Pre-Tenancy Requirements - Compliance Checklist

At Home Made, while we’re certain that our clients take their duty of care to their tenants seriously, we also understand that it can be difficult to keep up with the evolving regulatory landscape as a residential landlord. This is particularly true in London where, in addition to the prevailing national legislative requirements, each individual borough enforces its own set of regulatory imperatives. Matters are often further complicated by agents who fail to distinguish between internal process and regulatory requirement when guiding their clients through tenancy progression.

To that end, we’ve compiled this simple guide in order to demystify your compliance obligations and ensure that your property is ready for the start of your tenancy. We know that you’re a great landlord, so let’s make sure you have everything you need to prove it. The requirements are:

  • EPC
  • Gas Safety Certificate
  • Deposit Registration
  • Smoke and Carbon Monoxide Alarm Installation
  • Furniture Fire Safety
  • Licensing

EPC

An Energy Performance Certificate, or EPC, is a document which provides a general overview of the energy efficiency of a property, the average annual cost of its utility bills, and a series of recommendations for remedial measures that may improve the property’s energy efficiency. Much like the multi-coloured energy labels on new appliances, properties are rated on a scale from A-G, with A being the most efficient. Energy performance assessments may only be carried out by an accredited assessor, and once a certificate has been issued it will be valid for 10 years.

Many landlords operate under the misconception that an EPC is only required for marketing purposes. This is absolutely not the case – it is a regulatory requirement that any property marketed for let must have a valid EPC at grade E or above. It is essential to commission an EPC prior to advertising a property, and you must undertake every reasonable effort to acquire a valid certificate within the 28-day grace period permitted after your property has gone live on the market. All property listings must contain the first page of the EPC, and tenants must be provided with a copy of the certificate before the commencement of the tenancy.

It is easy to see how confusion arises, as our proprietary research indicates that 50% of property listings on Rightmove do not show the correct EPC information even after the expiration of the marketing grace period. Such poor regulation within the traditional industry leaves landlords and tenants exposed and perpetuates uncertainty with regards to compliance.

There are serious consequences for any landlord who fails to provide the correct EPC documentation to tenants prior to the commencement of a tenancy:

-          A Section 21 notice to evict tenants from the property will be invalidated (even where an EPC was provided later).

-          Fines of up to £5000 for renting a property without an EPC, or for renting a property that does not meet minimum energy efficiency standards.

-          The relevant enforcement authority can ‘name and shame’ landlords by publishing details of the breach and any penalties imposed.

Gas Safety Certificate

All landlords must commission an annual gas safety inspection with an accredited supplier listed on the national Gas Safe Register. The engineer will attend the property and inspect every appliance to ensure that it is burning correctly, suitable for the room it is located in, adequately ventilated, physically stable, and that all flues and chimneys are in good working order.

Following completion of the gas safety inspection, you must ensure that current tenants are provided with a valid gas safety certificate within 28 days following the expiration of the previous certificate. Any new tenants should be provided with a valid gas safety certificate prior to the commencement of their tenancy.

A gas safety certificate must include the following vital information:

-          The address of the property where the inspection was carried out.

-          The landlord’s name and address (or their agent where applicable).

-          The date on which the check was completed.

-          The name, signature, and gas safety registration number of the engineer who was commission to carry out the inspection.

-          A description of each gas appliance/flue and its location in the property.

-          Any safety defects identified and the remedial action required to correct the problem.

-          A confirmatory summary of the results of each operational safety check carried out during the inspection.

There are serious consequences for failure to comply with gas safety legislation:

-          A Section 21 notice to regain vacant possession the property will be invalidated.

-          A potential fine of up to £6000.

-          Any insurance policy taken out on the property or its contents may be invalidated.

-          A prison sentence of up to 6 months. See hereand herefor two example cases.

-          A landlord can be charged with manslaughter if a tenant dies due to faulty gas appliances. Though unusual, it is not unprecedented.

Tenant safety should be of paramount important to all landlords, which is why penalties for ignoring gas safety obligations are particularly severe. Keep up to date with your annual gas safety requirements to protect your tenants’ good health and your peace of mind.

