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When I wrote about some of the details of the Renters Rights bill last month I really believed that the next time I would be writing about it would be when it became law. Government have taken an unusual step and at this late stage they have published more amendments, technically they need to be debated but in reality many are likely to be part of the Bill as they stand.
The ongoing list of amendments is here – it’s a heavy read but amendments are marked with a star.
HL Bill 103—Running List 24 June
RENT INCREASES
All rent increases made after the passing of the bill must be notified to the tenant via a section 13 Notice
- Increases can only be made every 52 weeks
- Two months notice must be given for increase
- The Section 13 Notice tells them exactly how to appeal to the First Tier Tribunal to have the proposed rent rejected
- Tenants can apply to Rent Tribunal for an assessment of whether the increase is fair
This is the one which we need to take note of
At the moment a tenant can appeal to the rent tribunal and the tribunal has three options
- Agree the increase is in line with local rents
- Reduce the amount of the increase in line with local rents
- Increase the amount of the increase in line with local rents
Number 3 is what prevents some tenants from going to tribunal but under the Renters Rights Bill this option will no longer be available and therefore the risk has been removed in order to encourage tenants to exercise their legal rights, and also to ensure that landlords understand that there are limits to the amount a rent can be increased despite the fact that there is no specific legislation coving this at the moment
When a tenant appeals to the tribunal the rent increase is on hold and cannot take place until the tribunal have made their determination. Now that the tenant has no reason not to appeal an increase no doubt most tenants will do this, particularly when they realise that at the very least their increase will be delayed with no consequences because section 21 will be gone and landlords will only be able to remove them if they have grounds under section 8 (INCLUDING NEW GROUNDS WHICH WILL BE AVAILABLE). There are several proposals about when the increase would take place should the tribunal find it valid. If we end up with an increase not beginning until after the tribunal decides we may find ourselves in a similar situation to the current delays in hearings for possession cases and months before the increase will take place.
These are the proposals
“(4) If the tribunal determines that the proposed rent is equal to or lower than the open-market rent— (a) (b) where the tenant has stated in the application under section 14(A3) that the tenant wishes to pay any uplifted rent in a single payment, the tenant must pay the uplifted rent on the first day of the first new period of the tenancy which begins on or after the date of determination; in all other cases, the tribunal must order that the tenant must pay the uplifted rent in up to 12 equal instalments on the first day of up to 12 consecutive periods of the tenancy commencing on the first 4 Renters’ Rights Bill day of the first new period of the tenancy which begins on or after the date of the determination.” Member’s explanatory statement This amendment would ensure that, if a rent challenge was unsuccessful, the reviewed rent would apply from the date that the increase was due to take effect, rather than the date of the end of the legal process. The uplifted rent would be paid over a period of up to 12 months unless
Clause 7, page 12, line 10, at end insert— “(5A) The Secretary of State may by regulations make provision so as to substitute, in relation to relevant tenancies, a different date as the effective date. (5B) The effective date may not be earlier than the beginning of the new period specified in the notice served on the tenant under section 13(2) or 13A(2).
Member’s explanatory statement This amendment enables the Secretary of State to amend the Housing Act 1988 so as to substitute a different date from which new rent is payable. The substituted date must not be earlier than the date specified in the notice of the new rent given by the landlord. The new date will only apply to applications to challenge the rent made on or after the date on which the regulations come into force.
This is, in my opinion, the change to legislation which will impact most on landlords
Rent is why we let properties and if that rent is not protected we will soon find ourselves in financial difficulties, its going to be a big part of our job in future to protect that rent. We cannot stop tenants from appealing to tribunal when we increase their rent but we can do the homework and send them details of local rents to show that we are not just making random increases. I use this and I send the link to my tenants
Home.co.uk: Market Rents by Town and Postcode
Tenants may still appeal to tribunal, in order to delay the increase, but at least you have shown that you are being professional and have a good chance of achieving the increase you proposed
In my Facebook group we often read posts from landlords and tenants where the rent has been kept too low for too long and now that the landlord needs to make an increase the tenant cannot “afford” to pay the new rent, this causes a lot of bad feeling even when it is pointed out to the tenant that they have had very low rents for a long time and have saved money, they cannot see why the increase is necessary and often begin to talk about faults in a property that they have been happy with for years. IT IS REALLY UNHELPFUL TO KEEP RENTS LOW. Keeping rents artificially low may feel like it helps tenants but in fact it traps them in a property because they are afraid that they cannot afford to pay more. We read posts from tenants who have really bad relationships with their landlords and those who believe that their landlord is greedy because they don’t need to charge more rent, this is often caused by landlords sharing too much personal information with their tenants or those who feel the need to justify rent increases with their personal finances rather than with the fact that this is the cost of property of that size/type in that area, which is all we need to say.
