Greg Tsuman, previous president of Propertymark, has warned that the implementation of the Renters’ Rights Bill is already causing problems in the private rental sector (PRS).
Tsuman said he has seen a rise in early surrender agreements as tenants believe the new rules are already in place, meaning they can leave their tenancies just by giving two months’ notice.
Tsuman said: “Because the Renters’ Rights Bill means that any tenant can leave a fixed-term tenancy with two months’ notice, this may give tenants more freedom of movement without any fees, but it will also increase landlords’ costs.
“This could then push more landlords out of the private rental sector because it is yet another cost they would need to consider, alongside how much rent they are going to charge.
“This could then lead to fewer properties for tenants to rent.”
An early surrender agreement allows a tenant to end a fixed-term tenancy when there is no break clause, without being liable for the full rent for the remaining term.
Tsuman said that landlords should only agree to these in exceptional circumstances.
He said: “In the meantime, there must be a valid reason why landlords may want to waive their rights before they lose their rights.
“For example, if a landlord is selling in the future, it may suit their plans to agree to an early surrender agreement.
“Agreeing to an early surrender increases their risk of getting fined, experiencing loss of revenue, and additional expenses which they may not be able to cover.”
He added: “We have seen tenants turn on their landlord as soon as the early surrender agreement was signed.
“Once tenants are no longer contractually bound, some may feel emboldened to act unreasonably or even make threats.
“It’s a good reminder to document everything and, where possible, ensure mutual surrender terms include clauses about post-surrender conduct or settlement of disputes.”
Tsuman also commented on the Tenant Fees Act 2019, which stops landlords from charging tenants fees other than those outlined in the act.
Recent tribunal decisions have raised questions about what can be charged on early surrender.
Tsuman said: “A landlord putting forward an early surrender agreement even if this is financially better for the tenant than holding them to the existing contract, could land them with a significant fine and an inability to recover their costs, and that is the unintended consequence of the Tenant Fees Act.”
