How rural residential landlords can prepare for changes in lettings

The country is short of housing and rural properties for rent are in high demand.

Those letting rural accommodation are generally aware that change, in the form of the Renters’ Rights Bill (RRB), is coming but many have not engaged with what they need to do to prepare, say advisers.

See also: Tax and legal considerations for farm diversifications

Managing rural rentals

The legislation aims to professionalise the private rented sector, penalise “rogue landlords” and improve homes for long-term tenants, says Lucie Allan, head of lettings with land agent Batcheller Monkhouse.

“If you’re a compliant landlord you don’t need to worry about this legislation.

“Yes, the penalties are harsh, you need robust referencing and professional tenancy agreements and to be on top of meeting the requirements,” she says.

Decent Homes Standard  

The RRB will apply the Decent Homes Standard to the private rented sector.

This requires accommodation to meet minimum quality standards and is currently applicable only to social housing.

The bill will also introduce Awaab’s Law to private rented accommodation.

This came into being following the death of two-year-old Awaab Ishak, who died as a result of living in damp and mouldy social housing.

Issues with rural rented property tend to be about condition, with damp and mould a common concern, says Lucie.

“Tenants often tend not to report issues because they are scared of eviction, and the biggest problem is that there is a national housing crisis and tenants will put up with a situation because of the scarcity of accommodation.”

Self-managed properties

Advisers have cautioned that the RRB signals the end of the “DIY” landlord.

While urging professional help to draw up the legal letting documents, Lucie says that where landlords are managing private let property themselves, one of most important things to undertake now is a property visit, if that is not already being done regularly.

“Often landlords think that if they don’t hear from their tenant, everything is fine, but that may not be the case. They may need to be proactive in managing their properties.”  

On a property visit, Lucie suggests that, as a minimum, the following should be looked at:

• Evidence of damp and mould – check windows, sills, frames, gutters, the roof and chimney stack, key areas where gaps might arise, including taps and seals around the bath, anything that could create leaks or draughts. Look at exterior walls and chimneys for signs of water ingress, and at the immediate surroundings of the building.
• Check the boiler is working and serviced regularly – for gas, annual servicing and a landlord’s gas safety certificate is a legal requirement. For oil-fired boilers, an annual service is recommended but not a legal requirement.
• Ensure the right number of smoke and carbon monoxide alarms are in place and working.
• With open fires and wood burners, have chimneys swept once a year. Sweeps will highlight any issues. This will be an insurance requirement so don’t leave it with the tenant to organise and assume it has been done.
• Electrical safety – rented properties must have an Electrical Installation Condition Report at least every five years. This is commonly done the first time a property is let but often slips after that. The penalty is a fine of up to £30,000.
• Overcrowding – is the property being occupied as it should be by those listed on the tenancy agreement?

“When doing a check, go into every room, open every door, and ideally have the tenant there.

“They are more likely to tell you things that you might not spot,” advises Lucie.

“Take steps to alleviate a problem even if it can’t be sorted entirely.

“For example, if the property is single glazed, can you insulate the loft, which is a relatively inexpensive way to create a warmer environment for tenants.”

Damp is a common problem in older rural properties. As a first step, a dehumidifier can make a big difference and these are relatively inexpensive to run.

Permitted occupiers

One person may be the tenant but if there are additional occupants, it’s sensible to add them to the tenancy agreement as permitted occupiers but with no rights to the tenancy or property, suggests Lucie.

For example, a farmworker may be the tenant and family members permitted occupiers.

If someone new moves into a let property – for example, a new partner – they should at the least be put on the tenancy as permitted occupiers, with ID and reference checks advised.

Farm staff accommodation

The RRB provisions apply to farm staff housing only if it is occupied on an assured shorthold tenancy.

Some workers are housed on assured agricultural occupancy terms, where there is still a responsibility to provide safe homes and the local authority may be able to intervene under environmental health provisions.

Consider rent reviews

Once the property check is done, if a rent review is due, carry out the review, advises Lucie.

Rents must be fair and reasonable – now and in the future.

“This hasn’t always been the case, which is why the changes to rent review are being made. Things won’t be challenged if the new figure is fair and evidence backed.

“A lot of farmer landlords are very wary of rent increases because they are scared the tenants will leave – they generally like their tenants and may have made improvements to the property.

“However, they need to be building a buffer to save for improvement works that will be needed in future, so they should be reviewing annually – put it in the diary, and remember, it may not always go up, rents have to be in line with the market.”

Rent protection insurance

Insurance to protect against non-payment of rent for up to 12 months also covers eviction costs and major breaches of the tenancy.

“The cost of not having this far exceeds the cost of cover, which is about £300 a year for an average rent of, say, £1,000-£1,200/month,” says Lucie.  

Energy efficiency improvements

Alongside the RRB, higher energy standards will be required in let properties.

The current requirement is a minimum EPC of E but the plan is for this to change to a minimum of C by 2035 (see below).

Opportunity for additional income

Despite the challenges of making some properties compliant, high demand is a positive message for rural landowners with residential rental properties, or potential rentals, says Lucie Allan.

Private renting in county and rural areas rose by 450,000 households (31%) between 2011 and 2021, according to the County Councils Network.

“If there are derelict properties on the farm, or some which are not currently suitable for letting, consider investing in these.

“The housing crisis means the demand is there and from a bank borrowing perspective, the income potential makes this a reasonable prospect.

“It’s a good long-term strategy if you do it correctly from the start.”

At the same time, Lucie acknowledges that the cost of complying with forthcoming energy legislation in combination with the RRB measures means some rural landlords are selling older, more challenging properties.