Renters Rights Bill Webinar - With David Smith & Suzanne Smith (Let's Talk Lets)

[00:00:09] Speaker A: Hello and welcome to our let's Talk let's renters writes special webinar a change today from our normal weekly pod episode and definitely coming hot off the heels of yesterday's second reading on the of the bill in parliament. Today we're hosting an on camera recorded webinar episode. So I'm Heidi, the CEO of the Lettings Hub, the tenant referencing business that got good at tech. And let's Talk lets is our regular roundup of news and views on a whole range of subjects spanning the private rented sector. And on today's episode, I'm delighted to be joined by two of the industry's most knowledgeable experts on the renters rights bill, both of whom we've been very lucky to have as guests on previous panels and pods. Firstly, I'm going to welcome Suzanne Smith, founder of the independent landlord blog. Suzanne's weekly newsletter has over 6000 subscribers, most of whom are landlords, with some letting agent, local authorities and lawyers in the mix too. In addition, she runs a landlord only Facebook group with over 2000 members and she's also a lawyer, a landlord and an independent member of property marks disciplinary tribunal and more recently in April has launched the Good Landlording podcast. The independent landlord helps landlords navigate a diverse range of topics relating to the world of letting a property, including of course lots of well researched content and information on renters rights. Suzanne hears firsthand from landlords every day on what they're thinking at the moment about the bill, which is going to be especially useful for many of our listeners to understand. My other guest today is David Smith, partner in UK law firm JMW, an award winning full service law firm established over 45 years ago. David leads the dispute resolution team in the firm's London office, compromising of the property litigation, intellectual property and the commercial litigation teams. He specialises in residential property rights and agency and has a huge experience and wide range of property litigation. David is a well known figure to many across the lettering industry, so we're delighted to have nabbed him this morning straight after yesterday, and he has written or contributed to a large number of books, newspaper journal articles on these topics and is highly sought after as a speaker and a lecturer. Many of us at the lettings hub and our lettings agency clients attended his recent writers rents first look webinar back in mid September, and since then I've been lucky enough to hear David talk about the topic in person at the lettings Industry Council 10th anniversary. Actually meeting back a few weeks ago. Plus, I know you have also written on the topic for business newspaper Cityam, and a Q and a piece for invest tech recently. And this is all in addition to the day job. A huge welcome to both of you. Thank you very much for joining me today. Two very justifiably lengthy introductions there. But before we get started, is there anything either of you would like to add by way of introduction? [00:03:21] Speaker B: No relation. Oh, yes, the surname is merely coincidental. There we go. I'll spare Suzanne's blushes. No one thinks she's associated with me. [00:03:33] Speaker C: Yes, no relation. Smith and Smith, I guess for me. For those of you who don't know me, I'm not a housing law specialist. Instead, I worked in industry as an in house lawyer for 25 years, from small startups to big companies like GSK. And so when I comment at this, I come at it as I'm a business lawyer, a generalist, like a GP, and trying to make sense of it. What does this mean for my property business? And now I have the blog, what it means for landlords and all the other people who read it. [00:04:09] Speaker A: Excellent. Thank you. Thank you both very much. Right, so let's get started. It can be quite difficult, actually, to know how far back we go when talking about renters rights. On one hand, within our business and across many of the conversations we are having with our clients, experts like yourself and other suppliers, the awareness and knowledge level seems fairly high. But then, on the other hand, of the scale, it can seem particularly low. And actually, the TD's charitable foundation reported in their recent voice of the landlord survey that only 15% of landlords reported not being aware about the previous renters reform bill, and yet a further 38% stating that they had heard about it but didn't really know what was being proposed. And with that in mind, I want to do a brief synopsis of the road to where we are now before I come to both of you, if I may. So, the renters reform bill was first introduced in the House of Commons back in May 2023. It was intended to create a fairer rental market for both tenants and landlords. The bill was carried over to the 2023 24 session and was substantially amended as it passed through parliament. The government said it would delay implementation of some of the tenancy reforms until it judged sufficient progress had been made to improve the court system. The bill did not complete all of its parliamentary stages before the discussion in parliament in May 2024. So earlier this year, the Labour Party manifesto committed to legislate where the Conservatives had failed and overhauling the regulation of the private rented sector and the renters rights bill was subsequently introduced in the King's speech in 2024 and introduced in the House of Commons Commons on the 11 September. And then finally yesterday on the 9 October, the bill had its second reading in parliament, which leads us to the here and now. So yesterday's MP's debated the general principles of the bill and as expected, this included discussing tenant protections, the removal of section 21, the political impacts of landlords and the proposals. And the opposition tabled an amendment to decline to give the second reading to the bill, stating that it failed to deliver on respecting landlords property rights. But they lost the amendment with only 104 voting in favour of it versus 424 against. It was actually quite an odd situation, actually. Maybe we'll come back to that later. The second reading stage isn't one where amendments or decisions are made, and I. As was wildly expected, the bill was passed yesterday, which now means it moves into committee and report stages, which are more important, and the detail of the bill will now be examined in detail. And this stage typically includes discussions on specific clauses, possible amendments, and it's expected that this stage is going to be concluded before the end of November. So it's impossible to sum up every element of the bill in just a few sentences. And like us, I, I know that both of you have produced some great detailed resources and information that we will definitely include links to when we release this, and already you have both issued information this morning. But I think, in summary, it's clear that the government is clearly committed to this bill and for it to pass quickly. They are not hanging around and they're definitely looking for the Big Bang implementation. In reality, they're pretty set on most of the bill passing as it stands with very few amendments, and although this may cause frustration for some, at least it provides a fairly firm grounding for planning changes in this sector, and we need to get on with that. Listening myself to Matthew Pennycook summarising, it seems abundantly clear that the bill as it stands will remain in most areas, with only a few potentially up for debate or clarity, mainly around potentially rent in advance payments. Whether they are allowed, not allowed, will be allowed, I'm not sure, and whether anything further changes in the student market. So some of the key features of the bill, just in case anyone is a little bit behind the curve, include the removal of the section 21 that's called the no fault eviction. The removal of fixed term tenancies, limits rent increases to once a year, provides stronger penalties for non compliant landlords. These measures aim to enhance tenant security and improve housing standards. But there are also concerns about unintended consequences for landlords, landlords and agents. Industry groups like property mark warn that the removal of section 21 without sufficient resources for the court system could lead to a lengthy eviction process, making it harder for landlords to regain possession of their properties when necessary. And we know just by looking at the legislation, there's going to be a longer period of non payment of rent before that process can kick in. There are also fears that more landlords could leave the sector, really adding to the housing shortage and increasing competition for rental properties. The bill will introduce significant changes such as tenant tribunal to challenge rent increases and new standards to ensure safer housing, as well as the right to request consent to keep a pet, a ban on landlords or agents encouraging bidding wars, and new and revised grounds for possession. So before we kind of open it out, we asked anybody, actually our customers, non customers, anybody, to send their questions in, and we had a swell of questions, more questions than we have ever had before for an event like this. And I'm not sure we're going to get through all of them today, although some of them are quite similar and crossover. What I do just want to start is by asking you, following yesterday, do you think now we have a clearer picture of the government's plans for implementation, and how far do you both think the debate went in addressing the needs of tenants and the concerns of landlords and letting agents regarding the kind of operational impact of these changes? So, Suzanne, should I come to you first? [00:10:12] Speaker C: Well, I don't think we really learned too much about the plans for implementation other than we already know there's going to be a big bang implementation date for both new and existing tenancies