Landlords – something to spark your interest

The first draft of new electrical safety standards for the private rented sector (the “Regulations”) have now been laid before Parliament.  The Regulations will impose new duties on landlords in relation to electrical installations – with stringent penalties for non-compliance.  The Regulations are due to apply to new tenancies from 1 July 2020 so those operating in the private rented sector should start planning ahead now.

When will the new law apply?

The Regulations are intended to apply to all new tenancies from 1 July 2020 and to all existing tenancies from 1 April 2021.

However, the Regulations will only apply to ‘specified tenancies’, meaning a tenancy where the tenant is permitted to occupy the property as their only or main residence in return for the payment of rent (which need not be market rent).  This is a broad definition which catches more than just ASTs.  Holiday lettings will not be covered by the definition and there are also some specific statutory exclusions.  For example, the Regulations will not apply to social housing, where the landlord shares the accommodation, long leases, student halls of residence, hostels, care homes and tenancies relating to healthcare provision.  These types of property will remain subject to the current regulatory requirements.   

What is changing?

Landlords are already subject to regulatory requirements in relation to electrical safety.  The Landlord and Tenant Act 1985 requires landlords to keep electrical installations in the property in good repair and proper working order.   Local authorities have powers, through the Housing Act 2004, to take action where there are electrical hazards in a property posing a safety risk.  All circuits in new or rewired homes would normally need to comply with the relevant parts of the Building Regulations.  Five yearly electrical installation checks are mandatory but only for licensable Houses in Multiple Occupation (HMOs).  

Under the new Regulations, landlords will have to ensure that:

• an electrical inspection has been carried out before the start of the tenancy (or by 1 April 2021 for existing tenancies);
• inspections are repeated at regular intervals of no more than 5 years; and
• the prescribed electrical safety standards are met during any period where the property is occupied pursuant to a ‘specified tenancy’.

The Regulations define electrical safety standards as being those set out in the 18th edition of the Wiring Regulations (published as BS 7671:2018) which came into force on 1 January 2019.  Landlords should note that existing electrical installations installed before 1 January 2019 are very unlikely to comply with the 18th edition in every respect. 

The electrical inspection must be carried out by a qualified person and the landlord must obtain a report.  The Regulations simply define this as being someone who is competent but the government has previously indicated that it will produce new guidance setting out how landlords could determine competence.

Landlords must provide a copy of the inspection report to any new tenant before they occupy the property.  Landlords must also provide a copy to any prospective tenant who requests it within 28 days of a written request from the prospective tenant.   Landlords should therefore consider obtaining a report at an early stage (e.g. when preparing to market the property).   The Regulations specifically state that landlords must keep a copy of the report until the date of the next inspection so landlords must ensure that their paperwork is in order. 

What are the penalties for non-compliance?

The local housing authority will be responsible for enforcing the regulations.  Local authorities can request a copy of the electrical inspection report and landlords must supply it within 7 days of the request.

A local housing authority has a duty to serve a remedial notice (requiring the landlord to carry out works within 28 days) if it has reasonable grounds to believe that a private landlord is in breach of its duties under the Regulations.  However, the Regulations do set out a procedure for landlords to make written representations against the notice.  If the landlord fails to comply with a notice then the local authority can do the work itself and recover its costs.  Landlords have a right to appeal to the First-Tier Tribunal against the costs recovery.

In dangerous situations requiring urgent remedial action, the local housing authority can arrange for an authorised person to take immediate action (subject to providing the tenant with at least 48 hours’ notice).  Again, the local housing authority can apply to recover its costs in this situation. 

In addition, local authorities can impose a financial penalty of up to £30,000.  The local authority can issue more than one penalty in the event of a continuing failure.

Landlords will already be aware of the requirements relating to gas safety certificates.  Landlords are prevented from evicting a tenant using a Section 21 notice if the landlord failed to provide a copy of the gas safety certificate to the tenant prior to occupation.  It is worth noting that that the penalties for failure to comply with the new electrical safety regulations are as set above and the ability to serve a Section 21 notice is not affected.   

How much is this going to cost?

In the original consultation on this topic (2018), the government stated that they estimated that the average cost of an electrical safety check would be around £160 per property every five years.  However, there is likely to be significant variation across the sector depending on portfolio size and geographic location.  There will also be hidden costs such as those associated with researching and liaising with electrical testers, preparing the property and overseeing the checks, and one off familiarisation costs.

Action points

The Regulations are still in draft form so landlords should continue to monitor this topic.  However, given the cross-party support for this initiative, the details are unlikely to change significantly.  The changes also bring England into line with the mandatory requirements for electrical inspections that already apply in Scotland.   Landlords may wish to start researching suitable electrical testers now so that they are ready to comply with the new Regulations in relation to new tenancies later this year.  Landlords may consider reviewing their existing properties now in order to assess whether they comply with the ‘electrical safety standards’ as defined in Regulations. 

Landlords will no doubt want their electrical installations to be safe in order to ensure tenant safety and help prevent fires.  For further clarification of how the new regime will operate in practice landlords should also review the government’s guidance on the Regulations (when this is released).