A major power shift for UK landlords | Commercial Awareness Compass #69

Hello and welcome to the commercial winners compass. Your weekly guide to thinking like a commercial lawyer. Each episode we explore a key issue shaping the legal and business landscapes, helping you build the clarity and confidence to discuss it by breaking it down to three levels, beginner, intermediate and advanced. This week we'll be talking about one of arguably the most significant bills introduced in recent years. The Renters' Right Sack. It can be used for investors, tenants and look at how lawyers are helping clients to adapt to this new future. I'm Sam, a law conversion student and future trained solicitor. I'm joined by Paul from Trows and Hamlins. Would you like to introduce yourself and her a bit about your role? Yeah, of course. Paul Wittsington, Trows and Hamlins, I've just qualified recently as an associate in the property disputes team. The fall law had a slightly unusual routine. I used to run a catering company, which is a little bit different, but running my own business was definitely good preparation for the coming of lawyer. And then my role in property disputes quite varied. We do a lot of commercial and residential landlord tenant work. On the residential side we do a lot of service charge applications with the Tribunal. We do some rights of light work and some navely disputes, so quite varied in the work I get involved in. Thank you and it's great to be joined by someone who's seen both sides of that commercial when it's calling. We see it from that business side and now from that legal side. I think I have a really good discussion here today. And so just to start off with the beginner section, just a bit of an overview. What is the Renters Rights Act? And why is it so significant in the UK landlord and renting scene? Yes, well, the Renters Rights Act received Royal Assent on the 27th of October last year. And it's been hailed as the most significant legislative change to housing law in over 30 years. So most radical change since the 1988 and 1996 housing acts. To understand why that matters, you have to understand what the legal landscape looked like before this act comes in. So for the past 30 years, the private rental sector has operated on the basis of a short, short hold tenancies. And that's the standard form of residential tenancy which gave landlords a reliable route back to possession. So, practical possession of the property at the end of a fixed term of that tenancy. And they didn't need to show any fault on part of the tenant to do that. That certainty was enormously valuable for landlords and investors and that underpinned investment decisions in the sector. The act gives greater rights and protections to people renting their homes. So including the abolition of a short, short hold tenancies. The Section 21 No 4 Divisions, getting rid of those, which we can talk about later, reforming grounds for possession. The right for tenants to request permission to keep a pet is coming around. And the introduction of a private rented sector database. There's mandatory registration for landlords. It's likely to be rolled out late 2026 and there's also a landlord redress scheme with mandatory signup again and that's likely in 2028. So quite big changes coming. The original intention was to reform the private rented sector, but the concept of relevant low cost tenancies was introduced. Between talk about later, this covering a short tenancies of social housing, whether landlords or private register provider. So what that means is both sectors will eventually be changed by the act. In terms of implementation, the first of May is set as the first day as the date of information implementation. The reforms with private sector are only impacted initially. So in summary, reforms have a wide scope and touch on how tenancies are structured, how rent is increased, how possessions obtained and how properties are marketed and how the sector is regulated. So a big wide wide scope for the act. Yeah, it seems very broad. It's trying to do a lot of things. And did you say it was split into almost phases? So the first of May, that's almost like a phase one and you said, that was just a private landlord for the moment? Yeah, exactly. So yeah, for the implementation, phase one, first of May 2026 and then social housing to follow. The exact date is to be determined and then phase two, phase three. Again, dates are still up in the air at this point, but some of the changes might be around toward 2030, some 2026, 3738. So still some time, but doesn't mean it should be prepared. Yeah, that's quite a long way off to be thinking already, but I guess those are sort of things you have to be prepared for as a commercial lawyer. That's what your client's going to be asking you about already. And I think if we look at one of the major headlines of this phase one, you sort of touched on them in the big introduction. But one of the things that a lot of people talk about are the section 21 notices. So what exactly is the section 21 notice and how significant is the change that's happening to that? And what does it mean for landlords going into the future? Yeah, so the act marks a significant change in the private rented sector once it's commenced because it abolishes both the short short hold tenancies and the option to use section 21 of the housing act. So that's where it comes from housing act 1988. And you use that to obtain possession at the moment, simply by serving at least two months notice to expire at or after the end of the fixed term. So in the short hold tenancy of a fixed term. And that notice