What is the Renters Reform Bill?
The theory of the Renters Reform Bill, which is expected to become law in April 2024 and then effective from late summer or Autumn, according to the GOV.UK website is that it will ‘bring in a better deal for renters,’ while also aiming to ‘celebrate the overwhelming majority of landlords who do a good job’ and in practical terms, the main points the bill proposes are as follows:
1) Abolish section 21 ‘no fault’ eviction notices and no fixed terms tenancies allowed.
2) Introduce more comprehensive possession grounds so landlords can still recover their property if the tenants are at fault e.g., anti-social behaviour or rent arrears.
3) Allow tenants to appeal excessive rent increases – issues will be taken to a tribunal.
4) Introduce a new Private Rented Sector Ombudsman to resolve issues more quickly than the court system.
5) Create a Privately Rented Property Portal to help landlords understand their legal obligations and demonstrate compliance.
6) Allow tenants the right to request a pet in the property, while also giving landlords the ability to require pet insurance to cover any damages.
How will the Renters Reform Bill affect landlords?
In principle this Renters Reform Bill could be beneficial for landlords in certain areas, but I predict there will be a lot of chaos before that happens, as the industry comes to terms with the changes.
As for how these reforms will affect landlords directly, I’ll take you through it point by point:
1) With the abolition of section 21 ‘no fault’ eviction notices, the only way a landlord will be able to get their tenant to leave will be through a section 8 notice, which requires giving a reason, or to put up the rent with a section 13 notice, which can only be done once a year.
2) More comprehensive possession grounds are helpful for landlords trying to sell their properties and they are widening the scope to get tenants out of your property who are at fault.
3) An unintended consequence of allowing tenants to appeal rent increases could be that tenants decide to refer all rent increases to tribunals and as such rent increases are limited or it wouldn’t be unrealistic to imagine a cap being introduced.
Another consequence might be that the inevitable delays that will occur at tribunals due to an influx of new referrals could be used as a delay tactic from tenants to pay less rent for as long as possible.
And it could cause a breakdown in communication between landlords and tenants, as previously a rent increase could be negotiated between both parties, whereas now a section 13 notice indicating a rent increase has to be issued with no warning.
4) A new Private Rented Sector Ombudsman is an aspect of the bill that we support here at Rocket, as it means that all landlords will have to comply with various regulations and it will help provide more protection for tenants, which is something we believe is of the utmost importance.
5) This Privately Rented Property Portal could reduce hassle for landlords, as it will mean that you won’t have to register for licenses multiple times and pay councils every five years for a new license, instead you will register with this portal and you’re all sorted.
6) Giving landlords the right to request that their tenants have pet insurance should they want one in the property is a step in the right direction, as previously tenants were not required to do so.
How can landlords prepare for the Renters Reform Bill?
The main action that landlords can take to prepare for the Renters Reform Bill’s implementation is review your current tenancy.
You want to make sure that you’re happy with the tenants occupying your property and that they’re paying market rent because it may be a couple of years before you can change that.
Then you want to secure a fixed term tenancy for as long as possible because it looks as if there’s going to be a transitional period where existing fixed term tenancies can continue even after the bill comes into effect and then you will be able to serve a section 21 notice at the end of the tenancy.
This will allow you to ride out the initial chaos that could come with the introduction of the Renters Reform Bill in the short term and wait until the market has settled down before making your next move.
In terms of all the new regulations and signing up to the Ombudsman and the Portal, this is where landlords want to ensure they are with a competent and hands-on agent who can deal with this for them before the bill becomes law.
At Rocket, unlike many agents, we already apply for licenses on behalf of our landlords and we will take care of making sure all the landlords with whom we work are set up to keep their property portfolios operating after the coming changes without them having to lift a finger.
Fundamentally, this bill will not make residential property unprofitable, landlords will just have to operate in a different way and here at Rocket we’re ready and prepared to adapt to the changes and we will be guiding our landlords through the process step by step.
