Landlords are grappling with a minefield of new traps that could cost them tens of thousands of pounds and leave them unable to tackle nightmare tenants.
The buy-to-let market has been plunged into chaos after Labour introduced overnight on May 1 the biggest boost to rights in a generation.
The Renters’ Rights Act has shifted the balance of power away from landlords towards renters in the largest transformation to the private rental sector since the 1980s.
Landlords have told Money Mail that they are struggling to get to grips with a dizzying array of complicated regulations that are effective immediately. Buy-to-let investors risk facing fines of up to £25,000 if they miss deadlines set under the new rules.
Under one rule, they have just 18 days from today to send out letters to tenants or risk being slapped with a penalty.
Arguments are expected to break out between landlords and their tenants as renters take advantage of the new rules. In some cases, panicked landlords have kept new tenants waiting to move in until lawyers have combed through all the new rules.
Shake-up: The Renters’ Rights Act has shifted the balance of power away from landlords towards renters in the largest transformation to the private rental sector since the 1980s
Meanwhile, landlords across the country dumped tenants out of their properties in April before the incoming rules made it almost impossible to serve them notice.
Money Mail has spoken to landlords and estate agents to reveal how the new laws have turned the rental market into a total mess.
What is Renters’ Rights Act?
Among the key changes in the Renters’ Rights Act are far stricter rules on when and how landlords can evict tenants and how much they can increase rents.
Similar rules already apply in Scotland and Wales, but both will adopt parts of the Act by June 1. For example, Scotland will introduce new rules around discriminating against people on benefits.
One of the most groundbreaking changes is the end of fixed-term contracts. Until now, renters commonly signed a one-year fixed tenancy agreement, which meant they had to pay rent for the whole 12 months even if they left. This is now illegal.
All fixed-term assured tenancies and assured shorthold tenancies have been abolished and replaced with rolling periodic tenancies.
This applies retrospectively and includes fixed tenancies agreed prior to the rules changing. This means renters are no longer tied into long contracts.
Renters have the right to end tenancies with two months’ notice. They can also challenge poor conditions and unreasonable rent increases without fear of retaliatory eviction.
Problem tenants get protection
One of the most significant changes is the end of ‘no-fault’ evictions. This was the rule – called Section 21 – where landlords could ask tenants to leave without having to give a reason.
Now, tenants have the right to remain in their home unless specific legal grounds apply.
These include serious rental arrears, the landlord or a family member needing to move into the property, or the landlord planning to sell it. But landlords say this offers too much protection for problem tenants.
Mike Matthews, who has been a landlord for 15 years and owns nine buy-to-let houses, which are rented out to families and young couples, says most landlords only used Section 21 notices for truly problematic tenants.
He says: ‘Ending Section 21 evictions won’t have much effect on the market if you have good tenants. In the past ten years I’ve never issued a Section 21. I had no reason to. Ending Section 21 only serves to protect bad tenants.’
Renters moving on quickly
Buy-to-let owners have been stripped of their ability to sign tenants on for long periods of time and plan ahead.
With the end of fixed contracts, renters can end tenancies at just two months’ notice at any point. Some fear renters will serve notice on tenancies that were previously agreed for 12 or even 24 months.
Andy Graham, host of The HMO Podcast and a landlord of houses of multiple occupancy (HMOs), says: ‘I’ve seen this happen in several instances already.
Andy Graham, host of The HMO Podcast and a landlord of houses of multiple occupancy (HMOs) says he has already seen tenants serving notice on their landlords
‘This is especially problematic where they are a group of students because the landlords will have to wait until the next group moves in for the new academic year, which can leave them with several months of the property being empty. This costs many thousands of pounds.’
Landlords also fear savvy tenants will use their properties as short-term rentals – handing in their notice period as soon as they arrive and leaving after just two months.
One landlord, who wishes to remain anonymous, says: ‘Why, when we have fixed-term energy and broadband contracts, can you not have a fixed-term rental contract? It’s insane.’
Their fears are justified. More than 40 per cent of tenants are considering giving notice on their rental property now that the Renters’ Rights Act has come into effect, according to new research from lettings platform Goodlord.
Mountain of admin for landlords
Harry Johnston OBE, a buy-to-let landlord in North Manchester, says the new rules are an insult to hard-working, professional landlords.
He says he has only served Section 21 notices to tenants three times in his entire 55-year career as a landlord – that’s from a portfolio of 45 properties.
‘We have always supported tenants,’ says Harry. ‘That’s not to say we haven’t had bad tenants. We have some shocking stories to tell about conditions of apartments when returned.
Harry Johnston OBE and his wife Jane. The buy-to-let landlord in North Manchester, says the new rules are an insult to hard-working, professional landlords
‘This [Renters’ Rights Act] has been the biggest mess I have ever had to deal with. We have had to realign our tenancy agreements.
‘We currently have three new tenancy agreements with solicitors to check they abide by new rules.
‘The tenants can’t move in until these have been legally cleared.
‘I’m fearful for our tenants about what the future holds. We have been in this business for 55 years and it’s becoming unsustainable.’
Under the Renters’ Rights Act, it is a legal requirement for landlords to provide their tenants with an official information sheet that explains how the new rules will impact them.
Among the list of requirements, landlords must send a PDF document to their tenants by the end of this month.
This is a blanket document that outlines the changes for all tenants and is listed on the Government website.
If they miss this deadline, they risk being fined £7,000 per property they own.
A letting ban that lasts for 12 months
Many landlords decided to put their properties up for sale ahead of the new regulations and asked tenants to move out.
However, many could struggle to sell in the current property market because homes are taking an entire month longer than in 2022 to sell and house prices are falling across the country.
As they evicted their tenants before the new rules came into force, they can immediately find new tenants and re-let their properties if they change their minds about selling.
Landlords who choose to sell now no longer have such a luxury.
This is because the new rules ban landlords from re-letting a property for 12 months if they ask tenants to leave so it can be put up for sale.
This means that many struggling to sell in the sluggish property market could be left paying a mortgage, council tax and utility bills for a year on an empty home.
If landlords break these rules and re-let too early, they could be fined £25,000, according to the Government’s new guidance.
Renters will face greater scrutiny
Landlords say tenants will be subjected to greater scrutiny before their offer is accepted. This could include interviews and require additional paperwork, such as bank statements and payslips.
Landlord Mike Matthews says: ‘The Bill is supposed to focus on tenants, but no attention is paid to the unintended consequences for landlords and, ultimately, renters themselves.
The changes are making me and other landlords more cautious about who we accept as tenants.
‘With greater difficulty removing problematic tenants, referencing checks and the profile of the tenant’s prospects are far stricter, making it harder for younger people, those with irregular incomes, or anyone without an impeccable rental history or credit file to secure a home.’
Unlimited pets in properties
Renters now have the right to ask for permission to keep a pet at any time. The landlord must consider their request and can only say no if they have a good reason.
They can only refuse, for example, if another tenant has an allergy or the property is too small for a large pet.
There are fears that tenants will see the new rules as an open invitation to bring pets into properties without permission.
Landlord Andy Graham says he discovered a tenant was in breach of their contract as they were keeping a cat. Under the new rules, landlords like Andy are likely to find tenants trying their luck with pets will become more commonplace.
- Will you be negatively affected by the new rules? Email moneymail@dailymail.co.uk.