next year sometime. Matthew Pennycook has said it might be by the summer, but the, they didn't go into any more detail on that. But of course, we'll all be reassured that they said good landlords will have nothing to fear. And they also said, well, Matthew Pennycook did acknowledge it will take time for the sector to adjust to the significant change in regulation, but no real detail on that. And yes, we are going to need time to adjust because there's an awful lot of work from when we get the regulations that actually tells us all the detail to when we move over to the new tenancy situation. [00:11:02] Speaker A: Do we think Big Bang is just for impact? Because when legislation has been introduced before, I'm just thinking back to the tenant Fees act as an example. It came in phases. [00:11:12] Speaker C: Well, they're not intending to phase it this time. So last time, it was a very, very complicated thing. It would be. I remember talking to David about it. There was going to be existing tenancies and new tenancies, but then fixed term tenancies would become periodic, and then that would be new and all this different thing. It was going to be very confusing. And then it was linked to the. To the Lord Chancellor. This time the merit is simplicity. So when the date is chosen for the new tenancy system, whether it's a new tenancy or an existing tenancy, they'll all change over on the same day. There will be a few transition arrangements for section 21 notices and things that have already been served. But, David, please jump in. [00:11:54] Speaker B: I was going to say, ironically, I thought, of all people, Richard Tice of the Reform party made the government's point for it here, which I found found very bizarre, to say at least. He was oddly relaxed about all of this, which I expected him to reform away and start ranting and raving. But he made the point, because he is a property guy himself, and he made the point that some time ago, back in the eighties, there was a period where you had rent act tenancies, assured tenancies, and assured short haul tenancies, and there were quite substantial market differentials between the three. And I think the government has essentially learned that history lesson and is trying to ensure that there isn't a situation where you end up with a market differential between hungover asts and new periodic assureds. And then also they've watched what's happened in Wales, which also had a big bang, as it were, with the Renting Homes Wells act. [00:12:57] Speaker A: So if we. Let's talk about the timeline, although we now have a date for the committee stage, do we believe it will be in, before next summer? Do we believe it'll be in, in the summer? Could it come earlier than that? Or do. Are we all still totally speculating at this time? [00:13:15] Speaker B: We're always speculating, but I think that they, they've guillotined the committee stage in a program motion for. Was it the 26th or something of November? [00:13:27] Speaker A: Yeah, 28th. [00:13:30] Speaker B: Was it? Yeah. They've also guillotined the third reading debate to one day, which is pretty standard provision. There is a short break for the house in, I think, November, which is basically half term or late half term for them, and then the house rises for Christmas on the 19 December. I think, though, the reality is that they're going to try, and I suspect they can try and run the third reading before Christmas and have it coming back from Christmas and straight on into the House of Lords. And Matthew Pennycook openly said that his implementation timetable was somewhere between summer and October, with October being a long stop. I would be surprised if he doesn't actually, to some extent, consider for parts of this summer to be the long stop. [00:14:19] Speaker A: Yeah. And I suppose that then means that tenancies that are being granted now are probably not going to run their full course in reality. [00:14:28] Speaker C: Not as fixed terms, not as fixed periodics. [00:14:31] Speaker A: Yeah. [00:14:31] Speaker B: They'll be even more exciting than that. It's the student tendencies being signed now that might never, in fact, come into effect in the manner in which they are being signed. So they might even start as well as what they're described as. I think that's just, just a crazy. [00:14:49] Speaker C: Situation to be, and that's something that student landlords are very worried about. And it's just the start of a whole can of worms or pandora's box, whatever your metaphor is. [00:15:00] Speaker B: About 50 questions on this later on. [00:15:03] Speaker A: There is. Yeah. So my next question actually then is let's. I'll come to you first, Suzanne, is what we're really interested, I guess, to hear more about the thoughts on what landlords are really feeling about this legislation, what concerns are being voiced, which elements of the bill they're most unsure about, what they might need help with right now. Obviously, you mentioned students there, but what else? What are the key things that landlords don't like? [00:15:30] Speaker C: Well, I think, first of all, landlords and I think all of us in the prs are going through a change curve. So you've got different reactions, you've got the opt out. Right. That's the final straw. I'm selling up. And then you've got the undecided. Oh, I'm going to wait and see. And you get the bargaining. Where are the loopholes? Licenses, limited companies, things like that? Resigned acceptance, I guess I've got no choice. And those that are embracing change and saying, this is an opportunity, how can I get my business ready? And that's the approach that I'm taking and I'm advising that managing change is a bit like grief. And so you have the stages of grief, which I think we're going through at the moment. You've got the shock, the denial, the anger, the bargaining depression, and ultimately, for the people who stay, the acceptance. And I think we're all at different places in that change curve. And knowing where we all are and knowing where your landlords are can be really helpful for us. And I think that letting agents can really help landlords embrace change because it is coming. I put something on LinkedIn this morning. There was somebody complaining about it. It's like, you know, it is what it is. To use a phrase from Love island, it's going to happen and there might be some changes around the edges, so we just got to get ready for it. So, I mean, coming to specific areas and you can imagine that I'm getting very high engagement in the Facebook group at the moment. And after confusion about upfront rent payments, I know we're going to talk about that soon. Concerns about section 21, even though not many people have even enforced a section 21 notice in court. A big issue for student landlords, which I mentioned, and people don't like the end of fixed term tenancies. And there's also so much in the unknown category because we don't know what's in decent homes standard, we don't know what's a. Well, law, pets and things. So last night I gave a presentation, just well timed, at a property investors event on the bill. And at the question time, at the end, people moved on to epcs. What do we do about dampen mould and how to manage rent arrears? So I think kind of stepping back from all the noise, these are the things that landlords are talking about. We're coming up to dampen mould season, and that is going to be a big thing in the potential, a big thing with the Renters Rights Act. Renters Rights act bill, whatever. [00:18:10] Speaker A: Do we think then we're going to see an increase in evictions in the short term with landlords potentially serving section 21 now for anybody in their property that they don't want to stay in there, they've got to consider that, haven't they? Because otherwise we are seeing an increase. [00:18:26] Speaker B: Yeah, I mean, there is already an increase. [00:18:29] Speaker A: Yeah. [00:18:29] Speaker B: I mean, I wrote about this this morning, actually. [00:18:32] Speaker A: Okay. So David, tell us a bit more then. What do you kind of predict is going to happen between now and legislation? [00:18:38] Speaker B: As. Answer the first point for the previous question that you mentioned, Suzanne. First, because I thought there were two really telling comments yesterday, and Suzanne's mentioned one of them, which is Pennycourt said it'll take time for the sector to adapt, but there was also an intervention when David Simmons was closing for the opposition, where labor backbencher intervened to say, well, some landlords won't be able to meet these standards and they should just sell up. And I think the government is perfectly accepting of the fact that some landlords will leave the sector, but they take the view that those properties will probably be sold to other landlords. And there is an imaginational problem for a lot of landlords. A lot of landlords think they have some God given right to earn money out of their business. And being a landlord to business, just like any other business, the government is not obliged to give you a living, I'm afraid of now you may say, well, then, how are they going to deal with housing? And yeah, that's the government's problem, not yours. But some business models just won't work under the new regime. And those people will have to consider whether they can adapt their business model or do something else that applies to any form of business, really. I can tell you exciting stories about law firms that didn't do very well because they couldn't adapt to changing business models. But I won't. Coming back to evictions, there has been an uptick in section 21 while people use it while they can. I'm always a bit cautious when people say this, because you're just assuming that the next tenant will be magically better than the one you're getting rid of. So I think there's a lot of people who are perhaps betting on the next one being a better tenant, which seems a risk to me. There will be a number of evictions, of course, what people sell. There will be evictions