Renters Reform Bill – the end of fixed term tenancies

Renters Reform Bill – the end of fixed term tenancies

9:01 AM, 23rd May 2023, About 9 months ago 33

Text Size

By abolishing fixed term tenancies, the Renters’ Reform Bill will cause serious problems for landlords of student accommodation. The issue is not that the tenants may stay after the end of the tenancy but that they might leave early.

Even now it can take months to evict over-stayers. Many properties are unlikely to let to students except at the start of the academic year.

Students who have previously signed a tenancy from, say, September 1st to July 31st will be able to leave at any time on one month’s notice.

Many will choose to avoid paying rent over the summer holidays.

The group may choose to give notice

If one or more of a group of students falls out with the others, the group may choose to give notice rather than resolve their differences or bring in a replacement tenant.

Landlords will lose income and become liable for Council Tax.

The quid pro quo is that rents will have to rise to give the same annual return and cater for the risk of voids.

Some landlords may stop letting to students altogether putting extra pressure on rents.

There are other adverse effects to tenants being able to leave early.

May not offer better terms for signing a longer lease

Landlords may not offer better terms for signing a longer lease as tenants cannot bind themselves to stay.

Attempts to do so by reducing the rent later in the tenancy may fall foul of the Tenant Fees Act.

Instead of staying in hotels or Air BnB, holidaymakers may pretend they want a home and sign a tenancy of a property in a tourist area.

As soon as the ink is dry on the contract, they can give a month’s notice. “And summer’s lease hath all too short a date” – W. Shakespeare.

Renegotiate letting agents’ fees

Landlords will have to renegotiate letting agents’ fees. The typical 10% plus VAT of the first year’s rent will be excessive if the tenant leaves after a few months.

Michael Gove says the Bill is intended to help tenants to stay long-term in their homes.

This part of the Bill has nothing to do with that and allows, indeed encourages, tenants to behave cavalierly.


Share This Article


Comments

Marcus

9:48 AM, 23rd May 2023, About 9 months ago

What do you think the situation will be under the new legislation if a tenant pays 12 months rent in advance?

Ian Narbeth

10:05 AM, 23rd May 2023, About 9 months ago

Reply to the comment left by Marcus at 23/05/2023 - 09:48The tenant can ask for a pro rata refund if he terminates early. Section 1 of the Bill provides that the rent periods of a tenancy cannot exceed one month. Provisions will be void if they purport to created longer periods.

NigelH

10:27 AM, 23rd May 2023, About 9 months ago

We have to understand that the government does not want small portfolio landlords to exist any longer and is doing everything possible to get them out of the market.

Paul

10:34 AM, 23rd May 2023, About 9 months ago

I have to disagree with Ian regarding the most serious problem with the abolition of fixed term tenancies for students.
The main problem is that student groups start looking for their next years accommodation immediately after the Christmas holidays. My student HMO is usually let by February at the latest for the following Sept..
The problem under the new legislation is that I can no longer guarantee that the existing tenants will leave as normal in June/July and I have no means if evicting them if they choose to stay.
How can I sign up a fresh group in January not knowing the house will be available in Sept?
This means that students will have a tremendous scramble to select accomodation for Sept in July/Aug when they have already left the area to go home for the summer holidays.
I also have a summer holiday let in a popular Cornish seaside resort, which I let on a 6 month winter fixed term AST from Oct / Nov to Mar/Apr. The same problem occurs in that holidamakers start booking their accommodation in January. How can I take bookings for the summef when I have no guarantee that the winter tenant will leave in Mar/Apr as requested?
I have not had problems if a student tenant has left early for whatever reason. The rest of the group usually manage to find a replacement themselves.
I have mentioned these problems on several occaisions but no-one, especially the Govt, seems to be listening. Why have they recognised the need for fixed term tenancies for purpose built student accommodation but not for the large proportion of students who choose to live away from these large blocks of accommodation.

Yvonne Francis

13:44 PM, 23rd May 2023, About 9 months ago

Reply to the comment left by Paul at 23/05/2023 - 10:34
If I interpret you correctly, I can't quite see your disagreement with Ian over the end of fixed term tenancies being the worse problem with the Renters Reform Bill for student houses. The problems of letting and leaving you mention is simply because you no longet have a fixed term.

Ian Narbeth

14:03 PM, 23rd May 2023, About 9 months ago

Reply to the comment left by Paul at 23/05/2023 - 10:34
Paul
I am always happy to have people disagreeing with me if I am wrong. However, if your concern is that tenants might not leave at the end of the academic year, why is that not a problem now? Even if landlords serve section 21 notices on their student tenants, there is no guarantee of vacant possession when the notice expires.

Many landlords and agents will take bookings and may get the tenants and their guarantors to sign up in advance but the landlord does not sign and complete the lease until the current tenants have left.

Unless all the students want to stay on they will all leave because those wishing to remain will be liable for the rent and. in a properly drawn tenancy, so will those who leave as they remain liable when the tenancy becomes periodic. That will not change under the Renters Reform Act and students landlords need to ensure the tenants are jointly and severally liable.

Marcus

14:31 PM, 23rd May 2023, About 9 months ago

Under the new rules what happens if there is an AST in place and just one tenant ( say one of 3 ) gives notice to leave? If the other 2 wish to continue then they are of course liable for the full rent. Can they pursue the one who’s left for any losses incurred? Or could they argue a case of structural eviction?

Bristol Landlord

15:26 PM, 23rd May 2023, About 9 months ago

Reply to the comment left by Paul at 23/05/2023 - 10:34“Why have they recognised the need for fixed term tenancies for purpose built student accommodation but not for the large proportion of students who choose to live away from these large blocks of accommodation.”
Because, to echo Nigel as above, the Govts clearly intended (but unspoken) agenda is to drive out as many Independent Landlords as possible from the PRS and leave it wide open for the Corporate Landlords to swoop in and take over the market. It is a War on Landlords, though it’s clear the Govt despises Renters just as much as Landlords. We are the “little people” and so don’t count, we have no say in the matter, it’s been decided.
The UK Govt is neither Conservative nor Socialist, it is Fascist, or if you prefer the term, Neoliberal.

Paul Essex

15:36 PM, 23rd May 2023, About 9 months ago

I can not agree that leaving early is the biggest risk.

We had a student house in Cambridge many years ago and it was not abnormal for students to find local employment after university. On at least two occasions students wanted to keep living in the house as everything else was so expensive - just until they found a permanent place.
At the time it was a polite no, as this would change the dynamic of a student house as well as complicating council tax.
Once it gets around that this is now OK to do, I can see things getting messy very quickly for some landlords.

Ian Narbeth

17:43 PM, 23rd May 2023, About 9 months ago

Reply to the comment left by Paul Essex at 23/05/2023 - 15:36
That does not negate my point that the problem, such as it is, exists already because of time it takes to get tenants out if they don't go.

1 2 3 4

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Tax Planning Book Now