Should landlords be concerned?
Which elements of the original Bill are a cause for concern, and which won't make much difference in practice?
The first thing to say is that, although there was a lot of media and industry coverage of the rental reform proposals when the draft Bill was introduced in Parliament on 17 May 2023, bills tend to take up to and beyond a year to become laws – during which time the contents can change, sometimes significantly.
The Renters (Reform) Bill is no exception, as we've seen. It took 11 months from the launch of the Bill before it reached the third reading in Parliament in April 2024, when several amendments were added to the Bill. And there may well be additional amendments added at the next stage in the House of Lords.
And when it comes to the rental market, there’s usually a phased approach, with new tenancies being subject to the new laws first, and existing tenancies a year or so later.
That means it’s likely to be another few months before any of the proposed reforms come into effect.
Note: the following section was published following the introduction of the Bill to Parliament on 17 May 2023.
The amendments added to the Bill in April 2024 have addressed some of the concerns raised here.
When the Bill was launched in May 2023, we asked what elements of the current proposals do landlords need to be concerned about and what’s really not going to make much difference in practice?
Read on for our analysis, and watch this video with Sean Hooker, Head of Redress at the Property Redress Scheme and property expert, Kate Faulkner OBE, who discuss their biggest concerns and offer advice to landlords and agents on how they can prepare for the changes.
Although there’s been some widespread pushback from landlords about losing the right to take back their properties at two months’ notice and without having to give a reason, the reality is that most do have a good reason to evict their tenant – whether they use a Section 21 or a Section 8.
Many choose to use Section 21 either because it’s easier to move to a possession claim if the tenant doesn’t leave, or because the tenant has requested it so that they can apply for local authority housing.
Which they can’t do if they’ve legally breached their agreement and therefore made themselves ‘intentionally homeless’.
The reality is that landlords don’t go around evicting tenants for no reason, and under the proposals they will still be able to take their property back if they need to via Section 8, including if:
The tenant is in rent arrears
The tenant has caused nuisance or property damage, broken the law or been involved in domestic violence
They want to sell
They want to move themselves or close family into the property
The Government is also assuring landlords they will make it easier to repossess properties where tenants are at fault.
The main way this move could negatively impact landlords is if the court system remains unchanged and becomes overwhelmed with possession claims, as every one of them will require a court hearing if the tenant challenges the eviction.
However, at the second reading of the Bill on 23 October 2023, the Government confirmed the need for improvements to the courts before Section 21 can be abolished. This was reaffirmed at the third reading on 24 April 2024.
This means that the Government will not proceed with the abolition of Section 21 until reforms to the justice system are in place.
Read more on this in our separate Renters (Reform) Bill articles, ‘What’s happening to evictions and Section 21?’ and ‘Will the court process for evictions be improved?’
One final thing to note is that the rules on issuing prescribed information to the tenant – such as the Energy Performance Certificate (EPC), gas safety certificate and deposit protection information - will have to change.
Currently, this must be issued in order for a Section 21 notice to be valid, but it’s not yet clear what will come into place in relation to these documents (if anything) when Section 21 disappears.
As the proposal stands, abolishing Assured Shorthold Tenancies (ASTs) and introducing blanket two-month notice periods for tenants is primarily an issue for landlords of student properties.
Currently, they can issue tenancy agreements for a 12-month fixed term, to make sure the property remains tenanted for the whole calendar year, not just the academic year.
But if students can give notice at any time, they will be able to leave before the summer holidays or potentially after only a few months in the property – for example, if they give up their course or fall out with housemates.
Given the difficulty of finding students that need accommodation in the middle of the academic year and the cost of having to carry out additional referencing and other admin for replacement tenants, landlords are understandably worried.And with demand for student rentals already exceeding supply in many university towns and cities, the last thing the industry needs is a mass exodus of landlords, so this is one proposal in the Bill that’s highly likely to be reviewed.
And indeed, at the second hearing of the Bill in October, Secretary of State, Michael Gove, offered reassurance that this proposal will be reviewed at the committee stage.
He acknowledged that the Bill as it stands would pose problems for the student market, and committed to proposing a new ground for possession for student landlords. Again, this issue was largely addressed at the third reading (the report stage) on 24 April 2024 (see the chapter ‘How are rental tenancies changing' for more details).
