Landlord Times May 2024

LANDLORD TIMES

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May 2024

Renters’ Reform Bill passes Commons vote

MPs have voted in favour of the government's Renters' Reform Bill - despite it including an indefinite delay to the end of no-fault evictions.

The debate on the legislation took place on Wednesday, April 24, and included a new clause from

the government which would hold off outlawing Section 21s until a review of the courts system had taken place.

It will now move forward to the House of Lords for further debate and scrutiny.

Levelling up minister Jacob Young told MPs: “We’re investing £1.2 million for the courts and tribunals service to deliver these new processes.

“If we don’t have a ready court system when we make this change, the biggest change in 30

years, if the courts aren’t ready for these changes that will not benefit tenants, it won’t benefit landlords, but it certainly won’t benefit tenants either.”

Despite his assurances, he offered no timeline meaning there is no clear date for when it will actually be outlawed.

Elsewhere proposals agreed included the introduction of a decent home standard, the establishment of a new ombudsman, allowing tenants to bring their pets and stopping landlords having blanket bans on renting to those with children or who are on benefits.

However, the most contentious aspect of the Bill for many landlords was the proposed abolition of fixed term tenancies. Since the first reading of the Bill last year, backbench MPs had lobbied the government to ensure it was not adopted.

During committee stage an amendment was put forward in which tenants would have to stay in a tenancy for a minimum of six months before leaving. This amendment was voted through.

During the debate, Totnes MP Anthony Mangnall, a staunch supporter of fixed term tenancies, said he could not support the Bill as it could have “dire consequences” for future levels of housing supply.

He said: “Landlords incur costs and expenses when entering into a tenancy and they need the certainty of a minimum period. Many buy-to-let mortgage lenders also require a minimum six-month

tenancy agreement when lending to residential landlords.

“To be clear, the Bill will make it illegal to sign a fixed-term tenancy. The lack of clarity when describing the end of a contract has meant we are now terming simple cessations of contracts as no-fault evictions. Who is at fault when a previously agreed contract comes to an end at a future date? No one. I believe there are ways to retain fixed-term tenancies and scrap section 21.

“Removing fixed-term tenancies is a step too far for me – it will be significantly negative for the future rental market, and I will unfortunately have to vote against the Third Reading.”

Sheldon Bosley Knight’s associate director Nik Kyriacou said: “While I am disappointed fixed term tenancies have been abolished, I am pleased there has been some compromise to the issue. The amendment as approved will give some security of tenure to both landlords and tenants which will be a good thing.

“However, it is extremely disappointing the government has kicked the Section 21 can down the road yet again.

“The government has had five years to invest in the court system to ensure it is ready to cope with the demands it will inevitably face. Landlords and tenants just need clarity on when it might happen.”

“The government has had five years to invest in the court system to ensure it is ready to cope with the demands it will inevitably face. Landlords and tenants just need clarity on when it might happen.”

Labour's shadow housing minister Matthew Pennycook accused the government of lacking the "courage" to protect renters as they had promised.

He said: "Instead of ministers having the courage to face down their unruly backbenchers, this weak and divided Conservative government is appeasing them at the expense of private renters who will see the rights and protections they were promised watered down.”

A spokesperson for the department for levelling up, housing and communities said: "Our commitment to scrap section 21 no-fault evictions as soon as possible is unchanged.

“We have always said we will give six months’ notice before ending section 21 for all new tenancies. In addition, we have committed to ensuring improvements in the courts service are rapidly implemented before extending this abolition to all existing tenancies.”

Nik Kyriacou ASSOCIATE DIRECTOR

Labour to extend Awaab’s Law if elected

Awaab’s Law will be extended to the private rental sector (PRS) if Labour wins the next general election.

The campaign to do so has been spearheaded by Fleur Anderson, Labour MP for Putney, Roehampton and Southfields.

She is bringing a Private Members Bill to Parliament which would give all renters the right to live in mouldfree homes.

Awaab’s Law was introduced by the government following the death of two-year old Awaab Ishak from a respiratory condition caused by mould in his home.

