10:04 AM, 15th January 2025, About 5 days ago 30
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The below Clause 11 amendment did not make it through the House of Commons debate and was not put to a vote for the impending 2nd reading of the Renters Rights Bill in the House of Lords.
However Section 21 Guarantor not liable for rent payable after tenant’s death did make it through to the second reading
This introduces provisions to prevent guarantors from being held liable for rent payments after the death of the tenant they are guaranteeing.
Before the debate, Housing Secretary Angela Rayner emphasised that this amendment will safeguard bereaved guarantors, often family members, from facing financial hardship during a time of grief.
She said: “For far too long working people and families have been at the mercy of a fickle and unfair rental market, faced with outrageous upfront costs, and struggling to find a safe and secure place they can truly call home.
“Another change in law will safeguard bereaved guarantors, who are often family members, from being forced to pay rent for the rest of the tenancy where a loved one has died.
“This will mean families will not be put in unfair financial hardship during a time of grief and will not be liable for extended periods of rent when trying to end the tenancy agreement in unforeseen and tragic circumstances.”
Just when landlords thought matters couldn’t get any worse, a clause 11 was proposed for the Renters Rights Bill.
The clause 11 concerns restrictions on the requirement for tenants to provide a guarantor with details below:
“(1) A relevant person [i.e. a landlord or his agent] must not, in any of the circumstances set out in subsection (3), require a person, as a condition of the grant of a relevant tenancy, to provide a guarantor in relation to the observance or performance of the tenant’s obligations under the tenancy.
(2) For the purposes of this Act, requiring a person to provide a guarantor includes accepting an offer by that person to provide a guarantor.
(3) The circumstances are –
(a) that the person has paid a tenancy deposit or has been assisted under a deposit scheme;
(b) that the person is required to pay rent in advance equivalent to one month’s rent or more;
(c) that on a reasonable assessment of their means the person’s income (including state benefits received and any other lawful source of income) is sufficient to enable them to pay the full rent due under the tenancy;
(d) that arrangements will be made for housing benefit or the housing element of universal credit to be paid directly in respect of rent to the relevant person;
(e) that the relevant person has entered into a contract of insurance under which they are insured against non-payment of rent; or
(f) such other circumstances as may be prescribed in regulations made by the Secretary of State.
(4) In any other case where a relevant person lawfully requires a person, as a condition of the grant of a relevant tenancy, to provide a guarantor, the sum for which the guarantor may become liable under the relevant guarantee shall not exceed a sum equal to six months’ rent. (emphasis mine)
Given that almost all ASTs in the private rental sector require a deposit and a month’s rent in advance, this will mean a massive increase in risk for landlords.
The debate in the Commons last week https://hansard.parliament.uk/Commons/2025-01-14/debates/E7CB5480-DDD4-4F24-AB48-E957C964DC5A/Renters%E2%80%99RightsBill shows how out of touch with the workings of the rental market many MPs are.
To quote just one Labour MP, Alex Sobel (MP for Leeds Central and Headingley) said:
“The expectation that tenants, despite entering into legally binding rental agreements, must secure a third-party guarantor undermines the very purpose of their rental contract.”
A more naïve and ridiculous statement it is hard to imagine. Does he not realise that a guarantor is required simply because the primary obligor’s covenant is not sufficient?
On his (pitiful) analysis, signing a “legally binding rental agreement” (what other sort is there?) means that a guarantor is not needed. How on earth can anyone think that having a guarantor undermines the purpose of a contract?
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Ian Narbeth
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Sign Up11:00 AM, 20th January 2025, About 5 hours ago
Reply to the comment left by Seasoned Landlord at 20/01/2025 - 10:39
My apologies, everyone for setting a hare running. I see that Pennycook later said:
"My hon. Friend the Member for Leeds Central and Headingley (Alex Sobel) made a strong case for new clause 11 on acting to limit guarantors. I appreciate fully that obtaining a guarantor can be difficult for some prospective tenants, and I understand the reasoning behind his amendment. However, I am also mindful that in some instances the use of guarantors can provide good landlords with the assurance necessary to let their properties to tenants who may otherwise find it difficult to access private rented accommodation. For example, there are those with a poor credit history—the kind of tenant who the shadow Minister worries our rent-in-advance amendments will harm. Having considered this issue in great detail, I ultimately concluded that limiting guarantors could inadvertently make life more difficult for certain types of renter. That said, I will keep the matter under review, and I am more than happy to engage in a dialogue with my hon. Friend about this in the weeks and months to come."
