What happens when renters leave before their tenancy agreement ends?

What can you do if your tenants decide to leave before the end of their contract?

In the current climate, the last thing on many tenant’s minds will be moving. However, there are all kinds of reasons why people decide they are not happy where they are living and seek to leave – sometimes in the middle of their tenancy agreement. So here are some insights into what landlords can do if this happens to you.

In principle, tenancy contracts are binding upon both parties and hence can be enforced in a court of law. But in practice, negotiation is generally more effective and less costly than litigation. So good communication – if possible – will help.

When tenants give notice, try to determine their reasons and see if you can address them.
There are basically two reasons why tenants exit contracts early. The first is that circumstances have changed (either their own or something related to the property) and the second is that they are dissatisfied with the service they are receiving as customers.

In either case, there may be situations where your tenants feel that they have been let down by you (or your representatives) and are therefore perfectly entitled not just to break their contract but to get their deposit back. In fact, you may discover that they are absolutely right.

If the tenant’s circumstances allow, see if you can claim some form of compensation.
If the tenant’s circumstances are changing for the better (or at least are no worse), then the most pragmatic approach may be to split the difference with your tenant and see if you can come to some form of settlement.

When considering this option, remember that your claim against your tenant (if any) would be civil, not criminal. This has several implications and one of them is that a court would expect you to take reasonable steps to mitigate your loss and hence your tenant’s exposure to any claim for damages.

Given the demand for rental property in the UK, it’s probably fair to say that most landlords should be able to have new tenants in place within two to three months of their old ones leaving.

That being so, you could request either that your existing tenants find a new tenant who is acceptable to you or that they pay a break fee equivalent to two to three month’s rent to allow you to find someone else.

The advantage to you is that you (at least) cover the costs of changing over the tenancy without the hassle of having to pursue civil action. The advantage to the tenant is that they can move out without the concern of being pursued for costs and/or of having their credit records negatively impacted.

If the tenant’s circumstances have taken a turn for the worst, it’s usually best just to accept it.

If your tenants genuinely can’t pay then you are not going to get your rent. There is no point in pursuing the matter through the courts. Even if you get a judgment in your favour, you still have to collect the money and if they don’t have it, then you can’t get it. You can damage their credit record, but that won’t do you any good. If they go bankrupt, then your CCJ will be erased but your costs will not.

If your tenants can pay, you can, in theory, force them either to stay put or to pay you compensation to leave, but you could end up wishing you hadn’t done either. Disgruntled tenants can do a lot to sabotage the re-letting of a property and the internet has increased their power. In short, you could be trading a small, short-term upside for a lot of long-term downsides.

All change for right to rent checks

Home Secretary Pritti Patel has relaxed the rules around landlords’ right to rent checks

The Government has announced a change to the way landlords carry out ‘right to rent’ checks during the coronavirus outbreak. The right to rent scheme requires landlords to check that all tenants who are living in their properties have the correct legal status to live in the UK. But last night the Government said, with immediate effect, the Home Office will no longer require landlords to see original ID documents and will allow checks to be undertaken over video calls. From today, prospective renters can submit scanned documents, rather than originals, to show they have a right to rent.

Despite this relaxation of the rules, these checks are still necessary and it remains an offence to knowingly let a property to anyone who does not have legal immigration status in the UK. So if a prospective or existing tenant can’t provide any of the accepted documents, landlords should use the Landlord Checking Service for their own peace of mind and to avoid legal action being taken against them.

PlanetRent, our free automated lettings app is designed to help landlords with their right to rent checks and make the whole process easier. PlanetRent keeps a log for you of right to rent checks being accepted and reminds users that this is a mandatory requirement. The app also enables users to keep passports & visas on record and warns landlords if they expire.

The Government gave no indication of how long these changes might be in place. However, Home Secretary Pritt Patel made it clear that once the temporary changes end, landlords and employers will be asked to carry out the full checks on those tenants who rented a property during the pandemic.

Landlords can read the full guidance here to find out what this means for you.

Coronavirus: can I still make repairs to my property?