will be given at the at or after the end. And this was so called the no fault over eviction. So there's no fault to require on the tenants behalf. And this reform getting rid of it aims to provide tenants with greater security and fairness when it comes to their homes. Going forward, all tenancies will be periodic assured tenancies, which means that they don't have a fixed term. And landlords will have to rely solely on the section eight of the housing act. So a different section of the housing act to obtain possession. They need to serve notice and make out one of the specific grounds for possession in that section. And they're in the actual grounds are in the schedule two of their housing act. There are currently 17 grounds for possession of assured tenancies in schedule two. But once the act comes in and there will be total of 37 grounds. Some of the existing grounds possession will be retained in their current form. Whilst others will be amended, repealed, and there'll be some completing new grounds, which will come in. So with the abolition of the no fault eviction and the ability to obtain possession on an accelerated basis. So that that all going by serving a simple notice. All claims for possession were now to be need to be supported with evidence in order to make out the ground you're relying upon. So for landlords, it'll be far more important for just maintaining robust record keeping to ensure they're prepared and they would provide this evidence. It also means that possession claims will all require a court hearing. So what this means is leading to longer timelines for regaining possession and increased expense. Court proceedings are not cheap. So this is further complicated by the fact that the county courts are already significantly overburdened. It's just going to increase the burden. And the lack of investment means it's all still very paper based and not digital. So yeah, expect further delays unfortunately. The last day on which a section 21 notice can be served is the 30th of April. So day before the implementation. And then where you've served a valid section 21 notice before this date and not yet issued proceedings, you'll need to do so by the earlier of six months from the day that you serve the notice or by 31st of July, 2026. So that's the last day working day three months from the 1st of May. So you've got three months to issue the proceedings if it's right on the last day. So clients with cases in the pipeline absolutely need to be alive to these deadlines because they soon as they spend lines past, you've missed the opportunity. Yeah, it seems like a massive power shift almost if landlords now if they want to get rid of a tenant having to go through the court system that as you said already backlogged and I think we've seen David Lamy suggesting getting rid of, you know, jury trials. If that's the extent that the courts are struggling. So having even more coming through could be like extremely difficult for landlords. So with that in mind, how much is that power balance shifting? Is it almost certain tenants now have all the power? Now the section 21 notice is gone or is it still, landlords still have power or what does it mean for that sort of interaction between the two parties? It definitely remains to be seen. But the most substantial sort of changing practice in the private renters sector will be a move away from the conventional 12 month or longer term, longer fixed term tenancies. So that will take place overnight on the 1st of May. From that date all new and existing tenancies will be open ended periodic tenancies. So the tenancy will terminate within two months notice. So that remains but the landlord's not. So as mentioned, if landlords wish to terminate the tenancy, it would be necessary to go through one of the statutory grounds. So in that respect, the tenant takes on more power as a result of the act. And then if the tenant challenges the landlord's possession, court proceedings will be required and the judge will need to be persuaded that the statutory grounds is met. So there's definitely a shift in favour of the tenant there. Previously, I'd say the relationship was broadly balanced. Tenancy had security during the fix. term and landlords had that certainty about regaining possession, but now tenants have permanence should they want it. So they can stay indefinitely unless the landlord can find a statutory reason to get rid of them. The landlord no longer has that equivalent break clause, so the act represents a significant reform of the rental sector in that respect and aims to rebalance the interests of landlords and tenants, because I think the criticism is too much apparent for the landlords, as you mentioned. For landlords though, there are practical consequences and you've got the high threshold before possession can be sought, longer notice periods come in mandatory court hearings and greater evidentiary burdens. So there's an additional risk that tenants may choose to terminate early due to their personal circumstances, potentially leading to void periods and lost rental incomes. In general, the process for obtaining possession will be more involved and more expensive as I mentioned. So it definitely dyke the power of going away from the landlord in that respect and we expect those will prompt more thorough screening of tenants at the outset to try and avoid those risks. Yeah, I guess there's already been a challenge that people have been speaking about with tenants requiring almost personal statements. I think another one of the changes coming in that I think maybe we'll talk a bit later about the idea that you can't bid