View all articles
Article 4
The latest reading of the Renters Rights bill in the Commons took place on 14th January
Renters’ Rights Bill 3rd reading – Parliamentary Bills – UK Parliament
There have been some important changes proposed and the full document is here
renters_rights_rm_rep_0108.pdf
Some of the big issues for landlords:
- Assured tenancies to be periodic with rent period not exceeding a month
- Prohibition of rent in advance before tenancy entered into
- Signature on tenancy restricted for student accommodation
- Review of tenancy deposit schemes and requirements
- Rules for proposed rent levels
- Mediated rent pauses (housing conditions)
- Body to report on the impact of the Act on rent levels
TENANCY PERIODS
“Assured tenancies to be periodic with rent period not exceeding a month
Terms of an assured tenancy are of no effect so far as they provide— (a) for a tenancy to be a fixed term tenancy, or (b) for periods of the tenancy to be different from the periods for which rent is payable (“rent periods”).
3.Terms of an assured tenancy which provide for the rent periods are of no effect unless each rent period has Assured tenancies a period of 28 days or shorter, or a monthly rent period.”
Those terms may provide for different rent periods at different times during the assured tenancy (but each rent period must be permitted by subsection (3)).
In a nutshell once this becomes law any rent that we have taken in advance of the end of the month following must be repaid. Rent can only be taken for a rent period at a time and rent periods cannot be longer than a month, therefore no termly in advance, which is common in the student market, or 6 months in advance, which is common where there applicant doesn’t meet affordability criteria
LETTING TO STUDENTS & THOSE WHO DON’T MEET AFFORDABILITY
In my second article on the Renters Rights Bill, published in November, I concentrated on the many ways that the Bill would impact on the student market, this was before the proposed changes had been discussed at committee, that has now happened and this is the result which will go forward for the third and final reading in the commons on 14th Janaury
Amendments to Renters Rights Bill – update as at 4th November 2024 – Landlord insider
Its time that universities and students unions realised the impact of some of these changes on their overseas market and fought to protect those students who will be hardest hit by the changes
“Overseas student numbers
In 2022/23 there were 758,855 overseas students studying at UK universities, 95,505 of whom were from the EU and 663,355 from outside the EU. The total was the tenth record high in a row and 26% of the total student population.
In 2017/18, the number of new overseas entrants to UK universities was around 254,000, increases in the last five years saw overseas entrant numbers reach another new high of 459,200 in 2022/23.
The top sending countries for overseas entrants have changed over recent years.
- India sent the most students to the UK in 2021/22, 126,600 entrants in 2022/23; this was more than ten times the number of entrants from India in 2017/18.
- China had sent the most students to the UK for more than a decade, but new entrants from China fell in 2020/21 and increased only modestly afterwards to 102,800 in 2022/23.
- Rapid increases in entrants from Nigeria since 2017/18 have seen it move into third place with 53,800 entrants in 2022/23.
- The total number of EU entrants increased gradually in the late 2010s before falling sharply by 53% in 2021/22 (when funding rules and visa requirements changed) and a further 8% in 2022/23.”
International students in UK higher education – House of Commons Library
Many universities do have a combination of their own accommodation and those provided by purpose-built student accommodation companies (PBSA) but many do not and often it is not until August that overseas students come to the UK to take up their studies and many have relied historically on private landlords to provide accommodation at that late stage. Additional, like all young people, there comes a time for most of them when they no long want to be in “institutional buildings” and want to go for the full student experience of living away from home and making their own decisions – this is why the PRS is so popular after their first year.
The changes which have been proposed, many of which I am sure will get into the Act, will make letting to students from overseas very high risk, in fact letting to anyone from overseas will be high risk but at least where they can show that they have a contract of employment with an income which covers affordability the risk is less likely. BUT no UK guarantor and no rent in advance may be a deal breaker for risk averse landlords who have mortgages to pay. This will impact on the universities and when word gets out may well prevent some overseas students from applying in England to all but the top rated universities.
Additionally there are several companies who rely on bringing skilled workers in to carryout short term contracts, this will be unhelpful to them too unless they are prepared to rent the properties for them as a company. I have done this with IT workers from India, and the company pay the rent directly to the landlord. I cannot see an alternative but at least they have this possibility where students do not.
THE ISSUES FOR STUDENTS AND OTHER TENANTS
- Prohibition of rent in advance before lease entered into
The change, which is more extreme than the ones proposed in the article linked above, has amended the Housing Act 1988 and The Tenants Fees Act 2019 to completely remove the possibility of taking more than the months/weeks rent which is due.
“A person who paid rent in advance as a tenant under an assured tenancy is entitled to be repaid any part of that rent that relates to days falling after the end of the tenancy.”