It will compel social housing providers to act quickly and in a timely manner to address any complaints by tenants of mould in their homes. However currently it does not cover those in the PRS.

Campaigners hoped to bring it to the House of Commons on Wednesday April 24 as part of a series of amendments to the Renters’ Reform Bill.

However, the amendment 10 as it was referred to, was dismissed by the deputy speaker.

Levelling up secretary Jacob Young MP told MPs the decent homes standard and the ombudsman proposed as part of the Renters’ Reform Bill would serve to help enforce standards for tenants.

He said: “I am clear no tenant should have to live in dangerous

housing conditions, but our approach to tackling this issue must reflect the differences between the social and private rented sectors.

“Awaab’s Law was designed for social housing. Most social landlords manage large portfolios and have dedicated repair and maintenance teams, enabling them to tackle issues to specific timeframes.

“In contrast, the vast majority of private landlords own a small number of properties, with 82% of landlords having fewer than five properties and 43% owning just one.

“The Bill takes a different and, I believe, more suitable approach to ensuring private tenants have safe homes.”

Sheldon Bosley Knight’s regional lettings manager Jo Egan said: “It is right to highlight any situation in which a tenant is living in sub-standard housing. It is also right to distinguish between the social and private rented sectors.

“I believe the establishment of the ombudsman and the decent homes standard are the right routes to ensuring all tenants

live in damp and mould-free homes and that they are safe and dry. Having a landlord register will also be important.

“Our landlords are responsible and I’m sure they will be right behind this legislation.”

Free event for landlords in south Warwickshire

Landlords and managing agents in south Warwickshire are being encouraged to take part in a focused industry forum.

The Landlord Forum takes place on Tuesday, May 21 at the SYDNI Centre and is being led by the private sector housing teams from both Warwick and Stratford-upon-Avon district councils.

Run in partnership with the National Residential Landlords Association (NRLA) and the local Landlord Steering Group it is a free event and open to all those involved in letting property within the private rental sector (PRS).

There will be a series of short presentations covering a range of topics including a crime special for landlords, self-managing landlord tips, home upgrade grants and recent policy and legislation changes.

There will also be an opportunity to network with other professionals and industry experts and visit exhibitions from local specialist companies and council support organisations.

Landlords can bring questions to the popular, Tenancy Agreement Clinic for a specialist solicitor to answer.

Sheldon Bosley Knight’s lettings manager Natalie O’Sullivan said: “This sounds like a really useful forum. Not only is it free to attend, there will be lots of useful advice and so we would urge our landlords to come along and support it.

“There will be several members of the SBK lettings team there and it will be a great way to find out more about the sector locally, any particular local challenges and how we can help overcome them.”

Councillor Paul Wightman, WDC’s portfolio holder for housing, said:

“These are challenging times for the private rental market, so we highly recommend landlords, agents, and others involved in letting property in the private rented sector take a couple hours out to come along to this forum.

“We are confident all those taking part will find it beneficial, be it for finding out about the latest industry information, gaining advice and insights, sharing good practice and forging new partnerships.”

The forum takes place between 12.30pm and 4pm at SYDNI Centre, Cottage Square, Sydenham, CV31 1PT.

Visit https://shorturl.at/botPW to register, email Warwick district council landlord liaison officer Balwant Rai, balwant.rai@warwickdc.gov.uk or call 01926 456733

Longer tenancy trend emerging

Tenants are staying in their existing rental property for longer as they look to avoid higher rents elsewhere.

According to research from the Deposit Protection Service (DPS), the average tenancy length in England and Wales has increased by 218 days during the last four years.

It now stands at 924 (just over two and a half years) compared with 706 days during 2020 and is a rise of just over 30%.

The DPS’ research suggests the percentage of relocating respondents who found it ‘difficult’ or ‘very difficult’ to move increased by 6% (from 39% to 45%) between March and September 2023.

The data also reveals the

proportion of tenants who said they were not planning to move increased by 2%, from 48% to 50%, during the same period.

