Just when landlords thought it couldn’t get any worse?

Just when landlords thought it couldn’t get any worse?

10:04 AM, 15th January 2025, About 7 days ago 38

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Important update:

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)

In other words, if ANY of (a) to (f) apply, landlords cannot require a guarantor.

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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Jack Jennings

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21:05 PM, 20th January 2025, About A day ago

I think the title of this post should be 'Just when tenants thought it couldn't get any worse'. With even bankrupt councils selling off housing stock, the standards required to get a private rental are going to go through the roof with ever increasing demand.
There will be a larger divide between those who can afford expensive rent for fantastic, efficient homes (as mandated by legislation) and the rest who will be in tent towns. It will be truly appalling as is already seen in parts of USA.

Smiffy

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9:11 AM, 21st January 2025, About 17 hours ago

Unless the "month" is defined as a calendar month, 4 weeks will fail in court as it is a "lunar month".

You would need to drop down to fortnight or weekly rents.

LIZZY7

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10:32 AM, 21st January 2025, About 16 hours ago

I have 4 buy-2-lets just about hanging on in there, but sold my "home" to get son and his family on the property ladder 5 years ago. I now live in rented (quite happy with that). However, although my partner and I bring in around £70k net a year, our landlord still insisted my son acts as guarantor (as now he earns more than us!) - our rent £1850pcm. Seems crazy that I own 4 properties, age 72, but can't afford to rent without a guarantor and daren't even think of moving! Based in North London

Ian Narbeth

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10:41 AM, 21st January 2025, About 16 hours ago

Reply to the comment left by Jack Jennings at 20/01/2025 - 21:05
Yes, Jack, with friends like Red Alex Sobel (who proposed clause 11), tenants don't need enemies.

rebecca anelay

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14:24 PM, 21st January 2025, About 12 hours ago

Reply to the comment left by Mick Roberts at 20/01/2025 - 10:56
The morons will never realise the effects the ball is going to have. With my last two properties I'm kicking out wonderful tenants and giving it to my son and I'm going to dabble in Air BNB with the other until Labour are gone!
Stupid stupid morons!

TheMaluka

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14:56 PM, 21st January 2025, About 12 hours ago

Reply to the comment left by rebecca anelay at 21/01/2025 - 14:24
Don't expect anything better if the conservatives get back in, they are unlikely to repeal the wonderful new act.

Beaver

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16:50 PM, 21st January 2025, About 10 hours ago

Reply to the comment left by rebecca anelay at 21/01/2025 - 14:24
Certainly the labour government doesn't seem to have much of a grasp of business. How can you come to power saying that you want to grow the economy and then slap on a big increase in employer's NI contributions? It will have the opposite effect. Even if you'd only ever run a deli or a bar you'd understand that.

History repeats itself. This labour government came to power and then immediately gave a well-above inflation pay rise to train drivers without agreeing any changes in performance. And predictably the train drivers' union now wants more money.

https://www.dailymail.co.uk/news/article-14298315/train-drivers-inflation-busting-increases.html

So for now this government is going to thrash around continuing to try to blame the previous government for its failings. But if this doesn't change quickly the electorate is going to pick up on the bad smell of lack of competence and kick it out - before the next government has to cause even more pain to the electorate.

These people need to realise that their only solution is to stop penalising businesses, investors and retired people. Whether you are retired or working you can look elsewhere to invest. This article says that "Cyprus and Malta also offer low tax rates. Non-domiciled residents of Cyprus are exempt from tax on dividends and interest, there are no inheritance, wealth or gift taxes and there is no capital gains tax on property sold outside the island, according to KPMG"

https://www.msn.com/en-gb/travel/news/forget-spain-here-s-where-to-move-to-cut-your-tax-bill-and-receive-a-warm-welcome/ar-AA1xAMy5?ocid=msedgntp&pc=HCTS&cvid=41f1fc88034b4a269c0f275af7958788&ei=35

The article actually promotes the United Arab Emirates as a place to live on the basis that there is zero income tax.

This labour government needs to wake up and realise that a lot of business is now done online and in a world in which you can run an English-speaking small business targeting the UK from Cyprus or the UAE it isn't just pensioners who can head off to Cyprus or Portugal with their pension funds.

Keir Starmer apparently thinks that AI will stimulate "a decade of national renewal"

https://www.gov.uk/government/news/prime-minister-sets-out-blueprint-to-turbocharge-ai

Artificial Intelligence my a**e....more like lack of intelligence. Even a small UK business can now operate from the UAE. And only a fool would think that attacking landlords for investing in residential housing would do anything other than drive up rents and cause a homelessness problem.

Gromit

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17:43 PM, 21st January 2025, About 9 hours ago

Reply to the comment left by Beaver at 21/01/2025 - 16:50Starmer needs AI to replace the natural stupidity and ignorance in his Government (and the Labour Party in general).

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