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Buy-to-Let Regulatory Changes 2022

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The regulatory and legislative landscape for landlords in 2022 is one that looks set to see significant changes that could lead to a noticeable impact on the way the private rented sector (PRS) operates. This means that although some of the changes below come without specifics and dates for your diary, they are still things that we that feel it is wise for buy-to-let landlords to be aware of.

Richard Rowntree
Managing Director for Mortgages

First announced as part of the Queen's Speech in 2019, the Renters' Reform Bill set out the Government's plan to 'introduce a package of reforms to deliver a fairer and more effective rental market'.

After being delayed due to the Covid-19 pandemic, in May 2021 the Government restated its intention to reform the PRS. Proposals for a White Paper were outlined and originally slated for publication in the autumn of 2021 but following an update from the Department of Levelling Up, Housing and Communities (DLUHC), the policy document is now expected to materialise during 2022.

In response to a committee report by the DLUHC, then known as the Ministry of Housing Communities and Local Government, the government set out what it expected the White Paper to cover:

Reforming tenancy law to remove Section 21 of the Housing Act 1988 and to amend the possession grounds under Section 8 of the Act, so that landlords can regain their property where it is fair and reasonable to do so, for example where they need to sell or move into a property;

  • Introducing a new 'lifetime' deposit model to ease one of the key burdens when tenants need to move, while balancing landlords' needs for a deposit scheme;
  • Requiring all private landlords to belong to a redress scheme, to drive up standards in the private rented sector and ensure that all tenants have a right to redress;
  • Considering further reforms of the PRS enforcement system so it is well targeted, effective and supports improvements in property conditions. This will include a set of measures to hold bad landlords to account for delivering safe and decent housing to tenants without penalising good landlords; and
  • Exploring improvements and possible efficiencies to the possession process in the courts, to make it quicker and easier for landlords and tenants to use.

Changes to Energy Performance Certificate requirements

Minimum Energy Efficiency Standard (MEES) regulations set a minimum energy efficiency standard of Energy Performance Rating E for domestic private rented properties in England and Wales.

The Government has committed to upgrade as many private rented sector (PRS) homes as possible to Energy Performance Certificate (EPC) Band C by 2030, where practical, cost-effective and affordable.

Understanding the substantial impact that the proposed changes would have on landlords and the wider PRS, Paragon has worked to raise awareness of the subject and engaged with policy makers, expressing the need for a balanced approach that takes into account any unintended consequences.

A range of impacted stakeholders were invited to comment on policy proposals aimed at achieving the government's energy efficiency goals, as part of a consultation run by The Department for Business, Energy and Industrial Strategy (BEIS) between September 2020 and January 2021.

Considering issues such as financing, enforcement, measuring energy performance and exemptions, the consultation also outlined the Government's 'preferred policy scenario for improving the energy performance of privately rented homes', comprising of four elements:

  • Raising the energy performance standard to Energy Performance Certificate (EPC) energy efficiency rating (EER) Band C;
  • A phased trajectory for achieving the improvements for new tenancies from 2025 and all tenancies from 2028;
  • Increasing the maximum investment amount, resulting in an average per-property spend of £4,700 under a £10,000 cap
  • Introducing a 'fabric first' approach to energy performance improvements.

The findings of the consultation are expected to be published in 2022.

Right to rent checks

The following temporary changes were made on 30 March 2020 and remain in place until 5 April 2022 (inclusive):

  • Checks can currently be carried out over video calls
  • Tenants can send scanned documents or a photo of documents for checks using email or a mobile app, rather than sending originals
  • Landlords should use the Home Office Landlord Checking Service if a prospective or existing tenant cannot provide any of the accepted documents

Checks continue to be necessary, and you must continue to check the prescribed documents set out in Landlords Guide to Right to Rent or use the Home Office right to rent online service.

Visit the Coronavirus (COVID-19): landlord right to rent checks webpage to find out more, including what you need to do if you are carrying out a temporary adjusted check.

New guidance will be issued prior to 6 April 2022.

The Heat Network (Metering and Billing) Regulations 2020

The purpose of the Heat Network (Metering and Billing) Regulations 2014 is to drive energy efficiency and reduce carbon emissions from heating, placing various responsibilities on anyone supplying and charging for heating, cooling or hot water.

First introduced in 2014, the regulations were amended in November 2020 with some changes set to come into force in 2022. These are focused on the duty to notify of heat networks and to install meters and may apply in a range of different property types and scenarios, including 'Single residential building with multiple final customers'.

Regulation 3 (duty to notify) places a requirement on heat suppliers to submit a notification for each network they operate to the Office of Product Safety and Standards (OPSS). Following this initial notification, the heat supplier must submit an updated notification within four years of the date of the previous notification. This is an ongoing requirement.

Regulation 4 (duty to install) explains the circumstances in which heat suppliers need to install heat meters on networks they operate.

For buildings that fall into the open class before 27 November 2021, heat suppliers were required to complete the cost-effectiveness assessment in respect of (heat) meters by 27 November 2021. If the cost-effectiveness assessment results were positive, meters must be installed before 1 September 2022.

To find out more, please refer to The Heat Network (Metering and Billing) Regulations 2020 guidance.

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Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551