Landlords face £65 annual PRS Database fee as HMRC takes on rent increase disputes

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Landlords face £65 annual PRS Database fee as HMRC takes on rent increase disputes

Landlords will have to pay a £65 registration fee per property annually under the government’s new national landlord registration service.

The government has confirmed that landlords will be required to register their rental properties through its “Register Your Rental Property” service as the PRS database is rolled out across England.

The database will launch regionally, starting in the West Midlands in December, before being introduced across other areas over the following 12 months.

Alongside the PRS Database, the government has also announced additional power to the Valuation Office (VOA), allowing it to rule on rent disputes.

Important first step

Under the new rules, landlords will be required to provide information about their properties, including:

• the property address;
• the number of residents and bedrooms;
• the amount of rent received; and
• copies of required certificates, including gas, electricity and Energy Performance Certificate (EPC) documents.

The government adds under future legislation, landlords will also be required to register any unoccupied properties before marketing them for let. Letting agents and landlords will need to include registration numbers on adverts.

Housing Minister Matthew Pennycook said: “Rollout of a national landlord registration service is an important first step toward establishing our new innovative database of private rented sector properties which will empower tenants, support responsible landlords and help councils enforce our transformative Renters’ Rights Act.”

Fee is fair and sustainable

The government claim the £65 fee for each different property is “fair and sustainable” for landlords.

In a press release, the government said: “Landlords need to pay the fee each time you register a different property.

“The government has set the fee at a level that balances the need for fairness and sustainability for landlords, with the cost of operating the service, and tackling non-compliance in the private rented sector. In return for the fee, landlords will get access to information to help them meet their legal obligations and be able to show they are complying with the rules.

“Fees will also support activity to identify and act on non-compliance with the Renters’ Rights Act. This will include funding to help councils have the staff and skills they need to identify and tackle non-compliance and drive slum landlords who persist in breaking the law out of the sector.”

HMRC Valuation Office responsible for challenges to rent increases

The government have also announced that HMRC’s Valuation Office will become responsible for decisions on challenges to rent increases in England, rather than the First-Tier Tribunal.

Mr Pennycook explains: “By transferring responsibility for making initial rent determinations to HMRC’s Valuation Office, we will ensure that challenges to proposed rent increases are determined faster and pressure on the tribunal system is reduced, giving tenants and landlords confidence that rent disputes will continue to be resolved efficiently and effectively.”

Minister for Courts and Legal Services, Sarah Sackman, said: “I am on a mission to continue to modernise our courts and tribunals, from digital improvements to better efficiency, so those using the system can get justice sooner.”

“This change is another step in that plan. By ensuring rental disputes can be resolved through a new dedicated service, this will provide quicker decisions for renters and landlords while relieving future pressure on tribunals.”

For the moment, the government say renters who want to challenge a rent increase must still apply to the First-tier Tribunal.

According to the National Residential Landlords Association (NRLA), the scheme is expected to take two years to be introduced, although it is not yet clear when this process will begin.

Industry reaction

Greg Tsuman, managing director for Lettings at Martyn Gerrard, said on the PRS Database: “While this is yet another expense for landlords to pay, £65 a year is unlikely to be the straw that breaks the camel’s back. This is a common-sense measure, and the increased transparency and improved standards it should create for the sector are well worth the cost.

“Landlords might balk at the prospect of more red tape, but in practice, the requirements are all things they should already have been doing. For most responsible landlords, the changes will be simple to manage. However, we are still awaiting the full details before we have complete clarity. A key question that remains unanswered is whether the responsibilities can be delegated to managing agents, as many landlords would prefer to rely on these services rather than handle everything themselves.

“The changes will help protect tenants from unscrupulous landlords and provide a clear warning to anyone considering renting a property if the landlord is not registered on the database. The additional transparency for tenants should reduce the risk of exposure to substandard properties. It should also prevent delays in starting a tenancy due to boiler or electrical issues. It is similar to ensuring that a car for sale has passed an MOT.”

Responding to the government’s announcement that HM Revenue and Customs’ Valuation Office will be responsible for decisions on challenges to rent increases in England,

Mr Tsuman said: “The Valuation Office is a logical choice for determining rental increases. It’s reassuring to see the Government’s awareness of the challenges involved in employing a professional surveyor to assess rental changes.

“The Valuation Office has all the requisite expertise, so it is only natural to rely on it as the most cost-effective solution for the taxpayer.”

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Should you still consider a ‘rent to buy’?

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Should you still consider a ‘rent to buy’?

Selling to a sitting tenant is one of the more attractive exits available to a landlord today, as I said in this article. It is therefore unsurprising that “rent to buy”, where someone wishing to buy first becomes a tenant for a few years before the sale is concluded, is also of great interest to both landlords and tenants.