Deposit Registration

All landlords renting a property on an assured shorthold tenancy must register deposits with one of the three government-backed tenancy deposit schemes. The approved schemes are:

-          Tenancy Deposit Scheme

-          Deposit Protection Service

-          MyDeposits

Each scheme offers landlords two options: ‘Custodial’ and ‘insured’. In a custodial arrangement, the deposit scheme will hold the deposit directly and protect it for free. Under an insured scheme, the landlord (or agent) holds the deposit in their own bank account and pays the protection scheme to insure it.

It is essential that tenancy deposits are registered within 30 days following the receipt of the funds from the tenant, otherwise the scheme will not protect the funds. Within 30 days of receiving the deposit, each scheme requires you to provide tenants with the following documents:

-          The Prescribed Information.

-          A copy of the Deposit Protection Certificate.

-          The deposit protection scheme leaflet.

These documents confirm all of the relevant details pertaining to the deposit, explain why part or all of the deposit would be retained at the end of the tenancy, advise tenants how to apply to return their deposit at the end of the tenancy, and inform tenants how to proceed if there is a dispute over the amount of the deposit to be returned at the end of the tenancy.

Landlords who fail to protect the tenancy deposit with one of the three government-backed schemes could face significant penalties for their negligence:

-          A Section 21 notice to regain vacant possession of the property could be invalidated.

-          A court may order the landlord to pay tenants up to three times the amount of the deposit within 14 days. This is equivalent to a loss of 15 weeks’ rent.

For further information regarding the rules and regulations governing tenancy deposits visit the government housing and local services guideline for landlords.

Smoke & Carbon Monoxide Alarm Installation

In order to ensure compliance with the relevant regulation, private rented sector landlords must ensure that rental accommodation is equipped with the following:

-          At least one smoke alarm installed on every storey of the rental property.

-          A carbon monoxide detector in any room which contains a solid fuel burning appliance (e.g. a wood-burning stove or coal fire).

Once the appropriate hardware is installed, it is your responsibility as a landlord to ensure that all alarms are in good working order at the start of each new tenancy. Following initial checks at the start of the tenancy, tenants must take responsibility for their own safety and complete regular tests of all alarms as required.

Though bare minimum compliance standards do not compel landlords to install carbon monoxide detectors unless the above applies it is best practice to ensure that one is fitted anyway – particularly if there are gas appliances in the property. Tenant welfare should be a top priority for all reputable landlords and doing everything in your ability to provide tenants with safe accommodation will ensure that you have the best possible relationship throughout the tenancy.

Regulatory enforcement is the responsibility of the local authority. If the enforcing agent has reasonable grounds to suspect non-compliance, they will issue a remedial notice requiring the landlord to fit and test alarms with 28 days. If the landlord fails to act within the 28 days following the order, the local authority can levy a civil penalty of up to £5000.

Furniture and Furnishings Fire Safety

It is the landlord’s responsibility to ensure that all furniture provided in their rental property is compliant with the Furniture and Furnishings (Fire Safety) Regulations 1988. The regulations set the minimum standards of fire resistance required for domestic upholstered furniture and other upholstered products. Furniture and upholstery covered by the regulation includes:

-          Permanent covers for furniture, covers for non-visible furniture, and loose and stretch covers for furniture.

-          Beds of any size, including the mattress and headboard.

-          Pillows, scatter cushions, and seat pads.

-          Sofa beds, futons, and similar convertible furniture.

-          Nursery furniture.

The regulations do not apply to bedding (i.e duvets, linens, pillowcases, mattress protectors, etc), curtains, or carpet. Furniture produced prior to 1950 is also exempt. Furniture which complies with the legislation should display a permanent label indicating the ignition resistance of the item of the furniture. Examples can be found below:

It is the landlord’s responsibility to ensure that all furniture provided in their rental property is compliant with the Furniture and Furnishings (Fire Safety) Regulations 1988. The regulations set the minimum standards of fire resistance required for domestic upholstered furniture and other upholstered products. Furniture and upholstery covered by the regulation includes:

-          Permanent covers for furniture, covers for non-visible furniture, and loose and stretch covers for furniture.

-          Beds of any size, including the mattress and headboard.

-          Pillows, scatter cushions, and seat pads.

-          Sofa beds, futons, and similar convertible furniture.

-          Nursery furniture.