In addition to maintaining our properties at viable rents we need to do everything possible to ensure that the rent is paid in full and on time – no more fear of section 21 eviction may remove the priority of paying their rent from some tenants. I can remember when universal credit was introduced and included rent allowance, many tenants had never paid their rent because the payment was made directly to the landlord from the benefits department. With universal credit they were expected to manage their benefit payments, not only that, the payments went from fortnightly to monthly and many tenants did have the skills to manage the change and arrears began among tenants where there had previously been none. We need to understand our tenant groups and make sure that we do everything possible to make it easy for them to pay their rent, this includes annual increases rather than years with no increased followed by a big increase which they will struggle to fit into their budget and give them plenty of time to prepare for the increase. We will have to give them two months notice but there is no reason why we cant give them three months notice with the extra time to prepare. Where possible delay the increase if its due around Christmas or school summer holidays because these are already expensive times of the year and for many people on modest income cause a lot of stress
If all else fails we need a backup plan and Rent Guarantee Insurance is probably the safest option, though how this will work under the new monthly tenancy remains to be seen.
Asking for a suitable guarantor is the usual way that we protect our rent where the tenant hasn’t got the income to cover it, students are a good example of this but many other people on modest income are asked for a guarantor. There are several proposed changes:
“Restriction on landlord’s ability to require tenant to provide guarantor”
In a nutshell:
A guarantor cannot be required:
- where we have rent guarantee insurance
- where the housing benefit element of universal credit is paid directly to the landlord,
- Where a tenant has paid a deposit or has been assisted under a deposit scheme
- Where the tenant has paid rent in advance of 1 month or more
- Where their income, including benefits is sufficient to cover the rent
“In any other case where a relevant person lawfully requires a person, as a condition of the grant of a relevant tenancy, to provide a guarantor, the sum for which the guarantor may become liable under the relevant guarantee may not exceed a sum equal to six months’ rent. In any case where a relevant person lawfully requires a person, as a condition of the grant of a relevant joint tenancy, to provide a guarantor, the sum claimed under the guarantee may not exceed such proportion of the loss as is attributable to the act or default of the individual tenant on whose behalf the guarantee was given; and if such proportion cannot be proved, may not exceed the sum obtained by dividing the total loss by the number of tenants.”
This applies to the HMO market and it means that even in a joint tenancy the guarantee does not cover anyone other than the individual to who the guarantee was provided. For the parent of students this has been a major problem because no one owns up and even where the person who owes rent or damages can be by passed and the guarantor of another person can be held responsible. I have never agreed with this and I hope that this amendment makes the cut but actually if some of the other elements make it we wont be able to ask for a guarantor anyway.
As a landlord I am very aware that taking a guarantor is a “threat” to tenants to pay their bills and in my case in 52 years of letting to students I have not once ever had call on the guarantee. Its important to keep this in prospective and not to panic about things which very rarely happen.
The student market will need to change under this legislation and there is a whole section of proposed changes which mainly apply to Purpose Built Student Accommodation but this is interesting
“The new paragraph (b) of subsection (1) provides that a tenancy of student accommodation is not an assured tenancy if the person appointed to act on behalf of the landlord or to discharge management functions in respect of the building concerned is a member of a “housing management code of practice” (which is a code approved under section 233 of the Housing Act 2004). This makes provision which corresponds to the new sub-paragraph (2C) but which operates in relation to the case where a tenancy of student accommodation is not an assured tenancy because the person appointed to act on behalf of the landlord or to discharge management functions in respect of the building concerned is a member of a “housing management code of practice”.
“management functions” in respect of a building includes functions relating to— the provision of services, or the repair, maintenance, improvement or insurance of the building;”
This appears to be an attempt to avoid accusations of discrimination where Purpose Built Student Accommodation has been given different rules. If all that is required is for the landlord or agent to become a member of an organisation like UNIPOL that is not a bad thing and will educate more landlords and agents who often get it wrong through custom and practice
PETS
There is a lot about tenants keeping pets in these amendments and I am not going to speculate which will get through. Pet Insurance has been the subject of many proposals. To be honest, I would not accept a pet based on the fact that the tenant pays insurance – in my opinion they may just allow bad behaviour from the pet because they are paying that premium and I don’t want to have to chase to see renewals every year. My solution has always been to increase the rent to cover potential damages and in my tenancies the biggest issue with pets has been smells and I now use an Ozone machine to remove them at very little cost.
There is another proposal which I hope gets through
“(4A) For the avoidance of doubt, if a tenant fails to pay the deposit and the first month’s rent after the lease has been entered into but before the tenancy Renters’ Rights Bill start date as stated in the lease, the landlord is not required to grant possession of the property of the tenancy and if the tenant continues to fail to pay the deposit and the first month’s rent for a further 28 days then the landlord is entitled to treat the lease as annulled.”
At the moment once a tenant has paid the holding deposit and the contract is signed and exchanged the tenant must go ahead. Some landlords are too trusting and give access (the keys) to the property before the first months rent and deposit have come into their bank account. In my Face book group landlords admit that they have made this mistake only to find the tenant telling them one story after another about why they cannot pay, meanwhile they are living in the property and the landlord has no means of evicting them quickly. Of course even the proposed change would not save a landlord who has already handed over the keys but then there is no saving some landlords “they either win or they learn” (Nelson Mandella)
