RRB – Rent – What you will be able to and not able to do!
RRB – Rent – What you will be able to and not able to do!
There are three areas that are affected by the changes in the RRB, namely the marketing rent, the initial rent taken and rent increases:
Marketing Rent
Landlords or third parties, will not be allowed to advertise properties for rent, without specifying a rental price to be paid. This will be very specific, and any inclusions will need to be stipulated so there is no risk of the tenant agreeing a rent with add-ons. The landlord will only be able to accept bids up to that amount, NOTHING over – any attempt to persuade or encourage a prospective tenant to offer an amount over the advertised rent will be illegal.
Initial Rent
Landlords will ONLY be able to accept one month’s rent – any rent over one month will be banned not only for Housing Act 1988 tenancies but also for licences and student tenancies that are outside the scope of the Housing Act 1988. This will be all encompassing and is designed to remove any loopholes! It will no longer be possible to ask for six months’ rent in advance – ONE month’s rent only! Ironically, the tenant can voluntarily offer to pay more rent up front, once the initial rent has been paid.
Under the Tenant Fees Act, landlords need to be beware of accepting any rent before the AST is signed. However, under RRB once the tenancy is signed, the legal contract will have been entered into and at the start date the landlord must hand over the keys. This presents a potentially painful scenario where the initial payment bounces between signing and moving in; yet the tenant is still able to demand the keys and move in!
It is possible to accept the deposit before the agreement is signed and accept the rent after. Given the conundrum this could present landlords, it is highly recommended requesting the one week Holding Deposit in order to have some monies on account, in case of the tenant abusing the system.
This change is going to make it very hard for some good tenants who will not be able to prove their financial viability and who would rely on offering rent up front until they could prove a decent reliable financial track record – Think people from abroad, ex pats, those with poor credit, some self-employed, and people who are in partial work with Universal Credit top up.
Rent Increases
Currently, there are various methods of increasing the rent, but in future all rent increases will have to be by the statutory process. ONLY a “Section 13 type notice” will be acceptable for annual rent increases. In addition, landlords will have to give TWO months and not ONE month`s notice of the increase.
Landlords will need to show comparable rents in order to justify the proposed rent increase; the new rent will have to be relevant to the market price for properties similar to theirs. Both parties can agree a lower rent other than the one on the notice to the tenant, but this must be done in writing.
The tenant will have the right to contest a new rent through the First Tier Tribunal, who will make a judgement on any challenged rent. Unlike today, they will have no power to increase the rent over the proposed one but can only reduce it, if they feel it is unjustifiably high compared to the local market rent. The new agreed rent CANNOT be backdated to the original notice date but will start from the date of the FTT decision!! Tenants will only be able to challenge the increase within the two months’ notice period, otherwise they`ll have to accept the new rent.
Given the delay, if challenged, (likely to be 6 weeks+) for the new rent to be activated and the fact that the rent can be challenged by the tenant for FREE, there will be a vested interest for certain tenants to challenge it.
The government has continued to argue there will be no rent control, but this will seem like a less obvious way of suppressing the ongoing rising rents that the market is experiencing! It will place a larger responsibility on landlords to do their research, so as to justify any increase.
Given the potential delays from tenant challenges, for landlords, as well as the limit to annual increases, many landlords may want to look to increase rents before the legislation comes into force. This will ensure the current rent is in line with market value so the next increase will not be too hefty for the tenant and also be considering doing annual reviews and potential increases!
Having too big a period between increases is likely to give the tenant an excuse to challenge the increase, causing the landlord unnecessary paperwork and headaches. Landlords will need to be very organized and treat the rental as a business, to be able to streamline any future increases.