Implications of updating an old tenancy agreement

by Readers Question

10:09 AM, 1st April 2019
About A year ago

Implications of updating an old tenancy agreement

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Implications of updating an old tenancy agreement

I would like to update all my old tenancy agreements and some of them are now 4 years old.

The deposits are protected with ‘My Deposits’ and are nominated as rolling tenancies – does writing a new contract require another deposit protection fee?

Are there any other implications I need to consider?

Many thanks

Tracey

Editors Notes:

The Deregulation Act 2015 was passed on 26 March 2015  >> https://www.property118.com/what-does-the-deregulation-act-2015-mean-for-landlords/

“What laws have changed which affect landlords?

With more and more people moving into rented accommodation, the government has put into law better protections for tenant. The law also provides landlords greater clarification on their responsibilities concerning the protection of tenant deposits.

Below are the key changes that impact landlords.

The Energy Performance Certificate (EPC)
Tenancy Deposit Protection
Additional Information Relating to Prescribed Information
The Section 21 Notice
Retaliatory Eviction

Deregulation Act 2015 tenancy deposits

The requirement to protect a tenancy deposit taken for an assured shorthold tenancy in England and Wales was introduced on 6 April 2007, following its inclusion in the Housing Act 2004.

Deposit protection legislation was introduced because the government recognised many deposits were being unfairly withheld at the end of a tenancy. So the aim behind the Tenancy Deposit Protection is to raise standards in the lettings industry and ensure tenants are treated fairly at the end of the tenancy.

The legislation covers virtually all new assured shorthold tenancy contracts used by letting agents and landlords to let a property in England and Wales.

Since the Tenancy Deposit Scheme (TDS) legislation came into force, there have been a number of cases before the courts in which the wording of the legislation has been under scrutiny. These cases include Superstrike Ltd v Rodrigues and Charalambous v Maureen Rosairie Ng.

But overall the Deregulation Act 2015 has provided much needed clarification on the steps that a landlord must take to comply with TDS legislation.
Deposits taken before 6th April 2007 and tenancies that became periodic before April 2007

Deposits don’t need to be protected if a tenancy deposit was received for a fixed term tenancy before 6th April, or if the landlord holds the deposit against a statutory periodic tenancy, which also started before April 2007.

However, if a landlord wishes to gain possession of the property under Section 21 of the Housing Act 1988, the deposit must be protected and the Prescribed Information issued to the tenant prior to serving the Section 21 notice.

Landlords will not face any financial penalties for non-protection of the deposit.
Deposits taken before 6th April 2007 and tenancies that became periodic after April 2007

Deposits taken before 6 April 2007, for tenancies that are still running and have moved onto a periodic tenancy on or after this date, now need to be protected in a Tenancy Deposit Protection scheme. If a deposit remains unprotected, the landlord could potentially face a fine.
Deposits taken on or after 6 April 2007

Landlords who took a deposit on an assured shorthold tenancy (AST) after 6th April 2007 and correctly protected and served the Prescribed Information to their tenant do not need to reissue the Prescribed Information to the tenant on future renewals of the AST, or if the AST rolls into a statutory periodic tenancy.

This is so long as the tenancy details haven’t changed (i.e. landlord, tenant and property information) and the deposit remains in the same tenancy deposit protection scheme.

Prescribed Information can include details of a person representing the landlord. The act confirms that where an agent has protected the deposit on behalf of the landlord, the agent’s contact details may be provided in place of the landlord’s.

Deregulation act 2015 section 21

On 1 October 2015 further provisions in the Deregulation Act 2015 came into force to protect tenants against unfair eviction when they have raised a legitimate complaint about the condition of their home.

The legislation also requires landlords to provide all new tenants with information about their rights and responsibilities as tenants. This information includes such detail that a landlord cannot serve a Section 21 notice unless they have complied with certain legal responsibilities.

The government also introduced a new standard form that landlords must use when evicting a tenant under the ‘no fault’ (section 21) procedure. This makes it more straightforward for landlords to evict a tenant where it is legitimate to do so.

These provisions apply to all new assured shorthold tenancies that start on or after 1 October 2015. However, as of 1 October 2018 the provisions will apply to all ASTs in existence at that time.

1. Compliance with prescribed legal requirements

A Section 21 notice may not be given if the landlord is in breach of any legislation which relates to any of the below.

The condition of dwelling houses or their common parts
The health and safety of occupiers of dwelling-houses
The energy performance of dwelling-houses.

This means all landlords must provide tenants with an EPC and a Gas Safety Certificate before the tenancy begins. If at a later date the landlord wants to serve a Section 21 notice on a tenant, he will need to prove the tenant has been provided with these two documents. If they don’t do this then the landlord wont be able to use the section 21 notice.

2. Requirement of the landlord to provide Prescribed Information

At the start of each AST, landlords are now required to provide tenants with a copy of the Department for Communities and Local Government’s booklet entitled ‘How to rent: the checklist for renting in England’.

3. Prescribed form of Section 21 notices

The new Section 21 notice combines the two previous section 21 notices into a single use notice for both fixed-term and periodic tenancies. It‘s for use with new tenancies starting after 1st of October 2015 and all tenancies (regardless of when they started) from 1st October 2018.

