It is now less than four weeks until the Government’s Tenant Fees Actcomes into force across England.
From 1stJune 2019, landlords and letting agents will be banned from charging upfront fees to private tenants, except for charges relating to replacement keys (or a respective security device) and late rent payments.
Under the Tenant Fees Act, holding deposits will be capped at one week’s rent, while security deposits will also be capped, at five weeks’ rent.
ARLA Propertymark (the Association of Residential Letting Agents) has warned agents to “act now”, as the implementation of the ban is less than four weeks away.
David Cox, the Chief Executive of the organisation, gives his advice: “[Saturday 4thMay] marks the four-week countdown to when the Tenant Fees Act comes into effect, and the industry must face the realisation of preparing doe a post-tenant fees world.
“With no time to waste, agents need to ensure they’re compliant with the law and understand how the ban will impact their business. To help members overcome the legal challenges of the Act and comply with the ban, we launched the Tenant Fees Toolkit last month, providing practical tools and materials to support our members through every step of the transition and beyond.”
ARLA Propertymark recently added frequently asked questions to the toolkit, to better answer any queries letting agents and their landlords may have about the ban.
“We also have a series of upcoming road shows, which will update on the legislation and provide key insights on how businesses can thrive post the ban,” Cox adds. “We urge members to attend, as we rapidly head towards 1stJune.”
He gives a final piece of advice: “Agents can help reduce the impact on their business by being prepared, and, with the date fast approaching, they must act now.”
Whether you’re a landlord or a letting agent, you must assess how the tenant fee ban will affect your business.
Leeds saw the greatest increase in room rents of all UK cities in both the year to the first quarter (Q1) of 2019 and since the previous quarter, according to the latest Room Rental Index from ideal flatmate.
While London – unsurprisingly – remained the most expensive UK city to rent a room, with the average price rising to £745 per month, Leeds recorded the greatest increase in room rents.
ideal flatmate’s index looks at the cost of renting a room across the UK’s major cities. It found that Leeds recorded the highest growth in average room rents both year-on-year and on the previous quarter.
The firm analysed the cost of thousands of spare rooms listed on its platform, looking at the differing cost of renting across each major UK city and London borough, and how this has changed on an annual and quarterly basis.
The Room Rental Index for Q1 found that the average room rent price in the UK was £535 per month, which is up by 11% on Q1 2018.
Following London, Glasgow was the second most expensive UK city to rent a room, at an average price of £588 a month. Bournemouth (£575), Cambridge (£562) and Leeds (£548) were close behind.
While only ranking as the fifth most expensive room rents, Leeds tops the table for both quarterly and yearly growth, with prices up by an average of 32% and 50% respectively.
Tom Gatzen, the Co-Founder of ideal flatmate, comments: “A new year, but a similar story where the UK rental market is concerned, with the cost of renting continuing to climb as a result of the imbalance between high demand and insufficient stock levels.
“This trend is almost certain to persist over the coming year, and the impending tenant fee bancould see this growth spike further, as rental costs are used to recoup lost revenue.”
As the private rental sector continues to grow, the Government has issued guidance for tenants on their rights and responsibilities.
The Ministry for Housing, Communities and Local Government (MHCLG) has put together a document, Landlord and tenant rights and responsibilities in the private rented sector, to support all of those operating within the market, in order to set and maintain high standards of private rental housing.
Within the introduction to the document, the Minister for Housing and Homelessness, Heather Wheeler MP, commits to making sure that “everyone who rents can have a safe, secure, warm and dry place they call home”.
The private rental sector now accounts for 4.5m homes in England, representing around 19% of all housing. For many tenants, renting from a private landlord provides a range of benefits, including flexibility and choice.
The relationship between landlords and tenants, however, is essential in making this work to renters’ advantage. The Government’s guide aims to ensure that both landlords and tenants understand their rights and responsibilities, to promote a professional and positive landlord-tenant relationship.
The guidance for tenants should ensure that any issues that arise during a tenancy are dealt with quickly and properly. Although the vast majority of tenancies work well, a small minority of rogue landlords still operate in the sector. At the same time, some tenants don’t uphold their side of the contract.
Government Issues Guidance for Tenants on their Rights and Responsibilities
In situations where things go wrong, this guidance for tenants points you to the laws that apply to you and helps you find further information on how to deal with the issue. It also aims to help you avoid those situations in the first place, by making sure that you’re aware of your responsibilities.
The Government’s How to Rent guide, for instance, is a great place to start.
However, the latest guidance for tenants aims to make sure that you can benefit from being part of a flourishing private rental sector.
The tenant part of the guide applies to both existing and prospective tenants on Assured Shorthold Tenancies(ASTs). Most of the guidance also applies if you are living in a shared property, although sometimes your rights and responsibilities will be different.
The guidance for tenants does not cover lodgers, or those living in a property that is not their main residence.
When entering an AST – the most common type of tenancy in England – you are entering into a contractual arrangement, which gives you some important rights, but also creates obligations. The guide helps you to understand what questions to ask, what your rights are and the responsibilities that you have. It also directs you to relevant sources of support and advice.
