TWO MONTHS ON from the Renters Rights Act (RRA)
The impact on Letting Agents, Landlords and Tenants
As we reach the end of June, it is a good opportunity to reflect on how the introduction of the Renters’ Rights Act (RRA) is affecting the day-to-day business of letting agents and landlords.
While it is still early days, one of the most significant changes we are seeing is the introduction of the two-month notice period that tenants must now give when ending their tenancy.
For landlords, the priority has always been to minimise void periods and keep rental properties occupied. The new notice period is beginning to have a noticeable impact on this.
Vacant Properties
This is where we are seeing the biggest challenge.
When marketing a vacant property, one of the first questions we ask prospective tenants is:
“Are you currently renting, and when are you looking to move?”
This simple question has highlighted that many tenants are still unaware that they are now required to give two months’ notice to their current landlord.
As a result, landlords are often faced with a difficult decision. They can either:
· continue marketing the property in the hope of finding someone who can move sooner; or
· agree to wait six to eight weeks (or sometimes longer) for their preferred applicant to become available.
When you factor in the initial marketing period, this can easily result in a property standing empty for up to ten weeks, representing a significant loss of rental income.
Occupied Properties
The situation is generally more manageable when a property is already occupied.
If the existing tenants are happy for the property to be marketed during their two-month notice period and allow access for viewings, there is a good chance a new tenancy can begin shortly after they leave, keeping any void period to a minimum.
However, if tenants are unwilling to allow marketing or viewings during this time, landlords can quickly find themselves facing the same lengthy vacancy issues experienced with already vacant properties.
The Impact on Tenants Buying a Home
The new notice period is also creating challenges for tenants who are purchasing a property.
Solicitors almost always advise buyers not to serve notice on their rented home until contracts have been exchanged. This is sensible advice, as property transactions can fall through at any stage before exchange.
However, once contracts have been exchanged, everyone involved in the chain is usually keen to complete as quickly as possible. The requirement to then give two months’ notice can delay completion significantly.
Many buyers simply cannot afford to pay both rent and mortgage payments for two months, making this an expensive and stressful situation. Longer chains become more vulnerable to mortgage offers expiring, completion dates slipping, and in some cases, buyers or sellers reconsidering the transaction altogether.
A Possible Solution
One way to reduce these issues is for estate agents to discuss the tenant’s notice period at the point an offer is made.
Where possible, buyers who are currently renting could build the two-month notice period into their offer and negotiations. For example, agreeing a completion date that allows sufficient notice to be served or negotiating financially to help cover an overlap of one month’s rent and mortgage payment. Planning ahead in this way could help avoid unnecessary delays further down the line.
Looking Ahead
It is still too early to fully assess the wider impact of the Renters’ Rights Act, and many aspects of the legislation will only become clear as the market adapts.
What is already evident, however, is that the changes require landlords, tenants, letting agents and estate agents to plan further ahead and communicate more effectively. Like any major legislative change, there will undoubtedly be a learning curve for everyone involved, and we will continue to monitor how the market responds over the coming months.