where people change business models and potentially remove one lot of tenants to get a slightly different group of tenants in as they adjust their business model. I think when the new legislation comes in, evictions will fall a lot for a period of time, partly because a lot of lawyers won't be able to deal with it. I think also lawyers who are still in the sector will put their prices up to some extent because they will be able to. That's how business works. And some landlords will resist evicting because they'll be worried about it being too expensive. But I think ultimately, over time, because most section 21s were used for a reason, the number of evictions will rise to 80%, to 90% of what they are today. And I think Matthew Pennycook is flatly wrong when he says that there'll be fewer evictions. The government's belief is that x percent of section 21s were nonsense, basically, and so those will go away. And then they've also said that tenants, when faced with a section eight, citing reasonable grounds, will leave. But that's no more true or untrue than tenants who leave now when they get section 21. The vast majority of tenants, when server section 21 do in fact leave the property. I'm sure the vast majority of tenants, when leave face with section eight laser, will leave the property, but there'll be broadly the same percentage of people who won't because the local authority says they have to be evicted because they don't agree. In fact, I think it'll increase slightly because of course some of them will be like, aggrieved and say, well, how dare you say I'm antisocial? How dare you say I've broken the contract? How dare you say I've got a pet, I shouldn't be allowed one or whatever the climate will be. [00:21:55] Speaker A: Yeah, I think there'll be fights, evidence based, isn't it? And that is always going to be controversial, you know, but then the problem. [00:22:03] Speaker B: With the land is complaining about that. And one of the problems is we walked around, but section 21 was used for cause, but then the government's response to that perfectly reasonably is, well, then you shouldn't have a problem with us having a system which simply requires you to set up the cause. If the cause is so apparent, then no problem at all. Serve a section eight notice and show cause. Thanks very much. So the problem is that the argument's self defeating. [00:22:27] Speaker A: Do we think then that landlords are gonna need more specialist help? [00:22:33] Speaker B: Yes, with my solicitor hat? While I'm sincerely hoping. [00:22:39] Speaker A: Yes. Well, yes. [00:22:40] Speaker B: I mean, I mean, yes, of course they are. And one of the things that I think is problematic for a lot of landlords is that section 21 had a huge DIY element and the accelerated possession process, while in my view, being total rubbish. And actually, technically, if you look at the stats, slower than traditional possession proceedings was heavily used because it was on paper, there was guidance. You can get kits that tell you how to fill in the forms. Most of them involved ticking boxes. It wasn't that hard. And if you fell within its, its remit, it was useful. Whereas obviously, if landlords are required to go to court before a judge with witness statements, they're going to have to read the civil procedure rules and so on and so forth, and alternatively they're going to pay someone like me to do it all for them. [00:23:31] Speaker A: So obviously landlords are going to need a bit more specialist help. Do we think they're going to turn to a letting agent to have kind of ongoing support and help? Or do you think they're just going to use the likes of David's firm and get legal support as and when something goes wrong? [00:23:47] Speaker C: I think it's a really good question. And if letting agents can show they can genuinely add value and not just over dramatize and try and scare landlords into using them, which I know some do, then yes, potentially. But they have to know what they're talking about and get properly trained. I think the NRLA hotline is going to get a lot more use and people will be searching for more things on the Internet. And we're going to be in this period where it's not all clear. I mean, you think? I know it's like one of David's favorite subjects, deposits and prescribed information. What does that actually mean? And gas safety certificates. We're still having mitigation on those things. But I do think that there is an opportunity for letting agents, provided that they actually understand the rules, to add real value here and to take a load off the shoulders of the average landlord. [00:24:48] Speaker B: There's an aspect in which use of vetting agents has been declining gently, though not by, not as much, not by as much as people have predicted as people turn to online services. But what's also been happening is that there's fewer letting agents in, that there's been a degree of consolidation within the lettings agency sector. I mean, one thing I think is really missing from this bill, which I think the government should have done actually, although I think they might do it in their purported leasehold reform bill, is bring in some form of agency compulsory training or licensing regime. I'm not particularly a fan of agency licensing, but I am a fan of agency compulsory training. And I think the problem at the moment for a lot of agents is actually quite a lot of agents don't add that much value. There are a number of agents who do add value and add a lot of value. There are still quite a significant number of agents who add no value because their knowledge level is too low. And landlords may use agents more, but only if they perceive that they're going to get value from that process. [00:26:01] Speaker A: And I guess for agents, this is a good time to kind of review your business model exactly as you just said, really for landlords and exactly to your point, David, and we've had a very similar kind of, as I call it, three tier charging system for landlords over many years, where you've got a managed service, a rent collect service, or a tenant find only service. And actually maybe there is time for different levels of that to come in, where actually it's more of a legal support if the rent isn't paid type scenario, do you think? And obviously there's going to be no renewal fees, a tenant fine, only fee, where the tenant might only stay two months, might not be, obviously, that appealing to a landlord. How do you both think the charging structure may change? [00:26:47] Speaker C: I think landlords are going to be very reluctant to pay an upfront cost to find tenants. We're already seeing that. And that started really with the tenant Fees act and then the rise of open rent. Not just open rent. There are lots of other people snapping at their heels as well. I used to use letting agents. I moved to open rent because I had a poor service from a very big letting agent. And I'm not alone in that. I think that letting agents should not respond by trying to lock in, to lock in landlords. Instead, they should try and have the needs of landlords at the heart of what they do and provide such a fantastic service that that landlord will tell everybody, oh, these lettering agents are fantastic. And that is a unique selling point because it doesn't happen that often. [00:27:41] Speaker A: Suzanne, what does that look like? You know, just in a couple of sentences, what does that excellent service look like for a landlord? What do they really need? [00:27:49] Speaker C: They need to get the basics right, you know, find really good tenants and not just a tick box exercise, you know, trying to find any tenant, but try and find a really good tenant because tenant selection is going to be really key going forward, even more key than it is now. And that will be very comprehensive referencing. I've seen the referencing of NRLA and open rent. It is quite, you know, it's not hugely detailed. And I think that this is maybe something where letting agents can add value and also more maintenance and inspections. I call them maintenance visits because I think that's a bit less adversarial. But being really good on inspections and not just doing it once a year and being upfront about charges, not locking them in. It's the thing I get the most amount of emails about is people who want to move on for their letting agents for whatever reason, and the letting agents won't let them go. That's not a good way to run business. It's far better to do it by just doing what and being competent at the job and answering the phone or the queries and sorting out the repairs, all that kind of basic things, and giving training as well. I know that there are a lot of letting agents who do do that. They can add value there, but please, not all these scare stories because we kind of roll our eyes with it. [00:29:12] Speaker A: So do you see it more like, I don't know if I'm going to phrase this, but like a pay as you go service, if a landlord wants an inspection doing, they can go to an agent and pay for one. Do you see it that if they need help? [00:29:25] Speaker C: Yeah. And I know that there's been quite a lot of discussion about whether this percentage model is right because it's okay in the south of England because the rents are high. So you, if you, if you're getting 1015 percent, then that's quite a healthy income, whereas if you're somewhere else where the rent's a lot higher, then it can be quite difficult to make money. I think that landlords are letting agents really need to think about the way they charge, whether it might be for different services like that, as opposed to just a simple percentage. Because a simple percentage, to me it seems old fashioned. It's not about outputs, it's just something that's linked to the amount of rent. It doesn't actually reflect the value to the landlord. And I don't see why somebody should have to pay for the same service in two different towns and pay a different price for the same service just because the rent's higher and because the cost of the