Abolishing fixed-term tenancies will have serious implications
Propertymark says plans to remove fixed-term tenancies and prevent rent payments from being taken in advance must be fully assessed.
The impact of the Renters’ Rights Bill’s removal of fixed-term tenancies and the prevention of rental payments being taken in advance of the start of a tenancy must be fully assessed before the bill becomes law says Propertymark’s Timothy Douglas (pictured).
He believes a fixed-term tenancy allows security of tenure for the tenant and a guarantee of rent payments for the landlord.
He adds that they are often requested by tenants, including nurses working in hospitals for set periods, as well as from overseas families who want to stay in an area because their children are at a school.
Drive up rents
Douglas warns that the complete removal from tenancies of an initial fixed-term will effectively turn every tenancy into a short-term let which, with limited supply, will drive up rents for individuals, couples and families looking for a long-term home.
“With no security of a rental term for a landlord beyond the two months’ notice period and no long-term guarantee of rent, we would expect to see a significant number of landlords attracted to higher rents in the short letting market, which also offers them the advantage of being unregulated,” he says.
“Removing fixed-term tenancies will also impact the student market. The proposed Ground 4A as currently drafted refers to houses in multiple occupation which, by definition, is three or more sharers.
“With rent instalments being limited to one month’s rent, removing the possibility of paying rent in advance, this will change the student sector where tenants typically pay rent from receiving Student Maintenance Loans termly as well impacting those on fixed incomes.
They must recognise the unintended consequences of the proposals in the Renters’ Rights Bill.”
“Property agents,” Douglas continues, “recognise that the UK Government wants to increase protections and security for tenants, but they must recognise the unintended consequences of the proposals in the Renters’ Rights Bill and not reduce choice and flexibility for tenants.
“To support renters, we want to see fixed-term tenancies retained as an option and request that an impact assessment is done on the UK Government’s plans to remove fixed-term tenancies and shared publicly with the sector.
“The UK Government must enact the registration of short-term rental property requirements as passed in the Levelling-up and Regeneration Act 2023 alongside these reforms to level the playing field for landlords and the long-term rental market.
He adds that to support students, the UK Government must extend Ground 4A to one or more student sharers, move Student Maintenance Loans to monthly instalments and/or, allow rents in advance for student renters and others to keep flexibility and access to housing.
As Timothy Douglas has mention. The Renters Rights bill proposal would effect the situation when an overseas student with no UK guarantor or a tenant who does not meet the Credit reference salary threshold an does not have a guarantor who’s salary again does not meet the income threshold. Would stop the tenant making a payment in advance in an AST agreement being the minimum SIX months rental ?
Not just foreign students – verified new foreign employees also: they have no credit profile, usually no UK bank account, no enforceable guarantor unless the employer is prepared to act as one. And how about part-time, contract or self-employed workers, or visiting workers or academics from overseas on short-term stays? Tenants are going to learn to lie vigorously about their intentions to stay in the property, and all the financial risk of failure to pay rent, constant move-ins and move-outs, inventory costs, etc etc is pushed onto the landlord. What a nightmare the RRB is going to cause!