Amendments to Renters Rights Bill – update as at 4th November 2024

Original article from Landlord Vision - Amendments to Renters Rights Bill – update as at 4th November 2024 

This is the second article on The Renters Rights Bill. Last month I covered The Renters’ Rights Bill and How It Can Change Private Renting Forever you will find it here:

The Renters’ Rights Bill and How It Can Change Private Renting Forever – Landlord Insider

I repeat the advice I gave in the article above:

On 26^th September, the Government published a Guide to the bill and everyone should read it rather than speculate because this Bill will get through, although there may be some subtle changes as it passes through parliament and there are some major changes which all landlords need to understand. The Guide is here:

Guide to the Renters’ Rights Bill – GOV.UK (www.gov.uk)

Long title

“A Bill to make provision changing the law about rented homes, including provision abolishing fixed term assured tenancies and assured shorthold tenancies; imposing obligations on landlords and others in relation to rented homes and temporary and supported accommodation; and for connected purposes.”

The Bill is currently going through the Committee stage where there is debate and discussion and changes proposed.

There have been five debates so far 29, 30^th October and 5^th November and full details are published here:

Renters’ Rights Bill Committee stage – Parliamentary Bills – UK Parliament

Notices of amendments made at each stage can be read here:

Renters’ Rights Bill Committee stage – Parliamentary Bills – UK Parliament

The latest version, published on 4^th November 2024 is here:

renters_rm_pbc_1104.pdf

For those who haven’t the time to read all of this I will explain what, in my opinion, are some of the big issues and how they might impact our businesses.

The issues I am going to focus on relate mainly, but not only, to the Student Market

The following changes have been proposed.

“David Simmonds CBE is a British Conservative Party politician who has served as the Member of Parliament (MP) for Ruislip, Northwood and Pinnerfrom 2019. Simmonds was formerly a councillor on Hillingdon London Borough Council, having served from 1998 to 2022.^] He has been Shadow Minister for Housing, Communities and Local Government since July 2024”

David Simmonds. called for:

• an amendment to require the publication of an economic impact assessment of the bill including abolishing the fixed term on student accommodation. The student letting market is a micro market which has evolved over the years and although not perfect it works pretty well for both students and landlords. A few tweaks is all that was needed not a total upheaval which will impact on students as much as their landlords and if it drives landlords into other markets will force students to pay higher rents for PBSA or HMO where landlords need to cover the potential risk – more about that later;
• removal of the ability of local authorities to introduce Selective Licensing – presumably, the requirement will be outdated with the new requirements for the RRB – All properties to be registered with the local authority – after all this the “reason” that selective licensing has been introduced in so many parts of the country – or so we were told by those councils who have used this power. NB This will not change Mandatory licensing or Additional Licensing which both only relate to HMO and may be an attempt to reduce the overheads of those landlords who let family homes. Either way it’s got my vote; and
• “Assessment of operation of possession process The Lord Chancellor must prepare an assessment of the operation of the process by which— on applications made by landlords, the county court is able to make orders for the possession of dwellings in England that are let under assured and regulated tenancies, and such orders are enforced.

We would all agree that this is a very good call and should have been carried out before this Bill came into parliament

“Giddeon John Amos OBE is a British politician, architect, and urban designer. He has been Member of Parliament (MP) for Taunton and Wellington since 2024. A member of the Liberal Democrats”

Mr Gideon Amos called for:

• a limit on rent which can be requested in advance with a maximum of one months rent to be paid in advance. He talks about “any period of the tenancy” I believe that he has failed to understand the Bill is removing tenancy periods in favour of rolling monthly tenancies. I expect that this will be amended at some point to say that because there is no tenancy period beyond a month, rent in advance would be a deposit which is already controlled under the Tenants Fees Act and therefore the possibility of tenants from overseas, those with no UK homeowning guarantor, those with income from grants which is paid termly in advance are going to struggle as are landlords who are in that market and now cannot secure their rent. It gets worse I’m afraid and I will talk about guarantors later; and
• “Impact of Act on provision of short-term lets The Secretary of State must, within two years of the passing of this Act, publish a review of the impact on the number of landlords offering properties on short-term lets rather than in the private rented sector.” Despite the loss of tax breaks short term “holiday lets” are a very attractive proposition for many of us and I believe that those landlords who intend to sell will realise that evicting their tenants before they market the property is their best option. There are many posts on my Facebook group from landlords who have lost sales because they cannot regain possession in time and those who bought at auction with tenant who they now cannot remove easily – this will only get worse when we rely on section 8 only. By removing the tenants of course the income stops and many landlords cannot afford to pay their overheads without the rent – Enter Airbnb – income with no tenancies as long as you get it right.

Alexander David Sobel British Labour and Co-operative politician who has served as the Member of Parliament (MP) for Leeds Central and Headingly,. He served as Shadow Minister for Nature Recovery and the Domestic Environment from 2021.

Alex Sobel called for:

• the tenancy agreement may not be signed before 1 March in the year in which the tenancy is intended to take effect.