anymore and people can't out bid each other, but as they used to, so for landlords as a whole another element of how to think about which tenant is right for them and their property. And just on that actually, just another question I have quickly, what happens if a landlord wants to push up the rent? So if they can't get rid of a tenant who doesn't necessarily want to pay more, can they still request an increase in the amount of rent being paid every month? So there's definitely changed change to the way rent is changed and there's now going to be a contractual renting increases typically by indexes such as RPI or CPI or a fixed uplift. They're actually not permitted under the new regime. So there's actually statutory increases which yeah, so for landlords having to put up a rent, they're only able to do so on a manual basis and with two months notice and then the tenant can challenge those and they drive you know, so yeah, that's definitely a significant change. Yeah, that's really interesting. I think for the commercial side, we're going to start touching on a bit more now. That's a massive thing because you're suddenly having the mercy of you know, other the government in terms of your income and how you can change and react to market conditions. So as we talk a bit more about that commercial side, how do things like that predictability and control have been so important to landlords and investors, how are they changing? How is that affecting the rental market? Yes, that's a really important question because without understanding that commercial model, the significance of the reforms is difficult to appreciate or sort of the extent of the reforms is difficult to appreciate. So at its most basic, a residential landlord's business model depends on two things. One is a reliable rent-wing income and the second is the ability to manage the asset. So that includes being able to get the possession back when needed and for a small private landlord, these two factors will determine whether you buy a property, whether it's a viable investment. For an institutional investor, we look after a lot of institutional investors such as we've got pension funds, life companies or built a rental operators, they've got hundreds of properties in their portfolio. So the same factors are multiplied across a portfolio and underpriced unpredictability at scale is a very significant commercial impact. So on rental income predictability matters because it underpins financing. So if you look at tweet to a lender, they'll assess the serviceability of a loan whether they're able to pay about the loan against the projected rental income and the ability to pass costs through the tenants via the rent increases. And if you're not able to have an index linked increase, so CPI, RPI, then that really impacts that projection and might impact your borrowing. So if a bill to rent operators particularly, so those who build to rent out and make money off rental, they may have borrowed heavily to stabilize their assets and this disruption to prevent projected rental income. So how much they're going to get is a direct threat to whether they can cover their loans that they've taken on. And then on the asset management side, if they're not able to get back the property when they when they need to or they can do but only after lengthy proceedings, they can't manage their portfolio effectively. So what that means is they can't get rid of problem tenants, quite quickly. They can't refurbish units and they can't redeploy that property to someone else. So the inability to do so actually affects the valuation of a property. But saying that, always the case with major legislative change, the sector specific ramifications will take time to show, to emerge for the implementation. So one certain outcome though is that the act will permanently change market practice. So as well as the economics of the living sector, so that's reality landlords and investors are now having to price into their business plans. Brilliant, thank you. And I think that's quite a good bridge into the intermediate section now. We sort of look at the more legal side of these things. So you sort of touched on there the assumptions that have been made by especially the commercial sort of build to rent operators. How has this rent reformat redistripted those assumptions and what will they be sort of assuming what they knew assumption is going to be on the implementation of this? Yeah, I mean, this is probably one of the the less publicized parts of the the act and potentially the most commercially damaging aspects of the act for institutional players, not the other size of the actual landlords. So we touched on the rent increases in the private rent sector now being statutory. So you've got any contractual provisions will be convoyed. So that predictability of the inflation linked review clauses disappears. That's a huge one. Rent increases will only be possible as I say once a year and then you've got your two month formal notice when you to be served by the landlord on the tenant. And then if the tenant challenges the rent then you go to the tribunal and they are already really busy. So the new rent will not when they decide on the new rent which might take a long time the landlord won't be able to back to date that new rent. So yeah, it just goes from the date that the termination is made. The tribunal's jurisdiction is also changing so where statutory rent increases are challenged, the tribunal will set an open market rent and they'll do so which is the low of the open market rent and the proposed rent. So what that means is tenants will have nothing