What’s the latest Government advice to landlords who need to get repairs done?

The Government issued detailed advice to landlords and tenants over the weekend to clarify the situation regarding repairs and maintenance during the Coronavirus outbreak.

Despite the current need for social distancing, landlords’ repair obligations have not changed. Tenants still have the right to a decent home – and it is in the best interests of both tenants and landlords to ensure that properties are kept in good repair and free from hazards.

Good management requires regular review and maintenance of a property, but planned inspections just got a whole lot more difficult. However, that is no reason to allow dangerous conditions to persist. So tenants are being encouraged to inform landlords early and engage constructively with them if they have a problem with the condition of their property. Tech solutions such as photos taken and sent via smartphones should be used wherever possible to reduce the need for contractors to attend sites and carry out inspections. 

Where reasonable – and safe – landlords should make every effort to address any issues raised by tenants – and don’t forget to keep a record of what you did. You can find further guidance on visiting properties to make repairs here.

 Inspectors or maintenance workers can still visit blocks of flats and multi-occupied properties for essential or urgent work such as inspecting and testing fire alarm and emergency lighting systems. The Government has stated that “urgent health and safety issues” are those which will affect your tenant’s ability to live safely and maintain their mental and physical health in the property.

Here’s a list that might help:

  • If there is a problem with the fabric of the building for example, the roof is leaking
  • If your boiler is broken, leaving your tenant without heating or hot water
  • If there is a plumbing issue, meaning your tenant does not have washing or toilet facilities –
  • If the white goods such as the fridge or washing machine have broken, meaning the tenant is unable to wash clothes or store food safely  
  • If there is a security-critical problem, such as a broken window or external door 
  • If equipment a disabled person relies on requires installation or repair

Where property repairs aren’t urgent, landlords and tenants should use their common-sense. Wait until social distancing is no longer needed before tackling any problems that are inconvenient but that your tenants should be able to live with for the time being. Unnecessary visits to someone’s home by strangers could threaten their health and that of their family – so tenants should be encouraged to stay safe. That draughty window can wait.

New protections for renters now in place

Landlords and tenants are expected to work out a payment plan if renters find themselves in arrears

A complete ban on evictions and ‘additional protection’ for renters have been announced, coming into force from today. But what does this mean for landlords and tenants in reality?

First, the court service has now suspended all possession hearings. This means that no cases that are already in the system  – or those due to be heard – can be taken to the stage where a landlord can evict a tenant. No evictions will now take place for any reason and the ban will initially last for 90 days, but it might be extended if necessary. 

According to Landlord Today, “The Government has taken this measure to protect private and social renters, as well as those with mortgages and those with licenses covered by the Protection from Eviction Act 1977”. The new measures will apply to landlords and tenants in  England and Wales.

However, it is important for renters to note that these new government guidelines clearly state that tenants are still liable for their rent and they must do all they can to pay their landlord as usual. If renters find themselves in financial hardship due to the impact of the COVID-19 outbreak and are struggling to pay their rent, Government support is available. Go to the www.gov.uk website to find out more about the package of support that is being delivered by the Government in response to the pandemic. 

However, if a tenant does think they will have problems sticking to their rental agreement, the first step is to speak to their landlord. The Government is actively encouraging landlords and tenants to speak to each other and work together to put in place a sensible – and affordable – payment scheme. This is something that we wholeheartedly support.

The Government’s aim in all this is clear. As Housing Secretary Robert Jenrick said: “no renter who has lost income due to coronavirus will be forced out of their home, nor will any landlord face unmanageable debts.”

With new rules in place, landlords will now have to give their tenants three months’ notice if they want to end the tenancy. To clarify, this means the landlord can’t apply to even START the court process until the end of this three-month period. 

Evictions banned and mortgage holidays confirmed

Evictions have been suspended and landlords will get a three-month mortgage ‘holiday’ to protect them from financial hardship

Earlier this week, we blogged about the Labour party’s call for protection for renters in arrears due to the Coronavirus. Last night the Government took action, announcing proposals to protect renters and landlords by suspending evictions and confirming three-month mortgage payment holidays for buy-to-let landlords. This is to ensure that tenants won’t be made homeless if they can’t pay their rent on time. Emergency legislation is expected today or tomorrow so that landlords can’t start proceedings to evict tenants for at least a three-month period.