Landlords of ‘single let’ properties really shouldn’t be concerned as tenants don’t tend to ‘hop’ from one rental property to another without a good reason.
And it’s actually tenants that should be concerned, as having to give two months’ notice instead of the current one month could make it harder for them to move if they want or need to – meanwhile, it’s good news for landlords, as they’ll have more time to line up a new tenant.
The other change to tenancies is that rental periods will be restricted to either one month or 28 days – but the vast majority of landlords already charge rent on a monthly basis, so won’t be affected.
Read more on this in our separate article, 'How are rental tenancies changing?'
There are two proposed elements to this:
Privately Rented Property Portal
a publicly-accessible database of landlords and their properties that will also provide information to help landlords understand and comply with their legal obligations
Private Rented Sector Ombudsman
a government-approved scheme that will allow tenants to seek redress if they have complaints about their landlord
All private landlords will be required to register themselves and their properties on the portal and join the Ombudsman scheme.
Although there will be a fee for each, the proposals state that these will be “proportionate and good value”, and the Government intends to link the two schemes so that landlords only need to enter their information once.
Similar registration schemes have been in effect in Scotland, Wales and Northern Ireland for a number of years already and have not proved to be an issue or barrier for landlords.
In terms of penalties for non-compliance, if landlords advertise or let any property without it being registered with the Portal, or they fail to join the Ombudsman, the local authority will be able to fine them up to £30,000. For repeated offences, they could face criminal charges and a Banning Order.
As with so much in this Bill, these changes really shouldn’t concern law-abiding landlords who take a professional approach to letting their property.
Landlords will not be able to increase the rent more than once every 12 months and must give tenants two months’ notice via a Section 13 notice.
While this probably won’t make much difference to most landlords, there may be an increase in the number of tenants challenging an increase.
That’s because the Bill proposes digitising the First-Tier Property Tribunal process to make it easier for tenants to access.
Local authorities are being given more powers to fine criminal landlords, but that overlooks the issue of resources.
Councils can already fine landlords up to £30,000 without having to go to court, and yet there has been relatively little action taken to use this power, simply because they don’t have enough money or people to make the checks required to root out bad landlords. This funding problem is really what the Government needs to address.
Blanket refusals to accept tenants that receive Universal Credit or housing support are being outlawed, with landlords being encouraged to make decisions on a case-by-case basis.
However, the reality is that because local housing authority rates are capped, tenants on benefits often simply struggle to afford private rents in many areas. For more on this, see our article, ‘Are no DSS tenant blanket bans being outlawed?’.
Finally, landlords won’t be able to turn down a tenant’s written request to keep a pet without a good reason.
Many landlords already allow suitable, well-behaved pets and the good news is that pet insurance will become a ‘permitted payment’ under the Tenant Fees Act, meaning landlords will be able to insist on their tenant obtaining insurance to help cover the cost of any damage to the property. This does not mean however that a landlord can’t refuse pets!
Watch this video excerpt below to hear their discussion on whether the Bill really is a game-changer.
All in all, the majority of the changes proposed in this Bill will make little difference to most landlords and agents, who let property legally and safely. Strengthened Section 8 grounds for eviction may actually make it easier for landlords to regain possession of their property if a tenant stops paying rent or is behaving in an anti-social way.
The new Ombudsman may result in quicker dispute resolution and could be cheaper than going to court, while the Property Portal is likely to be a valuable resource that makes it easier for self-managing landlords and agents to keep up with legal changes.
However, if you currently self-manage and you feel you need some help navigating all these upcoming changes, it may be time to consider working with a qualified letting and managing agent. In that case, check out our ‘Ultimate landlord guide to choosing a letting agent’.
On the other hand, if you have enough time to dedicate to being a hands-on landlord and want to self-manage, read our ultimate landlord’s guide to rental property management – it covers all the key elements of successfully managing both the tenancy and your property, to help make sure your rental investment journey is as rewarding as possible – both personally and financially.
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Listen to our bonus episode of The Property Cast, for our experts initial reactions to the Renters (Reform) Bill.