to lose in challenging. So won't go up as a result of challenging whereas existing challenges you do have the risk of being going up to a market rent. Whereas well why wouldn't you bring a challenge yeah if you want to challenge your rent you think it's too high and you end up with either better or lower. So the same will lower. And what the impact on the tribunal is going to be huge they're already under significant burden so we expect significant delays with these applications. So the landlords will need to budget for a degree of uncertainty so that's the main impact for them. So when their rent increases will come into effect they don't actually know what this date might be so it's going to be very difficult to achieve harmonized rent increases. So what I mean by that is there's going to be fluctuations across the portfolio at different times. Review dates can end up differing across your properties which is a potentially a major issue for landlords with large portfolios. Another one is on advertising so landlords will not be able to accept a rent that is higher than advertised so there's no sort of bidding for rental accommodation. It's a beginning to keep thing in London where the demand for rental properties is higher than the amount of people that want them. Sorry the demand is very high and there's not enough supply to to compete with people properties. So this hopefully will, this is a measure that hopefully will stop that sort of bidding wall. So and they also, landlords can't request more than one month's rent in advance which is quite a big change. So for builds rent operators advertising multiple properties in new schemes where individual units are priced according to floor level layout or aspect this creates real practical difficulties for the landlord. And then you can look at the retirement housing specifically as well where rent increased challenges are determined by reference to a market rate rent but there might not be a wide range of comparison figures out there because you've got to take into factors which aren't included in open market rent normal calculation so it's things like meal provisions and domicillary care and this can result in unpredictable outcomes where rent increases are subject to challenge in the tribunal and potential operator cash flow difficulties. So there's a yeah potential for significant problems. Yeah it seems to be that this has really wide stretching sort of ramifications for the industry broadly especially with you know the prevalence of investors in the space. It seems to be something that's going to have massive impact and I think I'm not too sure how many people this effect don't have any stats to hand but I know quite a few people who've been served section 21s on the back of the verse. sort of legislation coming into force in marriage, in like, in preparation, so landlords are getting out in a way. But so now that we're sort of in that future, where these things are coming in, and we've got at the time, this has been recorded just over a month until they come into force. What steps are always taking right now to advise clients ahead of phase one? So that's the first of May. - Yeah, there's a lot of immediate work for clients to be doing right now, and that we're advising on ahead of the first of May, and then implementation. Firstly, their tenancy documentation, or know how team are putting in place a lot of wording, that can be included in new tenancies, but all existing agreements will need to be reviewed. So they should be converted to periodic with a maximum of one month, so periodic tenancies. The tenant notice period needs to be updated, contractual rent increases need to be removed. So there's quite a lot of admin involved in order to become compliant. And there's also secondary legislation, which will require specific information, it's including tenancy agreements. So there's quite a bit of change there. There's also something called the information sheet. So for existing private rented sector tenancies, landlords will won't need to issue a new tenancy, where there's already something a written tenancy in place. But landlords will be required to issue the government published information sheet, which is essentially details all the changes may by the act. So let's the tenant know their rights under the new act. And that needs to be sent by 31st of May, so you've got a month after the implementation date to send that. We've touched on section 21 notices. We've got to get those in before the 1st of May, and sure that proceedings are begun before that date and the end of July. Landlords considering seeking possession or properties will need to be conscious of the short time frame. So you need to be able to lead up before you serve a section for 21 notices. So make sure you're prepared before that date passes and that route will be lost. And landlords should be familiarising themselves with the new possession grounds once their changes come in. And then on a Rears Management. So because given the, there's a mandatory ground eight, which is for a Rears, a possession ground number eight. The threshold has increased to three months of a Rears. So it needs to be three months for a Rears before that ground comes into play. And the notice period for that has doubled to four weeks. So clients should consider early management of a Rears Places. So getting their early devices to be to intervene in the Rears cycle rather than waiting as they might have done previously. And then there's the private rented sector database and Ombudsman, which we'll touch on later. And I believe there was something I'll speak about later. But