Tenants going into arrears – for any reason – puts a lot of financial pressure on landlords. So the government also confirmed that the three-month mortgage payment holiday announced earlier this week will be extended to landlords whose tenants are experiencing financial difficulties due to Coronavirus. At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances.

The ‘pre-action protocol’ on possession proceedings will be extended to include private renters and its remit will be strengthened to help landlords and tenants resolve disputes. Landlords will be expected to reach out to tenants to understand the financial position they are in; and the Government will also issue guidance asking landlords to show compassion and to allow tenants who are affected to remain in their homes wherever possible.

These moves have been widely welcomed by industry bodies including the National Residential Landlords Association and ARLA PropertyMark, which said: “We are very conscious of the plight of tenants in these difficult times and appreciate any government action to help those affected by the current situation.”

Will Government act to protect renters?

The biggest question for tenants who may find themselves out of work or laid off without pay due to business closures caused by the coronavirus is, how do I pay my rent? To try and tackle what is likely to be a widespread problem, the Labour party has published draft legislation of its own ahead of the government’s emergency bill, which goes before Parliament this week.

Leading property lawyer Justin Bates of Landmark Chambers has been heavily involved in drafting the legislation. Giles Peaker who also “had a bit of a hand in this” has posted the details of Labour’s proposals on the Nearly Legal website.

The aim of the Landlord and Tenant Temporary Provisions Bill 2020 – Coronavirus emergency rent relief,  is to establish that “for assured, assured shorthold, secure or Rent Act tenants, where there was failure to pay contractual rent that was in any way related to the effects of the coronavirus during a designated period, this would not count as rent lawfully due for the purposes of the relevant rent arrears grounds of possession”.

This does not mean that tenants don’t have to pay their rent. Arrears would have to be paid eventually. But they could not be used as a reason to start possession claims, now or in the future.

Giles Peaker also points out that, “Where the tenancy may be subject to a section 21 notice, this draft [bill] does not stop potential service and proceedings under s.21, as it is impossible to establish the reasons for a section 21 (and some uses of it may be for such things as recovering an abandoned property)”.

The Residential Landlords Association (RLA) and the National Landlords Association (NLA) are also calling for a package of measures from government and mortgage lenders to support tenants and landlords affected by the coronavirus. This includes:

  • temporary scrapping of the five-week wait before Universal Credit claimants get their first payment,
  • pausing the final phase of restricting mortgage interest relief to the basic rate of income tax, and
  • ensuring lenders look sympathetically on requests by landlords for mortgage payment holidays where their income is being affected through reduced or non-payment of rent.

The Acorn union which supports tenants, workers, and residents, is also calling for a “rent holiday” and to protect tenants from the threat of eviction.  

In the meantime, the situation with possession claims in general, including section 21 based claims, remains unclear. Like most aspects of business over the next weeks and months, it will be a case of wait and see. The Grenfell Inquiry was halted yesterday as one key player needed to self-isolate and two others are over 70 and have been advised to stay at home. If this scenario, as seems likely, is played out across the courts then there will be no way to pursue claims for repossession on any grounds for perhaps many months to come.

In praise of letting agents!

planetrent logo

Last week Landlord Today carried a useful article from a Norwich-based insurance broker specialising in landlord insurance. The company gives a list of top tips for novice buy-to-let investors, outlining the key aspects of renting a property that new landlords need to understand.

They are:

  • Know the law  
  • Prepare for costs 
  • Evaluate tenants 
  • Understand eviction

These are all really important points. Landlords should have a clear understanding of the market they are investing in before they take the plunge. By letting a property, you are providing a home for someone: that is a major responsibility.  Of course landlords are running a business and expect to make a good return on their money – but that comes with a long list of obligations and responsibilities that anyone dipping a toe in the water for the first time needs to fully understand.