4. Timing and Lifespan of a Section 21 Notice

From 1st October 2015, a landlord is now no longer able to serve a Section 21 notice within the first four months of the contractual term of the tenancy. This is to stop landlords and their agents serving notice at the start of a tenancy if they want to finish it at their convenience.

A Section 21 notice now also has a lifespan. Once a Section 21 notice has been given under a fixed term AST or a periodic AST, possession proceedings must be started within 6 months of the date the notice was given. If the landlord doesn’t do this then the possession notice is invalid and a new one will be needed.”



Comments

Neil Patterson

10:12 AM, 1st April 2019
About A year ago

Dear Tracey,

You are not clear on the dates of your tenancy so I have included details of the deregulation act in my Editors Notes.

It is also not indicated why you wish to start new tenancies?

Ian Narbeth

11:48 AM, 1st April 2019
About A year ago

Tracey
This is not a complete answer but you also need to take into account the Tenant Fees Act 2019 which comes into force on June 1st 2019. https://www.gov.uk/government/publications/tenant-fees-act-2019-guidance
Among other things you cannot take more than 5 weeks' rent as a deposit, cannot charge more than 3% over Base Rate interest on late rent, cannot charge a fixed amount, say £20, for sending a late rent letter and cannot charge a fixed fee for checking in or checking out.

The consequences of getting it wrong are Draconian. You can be fined up to £5000 as a civil penalty for a first offence and up to £30,000 as a criminal penalty if there is a second offence within 5 years of the first offence. You may also be banned from being a landlord.

To give you an extreme (but not unlikely) example. Suppose your tenancy agreement is not updated but says that the interest rate for late rent is 4% pa. On a rent of £1000 per month rental the interest for late payment would be 10.96 pence per day. For 14 days' arrears the interest would be £1.53. However, the maximum allowable interest is at 3.75% pa so the interest should be only £1.44. If you demand and the tenant pays the £1.53, that additional 9p makes you liable for a fine of up to £5000 and moreover you cannot serve a s21 notice until you have repaid the 9p, even if the tenant owes you £3000 at the date of the court hearing! Do not be surprised if a well-advised tenant "invites" you to waive some or all of the £3000 arrears.

Steve Masters

13:00 PM, 1st April 2019
About A year ago

Reply to the comment left by Ian Narbeth at 01/04/2019 - 11:48
Any renewed or extended tenancies will need to be reprotected with mydeposits. See their FAQs.

There will be a one year transition period for existing tenancies after which any clauses in old tenancy agreements regarding prohibited fees will become ineffective. So in Ian's example £1.53 could still be charged in the first year, but after that only £1.44 should be charged.

Annie Landlord

13:10 PM, 1st April 2019
About A year ago

I have also wondered whether issuing new ASTs would be a good idea. Two of mine were issued several years ago by Lettings Agents I no longer use. They include clauses about fees for rent arrears and fees for sending rent arrears letters. As those clauses are not enforceable I'm wondering whether the legality of the whole AST could be questioned?

Ian Narbeth

13:17 PM, 1st April 2019
About A year ago

Reply to the comment left by Annie Landlord at 01/04/2019 - 13:10
Hi Annie
No the AST is still legal but if you forget about the Tenant Fees Act and actually charge the tenant who pays up, you are in deep trouble. The tenant may pay up because it's in the AST but finds out later and then has the whip hand. My advice is that it is best to update your documents.

Ian Narbeth

16:04 PM, 1st April 2019
About A year ago

Reply to the comment left by Steve Masters at 01/04/2019 - 13:00
Thanks Steve
The trouble with this law is that if a landlord (or the agent) makes a simple mistake (perhaps charges for 14 days interest instead of 13) the penalty is completely out of proportion. Even charging your own time at £10 per hour you probably will spend £5 of time calculating the arrears, double-checking what you can charge and sending out a demand. Hardly worth it for a few quid. I am not defending rip-off fees but the baby has been thrown out with the bathwater. The TFA 2019 is a nasty vicious Act that I fear will catch landlords out over trivial sums.

Chris Phoenix

18:32 PM, 2nd April 2019
About A year ago

I've rented a property for 14 years giving my landlady a cash deposit when I moved in. Last year she employed a Letting Agency to manage things as she lives outside the UK. I was asked to sign a new tenancy agreement despite having a rolling arrangement with the landlady. One of the forms was a deposit holding form which was dated last year. A week later I was asked to sign a sevond form as the first had incorrect deposit holding company (just one of many admin errors by the letting company) I returned the form ( signed for delivery )which I annotated to say the deposit was paid to the landlady in 2014. Now the company are saying they have no record of the form yet it was signed for as received. I also havent been given a copy of the EPC Where do I stand with reference to these admin errors also the woman from the letting agency repeatedly tells me if I move out she could increase the rent substantially which is worrying. I've waited 14 years for landlady to redecorate and have been told I can do whatever I like to make it my home I have replaced carpet and underlay in hallway living room and bedroom, painted and decorated living room and bedroom and replaced two sofas can these costs be offset against any rent increase and what is %age yearly rent increase?


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