If you would like to read the Government’s guidance for tenants, simply click here.
The guidance for tenants in this document sets out:
What to consider when finding a new home to rent
Your responsibilities as a tenant
Your rights as a tenant
What you can do if things go wrong during your tenancy
Useful contacts
We hope that this information is useful for all new and existing tenants!
Letting agents in England are using potentially unfair terms and conditions, and could be breaching consumer law by demanding deposits before allowing prospective tenants to even see a contract, a new investigation by Which? reveals.
The consumer champion visited 20 letting agents across England, posing as potential tenants looking for a rental home.
Which?’s mystery shoppers asked to see a copy of the terms and conditions that they would be signing up to, but one in four agents failed to produce a contract.
Five letting agents, including a branch of Connells, which has almost 200 offices nationwide, required a commitment or a holding deposit before tenants could view a sample tenancy agreement. Connells informed Which? that tenancy agreements should be freely available upon request.
In some cases, the letting agent also required a reference check to be paid for and completed before tenants saw the terms of the contract.
Letting agents have a duty by law to provide prospective tenants with the key information that they need to make an informed decision about the property. Which? believes that demanding a financial commitment before tenants can view the terms and conditions could fall foul of consumer law, by trapping renters into contracts that they haven’t had an opportunity to review.
Worryingly, three of the letting agents that required a commitment or deposit before tenants could view a contract are members of ARLA Propertymark (the Association of Residential Letting Agents) – a leading membership body for letting agents.
One agent in Leeds requested that the tenant visit its office to read the tenancy agreement. While the contract was accessible in this case, Which? fears that this practice could deter or place undue pressure on the tenant to read the contract quickly.
A report published last year by Which? found that only two-thirds (65%) of tenants read their tenancy agreement in full before signing it. Meanwhile, almost two-thirds (64%) of tenants who used an agent during their property search experienced problems, such as having to make decisions without enough information.
Letting Agents may be Breaching Consumer Law, Which? Investigation Reveals
In 13 tenancy agreements collated and inspected from other letting agents, Which? found evidence of potentially unfair terms and clauses that could breach the Consumer Rights Act.
In seven of the analysed documents, tenants were required to seek permission to notify their landlord or agent before switching utilities supplier, which could prohibit their right to choose for themselves and could mean that they are stuck on expensive tariffs.
Which? also found evidence of unclear language, which could confuse tenants, in at least eight contracts. These agreements included vague descriptions that tenants may be required to pay a “reasonable” amount or “a fair proportion of” additional charges.
But, without adequate explanation of what those charges would be for, or what constituted “reasonable” or “fair”, renters could risk being hit with extortionate fees during their tenancies.
All of the contracts reviewed referenced statutes and legislation that were not attached or explained further within the agreement, putting tenants (most of whom are not experts in property law) at an unfair disadvantage.
In all but two agreements, Which? found a clause that allowed landlords or authorised workpeople access to the property without prior consent, as long as 24 hours’ notice was given. It was not always specified that this notice should be in writing, and these contracts gave no indication that landlords and agents would take their tenant’s objections into account.
A template contract from the Ministry for Housing, Communities and Local Government (MHCLG) includes some examples of good practice, such as guidance notes explaining legal jargon. It also features a note outlining how tenants have a right to quiet enjoyment of a property, even if landlords provide 24 hours’ notice, so, if visits are very frequent or do not have a good reason behind them, the landlord may be breaching those rights.
However, even in that case, Which? believes that tenants’ rights to enjoy exclusive possession of their homes could be made clearer, and they should be empowered to push back if landlords seek non-urgent access at inconvenient times.
The organisation is concerned that many tenants could be rushed into signing contracts that they don’t fully understand and that contain potentially unfair clauses, as they may feel pressured to secure a property quickly, particularly in areas where demand is high.
According to the latest results from the Which? Consumer Insight Tracker, just one in ten people trust estate and letting agents, meaning that only car dealers are trusted less.
Just One in Ten People Trust Letting Agents
It has heard complaints from tenants who had landlords that entered their homes without prior notice or faced excessive charges for minor repair work.
The findings of this investigation suggest that tenants cannot always trust letting agents to act in their best interests, and, with some agencies apparently skirting the law, Which? is calling on the Competition and Markets Authority (CMA) to investigate further issues relating to practices, and tenancy terms and conditions in the private rental sector, and to take action where needed.
The consumer champion also calls on the Government to move forward with introducing a mandatory code of practice for letting agents, which is legally enforceable and ensures that all agents are held to an agreed set of professional standards.
Natalie Hitchins, the Head of Home Products and Services at Which?, says: “It is outrageous that some agents are demanding cash upfront before tenants are even shown a contract – committing them to agreements before they know what they’re signing up to.
“The results of this Which? investigation show how vital it is for the Government to introduce a legally enforceable code of practice, to ensure all letting agents act in a professional manner.”
She adds: “The CMA must also investigate the sector, and take action where needed to tackle unfair practices and contract terms.”
