10 practical tips to reduce Renters’ Rights Act risks

Much has been written about the increased risks that landlords will face when the Renters’ Rights Act is fully implemented, but there’s very little practical and actionable advice for landlords to reduce these risks.

In this blog post, I explain why the risks for landlords are increasing, what these risks are, and share 10 detailed tips to help you reduce the risks. You can also watch the YouTube version of this blog post in the embedded video below.

Remember, you don’t need to prepare for the Renters’ Rights Act alone, and you can receive extra support by joining my membership, The Independent Landlord Hub, with access to courses, regular webinars, templates and a forum, all in a friendly community.

Why is the Renters’ Rights Act increasing risks for landlords?

The Renters’ Rights Act will not only change the standard tenancy that private landlords can offer tenants, removing fixed terms, allowing tenants to terminate whenever they like, and abolishing Section 21 “no fault” evictions, but it will also introduce significant penalties for landlords who breach a long list of rules.

The local council will be able to take action against landlords for many breaches of the new rules, with the right to issue a civil penalty of up to £7,000 for a single breach, and up to £40,000 for continued or repeated breaches.

Local authorities will also have considerably greater powers to investigate and gather evidence if they suspect a landlord has breached rented accommodation laws. This includes the right to enter business premises without a warrant in certain circumstances. You can read more in this blog post: The investigation and enforcement powers of councils in Renters’ Rights Bill.

Furthermore, “tenant-led” enforcement will also increase, as the Renters’ Rights Act will add a further 6 offences to the rent repayment order regime and double the maximum amount the judge can order a landlord to pay. This means that tenants may be able to apply to the First-tier Tribunal for the repayment of up to two years’ rent if the landlord breaches one of 13 offences.

Consequently, it’s very important for landlords to understand the new rules, even if they use letting agents. The buck ultimately stops with landlord.

>> Related Post: Renters’ Rights: Landlord fines and penalties explained

>> Related Post: The new Rent Repayment Order rules in the Renters’ Rights Bill

10 tips for landlords to reduce increased risks from Renters’ Rights Act

1. Understand what’s different with the new assured periodic tenancy

Although “assured periodic tenancy” (APTs) sounds very similar to “assured shorthold tenancy” (ASTs), they are very different beasts.

Here’s a quick overview of the 5 key differences between the old tenancies and the new:

• Periodic. APTs will be rolling, periodic tenancies which will continue indefinitely until either the tenant terminates it with a notice to quit, or the landlord terminates it if they qualify for one of the grounds under Section 8 (eg selling up, moving in themselves or close family, rent arrears, breach of agreement by the tenant which the judge considers to justify eviction.
• No fixed terms. All existing tenancies which have a fixed term will convert into a rolling periodic tenancy on the day the RRA is implemented. Landlords will not be able to enter into new tenancy agreements with fixed terms after this date.
• Rent. Listings for new tenants will need to state a “proposed rent”, the landlord cannot agree to let a tenant rent the property for more than that proposed rent. (This is called “rental bidding”). The landlord won’t be able to require new tenants to pay rent in advance, or for rent to be paid at intervals of longer than a calendar month. This is all new.
• Rent increases. Landlords will not be able to increase rent unless they first issue a Section 13 notice (Form 4) if they wish to increase rent. This is new – currently landlords can increase rent using Section 13, an addendum, using a formula in the tenancy agreement (called a rent review clause) or even informally.
• Pets. Tenants will have a new right to keep a pet if they follow a certain process to ask the landlord for permission, although the landlord can turn down the request if they have a good reason.

>> Related Post: Renters’ Rights Bill Guide: The 12 key provisions

2. Know which breaches may lead to penalties

The Renters’ Rights Act will introduce the right for local councils to impose civil penalties on landlords for breaches of many of its provisions, and it’s important for landlords to know which provisions come with the large potential sanctions.

Here’s a list of actions on the part of a landlord (or agent) that may result in the council issuing a civil penalty, as introduced by the Renters’ Rights Act:

• “Purport to let a dwelling-house […] for a fixed term” – for instance, if a landlord uses an old assured shorthold tenancy which contains a fixed term for a new tenancy after the implementation date.
• Attempting to end a tenancy by serving a notice to quit (ie not a valid Section 8 notice).
• Asking someone to leave in person or on the phone (“orally”)
• Relying on a Section 8 ground to try to end a tenancy where the landlord doesn’t believe they “will or may be able to obtain an order for possession on that ground”
• Re-letting a property during the restricted period after serving a Section 8 notice using Ground 1 (landlord or family moving in) or Ground 1A (selling up).
• Failing to state the proposed rent when listing or advertising a property for rent to new tenants.
• Asking for or receiving a “prohibited pre-tenancy rent payment” from the tenant or someone paying on behalf of the tenant, ie before all parties have signed the tenancy agreement.
• Having a blanket “no children” policy, without having a good reason.
• Refusing to allow someone who receives benefits to view a property, even though they can afford the rent.
• Providing false or misleading information to the Landlord Database, once launched.