Rookie Landlord
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Sign Up11:13 AM, 20th January 2025, About 5 hours ago
Reply to the comment left by Mick Roberts at 20/01/2025 - 10:56
It might not be a great idea to sell to another landlord. I'm a relatively new landlord (less than 2 years), and I bought my property with a tenant in situ. That enabled me to drive a much hard bargain as I was a cash buyer and the landlord was desparate to get out. So far it's been a good experience for me
Rod
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Sign Up11:22 AM, 20th January 2025, About 4 hours ago
Reply to the comment left by aydin at 20/01/2025 - 10:21
I hope you will be writing to your MPhighlighting how this amendment would restrict the ability of tenants like this to find a new home.
The only work arounds will be to only accept tenants with provable assets greater than one year's rent that you can put a charge on
or
Sell up and help a home buyer remove capacity from the rental market.
This dodgy dogma will only worsen the housing crisis.
I'm off to the donkey sanctuary for a view on why this government thinks all stick and no carrot is a reward for hard-working landlords. Pin a tale on that MP
David
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Sign Up11:50 AM, 20th January 2025, About 4 hours ago
Reply to the comment left by Sangita Gupta at 20/01/2025 - 10:45
This now means every prospective tenant imo. A tenant may look good on paper but the risk of them reneging on rent or damaging property is unknown.I also wrote to my MP on the 13th January asking for her to object to these exact clauses when the bill was read, but of course being Lib Dem I doubt she was at all interested.
Mick Roberts
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Sign Up11:52 AM, 20th January 2025, About 4 hours ago
Reply to the comment left by Rookie Landlord at 20/01/2025 - 11:13
Ooh yes, I know, I'm prepared to lose 10k a house to new Landlord to keep tenant in.
Although I'm not desperate as most of mine are good tenants been there 20 years.
Chris @ Possession Friend
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Sign Up11:54 AM, 20th January 2025, About 4 hours ago
Reply to the comment left by aydin at 20/01/2025 - 10:21
These are the Tenant applicants that Landlords Must Decline, not try to find a reason or ' work-around '
Suggest to the applying tenant that he clears his outstanding debt, gets CCJ removed and you'll re-consider him.
Applying tenant is not going to do that, obviously, but even if they did, I would not accept them as a tenant, as a propensity to default on a previous debt gives rise to higher likelihood of them repeating this default on subsequent ( rental ) contract.
Landlords well know what its like trying to enforce a civil debt !
fairwood789
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Sign Up11:56 AM, 20th January 2025, About 4 hours ago
But it is OK for Councils to change Council Tax and delete the 25% discount for single occupancy and increase the council Tax from date of death by an additional 33% to make the bereaved pay 100% council Tax.
Ivor Tennant
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Sign Up13:09 PM, 20th January 2025, About 3 hours ago
25% increase to the rent should cover the risk... FFS only the millionaires fleeing the country will be able to afford to rent soon. No applicant on benefits or with any sort of adverse credit will ever be housed in the PRS again. Risk = cost but none of the labour ministers have ever run a business so they don't quite understand this basic business fact.
Sangita Gupta
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Sign Up13:41 PM, 20th January 2025, About 2 hours ago
Reply to the comment left by Peter Merrick at 20/01/2025 - 10:09Except in February that would be a month.
Kurt Peterson
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Sign Up13:51 PM, 20th January 2025, About 2 hours ago
Whatever. Common sense will not prevail. Labour believes it’s unassailable and indeed many Labour MP’s are inept. Little no no knowledge or experience in anything. Suffice to say when this all goes through all those people unable to get a rental property or who have lost their properties as we landlords exit can simply turn up at their local Labour MP and get them to house them. Labour has a plan don’t they.