The proportion of respondents who said they had taken on an additional job to secure their rental property increased by 3%, from 27% to 30%, between March and September 2023.

The data also shows 64% of movers questioned had made financial sacrifices to meet their new rental arrangements, an increase of 1% (63%) since March 2023.

Sheldon Bosley Knight’s lettings manager Josh Jones said: “We have found over the last few years there is a trend emerging for tenants to stay in the same property for longer than they might have done a few years ago.

“There are many reasons for this, but the main one I suspect is competition for rental properties remains high.”

“There are many reasons for this, but the main one I suspect is competition for rental properties remains high. If a tenant is happy where they live they are more likely to stay rather than try and find something else, especially as there are fewer rental properties available.

“However other reasons include the expense of moving and tenants wanting to stay put to save so they can buy a property.”

Protecting against financial adversity

What would you do if your tenant didn’t or couldn’t pay the rent?

Could you afford to pay any mortgage on the property and/or other costs associated with it? Would you be able to pay the legal fees if you had to issue court proceedings against the tenant?

Although not a pleasant thought, there are occasions when non payment of rent does occur and it often comes when you are least expecting it.

In Q3 last year 35% of landlords reported their tenants were in rent arrears according to a survey by Uswitch. In a separate survey last July, Octane Capital reported landlords were seeing a 42% rise in rent arrears in four years, from 4,930 in Q1 2019 to 7,030 in Q1 2023.

The ONS released figures earlier this year indicated around a third (35%) of adults in the country who were paying rent or a mortgage were finding payments very or somewhat difficult to afford.

Recent stats by lettings insurance

company Homelet show it paid out £3,367,233 in claims last year. The average volume of claims received per month in 2023 was 163 and in the year to date, it’s 199 which is higher than the average of 246.

With these figures in mind, now might be a good time to think about covering yourself financially should the worst happen – rather than let it be an afterthought.

Although under no legal obligation to take out any form of insurance to protect themselves, we feel it is a no brainer for landlords to cover themselves for loss of rent and other emergencies, especially during times of fiscal uncertainty.

Rent guarantee insurance is an optional cover that can be added to landlord insurance to protect your rent payments and give you peace of mind.

If your tenants fail to pay their rent, it can cover some of those payments until they can continue with their payments or until they are evicted.

Sheldon Bosley Knight lettings

manager Claire Paginton said:

“Sometimes events overtake us and life deals us a bad hand. Tenants can lose their jobs, be poorly and unable to work for a period of time or just decide to stop paying.

“We should also bear in mind the cost of living crisis hasn’t gone away and interest rates are still high.

“In this situation a landlord needs to know he or she is still going to receive the rental income every month regardless. We feel rent protection insurance offers security at a time when things do not feel secure.

“One of our services here at Sheldon Bosley Knight is the Homelet Rent Recovery Protection scheme. It covers the monthly rent should a tenant default for whatever reason and helps with legal expenses to cover eviction costs.

“If any of our landlords wish to talk to us about it, or have any concerns or questions, please do not hesitate to contact me or one of the team and we’d be delighted to help.”

• Private entrance

• Modern fitted kitchen

• Spacious shower room

• Lease length - 59 years remaining

• Current rent value of £625 pcm

• EPC - D

• Recently renovated

• Modern fitted kitchen and bathroom

• Highly sought after location

• Allocated parking space

£70,000

• Current rent value of £850 pcm

• EPC - C

Woodlands Court

Hickory Close, Coventry

• Prominent high street location

• One upper floor apartment

• Ground floor commercial premises

• Net internal area 383.7m²(4,130 sq ft)

• EPC - TBC 18,

• Apartment £7,200 per annum

• Development potenial (STP)

• Pershore town centre

• Freehold

• Shop - £18,000 per annum

• Town centre freehold

• Potential for residential conversion (STP)

• Prominent for passing traffic

• Vehicular access and parking

Gross yield of 6.6% £380,000 SOLD

• Rateable value: £16,000

• Three-storey commercial property

• 154.37m (1,662 sq ft)

• EPC - D

Gross yield of 5.4% £295,000

High Street, Pershore