It’s been a long time coming, but the biggest legal change in a generation is finally before Parliament. Originally proposed back in 2019, the Renters Reform Bill contains sweeping and landmark reforms, aimed at improving the rental system in England.
The bill claims to “serve both landlords and tenants better” but what’s the real impact for landlords and the buy to let sector going to be, and what do we all need to know?
Here are the main points that landlord’s need to be aware of;
Abolishment of Section 21 ‘No-Fault’ Evictions
This is the most talked-about part of the bill, prompting predictions of a potential ‘mass exodus’ of landlords from the sector.
The new bill will see the end of Section 21 notices, and landlords will always be required to provide specific reasons for evicting a tenant.
A landlord will still be able to ask tenants to leave if;
- They wish to sell a property or move in, other than in the first 6 months
- There are persistent rent arrears, or more than 8 weeks’ worth of arrears built up
There are also promises of new eviction rights for dealing with anti-social tenants, but all evictions will involve taking the case to court once the bill becomes law.
Although the government is promising prioritisation of the courts system to speed up the eviction process, we are all waiting to see how that will work in practise. We feel it likely that many landlords will find they still need to use the lengthy and expensive Section 8 process to repossess their property.
The bill has been designed to “provide tenants with greater security, supporting them to put down roots in their community, whilst ensuring landlords remain confident that they can regain their property where they need to”.
What landlords really need right now though is further details on eviction rights and how the court system will prioritise and deal with the inevitable increase in Section 8 notices.
Introduction of Rolling Tenancies
The Bill has made a major change to tenancy agreements, and all new tenancies will be on a rolling month-to-month basis from the start.
There is also a change in notice periods as tenants will need to give 2 months’ notice (rather than the current one month for Periodic Tenancies). Whilst this is a good thing from a landlord’s point of view, the fact that a tenant could potentially give 2 months’ notice on the day they move in is most definitely not good!
Rent Increase Notice Periods
Landlords will have to give tenants at least two months’ notice ahead of rent increases, which will also be capped at one increase per year.
At Horizon Lets, we always give tenants 2 months plus notice of a rent increase anyway and don’t see this point as having any major impact. The bigger news in our minds regarding rent increases is the fact the Bill will make provision for a tenant to ask a tribunal to adjudicate if they think their rent increase is above the market rate.
Yes to Pets
Landlords will no longer be able to unreasonably withhold consent if a tenant requests to keep a pet, but will be able insist on them paying for pet insurance to cover any damage.
Many landlords are happy for tenants to keep pets in their properties, but most are understandably wary – especially if they have had a bad pet experience previously.
We welcome the inclusion of the pet insurance clause but think landlords need further details on what a “reasonable” refusal is in order to fully understand the impact of the new legislation.
The government plans to introduce a new portal that will give tenants the opportunity to see a landlord’s letting history, and review landlords for other tenants to see.
Landlords will get the opportunity to earn some recognition for providing reliable and responsible service. However, in this age of the keyboard warrior we all know that some poor reviews are unwarranted, and there is certainly a risk of a landlord being poorly rated because the tenant had unreasonable expectations, or because of personal reasons.
New Property Ombudsman
A new single Ombudsman will be introduced to settle disputes between landlords and tenants outside of the court system. The aim is to simplify these cases, allowing for a quicker and less expensive process.
Of course, Letting Agents are already required to belong to one of the 2 current redress bodies. The Bill will extend this to private landlords with any that do not join the new Ombudsman facing hefty fines.
Repeated Rental Arrears Evictions
Currently, many landlords struggle with a loophole that allows tenants to avoid eviction based on rental arrears, provided they pay prior to a possession hearing and bring their arrears down to less than 2 months owing. This is a huge barrier to landlords wanting to repossess their property and evict tenants who consistently do not pay rent.
The new Bill will attempt to close this loophole, with repeated serious rental arrears to become mandatory grounds for eviction.
Decent Homes Standard
The ‘Decent Homes Standard’ currently only applies to social housing, but will be extended to the Private Rental Sector with the introduction of the Bill. The standard sets out to ensure that all tenants have access to safe, good quality and comfortable homes.
Check HERE for the government’s definition of what is a decent home, and guidance on how the decent homes standard should be implemented.
No Bans for Benefits
The Bill will make it illegal for landlords and letting agents to apply a blanket ban on tenants on benefits or to families with children.
When Will This Happen?
Let’s remember that we are now seeing the very start of the legislative process with many opportunities ahead for the bill to be amended. Don’t quote us on this but we are guessing that the Bill will become law this coming winter, possibly very early next year.
With many landlords already suffering from high interest rates, as well as higher taxes due to legislative changes, this announcement could be the final straw for some..
The increased costs across the board, coupled with the move to restrict landlords’ ability to repossess their own property, threatens to drive many reliable and responsible property investors from the market for good.
As Oli Sherlock, the Director at rental market expert Goodlord, has very succinctly put it;
“The rental sector has never been under more pressure. The ongoing delays to the publication of this Bill have caused a lot of uncertainty for the market at a time when it could ill afford it. Even now, we’re not completely clear on what the final version of this legislation will contain, but at least we have more clarity on the contours after years of speculation.
“Right now, all the anecdotal evidence points to a rising number of landlords deciding to sell up. This, combined with a chronic lack of new rental homes being built, is creating a supply and demand issue that is driving up rental prices, creating despair for tenants seeking new homes, and resulting in market conditions which this Bill hasn’t been designed to fix.
“The Government should not see the publication of this legislation as a job done. It should be the first step in a longer line of urgent changes that are needed. A healthy rental market requires empowered, protected tenants as well as fair-minded, incentivised landlords in order to function. Any legislation that addresses one without the other won’t make the difference it needs to.”
We agree with Oli 100% and are advocates for a healthy private rental market, but should landlords jump ship and leave the sector? At Horizon Lets we don’t think so – yes, there are major changes coming but if you are a good and fair-minded landlord the changes should not be too concerning.
And don’t forget that by the time this becomes law, several amendments will undoubtably have been made – and until that day none of us really know what the true changes will be.
Horizon Lets will be keeping a very close eye on this Bill as it’s debated in the Houses and will be publishing regular updates on our social media.
Follow us to keep up to date with the progress of the Renters Reform Bill….HERE
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