Rent-to-rent agreements will carry even greater risk when Labour’s assured shorthold tenancies come into force with the Renters’ Rights Bill, explains a top property lawyer.

The guaranteed rent agreements, which depend on time-limited tenancies as opposed to open-ended assured tenancies, are common but can prove contentious when properties are mismanaged, or communications break down.

JMW’s David Smith tells LandlordZONE that landlords will need to look at the provider much more carefully and make sure they know who is going in as they will be liable for Rent Repayment Orders and are likely to end up inheriting the occupiers later.

“Where any superior lease acts to prevent the creation of assured tenancies with indeterminate terms, then those clauses are of no effect,” he explains. “This will mean that long lease restrictions requiring subletting as an assured shorthold tenancy will be ineffective. Additionally, similar clauses in rent-to-rent agreements that require subletting as an assured shorthold tenancy will be of no effect.”

Terminating decision

Smith suggests that landlords who have let their property on rent-to-rent arrangements and want those properties back to rent out should think about terminating the arrangements before the Bill takes effect because any clause requiring the property to be returned with vacant possession will also be ineffective.

The only context in which a traditional rent-to-rent arrangement can work under the Bill is where the landlord lets to a housing association or other registered social housing provider.

Like the NRLA, Smith believes the government needs to think through how the mandatory ground 8 for rent arrears will affect landlords while the court system still needs addressing and predicts that First Tier Property Tribunals will have a lot more work from tenants contesting an annual rent increase – with an in-built delay of several months and no backdating to the notice date.

He adds that while tenants can ask for a pet once they move in under the new Bill - and it will be very hard to say no - the obligation to pay the pet insurance cost is now an implied term in tenancy agreements so tenants who do not pay can potentially be evicted.