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Anti-Money Laundering Regulations for Landlords

Anti-Money Laundering Regulations for Landlords

All letting agents and potentially, therefore, Landlords if they let directly, will need to comply with Anti-Money Laundering Regulations.

What is Money Laundering?

Money Laundering is a way by which criminals disguise the source and ownership of their money in an attempt to make the money lose its criminal identity and appear as though it has originated from a legitimate source.

anti money laundering

Customer Due Diligence

For landlords using an agent to let their property then it is the agent’s responsibility to ensure they ‘know their customer’, and therefore should be able to demonstrate Customer Due Diligence

The leading membership body for property agents, Propertymark believes “it is best practice for all letting agents, regardless of whether they fall under the definition of businesses with HMRC for AML supervision to carry out CDD on all their customers”. So even if you do not meet the criteria, it is best practice to:

  • take appropriate steps to identify and assess risks of money laundering and terrorist financing
  • establish an up-to-date written risk assessment and a written policy on how to manage the risk
  • appoint a nominated officer – Money Laundering Reporting Officer (MLRO) – who will be responsible for the letting agency complying with the Money Laundering Regulations
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Smoke and Carbon Monoxide Alarm Regulations

Smoke and Carbon Monoxide Alarm Regulations

Although the Smoke and Carbon Monoxide Alarm (England) Regulations 2015 came into force on 1 October 2015, the Smoke and Carbon Monoxide Alarm (Amendment) Regulations 2022 will come into force on 1 October 2022. 

It is important to note that there will be no transitional period after 1 October 2022 and the local authorities can impose a fine of up to £5,000 if a landlord fails to comply with a remedial notice.

What do the new Regulations mean?

In brief, all landlords must now ensure

  • that a carbon monoxide alarm is provided on each storey of their homes where there is a room used as living accommodation
  • that a carbon monoxide alarm in any room used as living accommodation which contains a fixed combustion appliance, this does not include gas cookers. It should be stated that this has been a legal requirement in the private rented sector since 2015
  • that smoke alarms and carbon monoxide alarms are repaired or replaced once they are informed and the alarms are found to be faulty. 
smoke alram

Are the tenants responsible for anything?

Landlords will be responsible for repairing or replacing any faulty alarms however if the tenant finds that their smoke alarms and carbon monoxide alarms are not in working order during the tenancy because of the batteries, then they are advised to arrange for the replacement of the batteries.

If the alarms do not work after replacing the batteries, or if tenants are unable to replace the batteries themselves, then they should report this to the landlord.

Landlords should also consider providing their tenants with instructions on how and how often to test the alarms to make sure they are in working order.

Which tenancies are exempt from these regulations?

  • shared accommodation with a landlord or landlord’s family
  • long leases
  • student halls of residence
  • hotels and refuges
  • care homes
  • hospitals and hospices
  • low-cost ownership homes
  • other accommodation relating to health care provision
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Redress scheme update for private landlords

Redress scheme update for private landlords

A redress scheme is an independent body set up to resolve complaints made by consumers against a member of the scheme. From 1 October 2008, every person in England who engages in estate agency work (property managers and letting agents) must be a member of an independent approved redress scheme. Private landlords can also join a redress scheme should they wish to do so, however, this is not a legal requirement.

There are only three redress schemes that an agent can join. They are:

How does it work?

The scheme allows consumers to escalate a complaint they have against a member of the scheme. The main aim is to resolve or settle unresolved complaints from consumers who have suffered a loss as a result of the actions of the member of the scheme. Redress schemes can order their members to pay compensation, with the threat of expulsion if the compensation is not paid.

What is the update for Private Landlords?

In January 2019 the Communities Secretary announced that all private landlords would be legally required to join a ‘housing redress scheme’ but since then there has been no sign of detailed proposals, however, in January 2020, the Government confirmed that leaseholders would be benefitting from a redress scheme, and as recently as March 2021 the current Housing Secretary, Robert Jenrick, stated in a speech to the National Housing Federation Summit that “tenants should be able to seek redress in a reasonable time without an uphill struggle and know that they will be heard”.

To this end, they have partnered up with the Property Redress Scheme and more recently The Dispute Service to set up a pilot scheme for their members. The scheme which will be free to NRLA members will provide a route for tenants to have their unresolved complaints dealt with by an independent third party in a confidential and non-confrontational process.

How can Property and Homes Management help Private Landlords with the scheme?

Our platform is all about helping landlord manage their properties more efficiently when it comes to repair and maintenance issues. By using our self-management service, landlords are able to act quickly when dealing with repair requests from their tenants, which in turn will help to reduce the need for the tenants to make complaints.   

