In the lead up to the 2015 General Election and thereafter, much publicity was given to Generation Rent and Shelter who concentrated on tenants’ rights and the problems faced by tenants with unscrupulous landlords or agents.
There are indeed rogue landlords and agents who mistreat tenants, charge exorbitant rents and/or fees and do not effect repairs. But… this is not the norm and it should not be seen as such.
The majority of landlords and agents behave well towards tenants and see them as an absolute necessity for their businesses to run smoothly. What would be the point of owning property to let if there were no good tenants? Most landlords want to keep tenants happy so that they stay long-term, avoiding voids and costly changeovers.
Shelter concentrates on tenants’ rights, citing landlords who change the locks to remove their tenants – this is not normal practice!
The media, sadly, picked up on the term ‘retaliatory evictions’ and this became a recurring theme. The accusation was that if a tenant made a complaint they might be served with a Section 21 notice asking them to leave the property. I cannot say that this has never happened but it is not the problem it was portrayed as.
Government, however, listened and included in The Deregulation Act 2015 changes to the rules for the service of Section 21 notices. For tenancies started after 1st October 2015 some restrictions on the expiry date of the notice went and in came other procedures which have to be followed for the notice to be valid, such as…
- using a prescribed form for the notice
- notice may not be served during the first four months of the tenancy
- action must be taken within six months or the notice will be invalid
- if taken, a deposit must be lawfully protected
- if applicable, a valid HMO licence must be sought
- a valid gas safety record must be given to the tenant
- the property must have smoke detectors and carbon monoxide detectors, if applicable
- an EPC must be given to the tenant
- a current ‘How to Rent’ guide must have been given to the tenant
Also, should a tenant complain and not receive an adequate response within 14 days –and then complain to the local authority and the authority acts by serving an improvement notice upon the landlord – a Section 21 notice will be unable to be served for six months. This sends a clear message to landlords to carry out essential repairs in a timely fashion.
FEES AND TAXES
Tenant groups also made much of charges to tenants and lobbied hard for tenant fees to be banned. Last autumn, rather out of the blue, the Chancellor announced a future ban on tenant fees with a consultation period in the spring.
Again, without doubt, there are some agents and landlords charging very high fees to tenants; most, however, charge a sensible rate for a job well done. For example, it has been standard practice for the cost of the tenancy agreement to be shared between the parties. This does not mean that each party should pay hundreds of pounds. Much of the agreement is standard but there are special clauses to be negotiated and considered and the agent must employ some legal expertise to ensure that they keep very up to date with changes to legislation. This does not take into account referencing (to be discussed in a future article), inventories, check in and out, renewals and more which must be done to ensure a smooth tenancy.
Landlords, in recent times, have also been hard hit by changes to Stamp Duty for second homes and investment property.
An additional 3 per cent adds a considerable amount to the purchase price. Landlords are being hit hard by changes to allowable expenses for income tax. Higher rate taxpayers will no longer be able to offset mortgage interest as an expense. One can see a clear intent to put off potential landlords.
What effect will these changes have to the lettings industry? Without doubt some investors considering property as part of their portfolio will think again. This, in turn, will have reduce the number of available properties which will increase rents through scarcity, not reduce them. Landlords facing many additional costs will naturally expect to pass on some to the incoming tenant. This will have the opposite effect than that which pressure groups were hoping to achieve. Also, I believe that standards in the industry will drop; tenants may not as well vetted and in turn this could lead to problematic tenancies. I hope that I am wrong.
Frances Burkinshaw is an independent trainer available nationally for in-house or group training. 01892 783961 or 07887 714341 or [email protected]