by Jen Lemen
Hot Topic Highlight - Residential Agency Update (February 2019)
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This week, we will be looking at three key proposals which will affect residential agency during 2019. Make sure you are aware of these if you are sitting your RICS APC or AssocRICS assessment this Spring.
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- Government commitment to introduce 5 yearly mandatory electrical safety checks
- Proposals to require residential landlords to join a redress scheme
- Proposals for reservation agreements to be brought into the transactional agency process
We will look at each of these in more detail below.
1. Electrical safety checks
At present, landlords have the following responsibilities in relation to electrical safety:
- Electrical installations in rented property must be safe when tenants move in and kept in a safe condition during the duration of any tenancy agreement.
- 5 yearly periodic inspections of electrical installations are required for Houses in Multiple Occupation (HMOs). Read more about changes to HMO licensing in our recent blog.
- Electrical appliances must be safe and have at least the CE marking
However, at present, periodic inspections of electrical installations are not required for rented property which does not fall under the definition of a HMO.
Due to the increasing size of the private rented sector, which now accounts for roughly 20% of all households, the Government carried out consultation on electrical safety standards.
The outcome of this will be the introduction of 5 yearly mandatory checks 'as soon as parliamentary time allows', for all private rented property. Landlords will also need to ensure that the inspector or tester they instruct to carry out the checks are competent to do so, e.g. by being part of a competent person scheme or signing a checklist to certify their competence.
A landlord who is in breach of the proposed rules may be liable for a fine of up to £30,000 or a banning order for repeat or serious offences.
2. Redress schemes
In January 2019, the Secretary of State for Housing, Communities and Local Government announced proposals to require landlords of private rented property to join a redress scheme.
At present, only letting and property management agents are required to be part of a redress scheme.
The proposed redress mechanism will be through the Housing Complaints Resolution Service. This is proposed to provide recourse for both private tenants and homeowners.
If a landlord does not comply with the proposed requirements, they may face a £5,000 fine.
3. Reservation agreements
The Government is currently considering ways to speed up and improve the process of buying and selling residential property. A key aim is to try to reduce the amount of sales that fall through during the exchange and completion process.
The primary way they are looking to do this is through a 'model' two page reservation agreement. This follows a Department for Business, Innovation and Skills survey which found that 50% of buyers and 70% of sellers would be happy to enter a reservation agreement to reduce the risk of a sale falling through.
The Government are looking at the specifics of what a reservation agreement might include, for example the amount of the reservation fee and in what circumstances a consumer may be able to pull out without paying a penalty, e.g. suffering a bereavement or being made redundant.
Formal proposals are expected to be published later in 2019.
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Stay tuned for our next blog post to help build a better you
N.b. nothing in this article constitutes legal or financial advice.