The UK Government has recently published the Renters’ Rights Bill, a major piece of legislation that could significantly change the private rental market in England. Expected to come into effect by summer 2025, the new rules will impact both new and existing tenancies. Below, we break down the key proposals and provide an analysis of what they mean for landlords.
The Renters’ Rights Bill introduces significant changes to tenancy and possession rules, impacting how landlords manage evictions and tenant relationships. These reforms aim to increase tenant protection while clarifying landlord responsibilities.
End of Section 21 (‘No Fault’ Evictions‘)
The Renters’ Rights Bill proposes abolishing Section 21, which currently allows landlords to evict tenants without giving a reason. However, any Section 21 notices served before the new rules come into force will remain valid until they expire.
What does this mean for landlords?
Once Section 21 is abolished, landlords will need to provide a valid reason to evict a tenant, such as rent arrears or the need to sell the property. This could make the eviction process more complicated and time-consuming, potentially increasing reliance on formal legal processes for tenant removal.
Landlords may want to consider whether a section 21 notice should be served on problem tenants before it is abolished.
Abolition of Fixed-Term Tenancies
The Bill will replace fixed-term tenancies with periodic tenancies, giving tenants more flexibility. Tenants will be able to serve two months’ notice at any time to end the tenancy.
What does this mean for landlords?
This change introduces more uncertainty for landlords, as tenants can leave with short notice, making it harder to plan long-term rental income. Landlords cannot end the tenancy at will and will be bound by stricter conditions, reducing their control over tenancy terms.
New Grounds for Landlords to Repossess Properties
The Bill introduces new and amended grounds for landlords to regain possession, including:
- Landlord Circumstance’ Grounds: Allows landlords to regain possession if they need to sell or if they or their family need to move in. These grounds cannot be used during the first 12 months of the tenancy, and landlords must give four months’ notice. Additionally, landlords cannot market the property for sale for 12 months after the notice expires or after filing a court claim.
- Mandatory Rent Arrears Grounds: Rent arrears of three months allows landlords to serve a eviction notice, with landlords required to give four weeks’ notice.
- New Student Possession Ground: Applies to student HMOs, requiring advance notice from landlords for student accommodation repossession.
What does this mean for landlords?
These new grounds add further burdens on the landlords complicate the process. Landlords seeking to sell or move back into the property face longer waiting times and more restrictions, while the extended rent arrears threshold may increase losses before eviction can take place.
The reality is, Courts are already backlogged and have been for many years. It could be many months before a possession order is granted and many months after that for a warrant of possession to be executed. These extended periods may exacerbate financial losses if tenants fail to pay rent on time and some tenants are likely to take advantage of this.
Unless the court process is drastically over hauled, landlords can expect to see properties occupied by tenants, without paying any rent for up to a year, before getting possession.
Ban on Discrimination
The Bill prohibits discrimination against tenants receiving benefits or with children, ensuring fair access to housing for all prospective tenants.
What does this mean for landlords?
Landlords will need to adjust their screening processes to comply with the ban on discrimination. While this promotes fairness, landlords may need to adopt new methods of assessing tenant affordability and risk.
Ban on Rental Bidding Wars
Landlords and letting agents will be banned from encouraging or accepting rent offers higher than the listed rate, effectively ending rental bidding wars.
What does this mean for landlords?
This change aims to create more fairness in the rental market but may limit landlords’ ability to maximise rental income, particularly in high-demand areas.
Limits on In-Tenancy Rent Increases
Rent increases will be capped to once per year, with the increase limited to either the market rate or the amount proposed by the landlord, whichever is lower. Landlords must give tenants two months’ notice of any increase, and tenants will have the right to challenge this through the First-tier Tribunal.
What does this mean for landlords?
A landlord’s ability to increase the rent during tenancies will be restricted. This will potentially limit rental income growth. However, this combined with the removal of section 21 could spell the end of insecurity for good tenants who are sometimes evicted because landlords simply seek increased profits.
Decent Homes Standard
The introduction of a Decent Homes Standard for private rental properties will include fines of up to £7,000 for landlords who fail to meet minimum living standards.
What does this mean for landlords?
Landlords will need to ensure that their properties meet the Decent Homes Standard or face significant financial penalties. This may involve additional investment in property maintenance and repairs.
Awaab’s Law Extended to Private Renting
Landlords will be required to address serious hazards in their properties within a set timeframe, following the extension of Awaab’s Law to the private rented sector.
What does this mean for landlords?
This extension increases the pressure on landlords to maintain safe and habitable living conditions. Failure to act on hazards in a timely manner could result in legal action or fines. This is likley to increase costs for landlords but will be a welcome change for tenants, particularly those who have been suffering with properties in a poor state of repair.
Digital Database for the Private Rented Sector
A new digital database will provide essential information for landlords, tenants, and local authorities, enhancing transparency and accountability in the sector.
What does this mean for landlords?
Landlords may need to register their properties and comply with reporting requirements. This database will likely make it easier for authorities and tenants to monitor compliance. Sadly, the same does not apply for tenants who too abuse the rental system, causing immense losses for landlords.
Stronger Local Authority Enforcement
Local authorities will have greater powers to investigate private rented properties and impose higher penalties for non-compliance.
What does this mean for landlords?
Enhanced enforcement powers mean landlords need to be more diligent in maintaining properties and complying with regulations, or risk facing substantial fines and other penalties.
New Ombudsman Service
A new ombudsman service will provide impartial and binding dispute resolution for landlords and tenants, reducing the need for court proceedings.
What does this mean for landlords?
While the ombudsman aims to resolve disputes more efficiently, it primarily focuses on tenant complaints. Landlords may need to use traditional legal routes for initiating disputes, which could add complexity to certain cases. This could also mean added expense for landlords as Ombudsman in other industries are funded by the industry. In this case, landlords are likley to be required to pay for the Ombudsman to investigate them if a complaint is upheld.
Furthermore, landlords may wish to ensure robust record keeping and as most complaints are likley to revolve around repairs and rent payments.
Support for Landlords
The Government is exploring ways to support landlords in resolving disputes, but details are still being discussed.
What does this mean for landlords?
Landlords should stay informed about future government support options that may streamline the resolution of disputes, particularly regarding rent arrears and property management issues.
Stay Informed
The Renters’ Rights Bill will bring significant changes to the private rental sector. It is crucial for landlords and letting agents to stay informed about these developments to remain compliant and protect their interests.
Amin Haque Solicitors are here to support landlords and letting agents through these legislative changes. Contact us today to find out how we can help you navigate this new landscape. We specialise in evictions. You can find out more about our services here: https://aminhaque.co.uk/landlord-advice-service