office and that would be fairly minimal in between. I must say it's the same with law firms who keep charging by the hour. I mean, that's an outdated mis business model and paying, paying for inputs rather than outputs there. So it's not just letting agents who need to think about it. [00:30:44] Speaker B: I'm not going to comment on hourly rates. I think it's actually a bit more complicated than that. I mean, the reality is that quite a lot of agents further north don't charge commission anyway. There are models out there involving pay as you go with fixed fees. There are models out there involving commission. I would say to any agent who asked me about it that they shouldn't rush into making a change right now because I don't think it will actually be a problem for a bit. I think they need to look at how things shake out. But I think there are a number of things that are going to be interesting. Renewal commission doesn't exist but the flip side of that is renewal commission doesn't exist, which means that I can continue to charge initial commission. Most of the case law around the office of Fair Trading goes away because that specifically relied on the fact that there were two separate. There was a renewal into a new fixed or periodic tenancy. Well, that doesn't happen. It's undifferentiated. And so the initial commission I'm charging is the commission and it's therefore exempt from considerations of fairness provided it's set out in plain English. So there's an interesting problem there between landlords and agents in respect to ongoing commission charging. As against that, a lot of agents make money off those renewals and the admin associated with them, and they clearly won't get that. But then there's whole new areas of interest, like section 13 notices and rent increases, which I don't doubt we'll talk about where I think one of the big drivers for rent increases will be agents looking for a fee for that rent increase. And then you've got additional services, you've got decent home standard allwabs law, the HHSRS review, assuming it reappears. So there's a whole load of areas where agents, I think, are likely to offer additional inspection type offerings around meeting those standards. And some landlords for sure, won't be interested in, I don't know, fully managed services, but that's true. Now, some landlords will be interested in fully managed services because they don't want to manage their properties. They want to just sit back and let an agent do it. Where it will get more interesting is around the issue of rent collection, because there's an increased burden on agents about civil penalties. There are a whole load of increased pressures there that make that model less attractive. [00:33:13] Speaker C: Actually, just as an aside, we still don't know the details of the decent home standard, so we don't know if it's going to be self certification, whether we're going to have a third party do it, or what it's going to look like, and that, you know, no one's really talking about that. I don't know if you've heard anything through your networks, David, but that's an. [00:33:36] Speaker B: My understanding is it will be a self certification, but the difference will be that you must meet the decent home standard, ab initio, regardless of whether someone complains to you or not about it or not. That's how it works now, and I anticipate that it will continue to work that way. But the problem with all of this stuff is enforcement. I mean, one thing I thought was quite interesting again last night is there were a number of calls, mostly briefed by the local government association, the LGA, for more funding for local authorities, and there were quite substantial commitments, which I assume have been run past the treasury, for more ring fenced funding for local authorities. So it'd be interesting to see what that actually looks like when it comes to the crunch, because that is the key problem. Is there a point in putting in more regulation if it's not enforced? Because good landlords will probably comply with it, but then they're effectively paying a backdoor tax by complying with a standard that other people are not complying with, and that's not a very workable system and leads to angst and general dissatisfaction. [00:34:42] Speaker C: I'm hoping that the landlord database will help local authorities there, because at the moment it can be very difficult for them to know who landlords are, where somebody is renting a property and it will be easy to check. I bought a property a couple of years ago from a landlord that had an unsatisfactory EICR with tenants living there and the boiler had never been serviced, and whereas the local authority wouldn't have known that, and I'm sure get calls. [00:35:10] Speaker B: From landlords who don't know that there's such a thing as tenancy deposit protection, Wales reckons it's only signed up 50% of all landlords in Wales to its database. Scotland's a little bit higher, about 60%. I think the database will help, but the problem, I think, is that vast numbers of landlords have absolutely no idea about any of this, or indeed all the legislation that already exists and will continue in blissful ignorance. [00:35:45] Speaker A: So I'm going to talk about the landlord state space in a second. I just want to jump back to one thing. Obviously with change, there's obviously opportunity as well. And one of the things that letting agents have got to consider is they're going to have to do a bit of a redeployment of resource. Some of the agents, especially if they're large, are going to have big renewals teams and all of a sudden they're not necessarily needed to do that anymore. And I guess it then is an opportunity, isn't it? Yes, there's going to be some required to serve section 13s, but actually, if we really, if everyone embraces it now and sees it as a positive change for the sector in terms of what they can actually do with it, look at their business model, actually, they could end up in a really kind of significant place. I don't think the sector is thinking that way at the minute. [00:36:34] Speaker C: Some people are, and I think that the renewal will just change, will just morph into section 13, because I think landlords are going to want to do the increase in the rent little and often each year. It's the best thing to do, rather than doing it in one go. If you put it up by a huge amount in one go, that's when tenants tend to get angry and appeal. But then there's the whole problem, I think it's actually a really unfair part of the bill is how if a tenant appeals against an ordinately reasonable rent increase that's way below the market rent, say, then that rent increase won't come into effect if the tenant takes it to the first tier tribunal until the first rent payment date after the tribunal determination. And so because there's a big delay in the first year tribunal at the moment when almost nobody uses it, that I can see is going to be a big delay. And of course, if that happens, then landlords will take that into account and know that if they've got a landlord who's. And they'll know that if they have a tenant that's likely to appeal it, then they'll add that into the increase and it will probably just push up rents higher. [00:37:55] Speaker A: I mean, there's no reason why a tenant shouldn't disagree with every rent increase to get a delay, surely. [00:38:02] Speaker B: Yeah, well, I mean, you should disagree with orn. But one option, which is new in the bill and wasn't in the reform bill, is that previously you couldn't make an agreement with your tenant under any circumstances until post tribunal determination. You can now make an agreement post section 13 notice. So I think in some cases what you'll have is people producing section 13 notices with market, but keen at market rent increases and then making tenants offers. I mean, there's also things you should just, just caution with this. I think there will be more tenants challenging it. But again, just as landlords are grossly ignorant about their, about their obligations, tenants are in general grossly ignorant about their rights, and you can provide them with bits of paper, but the reality is the vast majority of tenants don't even read their tenancy agreement, never mind any additional. The how to rent guide, for example, is routinely not provided and most tenants don't read it. So the reality is that I think there will be an increase, but I'm not sure it'll be as vast as people fear, because I think many tenants just won't bother. [00:39:09] Speaker A: I'm going to ask a question about the landlord database and then we're going to turn to all the questions that our listeners have asked us. Going back to the landlord's database, what do we know about it and how do we think it's going to work, what public information is going to be available? [00:39:27] Speaker B: We don't know. The government's being willfully obscure about that. All we can say is that you have to register with it, you'll get a number and you'll have to have done it before marketing, and there's a fee, and some of that fee could and I think will be given to local authorities. [00:39:50] Speaker A: So we're expecting it to kind of hold certain public information that a tenant then can check against to make sure that that landlord is a reputable landlord before, you know, deciding to rent from them. [00:40:02] Speaker B: I mean, that's what I don't think it will. I think this is. I think that. I think in practice it might start out that way, but the history of government it projects tells us that whatever they actually say is going to be on it is the one thing that won't be on it. I suspect it's going to be more like a straight register with some tick boxes than it is. I mean, I know there's been talk of uploading documents and all that stuff, but I mean, how you verify that stuff? [00:40:29] Speaker A: Yeah, I think. [00:40:31] Speaker C: Sorry, can I just add something? One thing that landlords are worried about is their names and addresses being on there, because