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Those Renting in the UK Could Be Owed 12 Month’s Rent!

As a component of their “Renters’ Rights Awareness Week”, the tenant campaign group Generation Rent has revealed that many of those that may be in imminent  danger of being evicted, could be in store for a significant back payment in rent. With the eviction ban introduced by the UK government during the initial lockdown period of March 2020 having effectively come to an end on the 1st of June 2021, tenant campaign groups warn that the high volume of evictions will casts a renewed wave of homelessness across the nation. Whilst opposition to the use of “no fault” evictions predated the coronavirus pandemic, the UK charity stepchange recently revealed the true extent of the rental landscapes disarray. Their report revealed that since the implementation of lockdown measures 19 million, or almost 40% of adults across England, Scotland and Wales have had their income significantly reduced as a result of the fluctuating employment.  

However, the impact of reduced income has not been exclusive to tenants. As can be expected if the residents of a rental property are unable to meet their obligation to make regular rental payments the landlord’s revenue will likewise be influenced. Whilst the common advice for the accumulation of rent arrears would be to attempt to negotiate a payment plan, or a reduced rental commitment, the unwavering effects of the pandemic have left many landlord with little alternative than to pursue possession of their property; made all the more clear with Stepchange revealing that almost half of all landlords within the UK derive their revenue from a single rental property.

However, reports from numerous new outlets supported by generation rent have claimed if a landlord tried to serve a tenant with a no fault eviction without first having the appropriate licence, the tenant could be entitled to have an entire years’ worth of rent repaid.  With this being said it is strongly advised that tenants check both the terms of their tenancy agreement and contact their local authority to see if their landlord is appropriately registered. 

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Approximately 50 local authorities currently dictate that those that wish to rent a buy to let property within their constituency must first hold some form of landlord license. Whilst this is not a legal required in every region of the UK, as over half of the local authorities that demand rental property owners hold a license are situated in London. In most cases if the landlord is letting out a larger property with shared communal areas, referred to as a house in multiple occupancy,  or HMO, a landlord license will be required. If the rental property in question is not considered to be a HMO, your landlord may still be required to have a license granted by the local authority. This would be referred to as a selective licensing scheme.

What Is a “No Fault” Eviction

Becoming the focus of many tenant campaign groups in recent years, the section 21 notice, more commonly referred to as the “no fault” eviction has been slammed by renters as one of the leading contributors to spread of homelessness across the nation.  The section 21 notice gains its moniker from the lack of justification landlords are required to give when serving such a notice to the residents of a rental property.  Unlike a section 8 notice of eviction, the owner of the rental property is not required to site any grounds under which the tenant has breached the tenancy agreement when serving a section 21 notice; this is because the transfer of possession back to the landlord will not take place during the fixed term of the tenancy agreement.  Instead, when serving a tenant with a section 21 notice the landlord is simply stating their intentions to reclaim possession of the rental property once the agreed upon rental period has expired. This makes it clear for the residents that the tenancy will not be renewed, nor will they be entering into a rolling tenancy and will need to begin the search for their next rental property.  This opportunity to largely bypass a lengthy eviction process and court disputes makes the no fault eviction favoured by most landlords.

The Deregulation Act and Eviction

However, there is circumstance under which the owner of the rental property would not be able to effectively issue their tenants with a section 21 notice. The implementation of The Deregulation Act 2015 introduced a series of protectionary measures for tenants that prevent a section 21 from being upheld if the landlord has failed to adhere to their legal obligations established in the tenancy agreement.

To this end before each new tenancy commences there is range of documentation and correspondence that must be provided to the tenants by the landlord. This information comprises the energy performance certificate of the rental that details its energy efficiency, alongside suggested improvements the landlord could make and estimations of its running costs. Additionally the owner of the rental property is required to provide the occupants with the current gas and electrical safety certificates prior to them moving into the rental. New tenants should also be issued with the latest copy of the government’s “How to Rent” guide, a document that helps those new to the renting process by detailing their rights and responsibilities when renting, alongside where they could turn for support during disputes. If the owner of the rental property neglects their obligation to provide any of the above documentation to their new tenants when requested, or from the outset of the tenancy, then any section 21 notice they issue to the occupants will not be upheld.  

