Landlord Patricia Ogunfeibo doesn’t want landlords to just ‘sleep-walk’ into 2025! Here’s her expert analysis of this long-promised piece of upcoming legislation…
As a landlord for nearly four decades, I’ve seen the rental market change, often to the detriment of both tenants and landlords, but the Renters’ Rights Bill 2024 proposes unprecedented (as promised) and seeming unfair (to landlords) change; it is expected to become law in 2025.
To give you some context, I first became a landlord in 1986. This was in the era of ‘sitting tenants’, and before the advent of the Housing Acts of 1988 that ushered in the opening up of the Private Rented Sector (“PRS”) by the then government promising landlords through the legislation that ‘sitting tenants’ would become a thing of the past to the point that landlords only had to give 2 months’ notice to get their properties back; no ifs or buts (aka Section 21).
Our governments (both the Conservatives and Labour) seem content however, to ignore history, and the policies that shrank the PRS pre 1988 are being re-introduced. We had the Renters (Reform) Bill 2023, and now have the Renters’ Rights Bill 2024 which is currently going through Parliament.
There are some particularly good things in the Bill; I love the creation of a Property Ombudsman. I also like that ‘minimum’ property standards will be required of landlords, but do not like the fact that the Bill is also drafted to, imo, indirectly control rents, thus stopping landlords from running their businesses 100% commercially; I am an advocate of pure laissez-faire.
It is also fantastic that long leases will no longer be Assured Tenancies; the Ground Rent problem that plagued many leaseholders when trying to mortgage their properties is therefore going to become outdated.
It is also commendable (in the context) that landlords are not being told they must rent to the first person who wants to rent from them; we can still base our decisions on firm business grounds of affordability; this, again IMO, is a very powerful rare concession afforded to landlords in the Bill.
The Bill – some points to note:
Tenancy Reform
- all tenancies will be periodic Assured Tenancies (up to 28 days, or monthly) and the rents must be for the same period
- fixed period tenancies are out
- Assured Shorthold Tenancies (ASTs) – brought in to attract landlords to the PRS are out
- rental bidding will be unlawful. If a property is advertised for £x, the landlord cannot ask for any more than £x. There is however, nothing to stop landlords from advertising their properties for say, £(x + 100), and say offers will be accepted, so that tenants can bid downwards (if you do not know the true value of your rental)
- rent payments in advance are supposed to be out, but this is still unclear
Rents
- an agreed initial rent can be challenged by a tenant from Day 1 in the Tribunal, and any variation (can only be lower) will be backdated to the day of the application, which itself, can only be made within the first 6 months of the tenancy
- rent increases must be dealt with formally and can be challenged in the Tribunal. Any determination (lower than current or proposed rent) will take effect from the date of the determination, or in some cases, up to another 2 months later
- landlords can charge a different rent amount for the first period if the charging period is less than 30 days, so you can still align your rents to a particular day in the month (1st, 15th etc.)
Leases
- if your lease allows subletting, but not via a periodic Assured Tenancy, it will be ‘re-written’ to legally allow a sublet under the new regime, and any clause about delivering vacant possession at the end of the subletting will become invalid (point to note for freeholders and rent-to-rent landlords who will also be potentially liable for any Rent Repayment Orders!)
Possession
There are many conditions that apply; possession actions have never been more technical, and most landlords will do well to find an ‘expert’ that they can work with if they need to evict under the new laws.
- Section 21 notices are out
- rent arrears will be actionable on 3 months’ arrears, and the notice period will double to 28 days
- There are 16 new mandatory and 1 new discretionary possession grounds, and 1 current discretionary ground will become a mandatory one. Of the new ones, of main interest to most landlords might be Grounds 1A (obtaining possession to sell), 4A (applies to ‘off-street’ HMO students), and 6A (to comply with a compliance etc. notice)
- There is no specific ground to get possession from students not in PBSA or HMOs (Academic Institution accommodation and PBSAs registered with the Secretary of State fall outside the ambit of the Bill/eventual Act)
- landlords will have to prove that they complied with deposit protection laws (if a deposit was collected) to get possession (except for grounds 7A (serious crime) and 14 (nuisance/ASB)
Right to request permission to keep a pet
- tenants have a right to keep a pet if they ask for permission as set out, and the landlord agrees, or does not respond in writing within the set timetable, or unreasonably refuses
- If consent is given, the landlord can require insurance for pet damage and if the landlord takes out the insurance, can ask the tenant to pay the premium for the pet damage insurance cost
Decent Home Standards
- rental properties will have to meet certain minimum standards
- “Awaab’s law” will now apply to properties in the PRS; when improvements notices are issued, they will have time deadlines
Redress scheme
- the government will approve a scheme that can investigate tenant complaints and order a landlord to apologise, carry out works, and/or pay compensation
- all “Residential landlords” will have to register for it (i.e. the tenancy is an Assured one, or a Regulated one from the 1970s). It is worth noting that an Assured Tenancy is defined as a tenancy of a ‘dwelling’ or HMO accommodation to an individual for use as their principal residence as well as it being a tenancy that is not excluded from being an Assured Tenancy (e.g. holiday lets, and where the landlord also lives there)
- decisions will be enforceable as if they are Court Orders
Discrimination
- landlords cannot deny a potential tenant because they have children, or are on benefits, and any ‘discriminatory’ mortgage conditions and/or superior leases provisions will have no effect
- any ‘discriminatory’ provisions in insurance contracts taken out after the Bill becomes law, will have no effect
Database
- a “residential landlord” and property database will be set up, without entries in which, it will be unlawful to advertise a relevant property for letting
- Unique Identifiers will be provided for each entry and will need to feature in any marketing material, or advertisement to let
- details of fines, offences and banning orders will be registered on the database, and linked to other properties of the ‘culprit’
- fees will be payable for entries
Duties of landlords
- landlords must give tenants a written statement of the terms of the tenancy before the tenancy starts
- the statement should include details of if the landlord will require possession because he wishes to sell the property under a Right to Buy, needs it because of employee requirements, a change in the tenant’s circumstances, superior lease matters, or needs it to let as supported living or homeless accommodation etc.
