The Cost of Compliance

When I say I am a letting agent most people presume that my job solely involves valuing properties and finding tenants. Collecting rent, carrying out inspections and dealing with maintenance are sometimes mentioned as an afterthought. What is never considered and, what in my opinion the most important aspect of my role as a letting agent, is compliance.

Our number one job is to make sure our landlords and their properties are abiding by the multitude of legislation provided by the government.  Many landlords are not aware of the changes to lettings that have been carried out over the last ten years, as their agent makes sure that their portfolio remains up do date with those legislative changes. Even in the last twelve months, as many businesses have been focusing on surviving the COVID19 pandemic, lettings agents across England have been working tirelessly to get every rented property a valid EICR.

The government passed a legislation on EICRs on the 1st June 2020 and gave landlords and their agents only 10 months to comply. There have been no allowances made for the fact we have had not one but two national lockdowns, and that accessing properties where vulnerable tenants live has been near impossible. This is just one on the many aspects of compliance that you pay for under your management fee.

In the next few weeks on this blog I will be looking at some of the changes that have taken place within the lettings industry and sharing the costs incurred if you are not compliant.

Electrical Installation Condition Report (EICRs)

As stated above the legislation for EICRs (The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020) came into effect from the 1st of June 2020. All new tenancies from the 1st July 2020 needed to have a EICR provided to the tenant at check in. All existing tenancies, including periodic agreements, then have until the 1st April 2021 to comply. The regulations form part of the Government’s wider work to improve safety in all residential premises and particularly in the private rented sector. This is seen as a major step towards levelling up the private rented sector, making sure it will offer high-quality, safe and secure housing.

The following is required of a landlord under the new law:

  • Ensure national standards for electrical safety are met. These are set out in the 18th edition of the ‘Wiring Regulations’, which are published as British Standard 7671.
  • Ensure the electrical installations in rented properties are inspected and tested by a qualified and competent person at least every 5 years.
  • Obtain a report from the person conducting the inspection and test which gives the results and sets a date for the next inspection and test.
  • Supply a copy of this report to the existing tenant within 28 days of the inspection and test.
  • Supply a copy of this report to a new tenant before they occupy the premises.
  • Supply a copy of this report to any prospective tenant within 28 days of receiving a request for the report.
  • Supply the local authority with a copy of this report within 7 days of receiving a request for a copy.
  • Retain a copy of the report to give to the inspector and tester who will undertake the next inspection and test.

This certificate only applies to ‘fixed’ electrical parts of the property. These include:

  • Wiring
  • Plug sockets
  • Lighting
  • Consumer unit
  • Permanently connected equipment such as showers and extractor fans.

Currently there is no legislations requiring portable appliances to be tested, however this is recommended. Items such as TV’s and microwaves can be PAT tested every 12 months to make sure they are still safe to use.

The cost of compliance for an EICR

The certificate starts at around £120 currently, depending on the size of the property, and lasts for 5 years. On top of this there will be any remedial work required to make the electrics satisfactory. The original outlay of the first certificate is potentially more, as any subsequent certificate should have less or no remedial work.

Even if the remedial work in the first instance costs £1000 (this would involve a new consumer unit) then annually, when split over the 5 years, you would be looking at an out going on £224 a year. This is just £4.30 a week!

And if you aren’t compliant?

Local authorities may impose a financial penalty of up to £30,000 on landlords who are in breach of their duties.

If you are using a letting agent, then they would have no doubt arranged the certificate for you and the remedial works required to make sure you are compliant at no extra cost, saving you the job of finding a contractor and arranging the work and the potential of a hefty fine.

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