June 3, 2016
Property gossip August 2016

When a landlord finds a good tenant they usually want to try and keep hold of them, likewise when a tenant has a good landlord they will want to stay on at the property. There are of course circumstances that mean a tenant needs to leave the property, perhaps they are buying a home of their own or their work takes them away from the area; however, sometimes a tenant will look elsewhere simply because they are not happy with their landlord.

Research by Direct Line has found that on average the British renter spends an average of 18 months in a rented property. In Birmingham the average stay is 2 years and 4 months, whereas on the opposite end of the spectrum the average Cardiff renter vacates within 12 months, followed by Leeds (12 months) and Bristol (14 months).

The analysis also focused on how long it takes a landlord to replace a tenant, with an average time of 22 days. Such void periods are costly and should be factored into your yield calculations. In Birmingham the average void period is only 11 days, whereas in Liverpool and Aberdeen the average void period is 33 days. In London the figure stands at 20 days.

They also looked at the number of tenants who vacate before the end of the tenancy term, with 1 in 11 tenants leaving early. The reasons were not broken down so it’s difficult to understand how many of those leaving early were doing so because they had a justified reason for being unhappy.

The figures somewhat contradict a view taken by some of a need to introduced new rules forcing landlords to provide longer minimum term tenancies – such as 3 years – so we can only assume, if brought in, the concept will be for a landlord to allow their tenant to stay for 3 years, but that if the tenant wants to leave earlier they can end the tenancy. Anyway, that’s a whole different topic altogether, best saved for another day.

In terms of tenants wanting to leave, our own research shows that a family is likely to stay longer, whereas sharers tend to change more often e.g. one wants to move out but they have a friend who wants to move in. Unfortunately it’s not simple as asking the incoming and outgoing occupants to swap keys and here are some of the issues created by such a situation.

DEPOSIT – With a change of occupant the situation creates a “new tenancy” and failure to observe the deposit protection rules could lead to a fine of between 1-3 times the value of the deposit and a need to return the actual deposit in full, regardless of any legitimate deductions against it.

RIGHT TO RENT – With the tenancy being a “new tenancy”, and starting after the 1st February 2016, “Right to Rent” rules come into force (which for all intents and purposes is an immigration check). A landlord must ensure the occupants in their property have a right to rent by carrying out “right to rent checks” and failure to do so could result in a civil penalty of £1,000 for a first offence, rising to £3,000 for a further offence. However, earlier this month the Immigration Bill became the Immigration Act 2016, and is intended to build on the Immigration Act 2014. For the private rented sector the new Act creates a series of criminal offences which sit on top of the already existing civil fines connected to failures to carry out Right to Rent checks. The new penalties are an unlimited fine and/or imprisonment for up to five years, which will exist alongside the fine structure in the 2014 Act (landlords who manage their own properties should most definitely become accustom to the new Act).

SMOKE / CARBON MONOXIDE ALARMS – Any “new tenancy” beginning from 1st October 2015, is subject to new legislation. Failure to observe this one can result in a civil penalty of up to £5,000. A landlord must “check the alarms” at the start of each “new tenancy”. Please do not confuse this with the requirement to have actually installed the required alarms post September 2015, which is required regardless, the point being here that the creation of a “new tenancy” requires that the alarms must be “checked” at the beginning of the “new tenancy”.

LICENCE CONDITIONS – If your property is in a borough in which a licensing scheme is in operation, various licensing conditions will apply. For example in Waltham Forest you are required to hold an inventory and to have referenced all occupants. Some landlords might feel that allowing a long term tenant to allow a friend to move into the property, perhaps a swap for an outgoing occupant, doesn’t warrant you to reference them, and whilst the council may not deem this a particularly serious offence you would be wise to read the following wording, found on a licensing advice website. When you factor in the Right to Rent rules it makes little sense other than to reference / properly assess each person who lives in your rental property.

“Ignore the law and you could pay a heavy price. You risk being prosecuted by the Council in the Magistrates Court. If found guilty, you would get a criminal record and could be fined by the Court and ordered to pay court costs and a victim surcharge. The maximum fine was £20,000 but in March 2015 the law changed and you can now be fined an unlimited amount, so this is really serious stuff. 

You could also be subject to a Rent Repayment Order and may have to repay up to 12 months rental income”

HOW TO RENT GUIDE – As from 1st October 2015, a landlord must issue their tenant(s) with the “How to rent” guide. It must also be re-served if, when renewing a tenancy with a new fixed term, the guide has been updated since it was previously issued. The guide was last updated in February 2016. If a landlord fails to serve the prescribed guide they cannot evict their tenant under section 21 until they do. Any notice served whilst the landlord was in breach of the rules would be invalid e.g. the landlord would need to start over and serve a fresh section 21 notice, having firstly issued the current How to rent guide.

It is certainly worth taking note of the points made above, especially if you manage your own property and have a somewhat relaxed relationship with your tenant. As a professional letting and property managing agent we would stick to set procedures; however, many hands-on landlords may not always be fully up to speed with new legislation. What might seem a harmless agreement between landlord and tenant could become quite complicated, especially if things turn sour between the landlord and the tenant. When a change of occupant takes place there’s always a risk that the “new group” will not get on as well as the previous group, even if it’s only a single change in personnel.