However, what the article fails to point out is that first-time landlords have a lot to gain by using a professional letting agent. Of course, this comes with a cost but what you may lose in fees you stand to gain via the local knowledge and expertise of a company with experience in the rental market. A good letting agent can be worth his or her weight in gold. You are likely to face fewer void periods when you aren’t getting an income and can rely on the agent to properly vet your tenants for you, so you are less likely to face problems further down the line. You can do all this yourself but it takes time and energy and if you haven’t done it before it is easy to make mistakes. So why not put the task in the hands of someone who does this for a living?

Not all letting agents are created equal. So if you do decide to go down this route, make sure the company you choose is a member of one of the three main governing bodies:

  • Association of Residential Letting Agents
  • Safeagent (Previously The National Approved Letting Scheme)
  • National Association of Estate Agents

Any letting agent who is a member of one or more of these professional bodies will carry its logo or trademark on their website. This means they are bound by the rules and regulations that govern the sector. The agent will also have a complaints procedure in place and can be relied on to safely manage your money.

But if managing and letting your own property really is the way you want to go, then Ringley has developed PlanetRent to do all the hard work for you. We have designed it to give your tenants a professional rental journey and to ensure that you as a landlord are fully compliant with all the latest legislation. So if you have a property to let, why not, sign up here today, free of charge, and find out how PlanetRent could benefit you and your tenants.

Would you vote for rent control?

Will the promise of rent control be enough to secure Sadiq Khan a second term as London Mayor?

London Mayor Sadiq Khan launched his re-election campaign today. He is hoping to win votes by promising Londoners that he will introduce rent control in the capital if he is voted in for a second term in May. Speaking in Hackney, the Mayor said that if he wins a second term, that would give him an “undeniable and irresistible” mandate to enforce rent controls.  

But there is a problem with this pledge: capping rents is not something the Mayor has control over. Rent control has to be agreed by central government and there is nothing to suggest that this policy would be acceptable at Westminster. It would also put him at odds with landlords, with the Residential Landlords Association and the National Landlords Association calling out the policy as”disastrous”.

Sadiq Khan claims he has “massively increased” affordable homes in London but has been blocked from making private rent more affordable. However, rival Tory mayoral candidate Shaun Bailey said rent controls always led to higher rents.

The other candidates in the race are also promising to improve the London housing market:

  • Liberal Democrat Siobhan Benita plans to bring thousands of empty homes back into use and use TfL -owned land to build rental homes;
  • Green Party candidate Sian Berry would freeze rents;
  • Independent candidate Rory Stewart pledges to establish a Mayor’s Building Company to build hundreds of thousands of new homes; and
  • Tory candidate Shaun Bailey promises to build new homes in London via a City Hall-controlled building programme that would assume control of the building process in London.

Maryanne Bowring, Group MD at Ringley has consistently argued against rent control. Commenting on the London Mayor’s pledge, she says: “Rent controls have time and time again been proven not to work in cities across the world. The war on landlords by all sides needs to stop. The biggest casualties will be renters being forced to pay more as buy-to-let investors sell up after facing the threat of reduced returns: they already have to grapple with harsher regulation, extra stamp duty, and reduced mortgage relief.

 “Build-to-rent will bring much-needed supply but still only makes up a fraction of the market and any form of rent control will discourage further investment into the sector, reducing the supply of potential new rental homes.”

Maryanne’s view is that London has a huge unmet demand for rental properties and any policies that restrict new supply – like rent controls – will only force rents to rise. “This could lead to the creation of a rental black market,” she says.

Where’s best to invest in today’s rental market?

Investment in the property market has increased by almost 50% in the last five years.

New research from peer-to-peer lending platform Sourced Capital has revealed the best places around the country to invest in the rental market. The findings are based on current rental yields across the UK property market.

Over the last five years, investment into the real estate, renting and business sector increased by 48.4%. This is one of the largest increases in the non-manufacturing industries behind construction and other service sectors in terms of performance. So despite Brexit uncertainty hitting house price growth, as well as changes to tax regulations and a hike in stamp duty thresholds for buy-to-let landlords, the UK property market is still a good bet for investors.  

