The tenant fee ban came into effect on 1st June 2019 and is now old news for the majority of our landlords, (we’ve been going on about it for quite a while!) but there are significant ‘hidden’ changes that have been added to the bill of which we need to advise you of and also details of the plans being implemented to protect your interests as our landlords.
In addition to the tenant fee ban there are two other main points; the Fitness for habitation act and the cap on the protection value of a tenancy deposit.
Fitness for habitation
The fitness for habitation act implies greater controls for councils and authorities on the standards of accommodation offered under a tenancy and with it, the obligations placed on landlords/owners for their rental properties.
For us, this means a significant increase in the obligations of our mid-term inspections and risk assessments, but as you would expect this equates to very little, if any, change to the actual conditions of the properties within our portfolio but does however place an increased level of compliance and box ticking necessary for either a landlord or their agent to facilitate during their management of a tenancy.
Section 21 and Section 8 notices
Greater restrictions and opposition has also been placed on the service of notices to end a tenancy - namely the service of sec 8 and 21 notices.
In brief, a Section 8 notice is for a breach of contract, whereas a Section 21 notice is a request for a tenant to leave on a ‘No Fault’ basis and has been far wider used throughout the industry to formally end a tenancy.
The reality is that it is extremely rare that a tenant is ever asked to vacate when they have done nothing wrong, but the service of a Section 8 notice will make it almost impossible for that tenant to be successful in their search for an alternative property and therefore the Section 21 notice is often ‘misused’ to aid the vacant possession of a property when a tenancy isn’t quite going to plan.
Correlation between social housing and Section 21 notices
The councils have realised a correlation between the number of tenants seeking social housing who have also been issued with Section 21 notices and, as always, don’t have the capacity to supply the demand - whilst also having the targets to improve their own figures of the number of anti-social tenancies occupying council houses. This is changed to such the degree that most councils have legal representatives actively seeking clauses to refute the validity of an eviction notice to stem the flow on social housing.
Herein lies the true nature and conflicts within the housing market but also the challenges within tenancy and property management.
Caps on deposits
What we believe you employ us to do is to circumnavigate these changes and to deliver you the best possible outcomes, whilst also having a duty of care to the tenants and an in-depth understanding of the legal system to ensure that all aspects are maintained.
The cap on deposits means that as of the 1st June any new tenancy will have a maximum deposit of 5 weeks. Which is a reduction on the normal deposit value we have come to expect and is so often necessary to focus the intentions of a tenant when returning the property upon vacation.
As of the 1st of June a tenant will also not be able to be charged for referencing. This has been a fundamental aspect of any pre-tenancy application as it is an in-depth insight to a prospective tenant’s rental and credit history as well as their ongoing financial ability to undertake the rental agreement as well as the historic conduct of tenancies to date.
It is vital that these checks are continued as this is the watershed for 99% of problematic tenancies and we feel that it remains unreasonable for a landlord to incur the costs of these checks as this could mean a number of unsuccessful references being sought until the successful application is obtained.
A solution to the tenant fee ban
So…. with the assistance of our referencing partners Let Alliance we have been able to come up with the solution to all three problems and that is a 0% deposit.
This will ensure that any future deposit claim is guaranteed to be covered to the full value of the deposit as the tenant’s deposit will be in-effect covered under an insurance scheme. Let Alliance then have the ability to pursue the tenant for any loss directly and without the need for third party arbitration under the government-imposed schemes such as the DPS and TDS.
This will also further reduce the financial barriers for a tenant to let and ensure that your property with Belvoir will be even more cost effective to move in than a property with a competitor and as Let Alliance are implicated in the standard of applicant they will cover the costs of tenant referencing to ensure that only the best tenants will be put forward for tenancy.
This really is a break thorough and finally a significant positive sway in the landlord’s favour and I am delighted to advise of the prospects.
There is a suite of new tenancy agreements, notices and contracts that have been written by our legal teams and will be in effect from the 1st of June to reflect the changes. This will also include updates to our terms of business to safe guard us all from the changes afoot.
As always, please sign and return the signature page when these documents are received to ensure that we are able to offer you the full extent of options for your next tenancy.
Making sure you are covered
Two final points, again in the interests of safe guarding - The mass majority of our landlords are now covered under our rent guarantee scheme and this has really helped us to bring about a swift end to a tenancy and reletting without financial interruption and we really do strongly recommend instructing us to enlist this protection for you if you haven’t already.
The second is to enrol your property with the land registry’s free alert scheme that notifies you of any planning or ownership changes that may not have been actioned by yourself. This is happening and the ability to protect is free and readily available. Please do ensure you create an alert to avoid any potential vulnerability from scammers.