When Parliament introduces legislation restricting what landlords can do, one of the first questions many landlords ask is:
“Is there a way around it?”
This is inevitably happening with the Renters Rights Act.
The risks of testing new legislation
The Renters Rights Act is a massive piece of legislation. Inevitably, there will be provisions whose meaning is uncertain until they have been considered by the courts.
There may also be arguments about how particular sections should be interpreted.
However, I would suggest that landlords be very cautious about trying to take advantage of these untested areas. Until the courts have ruled on them (or possibly the new Landlord Ombudsman service, once it is established), nobody can say for sure whether a particular approach will succeed.
For example:
A rent-in-advance conditional clause
Under the new legislation, landlords cannot take any rent in advance of the signing of the tenancy agreement. Between signing and the tenancy start, landlords can take one month’s rent in advance only.
When I first saw this, my first thought was
“Surely a landlord can simply make the tenancy conditional on that month’s rent being paid before the tenancy starts?”
I mentioned this to a contact of mine at Propertymark, who told me that they had discussed this with someone in the government who had told them this would not be allowed.
Now, once legislation is passed, a judge’s decision will depend on what the legislation’s wording actually says rather than the views of a government official. Still, it did make me have second thoughts.
Consider the following scenario:
Mrs A grants a tenancy to Mr B. The tenancy agreement contains a clause stating that it is conditional upon one month’s rent being paid before the tenancy start date.
Mr B fails to pay.
Mrs A then refuses to hand over the keys and, as Mr B continues to refuse to make payment, tells him that, as the tenancy condition has not been satisfied, the deal is off and that she will be letting to someone else.
Mr B then consults a tenants’ organisation. As the only property he has been able to find is at a higher rent, he then, with the support of the tenants’ organisation, brings proceedings for compensation for the difference between the rent he contracted to pay to Mrs A and the rent he is paying now.
Whether Mr B succeeds in his claim or not will depend on the validity of the conditional clause in the tenancy agreement.
I can’t say whether such a clause would be found valid or not. However, even if it is, Mrs A will have had the stress and inconvenience of a contested court claim. Even if she wins and gets a costs order, she is likely to end up being out of pocket.
If she loses, she could face substantial damages and be ordered to pay Mr B’s legal costs. It could be very expensive.
If you are thinking of challenging the new law
My advice to landlords is simple. Don’t do it.
Let the other guy pay for the litigation!
Testing the law is rarely a good business decision.
And finally
This post was inspired by a question raised by a Landlord Law member in our members’ forum.
Members regularly ask thoughtful questions which highlight important issues arising from new legislation. They often provide the inspiration for blog posts like this one.
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