Christina Harris, Director, Cheffins Residential Lettings, explains what landlords and tenants need to know about the new Renters' Rights Bill.
"At the end of this month, the new Renters’ Rights Bill will pass through the House of Lords and is likely to become law by Autumn 2025.
But in the words of Dad’s Army’s Lance Corporal Jones, our message to landlords is ‘don’t panic Mr Mainwaring!’ The Renter’s Rights Bill has sent shockwaves through the lettings industry, it’s claimed to be the biggest change to the Private Rented Sector in recent history, however, as always the devil is in the detail, and when we really look closely at the proposed reforms, it could well be that the results are not as negative for landlords as were first expected.
What the government appears to have forgotten here is that a large proportion of properties in the private rented sector are owned by occasional, one-off landlords, not always the cost-cutting, multi-property owning exploiters who look to get the maximum rent for substandard homes. Rather many of these are normal people, with a couple of houses which they may have bought as investments decades ago, or with properties inherited from family and which need to pay their way. For the good landlords out there, this Bill shouldn’t need to cause a state of alarm.
We can expect from the Bill a raft of changes to be announced, but when we really pick these apart, they are unlikely to make a huge amount of difference to the everyday landlord. Firstly, periodic tenancies will no longer be fixed for a set period of time, and rather they will run monthly, this gives tenants greater flexibility to give notice, however, there will still be a period of eight weeks which has to be given to the landlord in order for them to find a new tenant. This is actually an increase in notice period, giving landlords more time to find new tenants, and hopefully decreasing void periods. When it comes to rents, these will still be able to be increased once every twelve months to a maximum of the market value. This is not a great change to current market conditions, where landlords can already increase rents this way or may be reliant on rent increase clauses – which can in turn limit the top value for which a property can be rented.
However, there are two changes which might make a difference. First is that the way in which a landlord can ask a tenant to leave a property is changing. They will no longer be able to serve Section 21 notices – otherwise known as a no-fault evictions – rather they will need sufficient grounds for serving notice, such as rent arrears, should they need to sell the property or if they want to move themselves or a family member into the home. Currently landlords do not need to have grounds to end a tenancy by serving a Section 21 notice – so there is certainly a change here – but we find that the majority of landlords only really look to move a tenant on in these types of circumstances anyway. Should the Bill be passed, the landlords that evict tenants to be able to sell the property will not be able to relet the property once its placed on the open market for a set period of time. This is the government’s way of trying to ensure that people don’t use this as a loophole for just being able to move a tenant on, by placing the property for sale at a sky high price for it only not to sell. While this appears to be tricky and could lead to longer void periods, there is a chance here that this will help to keep sale prices at a reasonable level. Tenants are also now going to be able to request pets, and a landlord can only refuse if they have a valid reason, such as the property being unsuitable or if there is a head lease prohibiting animals. The landlord does have the ability in this scenario to require the tenant to take out pet damage insurance. While this may appear daunting for landlords, should the correct insurances be put into place, hopefully there will be minimal disruption caused by pets at a property, and it could be said as well, that happier tenants will stay in their homes for longer. Covid taught us the importance of pets for many people and the positive impacts on their mental health, so by allowing a tenant to have a pet, there could be a scenario here where void periods are reduced.
In order to protect tenants’ quality of living, there will also be the introduction of Decent Homes Standards, which implements minimum health and safety requirements for rental properties, and Awaabs Law will apply to these, which ensures that landlords have to address serious issues in a stricter timescale. Again, this shouldn’t be a concern for the good landlords in the market. We find that the majority of landlords will already comply to these new changes. They keep their properties in good repair and maintain high standards.
While scaremongering could lead to some of the so-called ‘rogue landlords’ to leave the market, we forecast that these changes will keep the good landlords, offering good properties in the sector. Hopefully this new Bill ought to bring in a greater transparency between landlord and tenant, while also protecting the rights and freedoms of both parties and also ensuring a better quality of housing for those in rented accommodation.
For landlords, the most important next steps is to speak to their agents and consider using a managing agent to ensure that all new compliance is being met. Referencing is going to become more important, as well rent indemnity and legal expense insurance. It is now that landlords need to address any health and safety concerns in their properties and also be ready to join the new landlord database which will be introduced, which hopefully ought to reduce the number of scams taking place. It is important for landlords to remember that they can still serve notice if they wish to sell their properties or move in and they can also serve notice if a tenant is in breach of their agreement. Tenants will need to give longer notice periods if they wish to leave, and they will still need to write to their landlord or agent to request any pets in the property. For tenants, if they are considering moving, we would encourage them to do so now, in case there becomes a shortage of rental properties which may push up rents.”
For more information on the Bill, or to discuss your lettings needs, please contact Christina on 01440 707076, or email christina.harris@cheffins.co.uk