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I know you are all thinking what the change in Government will mean for your rental properties. In truth, it’s too early to say. There were certain things in all parties’ manifestos that could possibly be interpreted as ‘not good news’ for landlords. In Labour’s one, things that stood out were:
- The immediate abolishment of Section 21 (without the same focus on improving the court system first as the Conservatives were mentioning)
- Rent controls have been mentioned, with rent increases being allowed in line with inflation only
- Pets to be allowed – banning a blanket ‘ban’ on pets by landlords (although if there are block management restrictions and similar this may be an exception)
- Give local authorities more powers, to issue fines to landlords and enforcement orders
- Introduce ‘Awaabs Law’, which will make landlords more responsible for health hazards such as mould in their rental properties
- Stronger enforcement of the decent home standards
- Bringing in the ‘warm homes plan’ by 2030 – meaning all EPC’s must be C or above (currently they must be E or above)
- A mandatory national landlord register – keeping a log of how landlords are ‘rated’
- An extension on how much notice has to be served to evict tenants
Before you all rush to sell your properties – remember all politicians discuss lots of things leading up to an election. What gets put into practice and when can be very different!
The election actually put a halt to the very much talked about and debated ‘Renters Reform Bill’. This means the bill will need to be proposed again and will give Labour the opportunity to change some of its content.
If you look at what Labour have discussed they want to do, then you will see that some of this is as it was within the Renter’s Reform Bill (maybe with parts slightly changed). So, it’s still very much on the agenda that the Section 21 will be abolished. My personal hope is that they do not do this without overhauling the court system first and adding more grounds to the Section 8 Notice.
But we are very much in a ‘wait and see’ phase right now. I don’t want to speculate on what ‘might happen’ until new legislation is passed, and new rules need to be implemented. At that point, myself and my team will do our best to guide you through it all.
Debbie Jones MARLA CertCIH - all views are my own, this does not constitute legal advice
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RENT GUARANTEE
Rent guarantee is a product we are able to offer via the referencing agency we use to give landlords extra protection against non-payments of rent. If a tenant does not pay the rent, and the landlord has a rent guarantee policy in place, the insurers will contact the tenants, if the tenants continue not to pay, then the insurers will make the rental payments, and, if necessary, will then start eviction proceedings to regain possession of your property.
If the tenant isn’t paying the rent and must be evited, the insurers will take care of the entire process. They will also cover the full rent (no excess), so a landlord will not suffer a loss because of this. It is important to note however, that insurers pay rent in arrears, and tenants pay in advance, so landlords must expect to receive the payments at different times if the insurers are making the payments.
The policy doesn't just cover landlords for non payments of rent. It also covers landlords for any tenancy breach (subject to terms and conditions), so if, for example, the tenant fails to vacate after the serving of a Section 21 Notice, or is in breach of tenancy under a ground within a Section 8 Notice, then the insurers will also take over this claim for you.
If landlords have a policy with a provider that isn’t via us then please check the policy terms and know exactly what you are covered for and how and when you need to make a claim. We are frequently made aware that landlords, who thought they had comprehensive cover with an outside provider, have had their claims denied. Please also be aware that submitting an insurance claim is an enormous amount of work, we carry out this work for landlords who have rent guarantee with us, we do not carry out this work if you do not, therefore if you have rent guarantee with an alternative provider, please make sure you know the claims process, if you require our help in providing documents and evidence then we do make a charge for this of £125.00 Plus VAT (we do not attend court for you)
We offer the rent guarantee policy at a hugely discounted rate for the first term of each tenancy, and then at a competitive rate for the remaining time a tenant remains in a rental property.
** If you do not have rent guarantee, and your tenant does not pay his rent, its important to realise that it will take many months for you to gain possession of your property through the courts. The loss to you financially will be several £1000.00 in rent plus the court costs, not to mention the stress that this will all cause and the amount of your personal time this will take up.
Debbie Jones FARLA Cert CIH 08/03/24
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HOLDING FUNDS IN MORE DETAIL
Once a landlord has been notified that a tenant wishes to apply for a property, and the landlord is in principle happy to proceed subject to referencing, we will ask the tenant to pay ‘Holding Funds’. The amount will be equivalent to one week’s rent.
The property is not removed from the market until these funds are received.
Once we have your holding funds, current legislation stipulates that the necessary paperwork should be completed within 15 days or such longer period as might be agreed. It is usual for us to agree a longer period with you, as quite often the referencing process and obtaining the relevant safety certificates takes longer than 15 days.
Do not pay any funds if you are still looking at other properties, or are unsure if this property is ‘right’ for you! If you pay the funds and then ‘simply change your mind’ then the holding funds are not refunded and will be retained by our firm. You will lose your money. By the same token, if you pay the funds and then you unreasonably delay in responding to any reasonable request made by our firm, or if it turns out that you have provided us with false or misleading information as part of your tenancy application, or if you fail any of the checks which the Landlord is required to undertake under the Immigration Act 2014, then again your holding funds will not be returned. They will be retained by this firm. If your employer or existing landlord do not respond, and you are unable to verify your work status and income by another means asked for by the referencing agency, then the funds will be retained by this firm.
