Chapter 1: What is the main topic discussed in this episode?
Welcome to This Is Money podcast sponsored by Trading 212. Download the Trading 212 app and open a cash ISA with promo code TIM to get the 12-month bonus promo rate at 4.51%. Terms apply. I'm Georgie Frost and joining me and Simon Lambert today is Helen Crane. And coming up, the biggest shake-up to renting in decades. The Renters' Rights Act comes into force this week.
Much-needed security for tenants, but is it the final nail in the coffin for landlords? Also today, interest rates have been held, for now. But brace yourself for Trumpflation, warns the Bank of England. So what should we be doing to prepare for that? Plus, we explore the huge rise in additional rate taxpayers. And you can't even blame Rachel Reeves for that one. And forget the Costa del Sol.
Have you considered Dortmund for your summer holiday? No, nor I. Don't forget, you can stay up to date with all the latest breaking money news just go to thisismoney.co.uk or download the app. But first, after six years and four prime ministers, the Renters' Rights Act has finally come into force, bringing with it some of the biggest changes to renting in decades.
Originally introduced by the Conservatives, the new laws aim to give greater security and protections to tenants from evictions and unfair rent increases, among other things. But some say it is the final nail in the coffin for the beleaguered sector with landlords selling up in droves. So will this all backfire? Welcome, Helen. Welcome, Simon. Simon, firstly, a bit of history on this one.
What's the Renters' Rights Act? Where has it come from? I feel like we've been talking about it for a long time. In fact, I've been talking about it for a very long time because I think I've bought a house and rented two other homes since this has been discussed with me by estate agents.
It's been a long time coming and it's been in various forms over successive governments. The idea that tenants need more rights to help shift the balance of power more into their favour and away from landlords. Renting can be a great experience for people. You get wonderful landlords. You get great letting agents. You get great tenants.
But you can also get bad landlords, bad letting agents, and bad tenants. And I think that it takes two to tango. You have to remember on this. And I can see this from both perspectives. But before I'll talk about that in a bit when we go on to the what do we think about this thing? But firstly, what's in it?
Basically, it's become law today, May the 1st, and it is the biggest upgrade to renters rights in a generation. Now, the big thing here is, firstly, it is the end of what's known as assured short-hold tenancies, so fixed-term tenancies, the 12-month tenancies that people commonly sign up to.
It used to be that you signed up to a six-month or a 12-month, but it's more often now you sign up to a 12-month or an 18-month or a 24-month even. And from this point on, That won't happen. Instead, there will be periodic or rolling tenancies that tenants are signed up to and they will be able to leave with two months notice. So they can give their landlord two months notice.
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Chapter 2: What is the Renters' Rights Act and why is it significant?
And they're not allowed to discriminate against people on housing benefit or people with children. And so on. So there's a big upgrade to renters rights. The flip side is that this is effectively another crackdown, more red tape on landlords. And we've already seen a scenario where potentially, you know, some people have been moved out of their properties before this kicked in.
And also the other really important thing to remember is this kicks in today, but it doesn't just kick in for new tenancies from today. It kicks in for all existing tenancies. So every renter now has these rights, whether they signed up to their tenancy from today or whether they signed up to it a week ago or a year ago.
And that's the thing, Helen. I believe I was essentially thrown out of my property how many moons ago over the fears that they wouldn't be able to increase the rent by that much. And they tried and then no one rented it. So they had to backtrack and lost months of rental income from me. So I wasn't too bothered about that. But what do you think?
In sum, all of these measures added together, because the thing that I hear from landlords is, oh, but what if I have a bad tenant? It'll be really difficult to get them out, etc., But if you are a really bad tenant, you're damaging the property, etc. That hasn't changed, has it? And the reality there is it's actually very difficult anyway for landlords to get people out.
The courts are all clogged up, all this sort of thing. So will this materially, do you think, change that much to the system?
I think you're right in that it was difficult to get rid of your tenants anyway. And there are all these exceptions, as Simon said, so this rule about landlords needing to give tenants four months notice to move out, that doesn't apply if the tenant hasn't paid their rent for a long time or has damaged a property or has caused antisocial behaviour, then it's only two months, which is
the same as it is now. So I think landlords' argument that it will be harder to get difficult tenants out doesn't necessarily wash, but it will be more difficult to get tenants who are good tenants out, which I think is right, to be honest. I think the main thing that this legislation brings for tenants is security.
um so it's going to be harder for your landlord to make you leave your house just because they want you to or they want to put the rent up which i think is is fair to be honest you know we've seen such huge rent rises uh over the last few years tenants are paying a lot it's pretty much at this point the same as paying a mortgage in in most areas and i do think you know you do deserve if you're a good tenant you pay your rent you look after the property i think you do deserve a level of
And security in your home, you know, that's one of the bases of a good life, really. I think, you know, knowing that you're not going to be kicked out for no reason, knowing that, you know, your landlord can't just wildly put the rent up whenever they want. I mean, it wasn't quite whenever they want before, but... There's stricter kind of rules on what they can do.