while the database and the Ombudsman schemes will be developed later in the year, both are we compulsory. So landlords should be making sure they got all the information documentation regarding their properties. Make sure it's up to date. And that avoids any concerns about being non-compliant further down the line. So it's getting your ducks in a row as soon as possible. And last, it's just about policies and procedures making sure that your policies, procedures are fully compliant ahead of phase one. And there's probably quite a bit in the act that you might not be aware of. So getting in touch, getting some advice and finding out what might not be compliant. Just to ensure you don't get caught out with further down the line. Yeah. And so there are a lot of provisions that are really important that landlords have to be aware of. But as many investors or maybe just be laid people who aren't necessarily commercial and may have the access to legal advice, what happens if these landlords who maybe aren't as switched on or aware of these things? Why don't they don't take those steps or fail to take the steps to prepare or fail any of those elements you set up? Yeah, the risks are significant. So on possession, we've with the section 21 notice, if you've served it before 30 of the vape rule-- I'm sorry, if you failed to serve it before then, if you lose that access to that route, that's quite significant-- on enforcement, though, penalties for breach of any of the new rules regime are up to 7,000 pounds just for minor breaches. And then 40,000 pounds for the more serious offenses. So they're quite significant, particularly, of a large portfolio, and you're not compliant across multiple properties. Rent repayment orders-- so orders to repay rent has been strengthened. So there used to be only one year worth of rent repayment orders now being extended to two years repayment. And it's also made available against superior landlords, so not just your immediate landlord, but the superior landlords. And also, there's potential direct to liability, which is a big change. So for corporate landlords and their offices, the personal exposure of directors is a genuinely new and serious risk for them. And the database, which I mentioned, failed to comply with the registration requirements can result in actually a bar to recovering possession, which is quite significant. So they can't bring possession proceeded unless it's on based on anti-social behavior grounds. And there's also a fine of, again, a maximum of 7,000 pounds, or 40,000 pounds if you provide false information to the database or repeat offenses. A landlord who is recovering possession is in very difficult position if they lose the option of repossession. On rent, any landlord who fails to update their TANSI agreements with the rent clauses and inverses it retains a contractual rent review mechanism. We'll find that provision is bought and may face TANI's from TANI's who are aware of their new rights, which there seems to be more information required to be given to TANI. So you should expect that TANI's are aware of their new rights. So the overriding message we have for clients is implementation is really close. So seek advice as soon as possible if you're not prepared. Yeah. And so far, we've been sort of focusing on that private sector where there are all these massive changes. And that's the main headline. But also you did mention earlier about the social sector and social housing, so things like councils and public bodies. Can you explain how social housing is also affected? And what the lots of things start to tend to see is what they are and what this means for the sector? Yeah, of course. This is probably a less well understood part of the act. Because I think people do assume that it's just impacting the private rented sector. And it's very important for anyone advising the social housing space. So the concept of relevant low cost tendencies were introduced. So that means what it means is it's covering a short tenet of social housing, where the landlord is a private register provider. Meaning both sectors will be affected by the act. The critical difference between private rented sector and the social housing sector is the timing. The reforms coming in for the private rented sector will be the first of May. And it will not be enforced for the social housing sector. And the implementation reserve for a later date, which is still to be confirmed, but it's anticipated to be some time in 2027. So not long. The reason for that delays procedure as much as it is political, they're doing a statutory consultation before the government can update the regulator of social housing. They'll consult social housing landlords. And the regulator of social housing will inform the consultation informed when those implementation dates will be. So what's that space? On starter tendencies, this is an important practice issue for registered providers. At present, an RP, a supervisor, will grant an initial 12-month a short, short hold tendency as a starter period. During wet foot possession, relatively straightforwardly using the section 21 process that we've talked about. If the tenant's not managing the tendency, so for example, they're anti-social, or their failings pay rent, or breaching other terms. And you don't need to prove a fault-based ground. And then if all goes well, the tendency then converts from a starter tendency to an assured non-short hold tendency. The problem is that the act will abolish the short hold tendencies and the option to serve the section 21 notice and obtain possession simply by serving the two once notice. Without