Whether you’re an existing tenant or looking for a new home to rent, it will pay to know what’s happening in the market over the next few months.
If you’re one of Britain’s five million renters, or if you’re going to be a new tenant this year, here’s what you need to know.
1. Renters’ Reform Bill
The Bill was included in the Queen’s Speech in December 2019, which means it is part of the government’s programme for the current parliamentary term. We don’t yet know when it will start the process to become law – but it will only apply in England.
The main elements are:
- removing the ability of landlords to evict tenants without good reason (scrapping section 21). As things stand, landlords can give tenants eight weeks’ notice to vacate the property after their fixed-term tenancy comes to an end
- the Bill proposes that landlords should have more legal rights to remove a tenant if they can show they have a valid reason
- it will also introduce a lifetime deposit scheme, which means a deposit can be transferred to a new property when a tenant moves so they don’t have to start from scratch each time
The Bill follows the Tenant Reform Act, which became law last summer. It prevents letting agents from charging tenants for the cost of obtaining references and carrying out credit checks.
Deposits have also been capped at five weeks’ rent in most cases.
Find out more about the Renters’ Reform Bill.
2. Credit scoring boost
Everyone has a credit score – it’s a record of how you’ve managed your money in the past, and it’s used by banks and other lenders to help them decide whether to offer you a mortgage, personal loan, credit card or other product.
One way to boost your score is to show you pay your bills in full and on time.
For years, rental payments were not considered (unlike mortgages), but now one of the main credit reference agencies, Experian, is rewarding those who make punctual rent payments with better scores.
You can sign up through Experian’s partners such as Credit Ladder and Canopy, and we can expect other agencies to launch similar schemes.
3. Zero deposit schemes
One of the biggest pain-points for renters is the security deposit, which traditionally amounted to six weeks’ rent (it’s now usually five) payable upfront.
That’s a lot of money sitting with the landlord for as long as you remain a tenant.
An alternative is a zero deposit arrangement. You pay a week’s rent to the company running the scheme, and it guarantees the landlord up to six weeks’ worth of rent if you cause any damage.
You’re still liable for any damage caused, so the company will seek reimbursement from you if it has to pay the landlord to repair any damage. There’ll also be an annual administration fee of around £20 - £30 in most cases.
If you’re already a tenant who has lodged a security deposit with a landlord, you might be able to get your deposit back by using a zero deposit scheme.
Your landlord will have to agree, of course, but the concept is proving popular with many landlords because it removes the need for them to safeguard your money (via a government-backed tenancy deposit scheme) while you are their tenant.
4. Renting with pets
There’s good news for would-be renters with pets. Many landlords don’t allow tenants to keep pets, but the government thinks that should change.
It is planning to re-write its model tenancy contract, which landlords are urged to use when signing up new tenants, to remove restrictions on tenants keeping well-behaved pets.
Landlords are under no obligation to use the government contract and they are still entitled to refuse to have pets on their property. But the hope is that more will now at least consider the idea.
When we dug into our own rental listings data, we found that just under 4% of landlords allowed pets. The figure was 7% or higher for different types of house, but only 2.7% for flats.
5. Energy performance certificates
The rules change in April 2020, when landlords will only be able to let out properties that have an Energy Performance Certificate rating of E or above.
That should mean your rental home should have decent insulation and efficient heating.
6. Affording rents where you want to live
If you’re an existing renter who’s planning to move in 2020, or you’re going to be renting for the first time, check out our latest Rental Market Report.
You can use the interactive map to find, for your chosen location, the average monthly rent, how rents have changed over the past 12 month, the average percentage of a single income that’s spent on rent, and how long rental properties are on the market before they’re snapped up.
This will give you an idea of how quickly you need to act when you see a property you fancy.
7. Rental costs
What is likely to happen to rents in 2020?
In April, landlords will no longer be able to offset any of their mortgage interest costs against their rental income, and will receive a tax credit of 20% instead. For those paying 40% and 45% tax, this will mean they will have higher tax bills.
There is a chance that this could mean landlords deciding to increase rents.
Interest rates on buy-to-let mortgages have been reducing, which could increase the number of landlords entering the market. If there are more landlords there should be more competition for tenants – which in turn should mean downward pressure on rents.