Renters Rights Bill – our three preliminary tips for landlords

The Renters Reform Bill is no more. Arise the Renters Rights Bill! It is very similar in many ways but more tenant-friendly.

However, from what I have seen so far, I don’t think it is a bad bill for landlords. So long as you comply with all your legal obligations (my Landlord Law service can help with that) and take care with your choice of tenants, you should be fine.

Bearing in mind that whatever legal regime is in place it is not going to prevent all issues.

The people who should be worried are the rogue landlords.  Hopefully, their time for ignoring tenants’ rights and regulations with impunity is drawing to a close.

This is good news for the good landlords as it will finally create a level playing field.  You will not find yourself paying for compliance while the rogues ‘get away with it’.

Three preliminary tips

My advice in my post of a few months ago still stands. But these were my preliminary thoughts on first looking at the bill.

1. If you want to use section 21 use it now.

You are in the last chance saloon for section 21 evictions. The government hope to get the bill passed and active before the summer of 2025.

If you have a bad or anti-social tenant you want to evict, then section 21 will be a much easier process.  But you should start NOW.

I would also advise you to use solicitors. Specialist solicitors who specialise in landlord and tenant work and possession proceedings. Landlord Action, for example, would be a good choice, but there are others.

We have a short free guide on using solicitors, which may help. Landlord Law members can use our special forms to instruct our recommended firms at fixed fees.

2. Do not enter into a ‘rent to rent’ arrangement

This is where you rent your property to a tenant, not for that tenant to live in, but to sublet to others.

The Renters Rights Bill is going to reverse the decision in the case of Rakusen v.Jepson.  In this case, tenants applied for a rent repayment order in the First Tier Tribunal, claiming the penalty as their landlord had not obtained an HMO license.  The case was subsequently appealed all the way up to the Supreme Court.  The Court held that rent repayment orders can only be made against the immediate landlord and not the owner of the property.

However, many rogue landlords use ‘rent to rent’ arrangements to let to a company with no assets specifically so if tenants bring a claim they will not get paid.  This is why the government is reversing the Rakusen decision.

What this means is that if your tenant does something which entitles the subtenants to apply for a rent repayment order, YOU could be liable.

Even though you may have known nothing about what your tenant is doing and have not received any rent. The new bill is also set to increase the penalty that tenants can claim to up to 2 years’ worth of rent.

If you are in a rent-to-rent arrangement after this bill becomes law, you are at risk of being fined large amounts of money for something you know nothing about. Don’t risk it. Use a decent agent instead.

I would also suggest you try to extricate yourself from any rent-to-rent arrangements you may have at the moment, before this bill becomes law.

3. Get into the habit of regular rent increases

In my previous post, I suggested that you get your rent up to a market rent. I know that so far as the press is concerned, all landlords are ‘greedy’ individuals who will jack the rent up to as high as they can.

That may be true for some. However I know there are many landlords who have not increased the rent for years and may be finding it hard to make a profit. If this is you, you need to get your rent up to the market rent.

If large number of landlords are charging a lower rent, that will then be deemed the market rent which the Tribunal will then set when tenants challenge rent increases. So make sure you are charging sufficient to cover your expenses and make a modest profit.

However, after you have brought your rent up to a market renr, it is essential that you get into the habit of increasing rent regularly. Small regular increases are much easier for tenants to cope with and will allow landlords to keep up with inflation.

The new act will only permit one method of rent increase, the statutory notice procedure, and you will only be able to use it once a year. So make sure you do this.

And finally

To summarise –

• If you want to use s21 you have a very limited time. So if you have an anti-social tenant, now is probably the best time. But use solicitors as if you make a mistake now, you may not get a second chance.
• Don’t enter into any rent-to-rent arrangements – once the act is in force, you could find yourself being fined large sums of money for something which is not your fault and which you knew nothing about
• Get your rent up to a market rent level and make sure that from now on, you do regular small annual rent increases.

I will be writing more about these issues in due course when I have studied the new act further.