the assured short hold tendency, there's no way to put in place a starter tendency. There wouldn't exist. So once the relevant provisions apply to the social housing sector, all existing starter tensors will automatically convert to periodic assured tendencies, so there ones with no fixed term. In general, the process of obtaining possession will be more involved, same with the private sector, more expensive. For our piece, this means having to rely on day one on the section 8 grounds, as detailed before. And that's just more ronorous. Takes long to satisfy. So we are advising better initial tendency support. And early intervention schemes might become more important than ever. And then on rent, there's obviously got the ban on contractual rent increase will go. And the social housing sector, it will continue to be governed by the separate regulatory framework that's in place. So that won't change. So roadstrip provideers are not exposed at the same sort of risk. in that respect. So they have the open market reviews in the Tribunal. So the overarching message for social housing clients is provide us to be engaging with the consultation process, get involved with that, review your tenancy management processes generally and you've got to prepare for a world without start attendances rather than waiting for an information to be announced you should be engaging with these consultations early thoughts. Yeah and I think as we go into advance or stick with that sort of idea of looking into the future and trying to almost get ahead and be aware of these things. I think one thing that we sort of it's almost been a theme for so far is that the idea that there's a lot of power that's going to tenants and in a way it does seem as if this seems like entirely positive for tenants but I want to ask you are there any risks that this act doesn't necessarily deliver four tenants as the government expects? Is there any way that could end up maybe harming tenants in the long run? This is a question that the market is generally grappling with. In general the process of obtaining possession will be more involved and more expensive and we expect this one from more screening of tenants. The outset which I mentioned the impact of the act on the private rented accommodation in the market and any knock on effect on the cost of renting remains to be seen as landlords get to grips with the changing landscape. There is also the concern about advertising, advertising rents so there is a prohibition on inviting or encouraging the bidding wars or accepting a highest on the advertising but this could actually lead to landlords and letting agents advertising properties at higher than market value to create headroom and measure designed to protect tenants from bidding wars could inadvertently inflate the headlines asking rents in high demand areas as mentioned there is that issue in London. In the retirement sector rent to buy landlords in the retirement sector usually rely on being able to terminate the tenancy within the first 12 months without proving fault. There is no available means to do that under the new act. This means that retirement operators may decide to cease offering those rent to buy products due to potential difficulties if it becomes necessary to recover from a purchaser who changes their mind or actually can't afford to end up buying the property. And this is a direct reduction in housing options for a vulnerable group in the retirement sector. So that's an impact possibly on tenants. As is always the case and I mentioned before it takes time for the sector specific ramifications to come through and fall into implementation. The act will change market practice as it will change the economics of the living sector. The honest answer that is that impact will take time to materialise. The one certain outcome is the act will permanently reshape renting. The question is whether that reshaping ultimately benefits of harms or tenants it was designed to protect. It's a good question. It remains to be seen. There is risk though. Yeah I think that's one of those things that going forwards it will be fantastic. Maybe talk about us again in a couple of years and see what's happened already because these change are coming quick and there are more to come. And so talking of those that are to come. We've got phase one being implemented now in just over a month but going forwards what to you are the most significant aspects of phases two and three that landlords and vests are thinking about. And just quickly as well will they also affect that sort of market relationship? So yeah even though phase two are further down the road the sensible commercial operators are already factoring them into their planning. So the PRS database that I briefly touched upon earlier said to roll out I believe in late 2026 might be later the exact dates to be confirmed. It will be mandatory for landlords to sign up to that database payment of an annual fee and that database will contain compliance documents. So these documents have existed but a question whether they've consistently been present for every tenancy and it's the EPCs so the energy performance certificate, your gas safety certificates, electrical installation condition reports, the deposit information failure to comply could result in a bar to recovering possession for landlord. So they've got to make sure their records are up to date and the databases up to date. And there's a fine for this one as well so £7,000 is the maximum client but then 40,000 for that false information if you provide incorrect information. For institutional landlords with large portfolios