by Peter Lee, Redbrik Director
A recent BBC news article headlined ‘Tenant fee ban brings cheer to Tenants’ raised a few eyebrows across the industry and in the Redbrik office.
The Tenant Fee Ban came into force on 1 June 2019 as part of the Tenant Fee Act – a new piece of legislation setting out the government’s approach to private sector renting. At its core, the Tenant Fee Ban is designed to place restrictions on the fees letting agents charge and it encompasses most types of private tenancies.
Certainly, in the short-term tenants will reap the benefits by not having to pay upfront fees to apply for a property, but what about the long-term consequences?
As we predicted, rents have continued to rise and the fees agents have been banned from charging are still being paid for by tenants – however it’s now through their rent, rather than upfront costs.
Already, in just the few months since the introduction of the fee ban, latest figures from ARLA (Association of Residential Letting Agents) show the number of tenants experiencing rent rises rose to 64 per cent. Year-on- year, this figure is up from 35 per cent in August 2017, and 40 per cent in August 2018. So, it seems the government’s solution to solving housing affordability problems is actually punishing those it was trying to help. Unfortunately, the impact of the Tenant Fees Act will continue to be felt by tenants. To keep their heads above water landlords will need to continue increasing rents to cover the additional costs they now have to bear.
Clearly, something needed to be done to prevent dishonest and unscrupulous agents and landlords charging over the odds for a very basic service. But there is a huge question mark against the Tenant Fee Ban. We would like to see far more work done to find a suitable and effective solution with proper time and resources allocated towards refining this regulation.
What else is changing in the industry?
In times gone by, anyone could manage a lettings property – they would simply produce a standard tenancy agreement and that was that. Unfortunately, the days of someone looking to purchase a property and manage the property themselves are extremely difficult in today’s market, and my advice would be to always look for a reputable letting agent. An agent must be on top of procedures and move with the times, abiding by new legislation and ensuring staff are adequately trained.
At Redbrik, we are proud of the professionalism and expertise demonstrated by our highly qualified team and we’ve always charged sensibly and fairly. We are committed to providing the very best service and work very closely with tenants and landlords guiding and supporting them through every step of the process. Our experienced lettings team offer a full end-to-end service including property inspections, maintenance and check-ins and check-outs.
The government has a clear and transparent vision for the industry, and it will, without doubt, benefit landlords and professional and serious letting agents like Redbrik. Further regulation is being considered to ensure everyone in the industry is licensed, adheres to a strict code of practice and holds at least a Level 3 qualification (the level equivalent to an A-level). It offers huge potential for the professionalisation of the sector and to stamp out bad practice and we very much welcome the work being done in this area.
As some landlords may already be aware, the government is looking to abolish the Section 21 notice – this is the form a landlord must give a tenant to start the process to end your assured shorthold tenancy. While it would be a major change to the industry and it is leaving some landlords feeling very vulnerable, the picture may not be as bleak as expected.
The section 21 gives landlords the ability to ask the tenant to leave the property at the end of a fixed term or periodic tenancy. The current Tenancy Agreements being used in the industry are Assured Shorthold Tenancy Agreements. The new government proposals would require a minimum term rather than shorthold agreement. In abolishing the Section 21 notice, it is proposed that landlords instead use a Section 8 notice to ask the tenants to leave, but you must have a ground (or reason) to ask the tenant to leave. A section 8 notice is the first step a landlord would have to take to make a tenant leave their home.
Consultations are currently taking place across the industry with discussions focused on the reasons you would be allowed to ask your tenants to leave.
• If a landlord wishes to sell the property – only after two years
• If a landlord or family member wishes to move back into the property – as long as you have informed the tenant at the beginning of the tenancy
One of the very positive things being consulted on is speeding up the process of regaining possession of a property (using a section 8) when a tenant is in rent arrears.
This is currently a difficult and cumbersome process, so the government is proposing the following changes:
• A landlord can serve a two-week notice when a tenant has accrued two months of rental arrears
• The ground is mandatory if the tenant still has one month’s (or more) arrears outstanding at the time of a hearing
• If the arrears are less than a month, the ground will be discretionary, and it will be up to the court to decide whether to grant possession
• Where a landlord can prove a pattern of behaviour of a tenant building up arrears and paying them off on three occasions, the judge must consider this as a mandatory ground
• The current requirement for the mandatory ground is that there is two months’ arrears when notice is served and on the date of the court hearing.
To chat to a member of our lettings team for advice on these issues or any other letting requirement, call 0114 361 0140 (Sheffield) or 01246 380414 (Chesterfield) or email firstname.lastname@example.org.