Expert Q&A: Material information, consumer protection, short-term lets and more

David Smith, Partner at JMW Solicitors, and Oli Sherlock, Goodlord's Director of Insurance, ran through some of the top pieces of lettings legislation you need to be aware of in Goodlord's recent webinar. From how to interpret the material information guidance to changing rules for short-term lets and the timescales for court processes, here's a breakdown of some of the top points they discussed.

What is material information - and is it open to interpretation?

David Smith: Material information includes anything that a reasonable person would wish to know before entering into an arrangement to buy or rent a property. The difficulty with it, and the thing that's always quite difficult for agents to deal with is: it could be anything. As long as it's something that's relevant that a reasonable person would wish to know, then it's material.

[...] The difficulty is that what is material depends on each individual case. The thing that I'm much keener on most of the time is that people shouldn't be misleading in the information they give. So for example, excessively keen use of Photoshop.

Highly deceptive use of photographs or angles of photographs to obfuscate issues that are likely to be relevant. So, for example, not so long ago I was looking to buy a house, and the house that I ended up viewing had a 24-hour shop abutting it next door.

All the photos had been taken so that that 24-hour shop wasn't visible, which took some really tight cropping on particular sides - but I would say that was a case of material information, to take a picture with bits chopped out.

What's changing around regulating short-term lets?

DS: The Levelling Up and Regeneration Bill is pretty much finished. And one of the key elements about it is a short-lets register, which is a national register of every property that is made available for someone to occupy [in England].

The definition is "to be occupied, not as their home". So anyone who's choosing to occupy a property for a holiday or something and advertising on that basis will be required to join a short register.

Wales is going to do something similar using its own structure. The consultation is already happening right now about the short-let register [in England], and that is a more than subtle indication that the government intends to ram it through as quickly as they can.

Bear in mind from the Conservative party's perspective that register is generally seen as a bit of a vote winner because it addresses issues in core seats that they want to keep in the West Country and through rural areas where they're under an enormous amount of pressure.

That's where things like holiday homes are generally seen locally as a bit of an issue. [...] This is local politics on a national stage.

When could the short-let register be launched?

DS: I would be very surprised if the register is not launched next year and ready to go. I can't give you any more details about what it will look like.

I would advise you to go and look at the consultations, and consider responding to it if you've got short lets as part of your business - because you're going to have to sign up.

What's changing for planning permissions and short-term lets?

DS: There is a proposed new planning use class for short lets. The consultation on short letting has an associated consultation on a new planning use class of short letting. So, if you want to change your property from its current, C3 domestic residential and dwelling use - whether let or or owner occupied - and want to short let it, you'll need to apply for planning permission.

If you don't do so prior to the short-let use class coming into effect again, the reality is I would expect that almost all of those planning permissions will be refused. And, of course, the short-let register will help with enforcement.

When will the short-let planning permissions change?

DS: The planning use classes are going to be pushed through before the Renters (Reform) Bill precisely to stop landlords turning around and saying that they don't like the Renter's Reform bill, so they're going to switch to short letting.

If you want to turn to short lets, then you should establish a usage of short let now. And even if you then drop out and go back into the mainstream market, you need to establish usage of short let in order to justify the planning change.

[...] This is one of the situations where, as you get close to an election, politics becomes very localised because MPs need to be able to walk around their constituency and say: look what I've done for you, make sure you vote for me so I can keep doing it.

What's the new review on tenant consumer rights?

DS: It's probably a bit of a flash on the pan. The Consumer Markets Agency (CMA) has a general regulatory view in relation to competition and consumer rights, separate from the Trading Standard Services. It has said that it's noted that talents are facing enormous financial pressure.

I'm not saying anything terribly surprising when I point out that rents are very high, especially as a percentage of take home earnings. The CMA has simply said it's going to carry out a review to determine whether it can use any of its competition powers to assist tenants or whether it should use its competition powers to assist tenants.

I get that it's quite concerning. [...] There's an argument - although it's not a very palatable argument - that the very high rents are a very clear example of the market working as it should. There is inordinate amounts of demand for relatively scarce rental properties, ergo rents are high. I don't think that that's an example of a consumer or competition law failure. It's unfortunate for sure, but I don't think it's a place that the CMA has any jurisdiction to go.

I suspect the reality is that their review will quietly fade away as they realise they don't have any significant powers that they should be exercising in this area.

What's going on with court proceedings and timescales, post-pandemic?

DS: There are real difficulties in attracting people of sufficient quality into the judiciary. [...] There are real shortages with administration staff so often, although there's a shortage of judges, you still find situations where judges are sitting around unable to do work because there are insufficient cases prepared to put forth before them.

So, at the moment it will take at least a minimum of four to six months to get a possession claim heard. I've got at least one case where it's taken so long for the court to even issue the claim that the section 21 with its six month "use it or lose it" provision has run out of time. We've made a complaint - and our complaints aren't getting responded to either because the complaints service is overloaded.

Oli Sherlock: On the importance of this, we are seeing, as a business, more landlords and agents switched onto the risk that they're facing here. We're seeing more and more questions around, for example, our rent protection product, which normally centre around arrears. Now, they're recognising that the arrears is just a part of the problem.

The other part of the problem is actually getting anything through the courts and therefore legal expense protection and support becomes more valuable today than it once was - especially with incoming changes to section 21 and section 8 under the Renters (Reform) Bill.

This article has been edited for clarity and brevity, based on the recent Goodlord webinar. The information is guidance only, and not intended as legal advice.