By also keeping a track of the repair logs, a landlord can use our service to show a clear history of their dealings with tenant repair requests.

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Energy performance certificate updates for landlords

Energy performance certificate updates for landlords

Landlords renting their property in the UK are expected to have an energy performance certificate (EPC), which confirms how energy-efficient the property is.

What is an Energy Performance Certificate?

An EPC gives detailed information about your property’s energy efficiency and carbon dioxide emissions. They were first introduced in England and Wales in 2007 and they are valid for 10 years, so depending on when you bought the property, you may still have a valid EPC.

An assessor will carry out a full inspection and the property will be given an energy-efficiency grade between A and G, with A being the best (he most energy-efficient) and G being the worst (least efficient). Click here to view an EPC sample.

Your EPC will also come with a recommendation report containing advice and improvements that will make your property more energy-efficient.

As a landlord, you have a legal responsibility to carry out the changes suggested in your EPC report and you may spend up to a maximum of £3,500 on these energy efficiency improvements, including any funding or grants given by the government, local authorities or energy companies.

If your suggested improvements exceed £3,500, you can apply for a high-cost exemption via the PRS Exemptions Register.

What are the current EPC requirements?

The Minimum Energy Efficiency Standard regulations set a minimum energy efficiency standard of Energy Performance Rating E for domestic private rented properties in England and Wales however the Government has committed to upgrading as many private rented sector homes as possible to an EPC Band C by 2030, where practical, cost-effective and affordable.  

When do I need to renew my EPC?

If an EPC expires after the 10-year period, landlords are not automatically required to get a new one unless you intend to let to a new tenant, or you wish to sell the property. Remember, you are legally required to provide your tenant with a copy of the EPC.

What are the new EPC regulations for landlords in 2021?

So in 2021, changes to the Minimum Energy Efficiency Standards were announced that will affect landlords and rentals from 2025.

The Government’s preferred policy scenario which is currently under consultation for improving the energy performance of privately rented homes comprises of four elements:

  • Raising the energy performance standard to an EPC energy efficiency rating of Band C;
  • A phased trajectory for achieving the improvements for new tenancies from 2025 and all tenancies from 2028;
  • Increasing the maximum investment amount, resulting in an average per-property spend of £4,700 under a £10,000 cap
  • Introducing a ‘fabric first’ approach to energy performance improvements.

The findings of the Government’s consultation are expected to be published in 2022.

energy performance certificate

How can landlords prepare for the new 2025 EPC regulations?

The government have recommended a “fabric first” approach, which includes covering a wall, loft and floor insulation. The installation of a smart meter is also recommended.  It is important to note that energy performance investment is currently capped at £3,500 for landlords, but as the higher EPC rating will require a greater investment, the cap will be raised to £10,000.

The government estimate that on average the improvement needed to reach an EPC rating of “C” will cost landlords around £4,700.

As you can imagine, achieving an EPC rating of ‘C’ will be more difficult than an ‘E’, especially if you have a property, so landlords are encouraged to apply for the Green Homes Grant where possible.

What happens if I don’t have an EPC?

You may be fined up to £5,000 by your local authorities if you are found to have no EPC, however, when the regulations are updated in 2025, the penalty for not having a valid EPC of ‘C’ or above will be raised to £30,000.

Also, remember that EPC requirements aren’t the only announcement for landlords in 2021 as mandatory electrical safety inspections came into force in April. Click here to read about these changes.

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Tenancy Deposit Protection – Which is right for you?

Tenancy Deposit Protection – Which is right for you?

Since the Housing Act came into effect in 2004, as a landlord, it has been a legal requirement to put your tenants’ deposit into a government-approved tenancy deposit scheme if you rent your home on an assured shorthold tenancy that started after 6 April 2007. In England and Wales your deposit can be registered with:

The schemes are designed to keep the tenant’s money safe and to help make sure they get back what they are owed at the end of your tenancy. There are two types of schemes offered by the government-approved providers, insured and custodial.

Custodial or Insured, which option is best for you?

The custodial deposit protection schemes are ideal for landlords who don’t want to hold the deposit themselves and is usually free for landlords to join and use.

Custodial scheme

A custodial scheme protects a tenant’s deposit because:

  • the scheme administrator holds the deposit until it is required to be paid back
  • the deposit is safe if the landlord or their letting agent goes out of business

Insured deposit protection scheme

The insured deposit protection scheme is completely free to join. As a landlord, you pay a small fee to protect each deposit, which means you can keep your deposit in your bank account for the duration of the tenancy, keeping the accrued interest and at the end of the tenancy, you as the landlord would administer the repayment with the tenant. If the tenant disputes any deductions, the protection schemes you joined would provide a free dispute resolution service.

