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The current government’s Renters’ Rights Bill is set to change the landscape of the private rented sector. The purpose of the Bill is to level the playing field between renters’ rights and landlords’ obligations. This Bill introduces new regulations that will alter the way rental properties are managed and let.
For private residential landlords already contending with problem tenants, recent tax adjustments and increased regulatory oversight, this new legislative framework could be a persuasive factor in deciding whether or not to stay in or exit the rental market. The changes are expected to significantly affect landlords with one or two properties, including so-called ‘accidental landlords’ who rent out their homes temporarily due to work relocations or other reasons.
One of the most notable reforms is the proposed abolition of ‘no-fault’ evictions under Section 21 of the Housing Act 1988. Presently, under section 21, landlords can evict tenants with two months’ notice without stating a reason. The ban on these types of evictions, aims to enhance tenant security.
The abolition of this route has been anticipated for a while and was expected to be enacted by the previous government. However, this was delayed due to fears that implementing these reforms too quickly would overwhelm an already over-stretched Court system. For further information on previous housing reform updates, please see our previous articles.
Renting laws are changing - Clarkson Wright & Jakes Solicitors (cwj.co.uk)
This reform could have a profound impact on landlords who depend on Section 21 notices to regain possession of properties for personal or financial reasons. Once this reform comes into force, tenants will enjoy a 12-month protected period at the start of a tenancy, during which landlords cannot evict them to either sell or move into the property.
After this 12-month protection period ends, landlords will be required to give four months’ notice if they wish to repossess for these reasons, compared to the current two months under Section 21. This aims to provide tenants with more time to relocate.
Another key reform is the extension of ‘Awaab’s Law’ to the private rental sector. Named after a toddler who died due to unsafe conditions in a social housing property affected by mould, this law will require landlords to investigate hazards within 14 days and complete necessary repairs within 7 days. For emergency repairs, landlords will have 24 hours to respond. With the government classifying 21% of private rentals as “non-decent”, landlords will face stricter timelines and higher expectations for property maintenance.
This change could be especially challenging for some landlords, particularly those with older properties requiring frequent upkeep. Non-compliance could result in fines, putting further pressure on already tight profit margins in some rental portfolios.
The Bill also proposes stricter rules around rent increases, limiting landlords to one annual increase at the market rate and prohibiting mid-tenancy hikes. This will reduce the flexibility landlords have traditionally had in adjusting rents to reflect market changes.
Additionally, the Bill grants tenants more freedom regarding pet ownership, restricting blanket bans unless landlords have a valid reason to refuse.
In an effort to address housing affordability, the Renters’ Rights Bill also seeks to end bidding wars for rental properties. Moving forwards, landlords and letting agents will need to list the rent upfront, and asking for or accepting bids above the stated price will be prohibited.
For private landlords, these changes arrive at a challenging time. Over the past few years, they have faced a succession of regulatory reforms, including higher stamp duty for second and further property purchases, reductions in mortgage interest tax relief, and the imposition of higher energy efficiency standards. The introduction of this new Bill may prompt some landlords to reconsider their positions in the market.
For those who are committed to maintaining high standards, the reforms may offer a level playing field by eliminating some of the unfair competition from sub-standard rentals. However, for those landlords already contemplating an exit strategy, such as those operating with tighter margins or in areas where rental yields are lower, this may be the tipping point.
The problem here is the further reduction in the overall supply of rental properties, which is already falling short of demand.
If you would like to discuss your repossession options, or need assistance with regaining possession of your property, our team of solicitors can help. Please contact Ife Kehinde-Taiwo on 01689 887803 or email Ife.kehinde-taiwo@cwj.co.uk