Guidance for the Private Rented Sector & Leasehold Reform on Ground Rent

1. Leasehold Reform (Ground Rent) Act 2022

The Leasehold Reform (Ground Rent) Act 2022 came into force on 30 June 2022 and is the first major piece of legislation to reform the leasehold system in a generation. It means new regulated leaseholders won’t face demands for ground rent and are entitled to refuse payment on any demand for any prohibited rent.

Generally, most residential long leases (over 21 years) of a single dwelling, which are not excepted leases, granted after 30 June 2022 will qualify for protections under the Act.

Ground rent is a property industry term given to a rent that is usually paid annually by leaseholders to their landlord on top of the property purchase price and service charges. There is no clear service provided by the landlords in return for the payment of ground rent and there is no obligation for landlords to charge a ground rent.

What changes does the Act introduce?

• That if any ground rent is demanded as part of a new regulated lease, it cannot be for more than one peppercorn per year (zero financial value).
• That a landlord cannot charge an administration fee for collecting a peppercorn rent. For further guidance go to Gov.uk 

Financial Penalty Enforcement Policy

To access the Financial Penalty Enforcement Policy related to the enforcement of the legislation go to Policy (pdf 460 kb)

2. Redress Schemes

Businesses must join a redress scheme if they are:

• an estate agent dealing with residential properties in the UK
• a letting agent or property manager in England or Wales

If a consumer has a complaint about your service that cannot be resolved between yourselves, they can complain to the scheme. The approved redress schemes are: 

• The Property Ombudsman  
• Property Redress Scheme

Individuals and businesses can be fined up to £5000 and have their licence revoked if they do not join a redress scheme.

Financial Penalty Enforcement Policy

To access the Financial Penalty Enforcement Policy related to the enforcement of the Tenant Fees Act 2019 and the other related provisions go to Policy (pdf 409 kb)

3. Tenancy Deposit Protection

A landlord must put a deposit in government-backed tenancy deposit scheme (TDP) if you rent your home on an assured short-hold tenancy that started after 6 April 2007. In England and Wales, your deposit can be registered with:

• Deposit Protection Service
• MyDeposits - Including deposits that were held by Capita  
• Tenancy Deposit Scheme  

The schemes make sure that consumers get their deposit back if:

• meet the terms of the tenancy agreement
• don't damage the property
• pay your rent and bills

The landlord must put the deposit in one of the schemes within 30 days of receiving it.

At the end of the tenancy

The landlord must return the deposit within 10 days of the agreement on how much the tenant will get back. If the tenant is in dispute with your landlord, then the deposit will be protected in the TDP scheme until the issue is sorted out.

Financial Penalty Enforcement Policy

To access the Financial Penalty Enforcement Policy related to the enforcement of the Tenant Fees Act 2019 and the other related provisions go to Policy (pdf 409 kb)

4. Tenant Fees Act 2019

The Tenant Fees Act 2019 sets out the approach to banning letting fees paid by tenants in the private rented sector and capping tenancy deposits in England. The Act came into force on the 1 June 2019. 

The aim of the Act is to reduce the costs that tenants can face at the outset, and throughout, a tenancy, and is part of a wider package of measures aimed at rebalancing the relationship between tenants and landlords. Tenants will be able to see at glance, what a given property will cost them in the advertised rent with no hidden costs. The party that contracts the service- the landlord - will be responsible for paying for the service, which will help to ensure that the fees charged reflect the costs of the services provided.    

The only payments that can be charged for in connection with a tenancy are:

a) the rent

b) a refundable tenancy deposit, capped at no more than five week's rent where the annual rent is less than £50,000, or six week's rent where the total annual rent is £50,000 or above

c) a refundable holding deposit (to reserve a property) capped at no more than one week's rent

d) payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher

e) payments associated with early termination of the tenancy, when requested by the tenant

f) payments in respect of utilities, communication services, TV licence and council tax, and

g) a default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement.

Guidance Notes on the legislation have been issued. Go to Tenants (pdf 1.3 mb), Landlords and agents (pdf 495 kb)

To access two booklets providing guidance go to Landlords (pdf 2.6 Mb) and Tenants (pdf 3.9 Mb) 

Financial Penalty Enforcement Policy

To access the Financial Penalty Enforcement Policy related to the enforcement of the Tenant Fees Act 2019 and the other related provisions go to Policy (pdf 409 kb)

5. Energy Performance Certificates 

Minimum energy efficiency standards (MEES) were introduced by the government in 2011. The legislation prohibits landlords from renting out properties with an Energy Performance Certificates (EPC) rated F or G.

Phase one of MEES came into force on 1 April 2018, meaning that it has been unlawful to let properties to new tenants with an EPC rating below an E rating since that date. From April 2020 all existing tenancies are now held to the same standards.

The regulations were introduced to improve the quality of private rented buildings in England and Wales and to increase the energy efficiency of the worst performing houses and buildings. In addition, these regulations aim to improve the comfort and conditions in private rented homes and reduce fuel poverty.

Energy Performance Certificates (EPC's) are needed whenever a property is:

• built
• sold
• rented 

Before the property is marketed to sell or rent, a EPC for potential buyers and tenants must be ordered. An EPC contains:

• information about a property's energy use and typical energy costs
• recommendations about how to reduce energy use and save money 

An EPC gives a property an energy efficiency rating from A (most efficient) to G (least efficient) and is valid for 10 years.

How to get an EPC

If you are selling or renting out your home you will need to employ an accredited assessor.  The person employed will assess the property and produce a certificate.

The landlord can be fined if you don't get an EPC when you need one. The person selling the house, the landlord or the letting agent must show the consumer the EPC if buying or renting.

Building that don't need an EPC

These include

• places of worship
• temporary buildings that will be used for less than 2 years
• stand-alone buildings with total useful floor space of less than 50 square metres
• industrial sites, workshops and non-residential agricultural buildings that don't use a lot of energy
• some buildings that are due to be demolished
• holiday accommodation that's rented out for less than 4 months a year or is let out under a licence
• listed buildings
• residential buildings intended to be used less than 4 months a year

EPC Register

The national EPC register allows information on all EPC's to be accessed. In respect of EPC's on non-domestic EPC's there is also a register. 

The related legislation: the Energy Performance of Buildings (England and Wales) Regulations 2012. (SI 2012 No. 3118) and the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (SI 2015 No. 962). 

For more information go to our website MEES

Financial Penalty Enforcement Policy

To access the Financial Penalty Enforcement Policy related to the enforcement of the Regulations and the other related provisions go to Policy (pdf 377 kb)

6. Product Safety

There is significant and important product safety legislation which has a direct impact on many products that may be supplied within the private rented housing sector. Information on the various legislative requirements can be found at Business Companion.    

7. Regulation of Property Agents Working Group - Final Report

On the 18 July 2019 the Regulation of Property Agents Working Group, Chaired by Lord Best released its final report. The working group was tasked with advising the Government on the way forward on a new approach to the regulation of property agents. The approach that has been recommended, includes proposals for:

• the scope of a new system of regulation,
• a new licensing regime,
• a framework for codes of practice,
• mandatory qualifications,
• transparency and use of leasehold and freehold charges,
• the set-up, functions and relationships of a new regulator; and,
• assurance and enforcement under the new system.  

To see a copy of the full report go to Gov.uk 

Contact

Trading Standards service, Directorate of City Operations, Neighbourhoods and Regulatory Services, Civic Centre, Newcastle upon Tyne, NE1 8QH. Email: tradingstandards@newcastle.gov.uk