David Cox, the Chief Executive of ARLA Propertymark, responds to the report: “There is currently no legal requirement in England or Wales to have a tenancy agreement, and, as legal statute overrides contract, any unreasonable terms in a contract would be unenforceable in a court of law. As such, we would question the suggestion that agents are breaching consumer protection law. We have long been advocating for a legal requirement to have a written tenancy agreement, as they have in Scotland, to avoid many of the misunderstandings cited in this research. Which? implies that even MHCLG’s template tenancy agreement is in breach of their best practice; this demonstrates just how complex the issue around terms and conditions can be.”
Dan Wilson Craw, the Director of tenant lobby group Generation Rent, has a more positive reaction: “Renters are under pressure to sign up to anything that a letting agent puts in front of them, knowing that, if they hesitate, someone else will take the property. The good news is that, from next month, tenants who are asked to sign up to unreasonable terms are entitled to back out and get their holding deposit refunded, under the new Tenant Fees Act. But, as Which?’s investigation shows, unscrupulous letting agents are adept at finding ways to bamboozle tenants. There is a constant need to identify and expose these unfair practices.”
The Residential Landlords Association (RLA) is warning of a rental housing crisis, as a quarter of private landlords are looking to sell at least one property over the next year.
Of almost 2,500 landlords who responded to the latest RLA survey, just over 25% said that they were planning to sell at least one property over the next year – the highest proportion since the organisation began asking this question regularly in 2016.
The same study shows that 23% of landlords reported an increase in demand for rental housing over the previous three months, while 57% described it as stable.
However, more than a third of landlords reported low levels of confidence in the private rental sector over the next 12 months.
The results arrive following the publication of Government data earlier this year, which found that 10% of private landlords (representing 18% of tenancies) plan to decrease the number of properties they let, while 5% of landlords (representing 5% of tenancies) plan to sell all of their properties.
The Royal Institution of Chartered Surveyors has warned that the imbalance between supply and demand of rental housing is expected to see rent price growth average 3% per year over the next five years.
Amidst the rental housing supply crisis that tenants now face, the RLA argues that it is vital that landlords retain confidence to provide the homes to rent that are desperately needed. This means ensuring that new regulations, governing how landlords can regain possession of their properties in legitimate circumstances, are fair and effective, both for landlords and tenants.
David Smith, the Policy Director of the RLA, says: “All the talk of longer tenancies will mean nothing if the homes to rent are not there in the first place.
“The Government’s tax increases on the sector are already making it difficult for tenants to find a place to live, with many landlords not renewing tenancies. If rushed and not thought through, planned changes to the way landlords can repossess properties risk making the situation even worse.”
He adds: “Action is needed to stimulate supply with pro-growth taxation and a process for repossessing homes that is fair to all.”
The average cost of renting a room in the UK has increased by 3% (£15 per month) since the first quarter (Q1) of 2018, taking a typical rent to £582 a month, according to SpareRoom’s Q1 2019 Rental Index.
While house prices are coming down, rent prices are on the up in all regions of the UK. London, Northern Ireland and the West Midlands recorded the greatest jumps in the year to Q1, at an average of 4%. Despite its proximity to the capital, the South East saw the lowest growth (2%), followed by the South West (3%).
Looking on a town/city level, the greatest surges in the cost of renting a room were seen in the north of England, with Lancashire’s Preston taking first place. Rent prices in the city rose by an average of 8% (£30) on Q1 2018, bringing a typical rent to £378 per month. York and Stockport were close behind, with average increases of 7%.
At the other end of the spectrum, Southend-on-Sea, Aberdeen and West Bromwich were at the bottom of the table, with declines of 5%, 3% and 3% respectively.
Oxford follows London as the UK’s second most expensive location to rent a room, at an average of £572 per month. This follows a modest 1% rise on Q1 last year. University hotspots Reading and Edinburgh were third and fourth, with average prices of £530 and £519 respectively.
Contrastingly, the cheapest rents can be found in Belfast (£312), Sunderland (£319) and Middlesbrough (£327).
Contrast to the traditional north-south divide seen in England, London has its own east-west divide, with many of the capital’s cheapest room rents located east and southeast, while the more expensive rooms are located in the west and southwest.
Unsurprisingly, central St Paul’s (EC4) is the most expensive location to rent in London (£1,336 per month), despite the cost of renting a room falling by an average of 7% over the past year. South Kensington/Knightsbridge (SW7), at £1,177, and the Stand/Holborn (WC2), at £1,157, were close behind.
However, there’s still hope, as the cost of renting a room varies widely across London, with 17 areas available for under £600 per month, including Abbey Wood (£531), Manor Park (£541) and Chingford (£542).
Matt Hutchinson, the Communications Director for SpareRoom, says: “House prices may have stalled, but rents are on the up again. The ongoing Brexit mayhem might be putting people off buying or selling, but renters still need to move.
“With that in mind,it’s no surprise London continues to show solid growth, but if this 4% rise is a reflection of what’s to come, we’ll see renters hit their affordability ceiling and be forced further out the capital, especially as Crossrail, when it’s finally complete, likely to drive rents up in the east and southeast of London.”