>> Related Post: Renters’ Rights: Landlord fines and penalties explained

3. Effective tenant selection

Once the Renters’ Rights Act is implemented, it will be more difficult to evict tenants who don’t respect the terms of their tenancy agreement.

This makes tenant selection even more important than it is now. At a very minimum, landlords should obtain a professional reference from an appropriate provider, such as The Lettings Hub, OpenRent, and Goodlord (available via the NRLA). You’ll need a professional reference if you’re going to take out rent guarantee insurance.

However, these companies will not speak to previous landlords, so I do recommend speaking to previous landlords yourself, as the current landlord may be tempted to give a good reference if they want the tenants to leave. Do also check them out on social media and Google.

If you use a letting agent, insist on seeing the reference (agree this up front with them before you instruct them to find new tenants). Agents work for landlords, their principals, and so long as the landlord has registered with the ICO and has a Data Protection Notice, there should be no reason from a GDPR perspective for an agent to refuse.

I also recommend meeting the tenants yourself before you agree to let to them, even if you use agents. This builds a relationship with them from the start, and shows them that you take your obligations as a landlord seriously.

It’s far better to have a longer void than to let to a tenant who doesn’t pass referencing or your own enquiries.

Remember that you can’t turn down an applicant just because they receive benefits, if they can demonstrate they can afford the rent.

>> Related Post: How to Choose Good Tenants

4. Decide if you need to change any of your policies

When the Renters’ Rights Act is implemented, you may need to change some of the ways you do things.

Here are some examples of policies you may need to change:

• Pets. If you previously had a “no pets” policy, you will need to allow tenants to have a pet if there isn’t a good objective reason to say no, such as it being prohibited in your lease. Instead, have a think about which types of pets would be suitable for your properties, and develop a pet policy to set out the conditions on which you would accept a request to keep a pet. You are welcome to adapt this: Model Pet Policy for Landlords.
• Tenant selection. If you currently insist on “professional tenants only”, you will need to consider all tenants, including those who receive benefits, unless the money they receive isn’t enough to enable them to afford the rent.
• Rent in advance. You will no longer be able to insist that a tenant pays rent up front. Any clause in a tenancy agreement that states this will have no effect. Instead, you might ask them to find a suitable guarantor, or use a professional guarantor.
• Requiring a long fixed term period. Sometimes landlords ask for tenants to commit to living in the property for a long period of time. Landlords will not only be unable to do this after the Renters’ Rights Act is implemented, they could receive a civil penalty of up to £7,000 from the local council if they do.
• Having set rent increases in a tenancy. Many tenancy agreements have automatic or agreed rent increases, so that both parties commit to future rent increases. These will be null and void in the future, and landlords will need to follow the statutory Section 13 process to increase rent, which will be subject to review by the First-tier Tribunal if the tenant wishes to appeal against it.
• Student lets. With the abolition of fixed term tenancies, you won’t be able to have minimum terms for tenants that mirror the academic year. Also, you won’t be able to insist that overseas students pay rent upfront.

5. Customer relations: build good relationship with tenants

The Renters’ Rights Act will change the balance of power between landlords and tenants, as tenants will be able to leave at any time, and landlords will only be able to evict tenants if they have a good reason.

Happy tenants stay longer, which reduces voids, and so much of the hassle involved in being a landlord disappears.

To succeed in this new environment, landlords will need to attract and keep good tenants who are happy with not just the properties, but also with the service provided by the letting agent or landlord.

Providing renters with high quality, clean rental properties is only the first step in having happy tenants. It’s also very important to provide an excellent service, carrying out repairs promptly and looking after the property.

If landlords use agents for property management, they should check in with tenants to see if they’re happy. This is easier to do if they have met the tenants at the start of the tenancy.

Landlords should go on inspections with their letting agents at least once a year to keep tabs on maintenance. Make sure you look closely at inspection reports, and ask to see the repair requests from tenants. If you don’t check, how will you know if they’re doing a good job?

Going on an expection at least once a year, even if you use agents, enables you to see the condition of the property yourself, and speak directly to the tenant. As well as getting direct feedback from them, it will help you develop a relationship with the tenant.

For those who self-manage, it’s a good idea to mention the Renters’ Rights Act to them, so they understand how it will change things for them. We will need to give tenants an information leaflet around the time of implementation, but it’s a good idea to mention it now.

>> Related Post: How to attract good tenants and keep them happy

6. Carry out regular inspections

Inspections enable the landlord or the letting agent to keep an eye on the property to see what needs repair now and in the future, and to check whether the tenants are complying with their obligations under the tenancy agreement.