Penalties & Offences (up to £7,000 for fines, and up to £40,000 for offences)
Fines and/or offences will be applicable if landlords:
- e.g. rely on a possession ground recklessly or fraudulently
- e.g. rely on possession ground 1A or 1B and then market the property during the restricted period of 16 months (also applies to non landlords, who may mount a defence)
- display the same conduct 28 days after a fine (landlords might get caught out if waiting for tenant to leave so that you can comply with an improvement notice etc. – will expect this to be clarified)
- incur 2 or more fines within a 5 year period
- are subject to a summary conviction (unlimited fines will apply)
- in some scenarios, landlords can be fined if they serve an invalid notice and their tenant leaves within 4 months of receiving the notice. Seasoned landlords know how technical the validity of notices can be with cases going to court for decisions on whether a notice is valid, or not
- There are lots of landlord actions and inaction that can result in fines and offences being committed, so landlords will need to be ‘on the ball’ all the time
- One thing to note is that with some fines/offences, the limited liability principle of companies will not apply to officers and members who make decisions. The way the Bill is drafted, it seems however, that each officer/member and the company can be liable for up to the maximum penalty. Time will no doubt clarify this
- Likewise, partners can also each be liable, but in this case, whilst they can each be asked for the whole sum due if the other(s) cannot pay theirs, their collective liability will not be more than the stated penalty
- All amounts will have to be paid within 28 days, but landlords will be able to appeal against the decision to fine, or the amount
Rent Repayment Orders
These will double to 2 years’ worth, and in addition to the current triggers, there will also be, e.g. when a landlord:
- misuses a possession ground
- breaches a restriction on letting or marketing a dwelling
- continues to breach the law to do with the reforms, as well as in relation to the landlord redress scheme and the database requirements
In some situations, the Tribunal will have to award the maximum repayment available
Enforcement
- local authorities are given very wide-ranging powers and can enter some premises to investigate/gather evidence without a warrant
- they are also given powers to obtain bank and accountants records if they think these are required
Final
It will be wise for landlords to either make sure they are aware of what is needed from them or find an agent who does. The Bill says that landlords will still be liable even where they are using an agent, so landlords should beware of choosing an inefficient agent, and in looking for one, landlords might want to ask the agent what level of indemnity insurance they carry etc.
Whilst a lot of the provisions in the Bill are tweaked and/or referenced provisions from 29 other Acts of Parliament, I think that the game changer here, apart from the new ones being introduced, is that local authorities will have a duty to enforce the law, and this will make a monumental difference to enforcement. In this respect, the government is making sure that local authorities can pay for enforcement activity by allowing them to take the cost of enforcement from the penalties collected. I’m cynical, and my views are that every Local Authority employee may well have a housing enforcement function, and the fines will therefore pay their salaries, or the authorities may simply employ ‘no fine – no pay’ personnel, who knows?
Call For Evidence
Parliament is inviting interested parties/experts to have a say in how the Bill is shaped. If you think this, is you, why not write in? It might not come to anything, but at least you would have taken action. 28 November (or earlier if deliberations finish before then), is the deadline for doing so. An Executive Summary, Introduction, numbered paragraphs, and recommendations – all in less than 3000 words in a Word document are the main guidelines. You can find further details on the “.gov.uk” website, and the address to send your ‘evidence’ to is “[email protected]”.
Conclusion
The Bill is currently going through Parliament, and although I am not expecting any major changes to it, we will not know what the precise law is until Parliament passes it. Even then, it may take a few tranches of case law to tell us what certain clauses actually mean!
Suffice it to say, a new landlord dawn is breaking with both threats and opportunities, and like with earlier challenges, landlords will survive, even thrive, if they do not sleep-walk into the future.
Patricia Ogunfeibo first became a landlord in 1986, and this economic activity has survived her obtaining bachelor’s and master’s degrees in law, as well as qualifying and retiring as a solicitor and chartered tax advisor. She is now a full-time landlord and property developer.
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