RENTERS REFORM BILL: BAD NEWS FOR LANDLORDS, OR LONG OVERDUE FAIRNESS FOR EVERYONE?
There’s been a flurry of news and commentary since the Government announced its Renters Reform Bill. Representing the biggest changes to the private rental sector in 30 years, the Bill is set for introduction to Parliament before March 2023, with a view to becoming law by early 2024.
Despite dramatic headlines, the Bill isn’t only about the rights of tenants. In fact, Nick Beadle, Chief Executive of the National Residential Landlords Association, has said the “commitments to strengthening possession grounds, speedier court processes and mediation are helpful”.
Nonetheless, Michael Gove’s rhetoric on June 16th promised to protect tenants from “landlords who fail to repair homes and let families live in damp, unsafe and cold properties, with the threat of unfair ‘no fault’ eviction orders hanging over them.”
Eliminating substandard homes from the rental market is obviously a welcome step forward, but what if you’re already a professional and responsible landlord? Our blog this week explores the proposals and what they actually mean for anyone owning a buy-to-let property.
THE MAIN CHANGES FOR LANDLORDS & TENANTS
One universally welcome intention of the Renters Reform Bill is swifter consequences for landlords and tenants who fail to keep up with their responsibilities. The proposed measures include:
- creating a new Private Renters’ Ombudsman to enable fast settlement of disputes through low-cost mediation
- speeding up the court process for evicting deliberately non-paying or disruptive tenants
- giving councils more powers to tackle unscrupulous landlords, with increased fines for serious offences
- requiring landlords to provide a good reason to refuse a tenancy to families with children (e.g. homes that are clearly too small or have no space for children to play)
- outlawing blanket bans on tenants who rely on benefits (although private market rents are generally far higher than local housing allowances)
There’s some good news in here for everyone, and buy-to-let remains a sound investment for any responsible landlord with a long-term strategy. You can discover more about building a legacy with your own sustainable and profitable portfolio in our recent article, Doing It For The Kids.
HIGHER LIVING STANDARDS FOR EVERY BUY-TO-LET
Our landlord clients take pride in offering warm and comfortable homes, but it’s estimated that one fifth of privately rented properties are cold, draughty, damp or neglected.
To combat this, the Decent Homes Standard that governs social housing will be expanded to include the private rented sector, requiring all buy-to-lets to be properly maintained, modernised and energy efficient. Here’s a rundown of the main proposals:
- The threshold rating for an EPC (Energy Performance Certificate) will be raised to C, up from the current D level.
- Adequate heating, noise insulation, kitchen and bathroom facilities will be compulsory in every rental home.
- Tenants will be able to claim back rent if their homes are substandard or fail to meet health & safety standards.
The amount of work required will depend on the age and current condition of each individual property, so do get in touch if you’re unsure which upgrades may apply at your buy-to-let.
MAKING LETTINGS MORE PET-FRIENDLY
Brits love pets so much that they’re now the most common reason for tenants moving home, according to the latest research from The Deposit Protection Service.
While many landlords are open to pets, others are wary, and the Renters Reform Bill seeks to give both sides comfort and security by:
- requiring landlords to have a good reason for refusing pets, and giving tenants the right to challenge the decision
- giving landlords the power to insist on pet insurance to cover any pet-related damages
- amending the Tenant Fees Act 2019 to include pet insurance as a permitted payment (this could mean landlords taking out policies themselves to be sure of coverage, then passing on the cost to their tenants).
It should be said that many tenants with pets take great care of their homes, and they prefer to stay in them for longer to retain a familiar environment. Although the Bill will remove blanket bans on pets, it should also give landlords greater confidence that they won’t be out of pocket.
The headline-grabber of the Renters Reform Bill is the abolition of Section 21 notices, also known as no fault evictions. Landlords have been portrayed as removing perfectly good tenants for no reason at all, but the term “no fault” doesn’t tell the whole story.
What doesn’t get reported is that landlords are often forced to serve a Section 21 notice when serious rent arrears build up, because local authorities will only house tenants who are evicted, not those who voluntarily leave a home. In fact, many landlords never chase previous tenants for the money owed – they just move on and start again.
The plans to replace Section 21 notices include:
- improving the grounds for gaining possession, particularly for landlords wishing to sell or move into their rental property
- overhauling the court process to make it easier and faster to evict tenants who are either wilfully not paying rent, or repeatedly engaging in anti-social behaviour
- providing more security for tenants by requiring landlords to have a good reason for ending a tenancy if the tenants haven’t breached their agreement.
If the bill achieves all these aims, it could finally bridge the gap between confidence for landlords and the sense of stability for tenants – welcome reassurance for all.
THE END OF ASSURED SHORTHOLD TENANCIES
The Renters Reform Bill will move all tenants onto a single system of periodic tenancies, meaning they can leave poor-quality housing or move more easily when their circumstances change.
Affecting new tenancies first, then existing tenancies twelve months later, the phasing out of assured shorthold tenancies will mean the following for rent increases and notice periods:
- Rent review clauses in tenancy agreements will be abolished, but rent increases will still be allowed no more than once per calendar year
- Landlords will need to give two months’ notice of any rent increase, and tenants will be able to challenge the new figure if they feel it is unjustified
- Tenants will need to give two months’ notice when leaving a tenancy to help landlords avoid lengthy void periods.
If you’re concerned that tenants will keep leaving early and you’ll have constant changeovers, remember that tenants are actually staying longer and longer. This comes partly down to the time it takes to save up to buy a home, and also to people delaying milestones like marriage and children in favour of discovering what they want from life first.
What’s your next step?
Landlords and tenants have been calling for changes in legislation for a long time, and while the new proposals certainly have positive aspects for both, they also raise questions. A new online portal is intended to provide greater clarity, but landlords will need to keep checking for updates to ensure they stay within the law.
If you’re wondering what actions you’ll need to take under the new Bill becomes law, or you’d like a managing agent in East Dulwich to take care of everything for you, call us on 02086907766 or email Anthony directly at firstname.lastname@example.org – we’re here to make your life as a landlord as easy and enjoyable as possible.