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As the Renters Right bill finally passes into law there are a lot of nervous landlords and agents in England. Unfortunately, this has been made worse by all the misinformation that has been published around this legislation –
much of it entirely wrong –
some of it misunderstood –
some where proposals were made but did not make it into the final Act
I am not suggesting that there are not items in the legislation which should cause concern – because there are, especially if you rely on less credible sources for your information so that you aren’t prepared, but we all need to understand the facts and to do everything which will be legally required in future. For those of us, the majority of landlords, who always try to be legally compliant and to treat our tenants with respect there is nothing to be nervous about but there are changes to be made and planning ahead to be thought through
I am not going to attempt to cover all of the changes in the Act but I will talk about the common myths which need to be busted to enable good landlords to continue to run our businesses and not to sell up out of fear – according to the members of my face book group many landlords are in this category and that is really bad news for those landlords and of course for the tenants who will find it so much more difficult to rent a decent property. Its too easy to blame government, not that they could not have listened more carefully to NRLA, but unfortunately I find myself in agreement with many of the changes because previous legislation, which was meant to balance the business of renting between landlords and tenants (as in the Housing Act 1988 where sections 8 and 21 gave us a legal method of eviction for the first time) has come to be used by bad landlords to escape their legal obligations and to hold eviction over the heads of tenants to prevent them reporting them to local councils or going to rent tribunal to stop a rent increase. No one should have to live under those circumstances and going forward they will not. Interestingly many landlords have never used section 21, if they had they would realise that it is not a magic wand and not the loss that they imagine I can tell you from firsthand experience of using section 21 this year that it took from service of a valid notice to possession 8 months and my documents were immaculate, and the tenants did not put in a defense which meant no delays other than the long wait for a hearing. For those who haven’t used section 21 it is a myth that it takes 2 months currently it can take a year in some areas where the courts are backed up.
The second big issue for many landlords is the loss of the fixed term tenancy and the fact that tenants can leave after a very short time, no more Assured Shorthold Tenancies (ASTs) (also introduced in the Housing Act 1988 and made the default tenancy in the Housing Act 1996) These tenancies were introduced to protect tenants from no fault eviction for the first six months ( or fixed term) of their tenancy. What was meant to protect tenants actually left some tenants living in properties which were poorly maintained and the only way out was to pay rent until a new tenant was found having paid the costs of finding and referencing that new tenant. Often this meant paying rent for two properties (the old and the new) which put enormous strain on the tenants finances. Once again good landlords who calculated their costs based on fixed terms have lost that privileged because of our less scrupulous colleagues because, in my experience, tenants only leave properties where they are happy when their circumstances make it impossible to stay there. It is a myth that the new legislation will give tenants the power to leave the property after a couple of months if they are not happy and tenants will simply hop from one rented property to the next. The fact is that, under current legislation, a tenant has the right to unwind their tenancy during the first 90 days and if the tenant exercises this right within the first month they must be given a full refund of all monies paid. Within the 90 day period the tenancy must be ended with no repercussions to the tenant and money not due must be repaid. The landlord can, of course refused the rewind and fight in court but a tenant who wants to rewind at this early stage will no doubt have good reason and if that reason amounts to disrepair or bad management etc., the landlords best option is to accept the rewind and move on. All this is current legislation but most landlords haven’t heard of it because so few tenants use this option – something worth remembering
I am one of many landlords who do not renew a tenancy after the initial 6 months fixed term, we just let the tenancy roll monthly until the tenant is ready to leave or things go wrong and we need to evict. The fact that there is never a time when the tenant has to decide whether or not to commit to another period of months means that, until they have a reason they just let it roll, my average tenancies (apart from students) is about 15 years now, though I once has a tenancy which rolled for over 30 years. It really is a myth that renewing a fixed term constantly gives the landlord more security and any landlord who tries to force a tenant to stay is asking for trouble – a reluctant tenant is usually a bad tenant. Once all good landlords become used to having rolling tenancies you will realise that it is not a bad thing.
The next issues this raises is when and how to increase the rent and this too is covered by the new legislation
A rent increase must be notified to the tenant on a FORM 13 Notice of Rent Increase. This form tells the tenant how much the rent will increase and from when, it cannot be earlier than 12 months since the last increase and a minimum of 2 months notice must be given The form also gives the tenant information on how to use the free services of the Rent Tribunal to ask for the rent to be assessed. Until now the tribunal had three options 1. to agree the increase 2. to reduce the increase or 3. to raise the increase. The final option will no longer available to them under the new legislation. Based on local rents for a similar property they will make their assessment and their decision is final. I am seeing comments on line where landlords are complaining because the new legislation allows tenants to go straight to a tribunal in the first 6 months of their tenancy. Another myth because this is not a change, it has always been an option but not one that many tenants are aware of and very few use.
We need to do our homework and check one of the online sites, where average area rents can be found for the whole country, before increasing the rent and to provide the information to the tenant so that they are aware of what the basis of the increase. It is never a good thing to allow your rents to fall well below the average for the area because tenants can become trapped and unable to afford to move, which might sound like good news but it isn’t and can lead to demands for improvements etc., and of course reluctant tenants.