this administrative burden of being compliant and maintaining this documentation centrally is substantial and this needs to be built into operational workflows. Now even though in the near future just to be prepared for it. I talked about a redress scheme with the landlord ombudsman so this is a significant element of phase two and three. It'll be established and supporting landlords with training and guidance with complaints handling. It's quite a significant part of it. Similar to the database the ombudsman joining scheme will be mandatory and funded by what they're calling a fair and proportionate charging model remains to be seen what that means. On how standards aspects of phase three include the introduction of a it's called a decent home standard for the private rented sector. This ensures properties meet a minimum standard of housing quality which can be enforced by the local authority. Consultation on this has already taken place and the standard is likely to be brought into force. I think I mentioned it was sort of mid-2030 but I think yeah 25, 35, 37 so still some time. The housing health and safety rating system will also be reviewed as part of the implementation of that standard. And then by 2030 they're talking about a minimum energy efficiency standard so they're talking about a minimum EPC rating C which with investors with older stock this creates a significant capital expenditure to get them to be compliant. This probably needs to be priced into acquisition decisions now because it will affect the minimum sort of four or five years time. Awebs law will also be extended to the private rented sector. So this if you're not familiar with Awebs law it currently applies to social housing and imposes strict timeframes on landlords to investigate and remedy damp and mold and it's because it's currently in the social housing it would be extended to the PRS or the private rented sector in phase three. Ex Extension would represent a further increase in landlord obligations and a real enforcement risk. And how I think you asked about the the market and the impacts of the market. So taking together it's just a further increase in the cost of operating in this rental market and that has real economic consequences. You've got the costs associated with the database and the the ombudsman registration fees annual fees and then the operational cost of maintaining all those records and compliance documents. There will be landlords will need to start considering where that burden will fall within their operations. So whether that's getting a compliance team. For smaller landlords though these costs may actually tip the economics of letting from marginal to unviable. We're already seeing private landlords or smaller landlords bleed in the market and get getting out or selling their properties. If there are only for the summer we're just sort of getting marginal profits. This may become make it unviable and of course better land landlords leave the market. For institutional landlords these costs are manageable but must be factored into their business plans and also their rent levels which again puts pressure on putting that market that advertised rent up which might have the opposite effect of going against the tenants. The decent home standard and the energy efficient standards represent probably the most significant capital expenditure risk bringing order stock up to EPC rating C particularly for larger portfolios of older properties could be a substantial investment. For investors are praising acquisitions today the cost of future compliance with these standards needs to be modeled into the underwriting assumptions and also where lenders will factor into how much they'll lend. Investors who fail to do this preparation will find themselves with what we call stranded assets so properties that can't be economically left without significant capital investment. The extension of Awebs law will create a more intensive compliance environment for landlords. I guess the overall trajectory is clear. The regulatory direction of travel is firmly towards heavily regulated compliance, heavy capital intensive rental markets, sector-specific ramifications as a state might take a while to emerge. However, those who are building the full regulatory burden into their businesses now or we'll do in the near future by the through investment in tech, getting compliance teams or investing in high-quality properties will be much better placed in those who treat each phase as a problem for the future So it's just preparation is key Yeah, so it's sort of that theme you've been saying throughout of we know what the immediate effect is But what that longer term looks like it's just really hard to know and you can't really know at this stage Yeah, exactly right and as you said we do a podcast in a couple of years like yeah We could quite nicely interesting to see what's what the effects actually been Yeah, hopefully I can have you back then and we can discuss what's happened and how things have changed and what's shaped out in the end But I think that nicely brings us to the end of this week's commercial winners comforts I want to say a massive thank you to you Paul for giving up your time today and talking to us about what is a very major Bit of legislation and updating to the rental market and for everyone listening Thank you as well and so remember being commercial work isn't just about flowing headlines It's about understanding the questions they raise and how lawyers help to answer them We'll see you next week to keep building a commercial winners, but until then prepare without the panic. Thank you