there are a lot of landlords who have HMO licenses get inundated with post rent to rent offers, this, that, and the other people trying to sell them things. And I just hope that what's available to the public is very much on a need to know basis. Sure, local authorities should be able to see the name and address of the landlord, but otherwise you'll get Joe public looking up, having a nose. [00:41:06] Speaker A: Yeah, but it could really help with tenant referencing, just to kind of add my part into the mix, because actually one of the things that we need to know is if we're taking a reference from a previous or a current landlord, that it definitely is that person, and that may help in that regard. Right. Let's turn to some of the questions. The first questions, even though some people have sent a list of questions, the one question that is typically at the top of everybody's list is going back to the timing point. So although we are totally speculating, do we think this bill will be ready and passed before summer 2025? If we were to make an educated guess? [00:41:45] Speaker B: Yeah, probably. Maybe not completely, but in the main. [00:41:52] Speaker C: I agree with David. [00:41:54] Speaker A: Okay, fine. Excellent. Okay, so basically we need to crack on. So, okay, getting rid of fixed term tenancies. What is likely to happen to current fixed term tenancies once the act is enforced? Will they immediately become periodic? That's a question from Sarah Gray. From wills and smeardom. [00:42:14] Speaker B: Yes, that's the. There's a whole section. I mean, it's hard to understand, and I, I must freely confess that I've been unclear about it myself a couple of times, but yeah. The intent is that there will be immediate conversion of all asts new and existing to periodic assured tendencies immediately and to anticipate another question that says, does that mean that notice periods will reset? No, they won't, because those tendencies are treated as effectively having always been a continuation of an existing tenancy as opposed to a new statutory periodic tenancy question. [00:42:51] Speaker A: Then linked to that is, for those tenancies, will there need to be a new tenancy agreement given to all of those tenancies? And if so, will they all need to be given pretty much on the same day? [00:43:10] Speaker B: Don't know. Probably. Ask Matthew Bennykut. [00:43:16] Speaker A: Okay, so we don't know the devil's in the detail on that one. [00:43:19] Speaker B: Well, it's a rate. That's a lot of the transition stuff. There's some high points in the transition, but a lot of it's regulations in principle. There will be a standard form of agreement in principle, yes. As soon as the legislation comes into effect, everyone will have to be given one. Will it actually work that way? I suspect not. And I imagine what the government will probably do, much has happened in Wales, is people will get a period of months, probably around six months, to get it sorted. Will they all manage that within six months? Probably not. Will they all be panicking in the last month? Yes. [00:44:02] Speaker A: So here's a question from Amir, from Adam Hayes, and he says, are landlords and tenants allowed to negotiate their own terms, such as an earlier termination, less than two months if they want to? [00:44:15] Speaker B: Yeah, I saw this question. It's quite interesting. If you're talking about tenant notice, that is two months notice, then yeah. The legislation says tenants can give two months notice or such lesser notices agreed in writing. So if a landlord wants to allow a tenant to give less than two months notice, though I honestly can't imagine any scenario where a landlord would actually want to do that, then, yes, they can, because if he's talking about all other forms of notice, like landlord notices, then no, of course they can't. [00:44:46] Speaker A: Okay, so a question for you, Suzanne. What can we tell landlords now when proposing new lets or renewals that run beyond next summer? [00:44:58] Speaker C: Well, you can tell them that they can enter into those agreements now, but they're in all likelihood they will convert into a periodic tenancy when the rules come into effect next year sometime. We don't know when that will be. So, you know, give them a heads up about it. And certainly, you know, when I'm going to be looking for a new tenant next week. And when I sign up with them, I would say to them, okay, we'll have a fixed term tenancy, but the rules are likely to change next year. So we'll probably need to either enter into a new agreement or turn that into a, it'll turn into a periodic tenancy and just to give them a heads up about it, because that way it doesn't come as a surprise and they're expecting it. [00:45:42] Speaker A: I guess making sure to your point that you made earlier, that they've got the right tenant in the property, and vetting the right tenant now becomes pretty important. [00:45:51] Speaker C: Oh, yes, absolutely. Absolutely. That should be starting, or should have started already. Definitely. [00:46:00] Speaker B: People should be vetting like mad. [00:46:01] Speaker C: Yeah. [00:46:02] Speaker B: I would generally say to agents, they should be pointing landlords at the MHCLG press releases around the renters rights bill. There's some pretty decent summaries, frankly, from the government, and if you point them at the government summary, then you can't really be criticized for what you've told them. [00:46:21] Speaker A: Do you think landlords are going to want to know more about a tenant than they ever have before? I'm going to ask you, Suzanne. So, for example, we've been asked more recently about criminal record checks, for example, which has not been on the radar for a very few number of years. Really? [00:46:36] Speaker C: I didn't know about criminal record checks, but I think that landlords are going to want to see the references. And legally it's an agency arrangement. As long as the landlord has signed up with the ICO and has a data protection notice, et cetera, et cetera, there is no reason why you can't share it with the landlord, and you can include that in the terms and conditions. If I were using a letting agent, I would definitely want to see the reference. And also I am recommending that people don't just speak to the current landlord, they speak to the one before, because the current landlord may be wanting to get shot of them, whereas the one before is far more likely to be open and frank. And so me speaking personally, I will be prepared to spend more money on more detailed references going forward. Not the kind of 20 quid jobby from open rent. [00:47:33] Speaker B: Yeah. [00:47:33] Speaker C: So we should chat about that. [00:47:35] Speaker A: Yeah. We've always done a previous landlord reference over a current one as a favorable option. Actually, for exactly that reason, agents should. [00:47:45] Speaker B: And referencing agents need to be looking at what the ICA says about this stuff. There's been a lot of guidance on this, oddly enough, from the Irish Data Protection Commissioner, because there was a big problem in Ireland with pre qualification checks for lettings and particularly property sales people asking really intrusive questions. You know, landlords have no right to criminal record vector. They're not going to get it. There is no mechanism by which they can get it anyway, really. And to ask for it is just going to get you into a massive amount of trouble with the ICO. There was a fad at one point of landlords and HMO's asking for mental health data because they were worried that tenants would turn into axe murderers. But, you know, this is just grossly out of the acceptable remit. And of course, the other point to bear in mind is that mental health and criminal record data are not standard data under the GDPR. They have very particular and specific processing requirements which you just ain't going to meet under any circumstances. [00:48:47] Speaker A: How do we actually think the discrimination part of the bill is going to work in practice? You mentioned pre qualification. There becoming a much bigger thing in our sector. How is it really going to work? [00:49:04] Speaker B: Let me read you a horoscope here. I'll tell you exactly what's going to happen. Landlords will. I imagine some people will still go around foolishly saying no DSS. I assume most people will stop doing that. What will actually happen is landlords will get references, will get people through, some of them will have DSS, they'll have exactly the same person who doesn't have on benefits, and they'll pick that person and it'll be very difficult for anyone to criticize that because they'll be exactly the same. And then what you will also have happen is a percentage of those individuals and a percentage of local authorities will demand that you justify it in various ways and will cause trouble. And people will turn around and say, well, you know, I had five applicants, I picked one, what do you want me to say? But I think the problem here has always been less that people discriminate. It was not so much people discriminate against people on benefits. It's that actually you had a significant number of people who had a policy of saying no benefits, which was, I mean, was always clearly wrong in practice. So you don't really need legislation for me to tell you that that's obviously wrong. [00:50:16] Speaker A: And I definitely think it's happened a lot less, you know, in terms of, you know, the agents that we deal with, for example, we don't have criteria where if the tenants on benefits, then, you know, they don't want to accept them. So I do think it's a bit of a dying thing. Anyway, I'm going to move to grounds for possession. There's quite a lot of questions that have obviously come in here. So the first one is, will a landlord have to go to court to get possession under ground one or ground one a and how will this affect the sale process? That's from Juliet, from car to Jonas? [00:50:51] Speaker B: Well, yes, if the tenant doesn't