Renters Rights Bill – more rights but more risk too
The recent introduction of the Renters’ Rights Bill marks a significant shift in the landscape of rental agreements in the UK, promising to fulfil Labour’s pledge to ban ‘no-fault’ evictions and enhance tenants’ rights. This legislation differs markedly from the earlier Renters Reform Bill proposed by the previous government, which failed to pass. In this article, we will explore the key changes introduced by the Renters’ Rights Bill and their potential impact on institutional landlords.
Abolition of Fixed-Term Tenancies
One of the most significant changes is the abolition of assured shorthold tenancies, transitioning them to assured tenancies with a maximum rental period of one month. This change removes the predictability that fixed-term agreements provided, allowing tenants to terminate their tenancy with just two months’ notice from the beginning. This could lead to increased turnover for landlords, complicating financial forecasting and management.
Furthermore, there are no transitional provisions for existing tenancies, meaning that landlords must prepare for this shift swiftly. The timing of this change will be crucial, and landlords should start strategising their operations now to minimise disruption.
Abolition of Section 21
The bill’s abolition of Section 21 of the Housing Act 1988 is a pivotal development. While this provision allowed landlords to evict tenants without providing a reason, its complexity often necessitated professional legal assistance. The transition to relying solely on Section 8 grounds for possession adds layers of difficulty for landlords. The expectation was that Section 8 grounds would be expanded to facilitate smoother evictions, particularly in cases of persistent rent arrears. However, the current bill does not meet these expectations.
Changes to Possession Grounds
While the bill introduces some amendments and new grounds under Section 8, it does not adequately cover all scenarios landlords might face. Notably, the absence of a mandatory ground for repeated serious rent arrears means that landlords may struggle to navigate evictions in such cases, leading to increased legal costs and uncertainty. The adjustments made to Ground 8, requiring tenants to be in three months of arrears instead of two, coupled with a lengthened notice period, will likely complicate matters further.
Landlords will have to convince judges of the reasonableness of granting possession in cases of anti-social behaviour, which can be a subjective judgement, thus adding unpredictability to the process.
Section 8 Preconditions
A key improvement in the bill is that preconditions for Section 8 eviction only need to be met before a possession order is made, rather than at the notice stage. This shift offers landlords a chance to rectify issues post-notice, potentially easing the path to eviction. However, the practical implications of this change remain to be seen, and landlords should remain vigilant about compliance to avoid any pitfalls.
Restrictions on Rent and Maintenance Obligations
The bill introduces strict rules on advertising rents and imposes limitations on rent increases. Landlords must now advertise properties at a fixed rent, which could lead to higher advertised rates as they seek to maximise returns. The requirement to limit rent increases to once per year and allow tenant challenges could further complicate revenue management.
Additionally, the proposed Awaab’s Law mandates landlords to address specific hazards, such as damp and mould, within set timeframes. For institutional investors with extensive property portfolios, this means increased operational demands and potential capital outlay to ensure compliance with new maintenance standards.
Addressing tenant discrimination and the private rented sector database
The bill also contains provisions to prevent discrimination against tenants based on family status or benefits. It grants tenants the right to request pets, which landlords cannot unreasonably refuse. Moreover, all landlords must register with a new Private Rented Sector Database, which may introduce administrative burdens and fees that could impact larger landlords disproportionately.
Conclusion
The Renters’ Rights Bill represents a considerable shift towards strengthening tenant protections at the potential cost of increased operational complexity for institutional landlords. With new restrictions on eviction processes, rental pricing, maintenance obligations, and regulatory compliance, the financial and legal landscapes for landlords are set to become more challenging.
Institutional investors must proactively prepare for these changes, as the implementation could occur as early as next year. Developing adaptable strategies now will be crucial in navigating this evolving rental market landscape. As we await further clarity on how these regulations will function in practice, landlords should remain informed and ready to respond to the new demands posed by the Renters’ Rights Bill.
Want to sell or let your property?
We are estate agents and letting agents in Leytonstone, E11 and we are specialists in the East London property market. Request a free valuation and one of our experts will get in touch with you to discuss how we can help you.