I’ve recently been asked a number of times if this still works under the Renters’ Rights Act 2025, I guess because I wrote and published the first book on what the Renters’ Rights Bill 2024 proposed.

My response is that for private landlords, the answer would seem to be no. There is a caveat: if a landlord is undecided about selling, in other words it does not matter to them one way or another, a variant of the old model could still work.

The old model

Traditional consumer Purchase Lease Options (aka ‘rent to buy’) models are typically a mechanism where the tenant is helped to build up a deposit pot whilst living in and maintaining the house they wish to eventually buy. The pot is then used to qualify the tenant for a mortgage or a better rate one. They worked like this:

1. The landlord granted a fixed term assured shorthold tenancy, typically for two to five years, and alongside it a separate option agreement giving the tenant the right to buy at a price fixed or by formula.
2. The tenant paid an upfront option fee and a monthly figure above market rent, the excess being credited towards the deposit or the price.
3. The option could be protected at the Land Registry by a unilateral notice, giving the tenant some form of peace of mind.
4. The fixed term provided the certainty the landlord needed before committing to sell at a fixed price years ahead.
5. Section 21 was relied on to evict the tenant if they got to the end of the option period without a mortgage offer, or they seriously breached other terms of the agreements.
6. The option fee and the accumulated credits were kept by the landlord if the tenant pulled out.

Renters’ Rights Act 2025

The Renters’ Rights Act 2025 recognises ‘rent to buy’ arrangements because it created a dedicated possession ground for them in Ground 1B. Ground 1B is, however, available only where:

1. The landlord is a private registered provider of social housing.
2. The agreement provides for the tenant to pay rent no higher than 80% of market rent, with rent and market rent both including any service charge, and gives notice that the landlord intends, after a period stated in the agreement of not less than five years, or ten years for properties in Greater London, to offer the property for sale to the tenant.
3. The landlord has complied with any obligation to offer the property to the tenant (the minimum notice period is four months).

Regarding private landlord ‘rent to buys’:

1. A fixed term period would contravene the Act. All assured tenancies are now periodic, and a tenant may end the tenancy on two months’ notice at any point.
2. Purporting to let for a fixed term breaches section 16E, attracting a civil penalty of up to £7,000, rising to £40,000 for a repeated or continuing breach. The option period and the tenancy have therefore been decoupled because whatever the option agreement says, the tenant can leave when the tenant chooses.
3. ‘Rent to buy’ deposit pots are typically financed by money taken at or near the start: an option deposit, and afterwards, monthly “rent credits” accumulating towards the purchase price. Each of those is now most likely unlawful to ask for and/or receive. Nothing may be taken by way of rent before the tenancy agreement is signed, and after signing no more than one month’s rent in advance may be required. Anything outside these is a prohibited payment under the Tenant Fees Act 2019.
4. Any rent set above market to fund the credits is vulnerable during the first six months of the tenancy. During this window, a tenant may apply to the First-tier Tribunal to challenge the rent payable. Following a determination, this is the open market rent if lower than the tenancy rent.
5. Money taken in connection with the tenancy that is not clearly referable to identified rent periods risks being treated as a tenancy deposit instead, which is capped at five weeks’ rent and must be protected.
6. An option fee required as a condition of the letting is, at the very least, arguably a prohibited payment attracting its own penalties, although there is also the argument that it is more referable to the envisaged purchase than the letting.
7. What if the tenant gets to the end of the option period without a mortgage offer, and the landlord now wants the property back to sell it elsewhere? If so, the relevant possession ground to use would be Ground 1A. For this, the notice cannot expire within the first twelve months of the tenancy, and the landlord must give at least four months’ notice to the tenant. The Ground also triggers a restricted period running from the date the notice is served until twelve months after the relevant date stated in it. In practice that will be around sixteen months from service during which the property cannot be let, licensed for money, or even advertised to let. Breach is a criminal offence under section 16J, carrying a civil penalty of up to £40,000, and exposure to a rent repayment order of up to twenty four months’ rent. The restriction is triggered by relying on the ground, not by succeeding on it, and remains live during the period.

The way forward?

There are three methods that would seem to work when selling to tenants.

I discussed the first one in this article [LINK] as mentioned above.

The second one is to take the arrangement out of the tenancy regime altogether, which can be done by executing:

1. an exchange of contracts with delayed completion,
2. an instalment sale, or
3. a lease granted for a term of more than 21 years at a low rent.

These, however, come with commercial problems that a lot of landlords may find too risky, and may therefore jeopardise any potential deal:

• getting a lender’s consent,
• obtaining the freeholder’s consent if the property is leasehold,
• the financial services ramifications where payments are effectively deferred purchase instalments,
• the ‘unfair trading’ laws and rules, and
• the buyer’s exposure if the landlord’s own creditors wish to enforce against the property first.

