Private Landlord Legal Update
The last quarter has seen significant changes in the law relating to let dwellings
If you are a landlord letting property to farm workers, family members or professionals it is important to stay ahead of the new rules and regulations whilst managing your properties. This article summarises 4 of these changes and how they may affect you.
1. Assured Shorthold Tenancy Agreements
It is recommended that any farm worker giving occupation of a farm cottage should be granted an assured shorthold tenancy agreement (AST), to ensure no security of tenure is inadvertently given. Farm workers must be provided with prior notice of any AST to ensure it is valid.
If a landlord wants to end the tenancy at the end of a fixed term then they must serve two months’ notice on the tenant to vacate the property. From 1 October 2015 all such notices must be in a prescribed form to ensure the notice is valid.
Although George Osborne committed £700 million to flood defences in his most recent budget speech, the Environment Agency estimates that one in six homes in England are at risk of flooding. Aside from the physical damage and emotional trauma caused by such floods, if a property is at risk of flooding it may be difficult to obtain suitable insurance cover at a reasonable price, ultimately leaving the property unmortgageable and unsellable. It goes without saying that this will affect the capital value of the property.
In order to protect dwellings the Flood Re programme has been developed, aiming to ensure that dwellings at risk can obtain affordable flood insurance at a reasonable price. However, there are exceptions to the Flood Re protection. Most notably for buy to let properties where the Landlord arranges the buildings insurance for the dwelling and residential property built post 1 January 2009.
Comfortingly farmhouse dwellings and cottages are protected by the scheme even if they are included in a commercial policy. However, it is likely that if the dwelling is let under an AST the landlord will be responsible for obtaining and paying for the buildings insurance cover for that property. In that event Flood Re would not be available to you.
3. Rent Checks
The Immigration Act 2014 prohibits private landlords of residential properties from allowing certain people to occupy those properties, based on their immigration status. Landlords must check the status of prospective tenants, and other authorised occupiers, to ascertain whether those parties have the right to be in the UK (right to rent checks). If landlords fail to comply, they may be fined up to £3,000.
From 1 February 2016 this law was rolled out to all private landlords in England. Consequently, if you are granting any form of occupancy, you must carry out the right to rent checks beforehand, together with appropriate follow up checks to ensure the tenant’s status has not changed.
4. SDLT Increase on Second Homes
As of 1 April 2016 all dwellings purchased that are additional to your main residence will be charged at a higher rate of stamp duty land tax. The new charge will now stand at 3% above the SDLT rate that you would usually pay for a main residence. The 2-tiered test for whether the higher SDLT rate applies is, if at the end of the day, you own two or more residential properties and whether it will be your main place of residence.