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I have written about some of the changes, which the Renter Rights Bill proposes, but while waiting for the bill to finally receive Royal Assent I have been looking at some of the items which I haven’t covered but which need to be considered to prevent them hitting us with unexpected issues. From the last version as amended in the Lords by committee and published here
There are some things which are covered under several areas of the Bill but amount to the same thing:
- Local authorities will have more powers to fill their coffers by taking action against criminal landlords (criminal meaning those who break the law even in a small way). More than ever we need to decide whether we intend to ensure that we understand the law and are in a position to meet all legal requirements OR put our properties into the hands of those who do and will manage them on our behalf OR its time to sell up as covered
When All Else Fails And We Need To Sell Up – Landlord insider
There are no other options going forward
- Tenants, as the title of the Bill suggests, will have more power to enforce their legal rights and will be given more legal rights. There are several items in this Bill which will not help most tenants and in my opinion have not been thought through sufficiently but there are several others which will shock landlords, especially those landlords who do not understand their legal obligations in terms of the on-going condition of the property.
- The loss of the Big Gun section 21 is now fairly well known and many landlords are nervous about their inability to remove bad tenants but many landlords haven’t considered the increase in what we all know is the most expensive cost in renting – churn. A tenant ability to give notice at any time coupled with their right to prevent viewings while they are still tenants is going to be a big issue for some landlords
Power to the tenant
All tenancies will become monthly rolling tenancies from the date the law is passed, this means that those with fixed terms will no longer have a “fixed term” beyond a month and should they decide at any time to end the tenancy they can give notice and leave 2 months later. It’s important to note that joint tenancies remain as they are now in terms of ending the tenancy and where one joint tenant gives notice the tenancy ends for all joint tenants unless they have made an agreement with the landlord.
Most of us now understand that the only way that we can evict a tenant is via court hearing having served a valid Section 8 (as above) but the loss of Section 21 comes with another sting in its tail because that has been the reasons why many tenants have tolerated poor quality property, lack of repairs, rent increases, rude/aggressive landlords…. They were afraid that a section 21 would mean that they would be homeless – that fear has no gone and we will see a lot more tenants making complaints to local authorities and challenging rent increases at tribunal. This will be a big shock for some landlords who, until now, have felt that they have the power to control their tenants rather than manage their properties as the law requires and see their tenants as the customers that they are.
The second sting is that if we successfully evict a tenant via section 8 on a ground which means that they didn’t meet the terms of the tenancy – like rent arrears – a local council may no longer have a statutory obligation to accommodate them, even temporarily, because they will be deemed to have intenstionally made themselves homeless. This is not good news for landlords because we would then be making the tenants homeless unless they have been able to secure another private tenancy – where will they go when the bailiffs do their jobs? I realise that this isn’t a landlords problem but I, for one, would not be immune to that situation
At the moment most tenants realise that if they don’t pay their rent they will end up in court with rent and court costs to pay in addition to being evicted, but when they understand that the only option is going to be court via section 8, paying their rent may not be such a priority if other grounds are being used, including the fact that they have done nothing wrong but the landlord needs to sell or move into the property, both grounds under new section 8. It will be interesting to see whether Government will instruct local authorities to continue to accommodate those tenants who are evicted under a Ground where they are not a fault, in other words status quo.
Double whammy
I’m not going to pretend that I have any sympathy for landlords who are going to be caught between two of these changes:
Tenants who can safely (no section 21) report disrepair and councils who will be able to fill their financial voids with penalties taken from bad landlords. This is what is going to happen and I believe it will happen quite quickly once the Bill becomes law because both councils and tenants are frustrated by criminal landlords who are taking rent and expecting people to live in, often dangerous, but certainly unhealthy homes.
More changes in this Bill will impact heavily on those landlords
We must all join a Redress Scheme just as letting agents do at the moment. This will give tenants free redress to complain about their landlords to the scheme who will then have sanctions – if we are thrown out of a scheme and another scheme will not accept us we will no longer be able to let property. In my Facebook group tenants and landlords are told on a daily basis to report a letting agent who is letting them down to their redress scheme. The agents pay to be members, as we will, and know that they cannot risk losing that membership – we will be in the same position
We must also sign up to a Landlord Register, how this will look and who will have full access we don’t yet know but no doubt this will be part of helping local authorities to get some money in, because they wont need to leave the office to find the unlicensed properties, the low EPCs ….. I imagine HMRC might be interested too and we all need to make sure that are records at HMRC are up to date especially since letting agents must now report on their client monies to HMRC
Not signing up to a Register and a Redress Scheme are two new items in the list of things that tenants can use to get a Rent Repayment Order
Finally in this area of change comes the standards which we are expected to achieve. Not forgetting that there will soon be the new minimum standard for an EPC to contend with. When the Bill becomes law the Housing Standard, which currently only applies to social housing will also apply to us as will Awaabs Lawwhich is mainly about damp and mould in homes and which came about because of the death of little Awaab Ishak in social housing. I wrote about this and shared links to the current standards here
The Renters Rights Bill Update Part 3 – Landlord insider
In a nut shell either we let homes which are in good repair and maintained as such throughout the tenancy or we will find ourselves with huge penalties and the possibility of losing our right to let them at all.