The third is the mentioned variation of the old model. It is where a landlord doesn’t necessarily want or need to sell. If the tenant cannot buy, the tenancy will simply carry on. As such, the landlord would end up having offered an option to buy at an agreed price or formula, granted for no premium, alongside a tenancy at market rent with no credits and no advance payments. If so, the compliance problems would disappear, but so would the deposit pot, which was the whole attraction for the tenant. What would be left would be a standing promise to sell, which might be worth having, but I’d question if this is a ‘rent to buy’; the reason why I’ve described it as a variant of the old version.

Final

Should landlords and/or tenants still consider a ‘rent to buy’? You decide.

Patricia Ogunfeibo is a non-practising solicitor and non-practising Chartered Tax Adviser and small developer. She has been a landlord since 1986 and is the founder of tenant2owner, a homeownership education platform for renters in England.

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Landlord rent arrears fall to record low

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Landlord rent arrears fall to record low

While growing numbers of landlords may be seeing fewer rent arrears, the problem is still causing issues for those with bigger portfolios.

Pegasus Insight’s latest Landlord Trends research found 26% of landlords had experienced arrears during the past year, the lowest figure recorded since tracking began and down from 42% in 2020.

There was a slight increase in the first quarter of this year, before arrears fell back again in the second quarter.

The gap by portfolio size shows 66% of landlords who own 11 or more properties seeing rent arrears, compared with 18% of those with between one and 10.

Larger landlords face arrears

A director of the firm, Bethan Cooke, said: “Larger portfolio landlords remain much more exposed to arrears, while voids continue to affect four in 10 landlords.

“Our tenant research also shows that most renters are continuing to meet their housing costs, but many household budgets remain stretched.”

She added: “With inflationary pressures persisting and landlords facing higher operating and regulatory costs, the position remains finely balanced.

“The priority now should be to avoid adding further pressures that could ultimately feed through into rents or reduce the supply of homes available to tenants.”

Tenant payment pressures

Separate Tenant Trends research from Pegasus Insight, based on 3,000 interviews with private renters, found 12% had missed a rent payment during the previous year.

Around nine in 10 tenants described their rent as either manageable or comfortable.

The research also found a significant minority were having to choose between paying rent and other essential household costs.

The firm said arrears have been easing gradually since reaching their highest level during the pandemic period.

Landlord voids remain high

Voids lasting more than seven days were experienced by 41% of landlords during the past 12 months.

Those empty periods lasted an average of 66 days.

Among landlords with 11 or more properties, 68% reported a void, compared with 35% of those with smaller portfolios.

HMO operators were also more likely to experience void periods, according to the research.

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Younger landlords set to reshape PRS

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Younger landlords set to reshape PRS

Britain’s landlord base is set for a generational overhaul, with Millennials forecast to account for 44% and Gen Z 18% within a decade, research reveals.

However, it won’t be a clean handover since Boomers and Gen X (those born between 1946 and 1980), who currently make up 54% of landlords, are expected to fall to 37%.

Research from Rely, part of the OSB Group, surveyed 1,509 current and future landlords about how the private rented sector could change over the next 10 years.

It also predicts ethnic minority representation among landlords will more than double from 11% to 23%, while the proportion of female landlords will rise from 36% to 42%.

Younger landlords move in

The firm’s chief commercial officer, Jon Hall, said: “Our new research makes one thing very clear: the private rented sector is not disappearing, it’s transforming.

“A younger, more diverse and more tenant-focused generation is taking over, changing what it means to be a landlord in Britain.”

He added: “This generation will think differently, look different and approach the role with a genuine commitment to professionalism and positive impact.

“They are motivated to deliver genuinely good homes, build real relationships with tenants, and raise the bar for what professional landlording looks like.

“The data shows a generation that sees being a landlord not just as a financial decision, but as a responsibility.”

Inheritance drives entry

Inheritance is expected to play a much bigger part in bringing the next generation into property, with one in three future landlords saying they expect to inherit a home to let.

That compares with 27% of today’s landlords who entered the sector by inheriting a property.

A further 21% of future landlords expect to inherit money to invest, while 13% anticipate taking on an existing portfolio of four or more properties.

Half also plan to pass property to their own family when they eventually leave the sector, compared with 42% of current landlords.

Landlord attitudes changing

Among existing landlords, 82% describe their relationship with tenants as positive, according to separate Landlord Leaders research.

More than half, 55%, said they are spending more time considering the tenant experience, while 59% have spoken directly with tenants to understand their needs.

The proportion feeling optimistic about operating in the sector has risen to 62%, up from 47% last year, with another 25% acknowledging challenges but still describing their outlook as positive.

Mr Hall said: “The picture that emerges is one of pragmatic optimism – a private rented sector that better reflects the country it serves, where landlord and tenant relationships are built on trust, and where professionalism is the norm rather than the exception.

“That future is not just possible; our research shows it is already taking shape.”

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