Sometimes tenants are reluctant to report disrepair, or don’t seem to get around it, but a regular visit will mean the landlord or agent can see it themselves.

If the property is not being looked after by the tenant, or there is evidence of unauthorised subletting or another breach of the tenancy agreement, it will be important to have evidence to obtain possession if the landlord wishes to use the discretionary Ground 12, breach of tenancy agreement.

Take photos of any issues discovered (either disrepair which the landlord needs to rectify or the tenant’s breach of contract), and follow up the visit by confirming in writing the observations, discussions and action plans. If you use an agent, they should do this for you, and you should study the report carefully.

As with all discretionary grounds, the judge will need to agree it’s reasonable to evict the tenant because of their breach of contract. Having documentary evidence that the landlord has acted reasonably, and has made given the tenant the opportunity to rectify any breach before seeking eviction will help support the landlord’s case that it is appropriate to evict the tenant.

>> Related Post: How to carry out successful mid-tenancy inspections

7. Keep on top of repairs and maintenance

Although the Decent Homes Standard due to be introduced by the Renters’ Rights Act is unlikely to come into force before 2035 (see The new Decent Homes Standard for the private landlords), it is important for landlords to keep on top of repairs and maintenance.

Good tenants will be free to move out whenever they like if they feel the property is not being looked after properly.

>> Related Post: What are landlords’ obligations to carry out repairs in England?

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8. Manage rent arrears proactively

The Renters’ Rights Act will make it more difficult to evict tenants if they fall behind with their rent. Whereas at present mandatory Ground 8 enables landlords to apply for an order for possession if the rent arrears amount to more than two months’ rent on the date the notice is served and the date of the hearing, the Renters’ Rights Act will increase this to three months’ rent. Also, instead of giving the current two weeks’ notice, landlords will need to give four weeks’ notice.

Prevention is very much better than cure, and early empathetic intervention from the landlord or agent can help the tenant and prevent arrears from escalating.

Don’t be afraid to contact the tenant if they fall behind with their rent to find out why, and how long their financial difficulties are likely to last. It might be a temporary problem, in which case a payment plan might be appropriate. On the other hand, it may be something serious. For instance, they’ve lost their job, had their hours cut or have been unable to work.

There may be benefits that they’re entitled to such as Universal Credit. The Entitled To website has an excellent online benefits calculator which will show if your tenant is eligible for support. 

More information is in the related post below.

>> Related Post: Landlord guide: How to deal with rent arrears effectively

9. Keep good paperwork and records

The Renters’ Rights Act will increase the amount of paperwork for landlords.

For instance, when launched, landlords will need to upload documents for every property once the Landlord Database is launched. As mentioned above, it will be an offence to “knowingly or recklessly” provide false or materially misleading information to the database, backed up with the right for tenants to claim a Rent Repayment Order for breach.

Landlords will need to be very careful with their paperwork and certifications, not least because the local authority will be able to see if the EICR has expired.

Another example is the process to increase rents. Whereas now rent increases can be agreed, and confirmed by a letter or addendum, after implementation, landlords will need to serve a formal Section 13 notice. Landlords should keep evidence of rents of similar properties in the area so that they can justify the rent if the tenant should appeal to a First-tier Tribunal.

When the Landlord Ombudsman is launched, landlords may be asked to explain their decisions and actions, and will need to have good records to explain why they did certain things. This means more structured decision-making and better record keeping.

As mentioned above, good documentation will help provide evidence that the landlord has acted reasonably if the tenant has breached the tenancy agreement, and has attended to reported disrepair in an appropriate time scale.

10. Consider rent guarantee insurance for new tenants

As it will take longer to evict tenants if they fall into rent arrears, rent guarantee insurance can reduce the risk of financial loss for the landlord. This is a relatively low cost action you can take to mitigate the risk of rent arrears.

Before you take out rent guarantee insurance, make sure that you comply with the terms and conditions, especially carrying out a professional reference, or not having any rent arrears if you are looking for insurance for an existing tenant.

Final thoughts: Get support from reliable sources

We’re entering a period of immense change for landlords, with the introduction of a complex piece of legislation.

Due to its complexity, it’s important to obtain information from reliable sources. For instance, the government will be publishing comprehensive guidance to help landlords prepare for the implementation of the Renters’ Rights Act.

However, unfortunately some businesses will use scare-mongering and exaggeration to attract new customers, so be on your guard for this.

An easy way of getting reliable advice is to join my membership, The Independent Landlord Hub, which provides support, training courses, regular webinars, resources, templates and a wonderful forum, all in a supportive community. There’s a strict “no sales promotion” policy, no sponsored posts and no affiliate links.

You don’t need to prepare for this alone. Come and join us. 😊