After much anticipation, the Renters' Reform Bill is finally here. What’s included in the Bill, and how will this impact landlords and the wider buy to let sector?
After long delays and ongoing uncertainty, the Renters’ Reform Bill has finally been published. Striving to “serve both landlords and tenants better”, the Bill, at last, provides property investors with some clarity on many of the controversial changes that landlords have been anticipating.
Michael Gove has been under considerable pressure since his reappointment to Housing and Communities Secretary to get the Bill published. The property market has been aware of many of the suggested legislative changes since the Bill was promised three and a half years ago, so many of the announcements will not come as a surprise.
With significant changes outlined for the buy to let sector, here are the ten key points from the Bill that landlords must be aware of.
1. The abolishment of Section 21 ‘no-fault’ evictions
The most highly-anticipated announcement is, of course, the abolishment of Section 21 evictions. The new Bill requires landlords to provide specific reasons for evicting a tenant, and will mean taking the case to court.
Currently, the only other alternative for landlords is Section 8 evictions, which are often lengthy and expensive. While the Bill also promises new eviction rights for dealing with anti-social tenants, many landlords will find they would still need to use Section 8 to repossess their property.
The abolishment of these ‘no-fault’ evictions is why we’re seeing many mainstream media outlets discussing a potential ‘mass-exodus’ of landlords. With many property investors remortgaging onto higher interest rates, as well as legislative changes meaning higher taxes for landlords, this announcement, for many, is the final straw. The increased costs across the board, coupled with this new move to restrict landlords’ ability to repossess their own property, threatens to drive many reliable and responsible property investors from the market for good.
In the coming months, it will be interesting to see how the market fares with this news. What the sector needs now is further details on eviction rights and how the court system will prioritise and deal with the inevitable increase in Section 8 notices.
2. Introduction of Rolling Tenancies
The Bill has made a key change to tenancy agreements, with tenancies to now automatically continue in lieu of the short-term, fixed contracts that the sector is used to.
3. Rent increase notice periods to double
Landlords will have to give tenants at least two months’ notice ahead of rent increases, which will also be capped at one increase per year.
4. New eviction powers for rental arrears and anti-social behaviour
This legislative change should make it easier for landlords to evict anti-social tenants and reduce the time it takes them to repossess their property. However, this is unlikely to go so far as to replace Section 21. For further details on these eviction powers, see our summary here.
5. Landlords unable to ‘unreasonably refuse’ pets in their properties
Landlords will now be unable to ‘unreasonably refuse’ to allow tenants to keep pets. Whilst this will not concern some property investors who are happy to keep pets in their properties, a staggering 88% of landlords have incurred damage to their properties from pets. Read our article here to see what would incentivise our landlords to allow their tenants to keep pets.
On Radio 2’s Jeremy Vine Show yesterday, Michael Gove was asked whether landlords will be able to advertise their properties as ‘No pets, no-one on benefits’, to which he simply responded ‘no’. Now, landlords need further details on what a “reasonable” refusal is to fully understand the impact of this legislative change.
6. A Landlord Portal
The Portal sets out to protect tenants by giving them the opportunity to review landlords for other tenants to see. This Portal gives landlords the opportunity to earn some recognition for the reliable and responsible service they provide. Tenants will be able to see a landlord’s letting history and ‘score’ a landlord.
7. A New Property Ombudsman
A new single Ombudsman will be introduced in order to settle disputes between landlords and tenants outside of the court system. The aim is to simplify these cases, allowing for a quicker and less expensive process. Landlords with letting agents already have access to this system, but the Bill will extend this to all private landlords.
8. Repeated rental arrears to be grounds for eviction
Currently, many landlords are struggling with a loophole that allows tenants to avoid eviction based on rental arrears, provided they pay prior to a possession hearing. This causes financial uncertainty and is a large barrier to landlords repossessing their property.
The new Bill is attempting to close said loophole, with repeated serious rental arrears to be mandatory grounds for eviction.
9. The Decent Homes Standard
The ‘Decent Homes Standard’, which currently only applies to social housing, will now be extended to the Private Rental Sector. The standard sets out to ensure that all tenants have access to safe, good quality and comfortable homes. You can read more about what this could mean for your property here.
10. No bans on tenants on benefits or families
The Bill will make it illegal for landlords and letting agents to apply a blanket ban on tenants on benefits or to families with children.
For further details on the Renters’ Reform Bill, visit the Government website.
While many of these announcements will not come as a surprise to property investors, the pressure of these changes will undoubtedly have an impact. Oli Sherlock, the Director at rental market expert Goodlord, commented:
“The rental sector has never been under more pressure. The ongoing delays to the publication of this Bill have caused a lot of uncertainty for the market at a time when it could ill afford it. Even now, we’re not completely clear on what the final version of this legislation will contain, but at least we have more clarity on the contours after years of speculation.
“Right now, all the anecdotal evidence points to a rising number of landlords deciding to sell up. This, combined with a chronic lack of new rental homes being built, is creating a supply and demand issue that is driving up rental prices, creating despair for tenants seeking new homes, and resulting in market conditions which this Bill hasn’t been designed to fix.
“The Government should not see the publication of this legislation as a job done. It should be the first step in a longer line of urgent changes that are needed. A healthy rental market requires empowered, protected tenants as well as fair-minded, incentivised landlords in order to function. Any legislation that addresses one without the other won’t make the difference it needs to.”
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