There was a lot of pressure to include rent controls in this legislation and I, for one, am very pleased that this did not happen. That is not to say that it won’t happen in future and we all need to be aware that there is a glass ceiling in every area and when we try to break it the market kicks back
That leads us to an important change – the introduction of Decent Homes Standard to private rented properties. It’s actually time to lay down exactly what “decent” standards are. We all have different standards, even in our own homes, and that’s fine as long as tenants are not expected to pay to live in poorly maintained homes where there is damp (usually blamed on the tenants life style but often not the cause) poor/out of date plumbing/heating/sanitary/food preparation areas. Going forward we will have a defined standard which is not an opinion of a tenant or local authority officer, it will be enforceable and there will be penalties for landlords who don’t meet the minimum requirements. It’s never been more important to have an up to date inventory of the content and condition of our properties at move in and updated at property inspections so that everyone is clear about which issues are cause by lack of maintenance and which by poor housekeeping or misuse.
In order to keep a track on rented property there will be national landlord register. This will take some time to compile and the details of how it can be accessed and by whom are yet to be known but this will be a go to place to trace the owners of a rented property and will help with enforcement.
Another new initiative is Private Rented Sector Ombudsman I expect that this will be similar to the current property redress schemes which all letting agents must join before they offer their services. The agent pays and the schemes offer free dispute resolution/arbitration between agents and landlords or tenants. This is a service that we constantly recommend to both landlords and tenants who feel helpless when the agent has the power to remove them from their home but is not doing their job properly/maintaining the property/dealing with issues raised. There is no doubt that this service will be more widely used once the fear of section 21 is gone. A similar option for tenants can only be helpful to the sector, less cases will go to court, local authorities will be able to concentrate on the issues for which they are qualified and funded and bad landlords will buck their ideas up – overall a simple option to a big problem
There will, of course, be penalties for those landlords who do not register and Rent Repayment Orders will probably be one of them. It will certainly impact on our ability to evict a tenant if we are not registered
That brings us to the BIG issue of regaining possession of our properties – this is causing a great deal of concern and it’s important that we understand the changes.
Evicting a tenant who has no fault.
I don’t know a landlord who would want to evict a good tenant but so many landlords have used section 21(no fault) that the stats look like thousands of tenants are being evicted without good reason. Now that we are going to have to use section 8 we will need to have evidence of wrong doing unless we use one of the new “no fault” grounds
Here are the important updates to eviction under section 8 – there are several other grounds which have not changed
There are two options The best option is if there are mandatory grounds for the eviction which, when proven, means that the judge must grant possession. Sometimes the only option is to use a Discretionary ground which means that we have to make a very good case so persuade the judge that granting us possession is a just decision. Often a combination of both types of grounds are used to strengthen the case.
GROUND 1 – Mandatory ground
The landlord or a family member needs to move into the property. 4 months notice must be given
GROUND 1A – Mandatory ground
The landlord intends to sell the property. 4 months notice must be given.
This ground cannot be used until 12 months of the tenancy have passed. After the 4 months notice a further 12 months must pass before the property is offered for rent again if it did not sell. It cannot be used as a holiday/short term let nor let on a licence. This means that a landlord who wants to sell a tenanted property must plan for long void periods whether or not the property sells
GROUND 4 Mandatory ground. Notice to give to student tenants 2 weeks notice must be given
GROUND 4A Mandatory ground. Notice to give to students in HMO. 4 months notice must be given
There is no doubt that those landlords who let HMO rooms to students have not come out of this well. In my opinion, neither have student tenants who may now be disrupted mid exams because one or more of a group decides to give notice – this means that the notice is given for the whole group unless the landlord and other tenants agree to allow the tenancy to continue without the tenant who is leaving and to forgo that rent because its highly unlikely that the remaining students will want to take on extra rent and will all move out. The decision we, as landlords, need to make is to lose the rent of one or possibly more rooms or to loose the rent for the whole house until new tenants move in. Students who are not in their final year tend to move their belongings from one rented property to the next to avoid hauling them home, they also often remain in the university area because they have part time jobs or for the social life, there are also those students who are from overseas and who use the long holidays to travel around the UK but need to keep their belongings safe and/or have a base to touch down between trips; on this basis we can hope that the changes will not cause a mass exodus once exams are over for the year and that most students will continue with the same cycle as before but time will tell. Depending on the date that these changes are introduced we may get away with one more academic year. There is a lot more to be considered for student tenancies but that’s for a future article
GROUND 6 Mandatory ground The landlord intends to redevelop the property. 4 months notice must be given
GROUND 6B Mandatory ground. Enforcement action has been taken against the landlord. 2 months notice must be given
Now that the fear of section 21 will not be there we must expect that more tenants will report disrepair to the local environmental health department and that will undoubtedly result in some properties being found not to be fit for Human Habitation.
CHANGE UNDER EXISTING GROUND 8 Mandatory ground. There must be 3 months total rent arrears(up from 2 months). 4 week notice must be given (up from 2weeks)
Now we wait for a timeline for introduction of each part of the Act