leave. [00:50:55] Speaker C: And that's the same as now with section 21, so exactly the same. [00:51:00] Speaker A: There isn't going to be much change at all in terms of what people can expect to happen. Tenants are just the timelines. If the tenant doesn't do it, exactly the same is going to happen. They're going to have to take further legal action and go through the courts. Yeah, that's the main thing, isn't it? [00:51:13] Speaker B: This is the unknown. The problem is that people's perception of section eight and section 21 are off the reality. The vast majority of section 21s get served and tenants leave. Tenants tend to contest section eight s more because they tend to be for renter ears. Very few people serve section eight notices citing ground one, for example. But actually, in my experience, the vast majority of section diagnosis citing ground one result in the tenant leave. I would imagine the vast majority of section eight notices citing ground one a will also result in the tenant simply leaving. So I think it's not necessarily as big a deal as people think. [00:51:55] Speaker A: So the next question is about fees, and I'm not sure if it's actually aimed at court and bailiff type fees or actually potentially your fees, David. So I'll ask the question being abolished and the landlords having to use section eight process if they're selling or moving back in or any reason, actually, let's say, to use the section eight notice, will the cost for this process be the same as the current section eight possession orders, like for red law? [00:52:23] Speaker B: Well, I mean, we'll be. I mean, will court fees change? Yeah, probably. I don't know. That's a matter for the ministry of justice. Will solicitors, net eviction specialists, or whatever you want to call them, charge? Well, yeah, probably because. [00:52:37] Speaker A: Just because it's an opportunity to put prices up or it's actually going to become more complex to do it, all of those things. [00:52:44] Speaker B: I mean, it's a scarce resource and business works in my business just like it does in any other business. Sorry. And also it's a way of limiting the amount of people who are coming through your door. You can't in realistically cope with the load anyway. And also because, yes, I think it will be more complicated, particularly initially, because what you'll have initially is you'll have judges themselves have to have training. As with any other individual, only 30% of what you teach them goes into their head. The rest disappears somewhere. So they will get it wrong and those will have to be appealed and dealt with. And so there's going to be an aspect in which it's just going to need more, you know, more detail up front so that the paperwork is going to be a bit longer initially. Well, judges to help judges, hearings will be longer. We'll have to use better quality barristers and they'll be more expensive because they charge more as well. So all of the on cost will increase and then there'll be more need to appeal stuff and make applications because it'd be messy. I think more tenants will appeal as well in order to test stuff out. I mean, for example, we can all say that there's a ground one a, for selling a property, but what's the evidence standard for that at the moment? If I want my property back for myself, then the evidence standard is I provide a witness statement. But lots of tenant groups think you should hire and I fully expect that some of them, and this is an increasing phenomenon across the legal sector at the moment, is using law for political purposes. A number of them will press cases and seek to appeal and say, well, you should have to provide more evidence and those cases will have to end up ultimately at some point in the court of appeal, because that's the only level at which you're going to get a binding decision. So. And the same thing applies in our sale. How much evidence do I need to provide that I'm selling it and I give you a witness statement, I'm definitely going to sell it once you get out. But do I need to already be signed up with an agent? Do I need to, does it need to be on right move? What's the standard that the courts will accept? [00:54:55] Speaker A: Yeah, and actually that brings me nicely onto another question, actually, about selling. So what happens if a landlord evicts a tenant for the purpose of selling a property, their property, and the sale does not go ahead, does that still mean that they are locked out from re letting for twelve months? You know? Yes, yes. [00:55:15] Speaker B: I mean, and to be fair, it's not twelve months really, it's 16 months, because the lockout period starts when you serve the four month notice and then continues for a further twelve months after notice expiring. [00:55:30] Speaker A: So that can put landlords in a very difficult position then, Suzanne, is that. [00:55:34] Speaker C: Yes. Yeah. And I think they were doing this to stop landlords gaming the system, saying, oh, I want to sell when they don't really. And so that means that you're not going to take this risk unless you really genuinely do want to sell and because you're not going to be able to relet it and so they're going to have to price and price appropriately. I mean, I sold my accidental landlord flat a couple of years ago and I went through the whole section 21 notice. They moved out, no problem at all. And then I decorated it and then the next day put it on the market. So the tenants had already moved out by the time I put it on with the estate agent. That's quite normal. I had spoken to estate agents beforehand but I hadn't signed up with them. So it's going to be interesting to see what's required. [00:56:23] Speaker B: Hamiltonian have themselves to blame on this to some extent, in that this was a position under the renters reform bill and a significant number of landlords, thinking they were tremendously clever, went on various websites and social media and made comments along the lines, well, I'll just tell them I'm going to sell, what they're going to do about it. And lo and behold, the government also in fact reads websites and social media and they're not stupid. So if you think you're cleverer than these people, then, then you may find youre wrong. There is an amendment, however, that is being pressed that might change that. Id say its got a reasonable prospect of being listened to. [00:57:02] Speaker A: Okay, whats that one, David? [00:57:04] Speaker B: Then there are a couple of people talking about amendments to say where propertys been on the market genuinely for sale at a fair market price and hasnt been sold, it can come back in to try. And with the argument being that actually by not allowing these properties back into the sector, what you're actually doing is reducing supply. And that's the winning argument in effect, is the supply reduction point of it. I mean, the counterargument is, well, if a landlord says they want to sell, then they should just sell it and if they're wrong about the price, that's their lookout. So I think the key point for landlords here either way, will be if you're telling tenants you're going to sell, then you better have done your homework and be very clear what the actual value is of your property, not your hope value, but your real value of your property and price it appropriately. The reality is that post Covid, after the slight madness, post Covid, of house prices, people pricing on sale is still hopeful as opposed to realistic. [00:58:15] Speaker A: I think it's hard though, isn't it? Because life does happen and circumstances can change, good or bad. And 16 months. Twelve months feels a really long time. Okay, so just going back to a question that we've kind of got in a couple of ways. So what advice would you give right now? If the landlord letting agent is dealing with a tenant where there is antisocial behaviour issues now, or a tenant not really looking after the property now, and so the property is deteriorating. We're talking now, as in now before, obviously, the bill comes into effect. What advice would you give them? What could they or should they do. [00:58:59] Speaker B: Serve a section 21 notice? Why we. Why make it harder on yourself? I mean, assuming you think the next tenant is going to be better, obviously, Dizan. [00:59:10] Speaker C: Yeah, I agree. Why wouldn't you? Because the relationship between landlord and tenant, it's a contract. You both have obligations and responsibilities. And if they're not holding up their end of the bargain, then they're in breach of contract. Do something about it. [00:59:28] Speaker A: Yeah. Okay. So I'm going to move on to rent increase and then I'm going to move on to rent in advance because I definitely want to talk about rent in advance. So is a landlord and a tenant allowed to negotiate a rent increase and implement it without serving a section 13? [00:59:48] Speaker B: No. [00:59:49] Speaker A: No. [00:59:49] Speaker B: There are two scenarios in which you can negotiate a rent increase. You serve a section 13 and then you negotiate a rent increase for a number that is less than the number on the section 13, which I can see happening a lot. [01:00:04] Speaker A: Yep. [01:00:04] Speaker B: And the second scenario is tribunal has made a rent determination and you then negotiate a number lower than the number on the determination, which I can't see happening. [01:00:15] Speaker A: Okay. So serving section 13 is going to come very commonplace. [01:00:20] Speaker B: Yeah, I think it'll be the starting point. I mean, I suspect most agents will be getting. I mean, agents should be. Should be looking at their rental databases, really. In some areas. I think they should be really trying to improve those databases because the problem is that the traditional methods are things like right move. But because of the overbidding legislation, the numbers on Rightmove are going to be really bad numbers because there'll be bid numbers. Sorry. There'll be asked numbers, not bid numbers. So the reality is actual market rents will be less