Understanding The Renters Reform Bill - A new era for Landlords and Tenants

What is the Renters’ Reform Bill? 

 

The Renters’ Reform Bill is a significant piece of legislation in the UK, designed to reshape the rental sector, improve tenant rights, and enhance the overall rental experience. This bill is part of a broader effort by the UK government to make housing more accessible, fair, and secure for renters. In this blog, we will explore what the Renters’ Reform Bill entails, its key provisions, and what it means for both tenants and landlords. 

 

The Renters’ Reform Bill, introduced by the UK government and expected to pass Royal Assent becoming law after Easter 2025, aims to overhaul the private rental market and tackle long-standing issues faced by tenants and landlords. The bill is a response to growing concerns about the lack of security for renters, poor living conditions in some rental properties, and practices that make it difficult for tenants to assert their rights. 

 

Here's a breakdown of the key changes and our view on the implications: 

 

 

All tenancies will become periodic, meaning they will run on a rolling basis with no fixed end date. 

Tenants will be able to terminate a tenancy by giving 2 months' notice at any time. 

Whilst this gives tenants the added security of longer term tenancies with more flexibility it removes the security of a fixed term for landlords.  

 

Our view is that this will have a limited effect on our Landlords as the majority of our tenants currently look for long term tenancies. The most recent housing survey suggests that the average tenancy term has increased to over 4 years, so we are not expecting a significant increase in turnover of tenancies particularly given current market conditions with high demand and reducing availability of good quality housing stock. 

 

 

Abolition of Section 21 "no-fault" evictions: Landlords will no longer be able to evict tenants without a valid reason. 

Landlords will need to rely on specific grounds for eviction, such as rent arrears or property damage. 

 

A lot has been said in the media about the abolition of the Section 21 'no fault' evictions and how detrimental this will be to Landlords 

 

Our experience is that landlords generally require possession of the property for a specific reason such as selling the property, moving themselves or a relative into the property, rent arrears or other breaches of the tenancy such as anti social behaviour. 

 

All of these reasons are still covered as a reason to require possession under the Renters Reform Bill, so generally speaking the Landlords rights remain protected. What the abolition of Section 21 does do is prevent a Landlord from evicting a tenant without a good and lawful reason, which in our extensive experience has not been the case contrary to Government opinion. 

 

 

Rent increases will be limited to once per year. 

Landlords will need to use Section 13 notices to increase rent, giving tenants two months' notice. 

Tenants will have the right to challenge rent increases they deem excessive. 

 

All of the above is standard practice already in terms of our annual review of rent based on current market conditions and comparable properties, serving notice of any increase and the right of a tenant to challenge an unfair increase, which realistically means being able to challenge an increase far in excess of the market rent so we are not expecting this to have any impact on our landlords. 

 

 

Rental properties will need to meet a minimum standard of quality, ensuring they are safe and habitable. 

The Decent Homes Standard has been in place for the Social Housing sector for nearly 20 years and will be extended to include the private rental sector. It is very straight forward about requiring landlords to provide accommodation to a certain standard that can be broadly defined as being fit for purpose, i.e the property is secure, has heating, a kitchen and bathroom facilities but also with clear obligations for repairs, safety checks, and general maintenance. This part of the Bill is very much directed to the 'rogue landlords' who provide sub-standard accommodation and tenants will have more rights when it comes to challenging poor living conditions and demanding repairs. 

 

 

 

When we market a property, we carefully consider the current market rent for the property taking into account location, condition, availability of other properties and potential demand. This change in legislation will not affect our clients. 

 

 

The bill includes provisions to cap advance rent payments at one month's rent. This measure aims to make housing more accessible and fair for renters, particularly those on lower incomes who may struggle to find large sums of money upfront. Currently where tenants have had historic issues with credit history and/or rent arrears or fail the affordability checks, sometimes depending on the circumstances we would still look to proceed with a tenancy subject to the tenant paying 6/12 months rent in advance however this would no longer be an option so unless tenants were able to provide the back up of a suitable guarantor then they would not be able to take up a tenancy. 

 

 

A new ombudsman will be introduced to help resolve disputes between landlords and tenants. 

 

The Landlord Ombudsman replaces the Housing Ombudsman to deal specifically with disputes between Landlords and tenants. All landlords will be required by law to join the scheme even if they use a managing agent. Failure to join the scheme and/or comply with ombudsman decisions in the event of a complaint could result in hefty fines and/or rent repayment orders. We have never had a matter referred to the Housing Ombudsman and so this should also have limited impact on our clients. 

 

Private Rented Sector Database:  

 

Landlords will need to register themselves and their properties on a new database. 

 

The proposal is a simple database of the landlord, their properties and a record of the legal compliance certificates and details of any enforcement action taken against the landlord. All landlords will be required by law to register themselves and their properties together with the related documentation or information and will be subject to penalties for letting properties if they havent complied with the requirements. 

 

Right to request pets:  

 

Tenants will have the right to request a pet, which landlords must consider reasonably. 

 

This is possibly the aspect of the bill which may cause Landlords some concern. The Bill suggests that landlords will have to have a good reason not to allow a pet. With over 57% of households being pet owners, Landlords who have not allowed pets at their property have immediately excluded a significant number of potential tenants from applying to rent the property. The concern for many landlords is about damage being caused to the property. This can be mitigated in 2 ways.  

 

Firstly, Letting Genie have a robust inspection process for their properties under management and as such will pick up on any issues very quickly. Secondly, the Bill is implying that tenants can be required to have Tenant Pet Insurance which compensates the landlord in the event of damage to the property. In the event that any damage is not rectified the Bill allows for eviction if the property is being damaged. 

 

Prohibition of discrimination:  

Landlords will not be able to discriminate against tenants on benefits or with children. 

 

Landlords and agents will continue to have the final say on who they let their property to and can carry out referencing checks to make sure tenancies are sustainable for all parties. They will be able to do this based on affordability, but not on the basis the prospective tenant has children or is in receipt of benefits. 

 

The rent element of Universal Credit is way below the market value of most rental properties. As such Letting Genie have always advised that a guarantor should support the tenancy for applicants who are claiming Universal Credit and this will not change with the onset of the Renters Reform Bill. It has been unlawful for some time to advertise properties which specifically exclude those claiming benefits from applying. 

 

Letting Genie have also never discriminated against tenants with children providing the property is considered suitable in relation to the proposed level of occupancy and ensuring the rules on overcrowding are not breached. 

 

As the bill continues its journey through Parliament, it’s clear that the Renters’ Reform Bill has the potential to shape the future of housing in the UK, creating a more secure and equitable rental system for years to come and we will continue to post further blogs on any further updates and changes with the likely impact to landlords and tenants alike.