The Renters (Reform) Bill proposes significant changes to the rental market – but how exactly could they affect landlords?
Although the Renters (Reform) Bill might not become law for a few years, or even at all, it could bring some big shake-ups that every landlord should have on their radar.
From ending Section 21 ‘no fault’ evictions to getting rid of fixed-term tenancies, there’s a whole lot more crammed into this lengthy document that you’re likely to miss on your first read.
So, if you’re not up for trawling through all the legal jargon and want to get a clearer picture, let’s break down what the Renters (Reform) Bill could actually mean in practice.
- Section 21 ‘no fault’ evictions to be abolished
- The end of fixed-term tenancies
- A simpler approach to rent increases
- Tenants to be given more rights to keep pets
- A new property Ombudsman
- A property portal for landlords and tenants
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Section 21 ‘no fault’ evictions to be abolished
As mentioned before, the Bill confirms its intentions to do away with Section 21 – a process that allows private landlords to repossess their properties by serving tenants with a Section 21 notice.
It’s often called a ‘no fault’ eviction notice since the landlord doesn’t have to provide a reason for ending the rental agreement.
If the Renters (Reform) Bill goes into effect, you will only have the option to end rental agreements using the updated Section 8 grounds.
The Bill’s goal is to amend and widen the current set of reasons outlined in Section 8 of the Housing Act 1988, which are split into mandatory and discretionary grounds for possession.
There is also a number of proposed new Section 8 grounds such as allowing you to end the tenancy if you plan to sell the property.
The end of fixed-term tenancies
The Renters (Reform) Bill also proposes simplifying how tenancies are set up. Specifically, it suggests replacing Assured Shorthold Tenancies (ASTs) with a single system of periodic tenancies.
Currently, ASTs are the most common type of rental agreement in the private rented sector. Tenants usually sign up for a contract of six or 12 months and once this time is up, a choice is made to either renew or continue on with a periodic tenancy where payments are made periodically, usually on a monthly basis.
Instead, the Bill suggests that all rental properties should switch to a rolling monthly tenancy, without a fixed end date.
In this case, when a tenant decides to move out, they’ll need to give a heads-up of two months to allow you time to recoup the costs of finding new tenants and avoid long periods of no income.
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A simpler approach to rent increases
Rent review clauses could also be coming to an end if the Bill passes, in a bid to prevent tenants from being trapped in automatic rent increases, among other things.
To let your tenants know about an upcoming rent increase, you’ll need to complete a new form, that will be available through the government’s official website, and then serve it to them.
If your tenants agree to the increase, they’ll simply start paying the higher rent. But if they find the increase unfair, they can contest it through a First-tier Tribunal.
Tenants to be given more rights to keep pets
Another view put forward by the Renters (Reform) Bill is about giving tenants more leeway to have pets, making it harder for landlords to simply say no without a valid reason.
When a tenant asks to keep a pet in the property, you would need to reply within six weeks of the request, if the Bill goes ahead.
However, you would be able to ask for more information, and once that’s provided, you would get an extra seven days to make up your mind.
Should you decline the pet request and the tenant finds this decision unfair, they have the option to escalate the matter to the Private Rented Sector Ombudsman or even take legal action.
Given that using the Ombudsman would be free for tenants, it’s likely to become the preferred route for resolving pet-related issues.
Then, the Ombudsman (or the court) would weigh the evidence from both sides and make a call on whether you should agree to the pet or not.
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A new property Ombudsman
It’s possible that every landlord will need to become a part of a government-approved Ombudsman –regardless of whether they use a letting agent or not – if the Renters (Reform) Bill becomes law.
A scheme for addressing landlord-related concerns would allow former or current tenants to lodge complaints against landlords, which would then be looked into independently.
The Ombudsman would have the power to put things right for tenants, which could mean making landlords apologise, give information, take remedial action, and/or even pay compensation of up to £25,000.
Landlords would then have to stick with the Ombudsman’s decision if the tenant agrees with the final call.
And if a decision isn’t followed, landlords could even end up facing a banning order, especially if they’re repeat or serious offenders.
A property portal for landlords and tenants
The Renters (Reform) Bill proposes yet another change – a new digital property portal designed to be a hub for landlords and help them better understand their legal obligations.
Moreover, this portal would tackle problems like tenants realising too late that they’re in a less-than-ideal property rented from landlords who are purposefully ignoring the rules.
Plus, local councils would have an easier time pinpointing the responsible party when serious issues arise.
On the flip side, this platform would empower responsible landlords to showcase their commitment to following the rules, making them more attractive to potential tenants.
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What we’re looking at is just the first draft of the Renters (Reform) Bill, and you can bet it’s going to see some changes as it makes its way through Parliament.
Currently, the Bill is at the ‘second reading’ phase within the House of Commons. However, this stage won’t begin until after the conclusion of the summer recess on Monday, September 4th.
Staying well-informed about these upcoming changes is essential for landlords who aim to maintain a strong foothold in the rental market while staying on the right side of the law.
This way you’ll be fully prepared to not only keep your rental operations running without a hitch but also thriving.