than the numbers on Rightmove. And this is a bit of a problem for an inflationary perspective. So agents will need good databases of not hope value numbers. Sorry? I said, right, new. But other portals are available, but they'll need numbers from real numbers and those will be quite useful. And I suspect a lot of agents will probably get into a process where they'll be serving a section 13 notice with a number, possibly with some evidence of why that's a good number, but then saying, but we'll take 80% of that, or whatever it might be that they think their tenants going to say yes to. [01:01:35] Speaker C: And I think this is somewhere where letting agents can add value, because if they're able to provide evidence and that a landlord can show tenant that this is at or below market, then that's going to be very useful because it prepares you for an appeal. [01:01:54] Speaker B: I think it's quite concerned about rural areas, this sort of unfortunate, unhappy position in that you're going to have. There's a relatively small number of valuers and a relatively small number of properties to compare with. In many rural areas, most of those valuers also sit on the first tier tribunal as valuers for the first tier tribunal. And they'll be marking their own homework, obviously nothing, not directly, because they won't be allowed to sit on a case they valued themselves, but it'll be someone they know. And there's a. There's a sort of really unhappy aspect of being judged during executioner in some areas, I suspect, in respect to rent increases. [01:02:29] Speaker A: And I know, David, when we sat and listened to you talk before, you talked about kind of rent suppression, potentially. So this is a question. [01:02:39] Speaker B: Rent suppression. Tm. I'm trademarking that. [01:02:42] Speaker A: Yeah, that's yours. We've got it down. It's yours. [01:02:46] Speaker B: I'll send you my bill for that. The use of. My use of my life. I'll license you that phrase later. [01:02:51] Speaker A: Okay, that's good. Thank you. So Natalie from Shenley Estates asks this question. Have the government not realized that in supporting an annual rent increase to market level rents that themselves will actually. That they'll actually be pushing rents up? If offering over the advertised rental is not permitted, this will only result in rentals being marketed at above the market value rents in order to negotiate, to negate this hurdle. Thoughts on this and how this might be policed? [01:03:18] Speaker B: Yeah, so this is what I was talking about. I think headline rents will increase because people will advertise at the top of the market, and that does create an inflationary pressure because some inflation measures are based on headline rent figures. So I'm a bit concerned about this, but bear in mind, what the government has also done is they've revamped powers that already exist today under section 22 and made them more front and center to allow tenants to contest an initial rent in the first six months as being over market. So if you advertise a property at some crazy rent on the basis that someone will pay it, the risk is they will pay it, they'll come in and they'll immediately then apply to the tribunal to have it lowered down to a proper market level. And then the second control on this is what we've already discussed. But again, unlike today, if I serve a section 13 notice, the tenant can contest it. That doesn't cost any money. And the tenants contest section 13s now because they're free. But unlike the current system where the rent increase is back dated to the notice date, the rent increase will be the tribunal's determination date or the next available rent, rent rent payment date. So the reality is, and of course, the tribunal can also push it off by another two months if they think theres undue hardship, which is a lower bar than today, which is exceptional hardship, undue hardships quite a low hurdle. So the reality is, from a talent perspective, its always worth contesting it. [01:04:47] Speaker A: Yeah, I understand. And I guess where natalies question is kind of going is going back to the discrimination point as well. Weve got more than one family or one person wanting a house at the moment. Its still a very hot market. In that instance, is the, if there is somebody willing to pay the higher rent, is that not doing exactly what the government are trying to avoid in the fact that people that are just meeting the affordability level or on lower incomes are not going to get those houses? [01:05:15] Speaker B: Well, clearly, she was listening to Jeremy Corbyn last night, who made this point and was slapped out quite thoroughly. I was delighted to see by Angela Rayner, which I thought was ironic. [01:05:27] Speaker A: So Theresa Wallace from Saviles, a good friend of ours, has asked this question somewhere in the small print, does it actually say rent can be taken in advance for certain circumstances, that is, let's say, affordability reasons? [01:05:42] Speaker B: No, it doesn't. [01:05:43] Speaker A: Okay. And yesterday, Matthew Pennycuick obviously talked about this point as one very specific point. And he said his words were, it is entirely open to keep under review. And therefore, I think that there is a bit of excitement maybe today in the industry that rent and advance payments might be allowed. What's the view? [01:06:05] Speaker B: Do you want to go first, Suzanne? [01:06:07] Speaker C: Well, when I had a look at the bill, I couldn't see it in there. There does seem to be a lot of confusion about it. I understand David's argument about how the rent period, the rent has to be the same as the rent period. It doesn't say anything in the explanatory notes or the guidance? There was some confusion yesterday. One MP complained about excessive deposit, clearly unaware that they're capped at five weeks anyway. And there was other comment, I think, by Angela Rayner or Matthew Penny Cook, or both of them, that seemed to suggest that there is a cap somewhere and three months was mentioned, but I've not seen that. [01:06:48] Speaker B: Yeah, the problem here is twofold. The first thing that people don't understand, that everyone needs to understand, is the government's view of its legislation is not, in fact, the legislation. The courts are not remotely interested in what the government thinks its legislation does. What they try to establish is the will of parliament. And there has been numerous cases where the government thought legislation did x, but the court in fact decided it did. Yeah. And MHCLG, under its various previous guises, has an appallingly poor history of actually knowing what its own legislation does. And this has come up numerous times in relation to tenancy deposit protection, for example. And there have been numerous cases where the Court of Appeal has heard evidence from, well, ODPM, and in one case, DLuHC, as it was, and just say, yeah, I don't think that's what the legislation does. You're wrong about your own legislation. So the first problem here is that the government doesn't appear to isn't the arbiter of what legislation says, which I know sounds perverse, but that's. It's a parliamentary democracy. It's what parliament says that goes. The second problem is that, is that the led is that the rent in advance stuff is really unclear and just all over the place. So what the legislation says is you can't have a rent period of more than a month. It then goes on to say that rent periods are those for which you're being paid. So I find it hard to understand how you can then say that the payment period is six months in advance if the rent period can only be a month, and the rent period and the payment period must be the same. DL UHC, sorry, mhclg. And as they, MHCLG officials appear to be suggesting that agents can demand multiple payment periods in advance of now, I'm not sure that they can, but I do notice there's no penalty if you do, so I assume you probably can, but it's probably not that enforceable if you don't get it. And then yesterday it was just all over the place, because a number of MP's were of the view that rent could be taken in advance. And that's clearly what tenant groups are briefing Penny, Cook and Rayner, turn around at various points and say, oh, well, we're going to make sure that you can't have excessive upfront rent demands. But I think they're just referring to the fact they've captured that they've said rent periods are a month. And I think the problem is that the relevant officials don't entirely understand the legislation themselves. They've not briefed ministers very well and it's just a complete mess. [01:09:29] Speaker A: Does the rent have to be equal across the rent period? Does it say that? [01:09:37] Speaker B: No, it actually says it can vary, but it can't be more than a month. [01:09:43] Speaker A: But you couldn't have a situation where the rent varies within, let's say the first year, within the month. So the rent's higher for month one and then it drops, because that's kind of a discounted rent. [01:09:59] Speaker B: Yeah, you could. And actually you've touched on something I was thinking about this morning because someone was saying to me, how are you going to get ten to stay in properties longer term? And one option I think might be out there is that landlords might offer rents that drop on particular markers for people who stay more than a certain amount of time. For example, if you get, if you could easily say the rent's x, but if you stay for more than six months, it drops to y. It's perfectly lawful. [01:10:24] Speaker A: And therefore the rent that would have to be advertised would be the highest, to be the highest point at the beginning of the tenancy. But that potentially is where my thought process went the other day in terms of, well, would that then cause a problem based on what they could advertise and how much would it drop and how much in advance would really then be taken? [01:10:46] Speaker B: That's one for people who have stats and maths, and I'm a lawyer, so I don't do