The average rental yield across the UK is around 4%, but there are some hot spots around the country that are consistently delivering higher returns than the national average.

Scotland continues to top the charts at 5.8%, with 14 of the best 20 areas for current yields located north of the border.  Glasgow ranks first at present with yields hitting 7.8% on average, followed by West Dunbartonshire (7.2%) and Inverclyde (7.1%).  

Northern Ireland comes second, with yields averaging 5.4%, and Belfast is currently delivering 6.4%.

Yields in England average 4.1% with the North East (4.9%), Yorkshire and the Humber (4.5%) and the North West (4.4%) home to the most favourable rental yields. Burnley ranks at number six in the UK as a whole and the best in England, with the average rental yield currently at 6.6%. Other areas outside of Scotland to make the top 20 include Blackpool (5.9%), County Durham (5.8%), Pende (5.8%) and Hyndburn (5.8%).

For landlords already in the market, London is still a good investment. According to Rightmove’s latest Quarterly Rental Trends Tracker, asking rents are rising nearly twice as fast in the capital than in the rest of the country. London asking rents have hit a new record average of £2,119 per calendar month (PCM) as ongoing lack of supply means rents are 4.2% higher year-on-year, and the rest of Great Britain is up 2.4%

Other findings show that:

  • Over the past 10 years London asking rents have risen almost twice as fast as the rest of Great Britain.
  • Average asking rents outside London have risen by 24%, compared to 45% in the capital.
  • In cash terms, London asking rents are up by £658 PCM compared to £159 PCM outside London over the last decade.
  • North East rents have grown the slowest, up 8.4% from £554 to £601 PCM in ten years.

Stagnant house price growth last year led to a boost for rental yields due to a fall in property values coupled with consistently high rental demand. The so-called ‘Boris Bounce’ following the General Election, means that many industry commentators now think the market has bottomed out. According to Sourced Capital this has led to a flurry of activity in the rental market as investors rush to secure the best deals before returns start to tighten. So the message for investors is “commit now while the market is still finding its feet”.

Here at Team Ringley we are working with funds and institutional investors to create next-generation renting propositions in both the affordable and market rent sectors, in London and beyond.

Five ways to compete with Build-to-Rent

The Build-to-Rent revolution is seemingly unstoppable but buy-to-let landlords can make their offer equally attractive

Build-to-Rent operators are rapidly changing the face of renting in the UK. New apartments, long leases and a wide range of amenities add up to a lifestyle that has strong appeal, particularly for young professionals. In the last year, there has been a surge in the number of completed rental homes in London and in key regional cities around the country. Outside the capital, Manchester, Birmingham Liverpool, Leeds, Glasgow and Sheffield are leading the way. 

And according to recent figures from the British Property Federation (BPF) there are another 35,415 BTR homes are under construction and 75,475 in planning. That’s an increase of 15% over last year. So with all this brand new rental property coming on to the market, buy-to-let landlords will inevitably find themselves facing stiff competition for the best returns on their investment.

Of course, there is still plenty of demand for more traditional rental homes. But if you are a landlord with one or two properties in a town or city that is now well served by the rapidly expanding BTR sector, it is worth bearing in mind that tenants will increasingly be comparing your rental home with one in a shiny new BTR block.

So here are our tips for ensuring your property still has plenty of kerb appeal.

  • Up your game: throw out that dated furniture and invest in high quality fixtures and fittings and fresh, modern décor.
  • Market your property effectively: take good quality photographs while the property is empty and ready to rent. That way it will be shown to its best advantage.
  • Use a professional letting agent to help you find the right tenant for your rental home.
  • Consider offering tenants longer rental agreements. Three-year terms are now commonplace in the BTR sector.
  • Finally, download our PlanetRent app to ensure you give your tenants a professional rental journey from start to finish and to ensure you are compliant with all the latest regulations.

Sam Hay, MD of our Manchester-based lettings business Life By Ringley, has plenty of experience in the buy-to-let and build-to-rent markets. She has more advice and tips to share with landlords and you can find her on Landlords TV on YouTube.