Further to this a section 21 notice will also be redundant if the landlord has failed to address any remedial work or repair requests made by their tenants. However, with this being said it is important to consider the tenants responsibility to inform the landlord of any work that needs to be conducted. Whilst property inspections carried out by the landlord or letting agency will work to diminish the chances of missing anything that needs attention, it goes without saying that landlords cannot be held accountable for a lack of repairs if they were not aware of the damage to the property or its furnishings.

The Act further prevents landlords from expelling their tenants from the rental property if there is any unsettled debt between the two parties. In the circumstance that the landlord is yet to return any amounts taken for the tenancy deposit, or failed to enter the amount into a government approved deposit protection scheme and has failed to either return or re-enter the amount, they are unable to serve their tenants with a section 21 notice. Additionally, renters do not have to live in apprehension that they could be served with a no fault eviction at any point as the act prevents landlords from serving their tenants with a section 21 notice within the first four months of the tenancies fixed term.  However, if the tenancy agreement has been renewed and the tenant has already occupied the rental property for an extended period of time this protection will not be granted.

What Is the Tenant Fees Act 2019

Introduced in June 2019, the Tenant Fees Act brought with it a series of safeguarding measures for tenants, preventing them from being exposed to excessively high fees when trying to rent a new home.  The tenant Fees Act puts an end to unnecessary fees charges by landlord when finding new occupants for their rental property, working to allow tenants to “see at a glance what a given property will cost them in the advertised rent with no hidden costs.”

As can be expected these measures were met with resistance by landlords after leaving them increasingly exposed to the costs of finding a new tenants; however many argued that any losses in revenue could be simply recouped through an increase in rental prices, simply realigning the cost tenants would incur. Historically, some residents of rental properties have been wrongfully charged hundreds of pounds in non-refundable administrate fees by the landlord, alongside equally extortionate amounts for completing the referencing process.

Alongside placing a threshold on the maximum amount a landlord is able to request their tenants pay for a holding or tenancy deposit, landlords will also be prevented from charging excessive amounts for amendments to the tenancy agreement. Currently if a rental property owner wished to pass the costs of these amendments to the agreement onto the tenant they will have to justify the amount they request.  The Tennant Fees Act established the limit for this cost to the tenant at £50; if the landlord wished to charge over this amount they will be required to prove they incurred this additional cost.

If the landlord is found to be in breach of the act and has made requests for prohibited payments from the occupants of the rental property, if they have not been previously convicted of such a penalty then they will incur a fine of up to £5,000 for each violation they have committed. However, if this if not the first time the owner of the rental property has been found to be in violation of the act the matter will be considered a criminal offence. The landlord can expect to face an unlimited fine alongside a banning order enforceable through the Housing and Planning Act 2016. With this being said, in some cases the enforcement authority may impose a fine of up to £30,000 as an alternative to criminal proceedings.

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How Much Can a Landlord Take for a Deposit?

However, with the introduction of the Tenant Fees act, tenants no longer have to commit to grotesque upfront costs before they have even moved into their new home. As can be expected new tenants of a rental property will be required to provide the landlord with both a holding deposit and a tenancy deposit. Whilst both of these amounts are refundable, with the holding deposit being deducted from the initial rental payment and the security deposit once the fixed term has come to an end, a limit has been placed on the amount a landlord can request for the tenancy deposit.  Providing that the amount of rent that a landlord request a tenant pays each year in rent is lower than £50,000 then the maximum amount they are able to take from a tenant for the tenancy deposit is the equivalent costs of five weeks rent. However, if the annual rental charge for the property is over this amount then the landlord is able to request up to the equivalent costs of six weeks rent for the tenancy deposit.

Similarly when a tenant wishes to “reserve” a rental opportunity and have the landlord take the property off the market whilst the terms of the tenancy agreement are negotiated, they will be required to pay what is called a holding deposit. The tenant Fees Act places a further limit on what landlord are able to request their tenants pay to reserve a property, with the maximum amount being placed at the equivalent cost of one week’s rent.  

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