12th January 2016
The government recently announced a number of changes that will affect landlords of residential properties. Sarah Everton, dispute resolution solicitor at Myers & Co Solicitors in Burslem, Stoke-on-Trent, outlines amendments to stamp duty which come into effect from 1 April 2016 and new rules for evicting tenants introduced from 1 October 2015.
The government has announced that higher rates of Stamp Duty Land Tax will be introduced from 1 April 2016, affecting anyone buying an additional residential property such as a second home or for buy-to-let. Landlords are advised to take legal advice as there are exemptions for corporates making significant investments in residential property. Other changes to stamp duty include:
For landlords in the private residential rental sector, having the right to regain control of your property when you need to is a vital power. Section 21 of the Housing Act 1988 allows landlords to end an assured shorthold tenancy by serving notice, without having to show any fault on the part of the tenant.
The amendments to section 21 affect three key areas:
There are also new rules requiring rent paid in advance to be repaid; and measures to stop landlords from evicting tenants who complain about the condition of the property.
Housing matters in Wales are now devolved, so these changes apply only to tenancies in England. The new rules currently affect assured shorthold tenancies granted on or after 1 October 2015, but not ‘continuation’ tenancies that arise automatically if a tenant stays on after the initial fixed term ends. Continuation tenancies will be affected from 1 October 2018. Until then, landlords will need advice on what sort of assured shorthold tenancy they are dealing with before relying on section 21.
Compliance
You cannot serve a section 21 notice unless you have given the tenant:
The landlord must also protect the tenant’s deposit in one of the official tenancy deposit protection schemes and provide the tenant with certain prescribed information. This is not new but remains a key compliance issue for landlords who want to use section 21.
A section 21 notice must now be in a prescribed form. Landlords will be pleased to hear that the rules on exactly when the notice period must end have been relaxed, which removes a key area of uncertainty.
The new rules on timing may create new traps for landlords. For example, it is no longer possible to serve a section 21 notice at the beginning of a new assured shorthold tenancy. Four months must have passed since the tenancy was granted. Where a subsequent assured shorthold tenancy has been granted, the timing of the notice is linked to the original.
Another potential trap is that once a section 21 notice has been served, the landlord now has only six months to apply for possession from the date of service of the notice to bring possession proceedings.
Landlords will need their legal advisors on board to make sure no key deadlines are missed.
The new rules mean that if the tenancy ends because of a section 21 notice, the landlord has to repay rent if the tenant:
The amount to be repaid is calculated by reference to a formula in the legislation.
The government has acted on reports that unscrupulous landlords have been using section 21 to evict tenants who complained about the state condition of the property. If a landlord fails to act on a tenant’s complaint and the local housing authority takes enforcement action, the new rules restrict the landlord’s ability to serve a section 21 notice or rely on a section 21 notice already served. Landlords will need advice on the type of complaints that are relevant and the precise rules on when a section 21 notice may be served.
The government’s aim was to improve the renting experience for tenants. Landlords now have new hoops to jump through, so they need to understand the new rules to stay in control of their property.
For advice from Myers & Co Solicitors, based in Stoke-on-Trent, Staffordshire, contact our dispute resolution specialist Sarah Everton by calling 01782 525012 or email sarah.everton@myerssolicitors.co.uk.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.
