landlords continue to let sub-standard property on or after 1 April 2020 (without registering a valid exemption), they could face enforcement action by local authorities, financial penalties, and negative publicity. It is essential that landlords review their portfolios, identify sub-standard properties and take appropriate action.
The Ministry of Housing, Community and Local Government (MHCLG) confirmed on 2 April 2020 that the MEES regulations remain in force during the disruption from Covid-19. As such, assessments must still be performed, and works (where required) must still be carried out. Landlords are advised to schedule assessments well in advance. Where possible, properties should be vacated before assessments are carried out, otherwise social distancing guidelines should be followed. While local authorities may still take enforcement action in the event of a breach, government guidance urges a pragmatic, common sense approach to enforcement during the current disruption.
Tenancy deposit schemes
Under the provisions of the Housing Act 2004, for all assured shorthold tenancies commencing after 6 April 2007, every landlord or letting agent that takes a deposit must protect the deposit with a government-backed tenancy deposit scheme. The regulations are designed to ensure good practice with regard to landlords’ treatment of their tenant deposits, and to keep any disputes out of the courts by encouraging alternative dispute resolutions.
Deposits can still be registered and released during the Covid-19 disruption, as this is largely done online.
If a landlord fails to comply with the requirements of the deposit scheme, a tenant can bring an action against the landlord and ask the court to award the tenant between one and three times the value of the deposit. Non-compliance can also affect the landlord’s ability to end a tenancy using a section 21 notice.
Gas safety checks
Landlords are required to carry out an annual gas safety check under the Gas Safety (Installation and Use) Regulations 1998. Many will find these regulations difficult to comply with during the Covid-19 disruption, with tenants self-isolating and registered engineers being unavailable. Guidance from the Health and Safety Executive suggests that in the event landlords find it impossible to arrange an annual gas safety check, they must be able to demonstrate that they took all reasonable steps to comply, including records of communication with the tenant and details of the engineer’s attempts to gain access.
Repair obligations
Residential landlords’ statutory repair obligations have not been affected by the 2020 Act. Guidance from the MHCLG advises landlords to take all reasonable steps to carry out essential repair work. If this proves impossible, the landlord should document why the work cannot be carried out, and it should be done as soon as it becomes possible to do so.
Works required to satisfy an improvement notice served by a local authority must still be done. Landlords should take all steps to carry out such works, and document any delays with reasons set out in writing. If appropriate, landlords may wish to communicate any delays to the local authority.
The pandemic has created a situation which is both unparalleled and fast-moving. Welcome measures to allow people to move home and view properties – subject to social distancing requirements – have been announced. Estate agents, removals firms and conveyancers can reopen, all of which is an encouraging sign for the residential market as a whole.
Jane Dockeray is a knowledge counsel, Ingrid Stables is a senior knowledge lawyer, and Conor Johnston is a trainee solicitor at Hogan Lovells International LLP