In his explanatory notes he says, “This new clause would prevent student leases being signed before March in the year in which they are intended to commence.” That clears that up then!!!  End of year exams begin at University of Birmingham, and I expect elsewhere, on 26^th March next year – nothing important only main revision time and worrying about finalising accommodation for July. I’m sure that Letting Agents will devise a system of agreeing a tenancy earlier in the year but until the contract is actually signed either party can walk away as could some of the joint tenants whose circumstances have changed or who have found a new love and want to live together, it goes on… ( It aint broke – why change what works?)

• He goes onto guarantees and it becomes complicated because this isn’t only about the student market  “(a) that the person has paid a tenancy deposit or has been assisted under a deposit scheme; (b) that the person is required to pay rent in advance equivalent to one month’s rent or more; that on a reasonable assessment of their means the person’s income (including state benefits received and any other lawful source of income) is sufficient to enable them to pay the full rent due under the tenancy; that arrangements will be made for housing benefit or the housing element of universal credit to be paid directly in respect of rent to the relevant person; that the relevant person has entered into a contract of insurance under which they are insured against non-payment of rent; or such other circumstances as may be prescribed in regulations made by the Secretary of State.”

To be honest even I am confused at this point but I think he means that all that excludes having a guarantor because he goes on:

In any other case where a relevant person lawfully requires a person, as a condition of the grant of a relevant tenancy, to provide a guarantor, the sum for which the guarantor may become liable under the relevant guarantee shall not exceed a sum equal to six months’ rent.

The goal here is obviously to cap the guarantee rather than to allow it to cover the whole of the tenancy as a good guarantee does at the moment and this will not only impact students from overseas (assuming student loans are covered above under “any other lawful source of income” ) it will also impact those who are self employed, on low income plus commission etc.

He goes on:

• In any case where a relevant person requires a tenant, as a condition of the grant of a relevant joint tenancy, to provide a guarantor, the sum claimed under the guarantee shall not exceed such proportion of the loss as is attributable to the act or default of the individual tenant on whose behalf the guarantee was given; and if such proportion cannot be proved, shall not exceed the sum obtained by dividing the total loss by the number of tenants. In this section— “guarantor” is a person who enters into a guarantee in relation to a relevant tenancy; “guarantee” is a contractual promise to be responsible for the performance of an obligation owed by the tenant to a relevant person under the tenancy if the tenant fails to perform the obligation; …….This new clause would restrict the circumstances in which a landlord can request a guarantor.”

It will not only restrict us on guarantees it will be a nightmare when there are a group on a joint tenancy with “joint and several” legal responsibility because we will need to identify the culprit and only charge the loss to that person. That should be easy!!!

All of this considered, should it make it into the Bill a guarantee, even when we are allowed to take one, will be pretty irrelevant and I can only imagine that rent will be increased to over that eventuality – not helpful for those tenants who pat their way and treat our properties with respect but we won’t know who they are at the start of the tenancy.

• A second offering to limit rent in advance –

“Limit on rent in advance of tenancy In Schedule 1 to the Tenant Fees Act 2019, ….if the amount of rent payable in advance of any period of the tenancy exceeds the equivalent of three month’s rent, the amount of the excess is a prohibited payment.”

Stella Creasy is a British Labour and Co-operative politician who has been Member of Parliament (MP) for Walthamstow since 2010.

Stella Creasy called for:

• the publication of an economic impact assessment of the bill, including abolishing fixed-term tenancies on student accommodation; and
• impact of orders for possession on credit ratings – The Financial Conduct Authority must develop guidance for credit rating agencies on the impact of orders for possession on the credit ratings of tenants. (2) Guidance prepared under this section must— (a) outline that being subject to an order for possession under Grounds 1 to 8 must not negatively impact an individual’s credit rating.

In my opinion that is discriminatory, singling out an issue like rent arears, which to satisfy ground 8, must be in excess of 8 weeks at the time of service of notice and could well have increased enormously by the time the case is heard. How can it be justified that a person who falls behind with mortgage payments would have their credit rating reduced but not a tenant who falls behind with rent. This surely cannot happen?

There is so much to think about in these proposals – remember that they are only proposals at this point – I fear that some  of them have the real possibility of excluding certain tenant groups from the market.

LHA RATES FROZEN

And then a bombshell for many tenants and their landlords when, on 30^th October, Liz Kendall, Social Secretary, announced after giving her statement on pensions and benefits for 2025

“Although not covered by my statutory review of state pension and benefit rates, I can also inform the House that local housing allowance rates for 2025/26 will be maintained at the 2024/25 levels, following their increase in April 2024; and that the benefit cap has not been reviewed for 2025/26 and will also be maintained at the 2024/25 levels.”

Written statements – Written questions, answers and statements – UK Parliament

Before the increase in April this year the rates had been frozen for 4 years and had fallen so far behind actual rents that many people had to choose paying rent, heat, or risk losing their homes. Some landlords are very savvy about increasing their rents to take account of the maximum LHA the tenant can claim but some are not and often try to keep their rents down. This doesn’t help the tenant, if they ever need to find a new home they may struggle when they see the actual rents being charged and it also has the effect of keeping average rents down, which, as rent assessment is bad news for other landlords especially if they have increasing overheads. Best practice is to review the rent before the anniversary of the tenancy, check local rents and LHA rates if your tenants are claiming and put in small annual increases rather than falling behind and needing to put in a big increase which is a shock and is often met with requests for repairs/upgrades or resentment.