On the day that the Renters Rights Bill receives Royal Assent all tenancies will become monthly rolling tenancies, any fixed term left on a contract will end and under this amendment any rent which was already paid in advance which would cover a period beyond the end of the month (or week for weekly tenancies) before the Bill became and Act must be repaid
- Signature of lease for student accommodation
Where the tenant meets the criteria of a student relevant tenancy agreement may not be signed before 1 March in the year in which the tenancy is intended to take effect.”
From the date that the Bill becomes effective students cannot be asked to sign for a tenancy which begin less than 6 months later or before March of the year preceding the academic year to which it relates. This means that as the Tenant Fees Act stands, holding deposits cannot be taken because they can only be held for 28 days before signing of the contracts, neither can rent be paid in advance, therefore this is going to be a very stressful time for students who find themselves in the middle of end of term exams before they are sure that they have accommodation for the summer – so many students remain in the area of their university these days, often because they are working to help to pay their way. I cannot understand why the students unions are not up in arms unless they perceive this as a benefit – it will not be. It will also be very stressful for landlords and our letting agents.
There has been some talk of how landlords and agent might get around the changes and one of those suggestions is that a licence to occupy would be used instead of a tenancy. Apart of the criteria for a licence not being a tenancy this legislation has now included licence to occupy where something applies to a tenancy and therefore there is very little point in trying to use that alternative.
If this legislation does go forward at it is now proposed we will all, not only those who let to students, need to re-think our risk management. This will be particularly true where the only options are tenants who are higher risk. I have not talked about tenants with pets this time but this is also an issue as are those who meet affordability but only through receipt of benefits. Between now and Royal Assent there is a lot to take in and prepare for and I will cover this is future articles in this series.
FUTURE CHANGES FLAGGED UP
Within the Act provision has been made to make changes in legislation via the Secretary of State
Review of tenancy deposit schemes and requirements
“1. The Secretary of State must, within 12 months of the passing of this Act, conduct a review of tenancy deposit schemes and tenancy deposit requirements.
(2) (3) The review must include, but not be limited to— (a) consideration of options for tenancy “passporting”; and (b) measures to improve trust in the deposit dispute process. As part of the review the Secretary of State must consult with such parties as they see fit, which must include representatives of tenants’ and landlords’ interests.”
As a member of the executive of the National Federation Of Residential Landlords ( this no longer exists it was in the 90’s) I was the representative who worked with the Civil Servant in the Office of the Deputy Prime Minister on the introduction of Deposit Protection in the Housing Act 2004.
Until then tenants’ deposits were totally unregulated and being honest I knew a lot of landlords who never returned a penny. One landlord told me “that’s my holiday spending money”. I was therefore onboard with regulation of this money which can run into £thousands. The proposal on the table was that every tenant paid a deposit into a national custodial scheme run by an government agency. We knew that they were using a model used in New South Wales Australia and we contacted one of their landlords associations who warned us not to allow it to happen because when a tenant was in the wrong and just walked away it was taking up to a year for the landlord to recover the deposit from the scheme and the bureaucracy, even where there was no dispute was awful. We set about looking for an alternative and came up with the insurance based scheme where the landlord would hold the deposit and pay an insurance premium to cover the cost of arbitration if it were needed. This would give tenants the opportunity to dispute any claims at no cost and the scheme would call in any money disputed and decide who should get what. Government saw the sense in this alternative and it became an option in the 2004 Housing Act, MyDeposits took up this scheme and I have always chosen to use it because it enables me to return my tenants deposits immediately they leave and in cash if they need it, unless we have agreed that I have a claim. Its always worked for me and for my tenants but I know that there are many landlords and agents who prefer to put the deposits into a custodial scheme and of course that is their choice up to now.
I wish that I could say that the legislation worked as I had expected but I’m afraid it has failed in many ways and this is why the issues keeps coming back. A few years ago government were looking at a national scheme where tenants would pay one deposit in and transfer it to each property as they moved – honestly I cannot imagine how that works when the new landlord wants the deposit and the previous landlord has made a claim. I hope that this doesn’t rear is head again but there is no doubt there is room for improvement and this is why they have made this contingency.
- Mediated rent pauses (housing conditions)
(1) (2) (3) The Secretary of State must establish a body to be known as the Independent Living Rent Body. The “proposed rent” must be calculated with reference to rules set by the Independent Living Rent Body. In setting rules to be applied to the calculation of a proposed rent under the Independent Living Rent Body will have regard to property type, size and condition, location, local incomes, and such other criteria as it sees fit.”
I am going to write an article to cover the proposed to rent increases and the condition of the property because there is too much to understand to include it in this article
- Abandonment
Its been a long time coming but finally – hopefully –
In the Planning Act 2016 we were given the ability to reclaim our property, where a tenant had abandoned, without having to get a court order. This has never been enacted, and this too is included in the items which the Secretary of State will carry forward – not before time.
“Abandoned premises under assured shorthold tenancies In the Housing and Planning Act 2016, omit Part 3 (recovering abandoned premises under assured shorthold tenancies).”
