Quarterly legal and compliance updates for letting agents

On 28 April 2021, Fixflo ran the first in a series of quarterly legal update webinars with David Smith, Partner at JMW Solicitors, to update agents and answer questions on the latest changes to guidance and legislation affecting the private rented sector.

With over 800 property professionals in attendance, the Q&A section was flooded with over 140 questions from agents wanting to hear David’s expertise. Here is just some of what was discussed.

Signing deposit prescribed information as an agent

In a recent case, the court ruled that a prescribed information certificate for a tenancy deposit protection scheme was invalid because it had not been signed in accordance with the Companies Act 2006.

Agents and landlords will need to be extra careful in the future when signing as a corporate entity. Those who sign prescribed information incorrectly could risk a penalty of up to three times the deposit.

To be safe, David suggested that agents insert a clause into their terms of business that allow for any employee of the agency to sign on the landlord’s behalf. This case is under appeal to the Court of Appeal.

Electronic signatures

The law has a broader view of what counts as an electronic signature than most would think; this even includes replying to an email and confirming you have read it and agree to its terms.

David recommended digital signing programs for increased security as these often have two-factor authentication as an option, which involves the signee confirming they are who they say they are by providing an additional piece of information such as a verification code sent to their mobile phone. Although these features do need to be turned on and without them, digital signing software has limited security benefits over ordinary email.

Electrical safety standards

Agencies should make sure their service provision sets out their position on EICRs - those offering a fully managed service place their reputations at risk if they do not remain compliant on the landlord’s behalf. An easy way to fit your position on EICRs into your terms and conditions is to use your Gas Safety Certificate clause as a template.

The Electrical Safety Regulations do not include an exemption if the occupier does not allow access to the property. According to David, a good rule of thumb is to attempt access at least three times after having written to the occupier, as this is what the Health and Safety Executive said they’d look for in their guidance for Gas Safety Certificates. An exemption can apply if a local authority has served a remediation notice.

Renters Reform Bill

If section 21 notices are abolished by this bill, David suggested that landlords could become more selective over their occupiers and that the sector could become smaller as non-professional landlords choose to sell their properties to those with larger portfolios.

As the bar for possession claims will be higher, landlords and agents will need to focus on gathering evidence and consider settling disputes through alternative means such as mediation.

Possession proceedings and notice periods

Six-month notice periods for section 8 and section 21 possession claims are scheduled to end on 31 May 2021. They may be reduced back to three months, as they were before the pandemic, or more exceptions could be added to the six-month rule. What will happen with the eviction ban is similarly unclear.

Because of the slowness of court processes, David advised that where possible, landlords should seek settlements with occupiers and consider mediation services because these enjoy high success rates and can be used to reach an agreeable outcome more quickly than it would take to go through court.

The current system could be seen as a ‘dress rehearsal’ for the future when section 21 is abolished. Once the easiest means to evict has been removed, occupiers and landlords will increasingly have to find out-of-court means to settle their disputes because the eviction process will be more difficult.

For more on these topics and others, watch the Quarterly Legal & Compliance Updates for Letting Agents Q2 recording and keep an eye out for further instalments in this webinar series on Fixflo’s webinar page.

*James Dilgul is Head of Marketing at Fixflo, the market-leading repairs and maintenance management software.