I had a call from a potential new client this week. He was in two minds over whether to sell his two rental properties or bring them into management with Moores, following a recommendation from a friend of his about our letting and management service. I asked the usual about gas safety certificates, EPCs and EICRs. I became concerned when he said he didn’t have an EICR (Electrical Installation Condition Report) for either property.
The potential client said he didn’t realise he needed to have EICRs for his properties. He thought they only applied to HMOs (House in Multiple Occupation). Apparently, he’d seen an article that said HMOs had been brought into the Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 but the article made no mention of smaller houses. He was correct that the article only referred to HMOs, but that due to the fact they were not originally covered by the 2020 legislation as they were already covered by a 2006 piece of legislation. The 2006 legislation has now been repealed, with HMOs now covered by the same 2020 Act as all private rented accommodation with tenancies of less than 7 years.
His smaller rental properties were covered by the 2020 Act when it came into force in July 2020 if he was commencing a new tenancy, or they were caught in April 2021 if his tenancies had commenced before July 2020.
The lack of an EICR could result in a financial penalty of up to £30,000 per property, whether the properties are safe or not. Additionally, the lack of an EICR compromises the landlord’s ability to obtain possession of his property should his tenant’s default on their covenants i.e. rent payments, noise, nuisance, etc. It would also compromise his ability to obtain vacant possession when the tenants fixed term ends upon service of a Section 21 Notice.
The landlord should have had a competent person undertake an inspection of the electrical system to his properties. That person should have provided a written report on the condition. Whether the properties passed the inspection or failed it, is irrelevant. A report should have been obtained and that report should have been passed on to the tenants within 28 days of the inspection.
If the property had a good report and it is deemed ‘satisfactory’, all well and good. Another inspection would be needed in 5 years time.
If a report is unsatisfactory and highlights necessary remedial work to make the installation safe, the landlord would need to have the work undertaken within 28 days. This is mandatory within the 2020 Act.
The report must be completed correctly to be compliant. Our Full Management service ensures all documentation is inspected and compliant. We have seen several Let Only clients with paperwork they believe is compliant, only to inspect it and find it is not. They then had to pay for a new EICR as they cannot reach their previous contractor to correct the errors.
I should emphasise, whether the property passes or fails, a report must be obtained and provided to the tenant. It is not adequate to simply get remedial work undertaken and then provide a ‘clean’ report to the tenant. Where remedial work is undertaken, documentary evidence must be obtained of the works completed and that the installation is safe. Copies of these should be provided to the tenants confirming the installation meets the required standard, which they can attach to the initial failed report.
I explained to the potential client that we couldn’t take his properties into management without the electrical installation being determined as safe, and the tenants being in possession of EICR reports confirming the same. Equally, we can’t put them on the market for sale as buy-to-let investments without the properties being fully compliant in respect of the EICRs. If we listed them for sale and found a buyer, the sales would stall when it came to the issue of the EICRs. If the landlord obtains vacant possession, we could then offer them for sale, as caveat emptor (‘let buyer beware’) would apply to the buyer. It would be up to the buyer to satisfy themselves the property was suitable for their purposes. Obviously, if we were asked whether the properties had EICRs we would have to disclose the fact they did not, which would alert the buyer to commission their own inspection, and no doubt open the door to a renegotiation of the sale price.
EICRs are new to the buy-to-let market, but they are in force now. Landlords (and their agents) need to be aware of the consequences of ‘turning a blind eye’ to this legislation. It could have severe implications.
Read the Government’s guide for electrical safety standards in the private rented sector here.
– A Newsletter Editorial by Director Michael Moore FNAEA, MARLA. Sign up to our newsletter below.