However, if the Landlord decides not to offer you a tenancy for reasons unconnected with the above then your funds will be refunded within 7 days. Should you be offered, and you accept a tenancy with our Landlord, then your holding funds will be credited to the first months’ rent due under that tenancy.
Where, for whatever reason, your holding fund is neither refunded nor credited against any rental liability, you will be provided with written reasons for this money not being repaid within 7 days.
You will not be asked to pay any fees or charges in connection with your application for a tenancy. However, if your application is successful under our standard Assured Shorthold Tenancy agreement, you will be required to pay certain fees for any breach of that tenancy agreement in line with the Tenant Fees Act 2019. In consideration of us processing your tenant application, you agree to pay those fees to us on request.
It is important that you know your legal rights and accordingly you should feel free to seek independent legal advice before paying any money or signing any paperwork. More information on the fees that can lawfully be charged can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/922900/Tenant_Fees_Act_-_Tenant_Guidance.pdf
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ASSURED SHORTHOLD TENANCY VERSUS STATUTORY PERIODIC TENANCY
When your tenancy starts it will almost certainly be an Assured Shorthold Tenancy Agreement (AST). An AST is a fixed term agreement. It has a start and an end date. It contains all the clauses that you need to fulfil as a tenant, as well as detailing your landlords’ obligations.
On renewal the landlord and tenant need to decide if they would like to commit to another fixed term contract, so have a new Assured Shorthold Tenancy Agreement, or if they would like to revert to a statutory periodic tenancy, more commonly referred to as a month to month or rolling contract.
Both parties must be in agreement as to the type of tenancy they wish to renew on.
With both types of tenancy, all the clauses in the most recent AST remain legally valid ….. so, if you have renewed with a new AST, all of these clauses are the ones you are bound by. If you have opted to have a statutory periodic tenancy, the preceding AST is the one that has the clauses that you are bound by. An exception could be the level of rent, which may have been increased by mutual agreement or by way of a separate Section 13 notice. The biggest difference is when the tenancies will end and how they will end.
ENDING A TENANCY
Some tenant’s will stay in their rental property for 30 Plus years, others will leave after 6 months. Depending on if the landlord or the tenant want to end the tenancy will depend on the process to follow.
Landlords- if you want to end a tenancy you ALWAYS have to serve a notice. It will either be a Section 8, or a Section 21 notice (depending on the circumstances) It doesn’t matter that your tenant has a fixed term Assured Shorthold Tenancy Agreement, that details an ‘end’ date. You will not be granted possession of your property at court if you have not also served the relevant notice. Please see the chapter on Section 8 and Section 21 notices for more information on these.
Tenants – If you are in an Assured Shorthold Tenancy Agreement we will contact you if your landlord has our fully manged or rent collection services and ask you if you are looking to renew or to leave. You should also read your tenancy agreement to see what is stipulated about ending your tenancy. Commonly it is requested that you serve your landlord two months’ notice. It may also say in your agreement how you need to serve this notice (by post, email etc)
Tenants – if you are on a Statutory periodic Tenancy then the law is different. You must serve your landlord a minimum of one months’ notice (If you pay your rent monthly), this notice must be served on or before a rent payment date, and must end to coincide with a rent payment period.
Tenants – if you want to leave before your contract naturally ends there is a process for this. Remember in law, you are not permitted to simply ‘end’ an Assured Shorthold Tenancy Agreement. But if you need to do this then it can only be done by mutual agreement and there are financial implications. Note these financial implications are permitted under the Tenant Fee Ban Act. Full details of this are available on our web site or by contacting the office.
Debbie Jones Cert CIH, FARLA 12th January 2024
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RENT REVIEWS
Typically, a rent review will take place once per year. For our fully managed properties, we quite often discuss rent reviews during the property inspection. For our rent collection landlords, we would normally contact you on an annual basis by email or phone to discuss a rent review.
When considering rent reviews, we will always look at the rental market at the time. We compare the rent of a property to the rents currently being achieved for similar properties. We then discuss this with the landlord and tenant.
Rents can be increased by granting a new Assured Shorthold Tenancy to the tenants, with the new rental amount listed, or, if the tenant is on a Statutory Periodic Tenancy, then the rent is increased by the service of a Section 13 Notice.
Rent reviews are always discussed before they are implemented.
If a tenant disagrees with a rent review, then the landlord will consider the reasons, the landlords then have two options:
The landlord may decide to renegotiate, they may decide they have not considered the local market correctly and may be looking to increase the rent too much in comparison to neighbouring properties, so the landlord may review the amount he wishes to increase the tenancy by.
Or
The landlord may decide that the rent review is fair, and if the tenant will not pay the market rent for the property that the tenancy will need to end. In this instance the landlord will need to serve the tenant with the appropriate notice to bring the tenancy to an end.
If a tenant feels that the rent being asked is too high, they can formally challenge this by taking their plea to the First-Tier Tribunal (property chamber). There is a set process and time scale to start this process, it must be before the new rent amount is due to start, or if this is a new tenancy, within 6 months of the tenancy start date.
In reality, it is incredibly rare for tenants to take their grievance to the First-Tier tribunal. The tribunal will look at the same evidence that the landlord has access to, i.e. local comparable rents. If the rent increase is deemed to be in line with the local property market, they will not rule in favour of the tenant.
Debbie Jones Cert CIH, FARLA 12th January 2024
