LEGAL REGULATIONS
43GUIDE TO BUY TO LET
An Assured Shorthold tenant has
guaranteed security of tenure for a
minimum of six months, depending on
the agreed term of the tenancy as long
as the tenant is not in breach of their
contract.
Further protection for the tenant is
that when the fixed term of the tenancy
ends, an Assured Shorthold Tenancy
does not come to an end but continues
automatically on a statutory periodic
basis, unless the tenant chooses to
vacate.
To bring an Assured Shorthold Tenancy
to an end the landlord must serve a
written notice on the tenant citing
Section 21 of the Housing Act 1988
and giving not less than two months'
notice. If the tenant is in breach of the
tenancy agreement (by not paying rent,
for example) then a Notice pursuant
to Section 8 of the Act will need to be
issued citing the relevant grounds for
possession from Schedule II.
The Housing Act 1988 also created the
Assured Tenancy, which has substantially
greater security of tenure than the
Assured Shorthold Tenancy. Assured
tenants cannot have their tenancies
terminated through the operation of
Section 21 of the Act, and are effectively
tenants for life as long as they obey the
terms of their tenancy.
These tenancies are now relatively rare
and will only normally be encountered
where a tenancy has begun prior to the
introduction of the Housing Act 1996 on
28th February 1997.
Even rarer are tenancies under the
Rent Act 1977. These tenancies can
only occur if they began prior to 15th
January 1989 when the Housing Act
1988 became law. A Rent Act tenant has
security of tenure for life and, even if
they break the terms of their tenancy, the
courts are reluctant to evict them. They
are only obliged to pay a `fair rent' set
by the rent officer rather than a market
rent. These tenancies can be passed on
to spouses but, if they are passed to
children as their main residence then the
tenancy ceases to be under the Rent Act
and becomes an Assured Tenancy under
the Housing Act 1988 and the tenant can
be required to pay a full market rent.
Other obligations
Landlords owe certain obligations to
parties other than their tenants. The most
crucial (and possibly the most annoying)
is to the HMRC. In the first year that a
property is newly available for rental the
landlord must inform the Inland Revenue
by 5th October. The landlord is required
to pay tax on the net income earned
from renting a property, therefore a
landlord must request a tax return from
the HMRC and file it by the appropriate
date (30th September for calculation by
the HMRC or 31st January for self-
calculation).
Landlords may not know that certain
key expenses associated with renting
a property are tax-deductible. These
include agent's fees, expenses such
as gas safety checks, costs of some
repairs, legal and accountancy fees,
insurance premiums, and mortgage
interest payments (but not the actual
repayments). If a claim for these
expenses is not made, the HMRC will
not advise the landlord of his rights
so be aware of the deductions that
can be made. Landlords should note
that the HMRC has recently made
clear its intention to crack down on
landlords who fail to pay taxes on rental
properties.
Under the Housing Act 2004, some
landlords need a licence for their
property. This is mandatory if the house
is on three or more floors and has five
or more occupiers. Landlords who are
letting to three or more individuals who
are not members of one family should
check with their local authority, which
may have imposed additional regulations,
and ensure a licence is not required.
Failure to hold a licence is punishable by
a fine of up to �20,000 and a prohibition
against recovering possession of the
property until one is in place. Several
landlords have been prosecuted for
failure to gain a licence and have been
fined sums ranging from �5,000 to
the full �20,000. More information on
the HMO regulations can be found at
www.lacors.gov.uk/lacors/upload/13810.pdf.
From October 2008 it has also
been necessary to secure an Energy
Performance Certificate (EPC) prior to
marketing a property. It is possible to
repurpose an EPC that has previously
been used for purchasing a property for
letting purposes.
It may seem that the private landlord
is hemmed in by a huge quantity
of complex and difficult legislation.
However, sensible landlords who take
good advice from an agent who is a
member of a professional body should
never fall foul of any of the legislation
and should experience few problems in
renting their properties.
Landlords will also need to be aware
of the new Housing Health and Safety
Rating System (HHSRS) which was
introduced as part of the Housing
Act 2004. This is a fairly complex
statistical system for assessing hazards
in properties which permits Local
Authorities to require landlords to
execute improvements in those premises.
A useful introduction to the HHSRS
aimed at landlords can be found at
www.lacors.gov.uk/lacors/upload/10873.pdf.
New guidance on the appropriate fire
safety standards for rented property has
also been produced. While this is only
guidance (www.lacors.gov.uk/lacors/
ContentDetails.aspx?id=19843) and not
a legal requirement the Local Authority
will use these standards when inspecting
a property.
Finally, landlords have a general duty
under the Defective Premises Act 1972 to
ensure that the tenant and their guests
along with their personal property are
safe from harm. This means that the
landlord is liable to the tenant for any
injury or loss suffered by the tenant due
to a failure by the landlord to keep the
property in repair.
Security of tenure
It is important to realise that all tenants
have a minimum level of security of
tenure which is guaranteed by the
Protection from Eviction Act 1977. This
act states that no tenant may be evicted
from residential property without due
process of law.
Attempting to harass tenants into
departure or changing the locks is
an offence punishable by a fine or
imprisonment. This means that any tenant
who refuses to leave a property and forces
their landlord to go to court to seek an
order for eviction is not breaking the law
but merely exercising their rights.
Given that it can take as long as
three months to secure possession of a
property through the courts, potential
investment landlords need to calculate
their budgets with sufficient latitude to
allow for these delays. The courts will not
be persuaded to act more rapidly simply
because a landlord is in danger of falling
into mortgage arrears.
Other legislation adds extra security
for certain categories of tenant. The
most important is the Housing Act
1988 (as amended) which created the
Assured Shorthold Tenancy, the most
common private sector tenancy in
England and Wales.

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