You may have seen a lot in the news recently about several changes the government are making to the private rental sector. This news has largely been confusing, so rest assured, you are not alone if you do not understand the details of the changes and headlines being spouted in the press.

I will quickly go through the main points so you can learn about how they will impact you;

Tenant Fee Ban

You’ve heard the headlines, and yes it does sound obvious to what it means. However, there is quite a lot in this ban that will affect you as a landlord, if not directly, then indirectly. Firstly, the ban comes into effect on the 1st June 2019 in England and on the 1st September 2019 in Wales. So, what does this mean in simple terms? Well, neither a landlord nor agent can charge a tenant a fee.

The only thing tenants can be charged will be Rent, Deposit and Holding Deposit. Tenants can no longer be charged an application fee, referencing fee, renewal or inventory fees. This means the cost of these, which was normally covered by the tenant, will have to be covered elsewhere, probably by the landlord. Agents will start communicating these details to their landlords and are likely to increase their fees to landlords to cover these costs.

Another major change in the ban will be the amount tenants can be charged for a deposit. Firstly, any holding deposit upon application can be no more than the equivalent to one weeks rent. Secondly, the security deposit in England can be no more than five weeks rent. We are still awaiting exact details to the amount in Wales; however, there is a chance it would follow suit with a five week security deposit cap.

Example

If the rent of the property is £600 per month, then the holding deposit can be no more than £138.46 and the security deposit can be no more than £692.30. There will be rules if the landlord or agent wants to retain the holding deposit and when it must be returned.

There will also be limits on what tenants can be charged in terms of lost keys and late rent etc.

Abolition of Section 21

This is a more recent headline that seems to be more of a vote grabber than actual sense. The governments reasoning for this is to end what it calls “no fault evictions”. Now, I am no advocate of using Section 21 as revenge for tenants’ complaints, however, scrapping it altogether may not be the best idea.

The changes the government would like to introduce would be for landlords to regain possession via the Section 8 process. This process allows landlords to seek possession of their property under certain grounds like more than two months’ rent arrears, damage to the property or other breaches of the tenancy agreement.

According to a survey done by the NLA (National Landlords Association) those landlords who sought to regain possession under Section 8 took on average 145 days at an average cost of £5,730.

The government have indicated that they will be looking to update the Section 8 process as part of the shakeup, including landlords having grounds to sell or move into the property. However, there are no guarantees this is going to be effective in appeasing landlords.

We do not at this point have any timescales to when the changes will take effect. There are still several stages before it can become law as government will need to get this legislation passed in Parliament.

I will be posting further updates and guidance to these issues on my blog Cardiff Property Info and on my Facebook page @cardiffpropertyinfo in the coming weeks – If you have any questions about these changes or are worried, please do not hesitate to get in touch with me at daniel@handmproperties.co.uk


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