Date Published 24 January 2025
Adams Estates have looked into the best methods for landlords on how to endure, as well as thrive, throughout the rental market following the Renter's Rights Bill coming into effect.
Beginning with a positive, the Labour Party has pledged not to implement rent controls, with interest rates due to decrease and the demand for rental housing at consistent highs. By using the right methods, you can successfully live and do well in the private rental market in the long term. However, this requires some shrewd thinking and a great deal of effort; landlords have faced difficulties during the Conservative government but the new laws suggested by Labour will change that situation significantly and not for the best. Renters will enjoy significantly greater protections than they have had in the past during the time of regulated leases, and if you have a troublesome tenant, it will be more difficult to evict them further down the line; therefore, it is essential to prevent such situations from occurring in the beginning.
The upcoming changes
The Labour Party's possible increase in capital gains tax, its plan to bring back the earlier relaxed energy efficiency standards for rental properties and its Renters' Rights Bill (RRB) will create difficulties for you but these challenges can be overcome. Exhausted buy-to-let landlords may be tempted to give up but surrendering in difficult times might not be the best choice for long-term success. The RRB marks the most significant shift in renters' rights since the Housing Act 1988 and is expected to ease some of the strain on emergency housing lists managed by local authorities. This change will likely come at the cost of landlords which seems to be a deliberate choice.
However, tenants require housing and ultimately the government cannot afford to completely demolish the housing market. For those landlords that choose to hang on and persist, the rewards could eventually arise; survival will mean hard work as well as keeping up a highly professional approach.
Please find below a list of priorities for survival under the RRB:
•Upgrade your properties to meet the latest energy efficiency standard which is an EPC grade of "C" by 2030 or earlier if possible and ensure that your rental homes are warm dry and safe to comply with the Decent Homes Standard. This may require a larger investment but as a responsible landlord you cannot expect to earn money from an asset without contributing something towards it. In certain situations, funds will be accessible for improvements.
•Maintain your current rents and raise them to align with or approach market rates. Under the RRB, you can no longer let rents stay below market levels for multiple years. Many landlords choose to do this particularly when they have a reliable tenant and wish to retain them especially when some tenants may not have the financial means to afford it. However, adjusting the rent to match the current market can result in a significant increase. To handle yearly rent increases you must utilize Ground 13. You can even provide a small discount to tenants who stay for a long time, but please remember that the tenant has the right to apply free of charge to the First Tier Property Tribunal to have the rent evaluated.
•Carefully reference and choose your tenants. This includes reviewing their credit history and contacting their previous landlords and employers for references. Make sure to require guarantors or rent guarantee insurance policies, new policies that have been evaluated for risk concerning RRB will be introduced soon. You do not want to have a problematic tenant under the new RRB rules as this situation would likely lead to an eviction that is costly takes a lot of time and can be very complicated. If you choose to have a guarantor ensure that you have a solid guarantor agreement. Adams Estates has worked over the years to implement processes to help enable this such as our use of secure referencing through an external and specialised agency as well as our own rent protection policies for our managed portfolio (please feel free to contact us for more details regarding this). Understanding discrimination laws is also crucial when choosing tenants so ensure that all applicants follow the same procedure. It is important to note that you have the right to make decisions based on how suitable the accommodation is and whether it is affordable. The RRB implemented two key rules: first they cannot treat tenants unfairly if they receive housing assistance; second, they must not discriminate against tenants who have children.
•Employ a reliable independent inventory company to create detailed reports at the start and end of tenancies. By doing this you will gather all the proof you need if you need to ask for compensation for damages. Ensure that you have adequately secured any deposit you accept through one of the government-approved agencies; please remember that deposits cannot exceed the amount of 5 weeks' rent. For all managed properties, Adams Estates will carry this out for you ensuring compliance and a stress-free process.
•Conduct regular inspections that are documented and include risk assessments ensuring that you notify your tenants well in advance. Ensure that you fulfill your legal responsibilities related to EPC, gas safety and electrical safety inspections. Additionally ensure that you have functioning smoke and carbon monoxide (CO) alarms, as well as pay close attention to condensation and mold. Again, this is something Adams Estates guarantees is carried out for our managed portfolio; if you would like to hear more about our management services and fees, please feel free to contact one of our Agents.
•If your tenants enquire to have a pet, keep in mind that according to the RRB you must not refuse their request without good reason. You should thoroughly evaluate whether the pet is a good fit for you and conduct background checks before bringing it home in which you will have 28 days to complete that task. Ensure that a complete pet policy/ agreement is in place and it may be helpful to obtain complete pet damage insurance; new policies will be available soon allowing you to pass the expense on to the tenant. If you deny the pet request, ensure that you have enough written proof to support your decision in case the tenant decides to appeal to the Private Rented Sector Ombudsman.
•Finally, always regard your tenants with respect as they are paying customers and promptly address their repair requests. As conveyed earlier, it is essential to maintain rental prices at competitive market levels by reviewing them each year according to the Section 13 process as permitted by the RRB.
As always, Adams Estates fully understand that these changes may raise questions or concerns. Please remain rest assured we're here to provide guidance and ensure a seamless management experience for your properties, whilst staying on top of all new developments relating to this Bill.