NEW DOCUMENTS WHICH WE WILL NEED TO USE
As with all new legislation, it will bring changes to some of the documents that we use and its important that we keep up with this
- Form of notice of proceedings for possession In section 8 of the 1988 Act, to be updated – after subsection (6) insert— “(7) Regulations made under section 45(1) by virtue of subsection (3) may— (a) provide for the form to be published by the Secretary of State; (b) provide that the form to be used is the version that has effect at the time the requirement applies.”
- The current version of the How to Rent Guide must be given with new tenancies and it’s important not to hold a copy on your device but to download the latest version as you need it. There will be a new version shortly after the Bill receives Royal Assent NB This little guide aimed at tenants is really worth reading because it’s constantly updated by Government and it’s very easy to follow
- Section 13 of the 1988 Act (increases of rent) will be amended and the new version must be used. This does not remove the rights of the landlord and tenant to come to an agreement on an increase without using a section 13 Notice but we cannot have a rent increase clause in our tenancy agreements therefore we need to do the homework on local rents and national percentage increases. Rent can only be increased once a year and must be in line with local market rents otherwise the Section 13 Notice will give tenants all the details of how to ask the rent tribunal to assess a fair rent and landlords must abide by their findings. This isn’t new but without the fear of section 21 I believe that more tenants will challenge increases in the hope that they will end up paying less than the landlord has asked for – they have nothing to lose because one change is that the tribunal can no longer prescribe a higher increase, therefore it will either be confirmed or reduced and the rent will remain the same until that happens
- Of course we will need new tenancy agreements and I expect NRLA and other organisations whichcurrently produce them will get them hot off the press as soon as the law is passed.
Odds and Ends
There has been a lot of discussion about rent in advance and even property lawyers are disagreeing online but this is an important issue for many tenants and their potential landlords. When the Bill is finalised, before it becomes law, we should have a definitive answer on this. From what I understand currently there seems to be hope that while we will not be allowed to ask for rent up front ( say 6 months as we often do now) before the contract is signed there is the possibility of a tenant offering rent in advance and paying it after the contract has been signed. Not very satisfactory because it cannot be included in the contract and therefore if they back out we cannot enforce it but it’s looking better than it once did and not a total ban. Between the those coming from overseas market, and particularly the students, we need a resolution on this sooner rather than later. Interestingly some of the legal people on LinkedIn were discussing the fact that the Renters Rights Bill actually contains the instruction that rent which is paid in advance if the tenancy ended earlier than was planned must be repaid to the tenant – that does seem like a hopeful indication that they are open to amending the bill.
Most landlords cope with various issues from tenants but we need to know that the rent will be paid to enable us to pay our loans and keep the property legally compliant with everything in working order. It’s important that we do everything possible to avoid having to use the tenants deposit for property damage leaving us with little or nothing to cover rent arrears. A good inventory at check-in and checkout is vital as are regular inspections to keep an eye open for small issues which may not have been notice or reported by your tenants before they become expensive issues
From the discussions in my Face Book group more and more landlords are considering taking out Rent Guarantee Insurance
Finding the Right Landlord Insurance Policy | Landlord Vision
The thing that I find most helpful about rent guarantee insurance is that they, like all insurance underwriters know their business, they have the stats on which to base the risk AND they avoid risk – therefore if they won’t cover a tenant we need to ask ourselves should we take the risk? It’s tax deductible and hopefully a waste of money every year but it’s money we should be happy to waste – no claim – good tenants
Taking a guarantor is another option many landlords like. It’s important that this is a homeowner in the UK to enable the landlord to have any chance of chasing the guarantee should they default
In the Renters Rights Bill we are restricted in who we can ask for a guarantee, including where the tenant has paid a tenancy deposit, a tenant has paid one month’s rent in advance (the new maximum rent payable) or if their income is sufficient to pay rent on a reasonable assessment we cannot then also ask for a guarantee.
The Guarantors’ liability will also be capped at six months’ rent and they will no longer be liable for rent after the death of a tenant.
This may still help those tenants at the modest end of the market or who have credit issues.
A lot to consider and still time to make any changes/learn new ways of working/investigate local letting agents/fix any property issues/replace things which are getting to the end of their expected life/decide what will give us the assurances we need particularly in relation to rent and make sure that we don’t fall down any potholes
