Property journalist Nigel Lewis looks at tenancy contracts in practice, and how crucial it is that landlords and letting agents get on board with the Renters’ Rights Bill as quickly as possible.
This column will have a personal aspect based on my recent experience helping a family member rent a property but will make a wider point, so please excuse the short ‘case study’ that ensues here.
It’s worth taking this approach because some landlords, property investors and letting agents out there have not grasped yet how their lives will change after the Renters’ Rights Bill becomes law in a few months’ time.
I have seen platitudes from letting agents saying ‘good landlords will have nothing to fear from the legislation’ but that’s them being corporate and coy – times they are a changing, as I hope to show here.
Tenancy agreements in practice
My niece, who is starting her second year soon at university in London, has rented a three-bedroom apartment in the Barbican complex with two friends.
Given my job as a property journalist, she asked for some advice on the draft contract, which was being sorted out via the landlord’s agent, Foxtons.
Was it fair? Should she sign it? Were there any bear traps? – were the questions she wanted answering.
A perusal of the 17-page document, which was not based on the government’s model Assured Tenancy Contract, was many things if not pricey at nearly £5,000 a month. Oh, to be a student in 2025.
The first shock for me was that the three students were being asked for six months’ rent in advance, plus the deposit – so just under £34,000 ‘up front’.
Their contract has one other curiosity – there was no break clause in it. The trio were committing to two years at the property without the ability to leave should their circumstances change – although the Foxtons negotiator assured me that they would help swap out any of the tenants if they had to leave suddenly under its ‘jointly responsible’ terms. But that put the ball firmly in their court.
I challenged the negotiator on this, and the answer came that the landlords, who are a couple, believe this rather one-sided approach was justified because the property is ‘furnished’, suggesting they were lucky to get the property in this state.
Renters’ Rights Bill is imminent
I am not going to get into the moral maze about whether this contract is fair or not (the tenants signed it) because, although aggressive and favouring the landlords, it was drafted by Foxtons after all – and in London’s super-competitive market fairly standard, I’m told.
The wider question, which I’ve put to Foxtons, is what on earth landlords like the couple who own this apartment and the thousands like them are going to do once the Renters’ Rights Bill becomes law?
Among its many fairly radical measures designed “give renters much greater security and stability” (housing minister Matthew Pennycook has insisted on many occasions) it will ban ‘rent in advance’ of more than a month and enable tenants to give notice to quit of two months the moment they move in, along with a rolling ‘periodic tenancy’. ASTs will be toast, by the way.
One other point – the rental contract I’ve been discussing also allows the agreement to be forfeited and therefore terminated if the rent ‘remains unpaid for 14 days’ .
This area of tenancy is also set to change under the Renters’ Rights Bill – the renting reforms will increase the mandatory threshold for eviction from two to three months’ arrears and increase the notice period from two weeks to four.
When speaking to the Foxtons negotiator, I pointed out that the contract was pointless in its current form because, when the Renters’ Rights Bill becomes law, it will mean many of the clauses within it will be retrospectively rendered illegal and/or unenforceable.
“Well, your niece will be OK then, won’t she,” came the cheeky riposte. Mine in return was to point out that issuing the contract in the first place was, therefore, somewhat pointless, but hey ho.
Understanding the changes
As mentioned, I’ve put all this to Foxtons. Why? It’s important that BuyAssociation readers understand how renting homes is about to change – and not for the better if you’re a landlord – and how the sector is going to adjust when the Renters’ Rights Bill passes into law.
Foxtons says it and the landlords the firm represents will operate ‘in line with the requirements of the Renters’ Rights Act’, which it’s keeping landlords up to date on ‘as the Bill develops’ – although the Government have refused all but three minor amendments so far.
The firm also says that in its experience good tenants and good landlords only make a change when absolutely necessary, so we don’t believe the Act will generate a major change in behaviour or length of tenancy.
That may be so – but Foxtons is referring to ‘in-tenancy’ changes while the contract is issued to my niece and her friends was all about the ‘pre-contract’, something the company has chosen to dodge, perhaps understandably given it will soon be a minefield – as landlords realise their ‘security’ once so easily obtained via tight contracts like this has largely evaporated.
Keep up to date with the Renters’ Rights Bill on our news pages.