 

 Custodial

 Insured

Deposit held by

Scheme provider

Landlord

Cost

Free

Small fee

Landlord/Agent must provide prescribed information

Yes

Yes

Can return the agreed deposit without involved scheme

No

Yes

Must involve scheme with disputes

Yes

Yes

Free alternative dispute resolution

Yes

Yes

Dispute decision is final

Yes

Yes

How much should the deposit be?

The tenancy deposit will usually be the same amount as 4 or 5 weeks’ rent as it is now illegal for landlords to force tenants to pay a deposit of more than 5 weeks’ rent (or 6 weeks’ rent if the annual rent is more than £50,000).

It’s all about timing

Landlords or letting agents must put the deposit in the scheme within 30 days of getting it and then provide the tenant with the ‘prescribed information’ which includes details about the property and your deposit. Once you have registered with a scheme will give you the option to print out the ‘prescribed information’. Landlords cannot evict tenants with a section 21 notice if they haven’t given their tenants this information.

At the end of the tenancy

Landlords must return a tenant’s deposit within 10 days of both agreeing how much will be paid back after you have dealt with any issues that may require a deduction from the rent (i.e. unpaid rent, damage to the property etc.).

If the tenants dispute the amount to be paid back then the deposit will be protected in the Tenancy Deposit Protection scheme until the issue is sorted out.

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Are right to rent checks a legal requirement?

Are right to rent checks a legal requirement?

So what are right to rent checks and why should you even care?

The right to rent checks relates to a person’s immigration status. So this is when a prospective tenant(s) of a rental property shows their identity documents to a landlord or letting agent. The landlord/letting agent must take a copy of the documents seen and record that the check has been completed.

At the start

Before the start of a new tenancy, a landlord/letting agent must check all tenants aged 18 and over, even if:

  • they are not named on the tenancy agreement
  • there’s no tenancy agreement
  • the tenancy agreement is not in writing

Children under the age of 18 are exempt from the checks, but landlords/letting agents may need to verify their age.

right to rent

Immigration status

Depending on the tenant(s) immigration status and which type of leave to enter or remain in the UK they have, people can have:

1. An unlimited right to rent

  • a British or Irish citizen
  • a Commonwealth Citizen with right of abode in the UK
  • a person with indefinite leave to remain (ILR) in the UK, including settled status granted under the EU Settlement Scheme
  • a person with no time limit on their stay in the UK
  • After 30 June 2021 EU, EEA and Swiss nationals and their family members no longer have an unlimited right to rent unless they meet one of the conditions listed above.

2.A time-limited right to rent

  • they have been granted leave to enter or remain in the UK for a limited period – this applies regardless of the reason for granting the leave
  • they have been granted a time-limited permission to rent by the Home Office.

3.No right to rent

  • they do not have valid leave to enter or remain in the UK, and have not been granted discretionary permission to rent by the Home Office.

Why do you have to carry out these checks?

The Immigration Act 2014 imposed on all landlords in England (including lodger landlords) the obligation to find out whether the proposed occupants have a ‘right to rent’ property in the UK.
The need to carry the checks out in person was suspended at the beginning of the coronavirus pandemic, although landlords with properties in England must still perform Right to Rent checks online.

The temporary adjustments to right to rent checks due to COVID-19 will end on 5 April 2022 (inclusive). New guidance will be issued prior to 6 April 2022.

What are the landlord’s/agent’s responsibilities?

The landlord/agent must:

  • Check the adult tenant(s) who will live in the property as their only or main home
  • Ask the tenant(s) for the original documents that show they have the right to be in the UK
  • Check the original documents with the tenant(s) physically present and ensure they are valid
  • Make copies of the original documents and record when the check was completed
  • Conduct follow up checks at the appropriate time
  • If follow up checks reveal that a tenant(s) in a rental property no longer has a valid ‘Right to Rent’ then the landlord/letting agent must report that person to the Home Office.

What documents are acceptable?

Acceptable documents that a tenant(s) can use to demonstrate their identity and Right to Rent are dependent on their nationality. For example, a valid passport that shows a right to reside in the UK lawfully.

Follow-up checks on time-limited right to rent

Where accommodation is let to, or occupied by, a tenant(s) with a time-limited right to rent, a follow-up check must be carried out before the end of the ‘eligibility period’, which is the latest date of:

  • 12 months after the previous check
  • when the tenant(s) leave to enter or remain in the UK expires
  • the expiry of an immigration document
right to rent

Failure to conduct right to rent checks

Failure to conduct the checks and the subsequent provision of accommodation to a person with no right to rent may lead to a civil or criminal penalty.

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