The regulations do not apply to bedding (i.e duvets, linens, pillowcases, mattress protectors, etc), curtains, or carpet. Furniture produced prior to 1950 is also exempt. Furniture which complies with the legislation should display a permanent label indicating the ignition resistance of the item of the furniture. Examples can be found below:It is the landlord’s responsibility to ensure that all furniture provided in their rental property is compliant with the Furniture and Furnishings (Fire Safety) Regulations 1988. The regulations set the minimum standards of fire resistance required for domestic upholstered furniture and other upholstered products. Furniture and upholstery covered by the regulation includes:

-          Permanent covers for furniture, covers for non-visible furniture, and loose and stretch covers for furniture.

-          Beds of any size, including the mattress and headboard.

-          Pillows, scatter cushions, and seat pads.

-          Sofa beds, futons, and similar convertible furniture.

-          Nursery furniture.

The regulations do not apply to bedding (i.e duvets, linens, pillowcases, mattress protectors, etc), curtains, or carpet. Furniture produced prior to 1950 is also exempt. Furniture which complies with the legislation should display a permanent label indicating the ignition resistance of the item of the furniture. Examples can be found below:

Regulations are enforced by the local Trading Standards Office and penalties for non-compliance can be severe. Landlords can face a maximum fine of £5000, or up to six months in prison for the most serious breaches.

Licensing

Since 2006, the government has operated a mandatory licensing scheme applicable to all rental houses in multiple occupation (HMOs). HMOs are defined as properties occupied by five or more persons forming two or more households, where at least one tenant pays rent. Families are exempt from regulation, as a household is defined as occupiers who are immediately related.

Student accommodation is a common example, but occasionally professional sharers may band together to form a composite household governed by mandatory licensing. HMO licensing applies to the following housing categories:

-          Houses with shared basic facilities (i.e a bathroom or kitchen).

-          Self-contained flats where some basic facilities are in shared use.

-          Converted buildings comprising a mixture of self-contained and non self-contained residential units.

You must have an HMO licence if you’re renting out a property which meets the above criteria. A licences are valid for 5 years and a separate licence is required for each HMO you run as a landlord. You must apply for your licence with the local authority and ensure that you meet the following conditions:

-          Your property is suitable for the number of occupants included in the tenancy.

-          You must demonstrate that you (or the managing agent) are considered ‘fit and proper.’ This means that you have no criminal record and no recorded breaches of laws or codes of practice governing landlord conduct.

-          Smoke and carbon monoxide detectors are installed and maintained.

-          You can provide a valid gas safety certificate (updated certificates must also be sent to the council every year).

-          You can provide safety certificates for all electrical appliances.

Your local authority may choose to impose additional conditions at their discretion. The average cost of a licence is £500 for 5 years, though this will vary according to local authority.

Licensing is a frequent source of confusion for landlords, particularly those renting properties for the first time. It can be particularly difficult if you let property in a borough governed by obscure and ill-publicised additional licensing requirements. For instance, the borough of Camden operates an additional licensing scheme requiring landlords to purchase an HMO licence if they let to three or more tenants forming two households. The borough of Newham operates an additional scheme requiring all private landlords to purchase a license to let any property in the borough. The best thing to do is to contact your local authority directly to ask them about any additional licensing schemes that may be in operation regardless of the number of tenants you intend to let to.

There are serious consequences for failure to comply with licensing regulation. As per the government website, local authorities have the discretionary power to issue an unlimited fine to landlords renting out an HMO.

In addition to a hefty fine, tenants living in a property owned by a convicted landlord can petition for a rent repayment order that refunds any payments they have made in the preceding 12 months. In one infamous example, a landlord in Leeds was ordered in court to repay £15,000 to his tenants after it transpired that he had failed to acquire an HMO licence.

HMO licences exist to help local authorities maintain standards in properties housing multiple occupants, and their requirements should not prove burdensome to any reputable landlord who follows the existing rules governing all types of rental property. The extra rental yield should also more than justify the additional upfront cost to ensure that you have the proper documentation. However, it is essential that you touch base with your local authority to make sure that you are fully compliant with all relevant local schemes. The penalties are steep, and we don’t want you to be left out of pocked due to an honest mistake.

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Jess Brookes

Operations Associate at Home Made