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Chapter 3: How does the new law change the eviction process for landlords?
and people saying, oh, well, that means more houses for first-time buyers. Firstly, firstly, you know my views about renting and this obsession we have of buying. And you're seeing couples who are really young, haven't been together very long, saying this is the only way I can buy a house, to which there's red flags going off everywhere if you feel you have to buy a property in your early 20s.
No, you don't. Enjoy working and moving around the country. However... I don't even think that will necessarily happen. Are we not just going to see a load of, I probably think like private equity or something coming in, buying up professional, professionalize. But then you get an even further distance away from the tenant. Do you know what I mean?
The problem, I think, is that, you know, the further away you get from the tenant, from landlords, to letting agents, to business, big property companies, the less they actually care about the individuals?
Yeah, I think you're right. And a lot of landlords, and it is a lot of landlords that say they're going to sell up because of this. So also the auction house did a survey last week and 42% of the landlords that they asked said they were unlikely or very unlikely to keep on letting their property as a result of the renter's rights act.
As Simon said, they might have been thinking about that anyway because of all the
stuff that they've been subjected to over the last few years but 42% is is a big amount and you know yes when I was a first-time buyer a couple of years ago I did look then a lot of properties that were being sold by landlords can be quite attractive to a first-time buyer because it's obviously a bit of a blank slate you can kind of decorate it how you want they're normally a
you know, kind of quite basic, but you'd expect you maybe get a bit of a better price, and then you kind of do some stuff to it. So yeah, it can be a good opportunity for first time buyers. But then, you know, there is always a finite pool of first time buyers who have actually managed to get over this sort of deposit hurdle and afford to actually buy a flat.
So I think if we're saying, you know, if 40% of landlords do really sell up, I think it's a bit much to believe that all of those flats will be moved into by first time buyers. So Yeah, I mean, a lot of people talk about this rental market becoming more professional.
So I think a lot of these landlords who will drop out will be landlords who've just got a handful of properties, accidental landlords, you know, people who've maybe bought a property on their own, then moved in with a partner and decided to keep the property. that they had before and rent it out.
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Chapter 4: What protections are now in place for tenants under the new act?
So as mortgage lenders tend to do, as soon as Iran... kicked off they put up their rates quite rapidly you know they tend to kind of rush in and then they come down more slowly but they are coming down gradually still about a percent higher than they were at the start of March but falling slightly I think in terms of what to do
Simon was talking about this confidence trick of making people you know feel like they need to sort of squirrel money away where they can and sort of be sensible with their finances and and I think in a way that that confidence trick has worked so something that I noticed this morning they had the nationwide house price index out and prices have gone up by three percent in the year to April which is more than probably expected given everything that's gone on even though that obviously only reflects the first sort of month of the conflict um
But one of the reasons that their chief economist said that house prices have been able to go up is because basically people have been really sensible with their finances. You know, this is obviously sort of wealthier people where they've been able to. But people's household debt is lower than it's been for years. People have quite a lot of money in savings.
And that's kind of given them that confidence to still... You know, buy a property, even if they have to take a slightly more expensive mortgage, because after everything that's happened over the last years, they've kind of built this buffer. And I do think, again, you know, the cost of living has been really hard on a lot of people. And there are people that aren't able to do that, of course.
But I think if the last few years has taught kind of comfortably off people anything, it's having some kind of buffer, if you can, makes it feel like you can sort of smooth over a lot of these crazy ups and downs that we now seem to see all the time. So if you do need a mortgage, though, in the immediate term, obviously... Speak to a broker is really good advice.
When things are changing so quickly, they'll have a direct line to the lenders. They'll know what the best rate is and also what suits you best. So do you need a two year? Do you need a five year? Should you pay a fee? Should you even consider a tracker, which is something that. some people are considering right now.
So those are mortgages which are linked to the base rate, go up when it goes up and go down when it goes down. Obviously, seems a risky move at the minute because rates might go up. But before they do, some people are considering a tracker as kind of a stopgap because they're actually cheaper than a lot of fixed mortgages now. And you can normally get off them at any time. So
If you're considering one of these niche moves, brokers are really helpful. A really good time to look at your savings as well. Check there in the best account possible. When the base rate doesn't go down, savings rates tend to stay the same. And there are still some really, really good savings.
rates out there sort of close to four and a half percent on easy access in some cases you know fixed rate accounts as well looking quite good at the moment and obviously we've got a fresh ISA allowance as well so do make sure that you're making the most of your tax-free savings allowance definitely still worth looking at savings accounts and switching where you can.
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