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Published On: March 29, 2019 | Blog | 0 comments

Brexit and Residential Property

I was recently asked what would happen to law within the PRS in the event of a “no deal” Brexit. I initially did not think much of this question but the current situation is making such a possibility more and more likely. So what will happen? Naturally, there will be wider consequences economically and socially, but what about the legislation relating to residential tenancies?

In fact, most law will not change. Things like the Housing Act 1988 will remain in law as they are. The potential changes will come in some areas of regulation and consumer protections where we have regulations which sit on top of and implement EU Directives.

The Withdrawal Act
In principle, there should be no change at all. Section 2 of the European Union (Withdrawal) Act 2018 ensures that any legislation which is made to implement an EU Directive under the European Communities Act 1972 will continue to have effect. So, even in a “no deal” scenario there should be no changes, at least initially.

But what about the hardest of hard Brexits where all EU legislation is immediately eliminated. What would be lost which is of relevant to the PRS?

Energy Efficiency
Well the entire requirement to have an EPC is based on EU directives. So they would no longer be required. That also means that the new requirement to have a minimum energy efficiency standard in residential property would also go. As would the requirement to serve an EPC in order to be able to serve and s21 notice.

Consumer Protection and Rights
This is the main area of change. Unfair Terms are directly incorporated in UK law in the Consumer Rights Act 2015. But the Consumer Protection From Unfair Trading Regulations 2008 (CPRs) rely on EU legislation. This would impact the entire sector as it is the CPRs which require that both estate and lettings agents do not provide misleading or inaccurate advertising of residential property, the Property Misdescriptions Act 1981 having been repealed some time ago on the basis that the CPRs were a complete and more substantial replacement. Likewise the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 which do not apply to tenancies but do apply to estate and letting agents terms of business would also go, so rights to cancel these agreements at an early stage would disappear.

The General Data Protection Regulations would actually remain as they are directly incorporated into UK law by the Data Protection Act 2018. How well they will operate if we are not going to use European guidance and do not have a good relationship with Europe in this area is open to doubt.

Heat Networks
This affects fewer people but the Heat Network (Metering and Billing) Regulations 2014 which require landlords who are engaged in the supply of energy to their tenants to give information about those costs and allow elements of control over that cost are based on EU law entirely. This will affect those residing in blocks with district heating schemes and some HMOs as well.

HMOs and Licensing
The EU Provision of Services Directive and the consequent Provision of Services Regulations 2009 would also not be relevant any more. This would mean that the decision in R(Gaskin) v Richmond would be largely irrelevant and local authorities would be less restricted in the charging of HMO licensing fees.

Money Laundering
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 apply to estate agents but not to letting agents. However, they are made in part based on EU law and rely heavily on EU guidance and the EU sanctions regime. Therefore their ongoing operation is open to some doubt.

So at a basic level nothing changes. An AST would still be an AST. But the substantial overlays added over the years to improve rights and consumer protections would all be put at risk. But as they say, it will never happen!

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

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