maths. [01:10:51] Speaker A: Okay. [01:10:52] Speaker C: And then you've still got the market cap, the open market rent issues. [01:10:58] Speaker B: Yeah. I mean, what's complicated about open market rent, again, is that there's a lot of misunderstanding about this. Agents tend to suggest and cleave to the idea that open market rent is a number. I mean, it's clearly not. It's a band. And the FTT certainly looks at it as a band. And once you start to think about it as a space of numbers, it becomes a lot easier to think about this. Because one thing people said to me was, well, if I go and put a market rent to the FTT, how could they come up with a different number? And the answer is well, because you're suggesting that market rent is this fixed number in the world and it's not. It's a space of numbers. [01:11:44] Speaker A: Yeah. So I guess another opportunity for agents or industry to provide a market range to landlords in advance of them, considering what that rent should be. [01:11:58] Speaker B: Well, the reality is that in some situations, agents are nowhere near up to where modern thinking is on this sort of stuff. There's tons of really good academic work on pricing. Lawyers spend hours now being trained in pricing, and I'm sure Suzanne had to endure this because corporate lawyers spend even more time on it than I do. And the agency sector and property sector just really needs to start to think about pricing. I mean, the commonest expression of this is people who think that a house is worth any sum of money. But you'll find lots of people who understand more about pricing will turn around. You would say that a house is worth what someone's prepared to pay for it. That is a pricing specialist. Response to house prices and rents are the same. The rent for a property is what someone's paid to give you for. [01:12:51] Speaker A: I'm conscious we're probably running out of time. I'm going to ask two more questions and then just ask you for any kind of closing comments. So, this question was submitted before yesterday, and I think yesterday it became quite clear about the, you know, the court system. But I'm going to ask the question. If arrears needs to be three months before a section eight can be served, and the notice has to be a month, and a tenant will therefore be in four months worth of arrears before any court action can be taken, will there be any improvement or speed up to the court possession process? No. They made that clear yesterday, didn't they, that it was a no. [01:13:32] Speaker B: Well, what they're talking about is this digitisation project that was launched under Theresa May, and what that's really intended to do is to allow landlords not to use me in practice and to fill in their paperwork themselves. But, I mean, there was quite an interesting leak about this last week, because the Lord lady chief justice turned around to Shabana Mahmoud, the justice secretary, and asked for more money for criminal justice, and made very clear to the ministry of justice that there'll be no reduction in wait times for criminal cases unless they increase the number of judicial sitting days. And Shabbat Mohammed basically turned around to said, well, there's no more money, so thank. Thank you. And a letter was then written by the LCJ, as she must do, to Crown court judges to inform them of this. And unsurprisingly, it was leaked. Who knew? Crown court judges can be. Can be gobby as well. They leaked it to the law society gazette and beyond, and it's caused the government some embarrassment. But let me put it to you simply. If rape trials don't get more money, why do you think that the county courts. Yeah, I mean, I'm a civil lawyer, but if I had a limited pot of money, I wouldn't be putting to the county courts either. I'd put it into the magistrates and crown courts. No two ways of adding. [01:14:47] Speaker A: Yep. Understand? And then the final question is, can a tenant, under the new legislation, avoid eviction by staying two months in rent arrears? So they avoid reaching the three month threshold for eviction? [01:15:03] Speaker B: Yeah. The problem about this is that people are just. And this is where people's understanding is going to get a lot more sophisticated. Mandatory grounds for possession are the be all and end all of the world. I get fed up, to be honest with you. Daniel is saying to me, oh, well, discretionary grounds, possession don't work. Of course they do. I've evicted loads of tenants for discretionary rent arrears below the two month threshold, because judges aren't idiots. If you've been in two months arrears and then you turn up in court, 50 quid below and go to the judge, 150 quid below the threshold, do you really think that a judge says, oh, all right then, mate, why don't you stay there? Of course they don't. It's not how it works. So the problem here is that people need to read less on the Internet and actually deal with reality. I mean, you often have people say, discretionary. So I've had someone try and sue me. It's because I use discretionary grounds. Possession. They said, oh, you shouldn't have done. You should have used section 21. I had to point out to them politely that section wasn't even available in their case. Everyone knows you shouldn't use section eight and discretionary grounds because they never work. Well, of course they work. So, yes, it's possible, depending on the situation, but no, I don't think that tenants won't get evicted if they sit below the three month threshold, whatever it happens to end up being. [01:16:29] Speaker A: Okay, so I'm going to ask a final question, but there's kind of three parts to it. So out of all, Suzanne, though, I'll ask Suzanne the question first. So my question is, what, out of all of the changes under the renters rights bill, do you feel is going to have the most negative impact to the sector, and the reason my question is in three parts is, when we think about it, for an agent, a landlord and a tenant, the worst one. [01:16:58] Speaker C: Because it just depends. If you read all the clickbait headlines, it's just really difficult. I mean, I think of all the changes that are coming, the thing that's going to make the most amount of difference is epcs. If they're going to have to be c by 2030 and there's not going to be lots of exceptions, that's something that is a bigger problem. Whereas, whereas I think most of the renters reform. Sorry, renters rights is all stuff that we'll get our head around and as long as we provide good houses, we look after them, or flats or whatever good. And we look after the tenants and the properties and we get our paperwork right, it'll be all right. [01:17:40] Speaker A: So for David the most. [01:17:41] Speaker B: I don't agree with the premise of the question. I think things will have impacts on the sector. When you say negative, negative in what context? For who? I know there are a lot of people saying, oh, what's bad for landlords is also bad for tenants, but that's just not true. Sorry. The objective of the government is to rebalance the sector. Will that have a negative impact on some landlords and agents? Yeah, obviously, because they're having their power level reduced within the sector. Will they have a positive impact for tenants? In some cases, yes. In some cases, not so much. I mean, obviously there will be negative impacts by doing this. There will also be positive impacts. Will the sector be the same afterwards? Not really. Will it cease to exist? No, of course it won't. There are. There are fewer houses available than people who want them and people want to rent them, the business model will continue. [01:18:37] Speaker A: Do you think it rebalances the sector? [01:18:41] Speaker B: Yeah, for sure. Section 21. I mean, I'm sure I'll make myself unpopular by saying this, but I'd be very clear that section 21 is abused a lot. I don't doubt for a minute I completely accept it's used for lots of perfectly legit reasons, but it is abused a lot by people who. Yeah, and they're not your clients, really, or people you would ever deal with, frankly. But there are some really, really horrible people out there whose first response to anything is to serve a section 21. In fact, there are even more horrible people whose first response to is to pop round to the property with a baseball bat and change all the locks. So to suggest that, and I think the government's pretty clear about that this has not really targeted a good landlord. But even arguably, even using section 21 when there's a section eight ground is arguably an abuse of section 21 because it's not really intended for that purpose. But for a lot of landlords, I don't think it will actually make that much difference. And I think, as always with these things, that there's just way too much heat. [01:19:56] Speaker A: Okay. [01:19:57] Speaker B: And people should take a cooler look. [01:19:59] Speaker A: At it just before I close then the session. And thank you both. Is there any final comment that either one of you would like to share? [01:20:10] Speaker C: Well, people need homes. People need somewhere to live. There's still a demand, and I don't think this is an existential threat to the private rented sector. We're going to have to do things differently. We've got to figure out how that's going to be. The demand is still there. [01:20:28] Speaker B: Fundamental economics are sound. They're just going to be different. [01:20:34] Speaker A: Thank you both very much and thank you for sharing so much time, expertise and obviously insight really into kind of the last 24 hours in terms of what's happened. Very much is hot off the press. It's been a really useful session and I'm very much sure our audience have learned a lot on a topic that we know is going to continue to dominate the narrative across the letting sector. I think for some time for our listeners to ensure you never miss an episode of let's talk, let's please follow us on Spotify or wherever you listen. And please leave us a review if you like what you hear. Thank you very much for listening. It.