Renters’ Rights Bill – How Will Rent Be Affected?

The Renters' Rights Bill continues to progress through Parliament and will introduce significant reforms aimed at enhancing tenant protections and establishing clearer guidelines for landlords.  The rules around Rent and the changes that the RRB will implement need to be firmly understood, and adhered to for landlord compliance.  It is always worth pointing out that these changes are not yet law, and until legislation is passed, we won’t know the full extent and how this will look in practise.  However, the proposals are worth being aware of in the meantime.

What are those changes?

The Advertised Rent

• The property will need to be advertised at a ‘proposed rent’ – which is the maximum which can be charged. This will be an important consideration and should be set carefully

• Bidding laws are prohibited

• Rent must be set in line with local market values

• Remember that you will not be able to charge more than the proposed rent, but if the rent is too high, tenants will be able to challenge this to the First Tier Tribunal within the first 6 months of the tenancy

  
  

Rent in Advance

• Before the tenancy is signed, you can only take the holding deposit and a tenancy deposit

• After the tenancy agreement has been signed, this becomes a legal contract and the landlord and the maximum rent that landlords can take is one month in advance

• During the tenancy, landlords cannot ask tenants to pay rent before the month during which it is due.  However, it seems that tenant can pay rent in advance if they want to (landlords cannot request this)

• Pre-tenancy payments to third parties will be prohibited under the Act

Rent Increases

• Rent review clauses will become invalid and landlords will only be able to increase the rent once a year and will need to use the Section 13 Statutory Notice process. 

• The notice period will increase from one month to two

• If the rent increase is not at ‘market rent’, tenants will be able to challenge this at the First Tier Tribunal

• It is worth bearing in mind that, albeit an unlikely eventuality, initial rents can also be referred to the FTT in the same way during the first 6 months of the tenancy

• If the rent has been challenged, the new rent will apply from the date of determination, or up to 2 months later in cases of hardship

  
  

At the End of the Tenancy

• When the tenancy ends, tenants will be entitled to be repaid any part of the rent which relates to days falling after the end of the tenancy

With local authorities having higher enforcement powers to impose penalties on landlords, ranging from £7,000.00 to £40,000.00, the reminder to stay compliant at every stage of your portfolio management will continue to be paramount. Keeping on top of legislation and checking in with your landlord association will help landlords on this path.

Some of the resource above taken from seminar held by Tessa Shepperson, Landlord Law