Residential Newsletter: Spring 2019
Meet the Team: Rebecca Maeers
- How long have you worked at Freeths and why did you decide to join this firm?
Five and a half years. I previously worked at a leading Derby firm but jumped at the chance to join Freeths purely because of the reputation.
- Why did you choose to specialise in Residential Conveyancing?
It wasn’t an area that I was initially interested in when studying law but I did a seat in residential property as a trainee and really enjoyed it.
- What has been the most complicated transaction you’ve been involved in during your career?
The most recent one has to be the sale of a part of property with planning consent to build a new dwelling that was accessed, together with other properties, via a private road. We needed to deal with the amendment of the rights of way, etc that were granted in various old conveyances and join in the neighbours. There was also the added complexity of potential breaches of covenant to resolve.
- If you could have a meal with anyone, alive or dead, who would it be?
Andrew Nicholson – the eventer not basketball player(!)
- Tell us an interesting fact about yourself
I have a beautiful horse that I compete at grassroots level eventing. We qualified for and completed the Grassroots championships held at Badminton Horse Trials in 2016 and were placed 4th individually and 2nd individually at the British Riding Clubs championships in dressage and eventing respectively last year.
Residential Letting Fees – A New Era Has Arrived!
Representing 20% of all households in England (including a quarter of London’s population), the private rented sector forms a substantial part of our housing market. The Government’s commitment to ensuring that sector has security and stability has taken a massive step forward with the introduction of the Tenants Fees Act 2019 (TFA). The TFA applies to assured shorthold tenancies (ASTs) (with the exception of social housing and long leases), student leases and most licences to occupy. New tenancies coming into effect from 1 June 2019 are covered by the TFA. It will extend to all existing tenancies from 1 June 2020.
To remove potential loopholes that would undermine the aim of the legislation, the TFA prohibits all payments tenants pay to landlords and letting agents, except those defined as “permitted payments”. As one would expect, rent is a permitted payment but a tenant cannot be required to enter in to an arrangement that “front loads” the rent at the start of the tenancy.
Some other permitted payments are subject to caps. For example, refundable tenancy deposits, to compensate a landlord for breaches of the tenancy, are capped at five or six weeks’ rent depending on whether the rent is more or less than £50,000 per annum. Protection of these deposits in a regulated “client money protection scheme” is still required. Capped at one weeks’ rent, holding deposits must be returned within 7 days of a tenancy being granted unless it is set off against the rent or tenancy deposit. In the event of a tenancy not being granted, the holding deposit must be returned within a defined period unless, for example, the prospective tenant fails “Right to Rent” checks.
Landlords or letting agents can recover default payments from a tenant for replacement keys or other access related security devices or where the rent is more than 14 days late provided the tenancy agreement includes that ability. However, any payment for replacement keys/security devices exceeding the cost reasonably incurred by the landlord/letting agent in respect of the default will be “prohibited”. For late rent, the fee charged must not exceed interest on the sum due at a rate of 3% above base from the due date until payment.
On 1 April 2019, the Government produced guidance entitled “Tenant Fees Act 2019: Guidance for landlords and agents”. This publication includes numerous questions and answers enabling the reader to understand the practical implications of the TFA.
The TFA comes with “teeth”! Each request made for a prohibited payment is a breach. Usually, a breach is a civil offence carrying a fine of up to £5,000. However, if a further breach is committed within 5 years of the imposition of a financial penalty or conviction for a previous breach, this will be a criminal conviction. The penalty for a criminal office is an unlimited fine. It is also a “banning order offence” under the Housing and Planning Act 2016. Furthermore, any landlord who has not repaid a prohibited payment to an AST tenant cannot use the procedure in section 21 of the Housing Act 1988 to regain possession of their property. The ban on tenant fees is expected to have a major impact on agents who rely heavily on tenant fees as part of their income stream. Landlords and letting agents in the residential market need to ensure that new tenancies to which the TFA applies are TFA compliant. An audit of pre-existing tenancies is also crucial in the lead up to the end of the transitional period on 1 June 2020.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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