REALWorld Law

Are there any limits on the landlord’s right to request reimbursement of expenses (such as property taxes, insurance costs, etc.) from the tenant? Can the concept of “triple net rent” be achieved?

There are over 50 Acts of Parliament and 70 pieces of delegated legislation which affect landlords owning residential property for let. Below is a sample of the main statutes and the areas they cover:

• Fire Precautions Act 1971 – allows the Fire Service to prohibit or restrict the use of premises where there is a serious risk to life in the event of a fire.
• Defective Premises Act 1972 – ensures landlords prevent disrepair which could cause harm to tenants and others or their possessions.
• Landlord and Tenant Act 1985 – ensures landlords repair and maintain properties for tenants, also covers electrics.
• Furniture and furnishings (Fire) (Safety) Regulations 1988 – requires landlords ensure their furniture and furnishings meet set safety standards.
• Housing Act 1988 – introduced the most common form of tenancy for private sector tenants, the assured shorthold tenancy agreement.
• Disability Discrimination Act 1995 – makes it illegal to discriminate against disabled people.
• The Regulatory Reform (Fire Safety) Order 2005 – places specific fire safety duties on persons who have control of premises, including common parts of blocks of flats and houses in multiple occupation.
• Housing Act 2004 – changed the way properties are inspected, licensed and registered and the way in which deposits are handled.
• The Energy Efficiency (Private Rented) Property Regulations 2015 – set out a Minimum Energy Efficiency Standard (MEES) for all privately rented properties in England and Wales. From April 2018, it will be unlawful to let properties with an Energy Performance Certificate (EPC) rating of F or G, unless exemptions apply.
• Immigration Act 2016 – Right to Rent Mandatory. It is a criminal offence and unlimited fine should you be unable to demonstrate that you have taken reasonable measures to ensure persons residing in your property have a continuing right to reside.

Last modified 22 Mar 2024

Are there any limits on the landlord’s right to request reimbursement of expenses (such as property taxes, insurance costs, etc.) from the tenant? Can the concept of “triple net rent” be achieved?

The default for all residential tenancies is the assured shorthold tenancy. However, Schedule 1 of the Housing Act 1988 contains certain tenancies which cannot be assured shorthold tenancies, for example resident landlords and tenancies where the rent payable is greater than £100,000 per annum.

A brief list of the exclusions are:

• Tenancies entered into before commencement (of the Housing Act);
• Tenancies of dwelling-houses with high rateable values and where rent payable greater than £100,000 per year (£25,000 Wales until 1 December 2011 then £100k);
• Tenancies at a low rent (in Greater London, £1,000 or less a year and, if it is elsewhere, £250 or less a year);
• Business tenancies;
• Licensed premises (accommodation in same building as pubs, nightclubs etc);
• Tenancies of agricultural land;
• Tenancies of agricultural holdings;
• Lettings to students by universities;
• Holiday lettings;
• Resident landlords;
• Crown tenancies; and
• Local authority tenancies.

Last modified 22 Mar 2024

Are there any limits on the landlord’s right to request reimbursement of expenses (such as property taxes, insurance costs, etc.) from the tenant? Can the concept of “triple net rent” be achieved?

Technically, no. In theory you could enter into a short-term tenancy of 1 day. However, under the provisions of the Housing Act a possession order from the court can only be sought after six months. So this tends to be the minimum term to ensure proceedings can be brought immediately following breach.

Last modified 22 Mar 2024

Are there any limits on the landlord’s right to request reimbursement of expenses (such as property taxes, insurance costs, etc.) from the tenant? Can the concept of “triple net rent” be achieved?

Yes, for all private sector residential leases. However, there is a complaints process where a tenant has previously had an agreement for the same property and rent is increased at an unreasonable level. Rents for social housing can be capped by planning restrictions and limited to an affordable level.

Last modified 22 Mar 2024

Are there any limits on the landlord’s right to request reimbursement of expenses (such as property taxes, insurance costs, etc.) from the tenant? Can the concept of “triple net rent” be achieved?

Yes, but this would need to be agreed at the outset and would be unusual for a tenant to accept. If a fixed-term agreement is in place a landlord could only increase the rent at the end of the term by a reasonable amount.

Last modified 22 Mar 2024

Are there any limits on the landlord’s right to request reimbursement of expenses (such as property taxes, insurance costs, etc.) from the tenant? Can the concept of “triple net rent” be achieved?

Only a residential lease of more than 21 years needs to be registered. Assured shorthold tenancies are not registerable. There is a complicated land tax for long lease and freehold purchases, but AST's do not incur taxes for the tenant.

Last modified 22 Mar 2024

Are there any limits on the landlord’s right to request reimbursement of expenses (such as property taxes, insurance costs, etc.) from the tenant? Can the concept of “triple net rent” be achieved?

Long leaseholders have the right of pre-emption, right to manage and right to purchase the freehold. It is possible to structure around the pre-emption rights, but the right to purchase the freehold and manage are very difficult to avoid.

Last modified 22 Mar 2024