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Property & Investment News

The Latest Housing Reform Bill is Rocking the Foundations of the UK’s Rental Market

In 2019, the government pledged to make life better for the UK’s 4.61 million renters, claiming that it would halve the number of ‘non-decent’ rented homes by 2030[1]. True to its word, on the 17th of May, 2023, it introduced a revolutionary housing reform, described by Landlord Today as a “pro-tenant, anti-landlord[2]” movement. Despite the fact that the changes still need to pass through parliament and the House of Lords – meaning months of waiting, a series of discussions and content that’s up for debate – the Renters’ Reform Bill is already causing quite a stir. But is it as bad for landlords as some say it is?

What will change?

The proposed legal amends – labelled the “biggest shake-up since the Housing Act of 1988” by the Evening standard[3] – are all part of the government’s plan to deliver “safer, fairer and higher-quality homes”. From banishing ‘no-fault’ evictions to putting an end to cold, damp housing, the bill is expected to benefit almost eleven million tenants across England alone[4].

The Renters’ Reform Bill will:

  • Abolish Section 21, meaning that landlords now need a good reason to evict their tenants.

  • Tenants will have the legal right to request pets. Landlords must consider the request and cannot ‘unreasonably[5]’ refuse.

  • The Decent Homes Standard, which currently applies to social housing, will also be applied to the private sector.

  • Landlords can no longer refuse to rent to tenants on the grounds that they claim benefits or have children.

  • Assured shorthold tenancies will be replaced by periodic tenancies, allowing tenants to move out with two months’ notice if the property has problems or their circumstances change.

  • Rent review clauses will also be abolished.

Why landlords are concerned

Landlords around the country have been plagued by uncertainty after hearing the news, worried that the removal of Section 21 ‘no-fault’ evictions could make it more difficult for them to recover their properties. It’s not that they’re horrible people looking to get rid of innocent tenants. The majority simply feel that, if it’s more difficult to evict tenants, they might fall into financial arrears. At the moment, local councils will only house tenants who have been firmly evicted – not those who leave voluntarily. As a result, many landlords feel forced to serve a Section 21 notice when they haven’t received rent from tenants who long abandoned ship.

Another concern is that rent review clauses will make it harder to charge tenants more in an effort to keep up with the rising cost of living and inflation. Nevertheless, this need not be too much of a concern, as landlords will still be able to increase their rates, provided that the increase is fair and they provide tenants with two months’ notice – just one example of how the reform will work both ways.

It’s not all bad news

The Renters’ Reform Bill could actually offer some good news for landlords. Whilst tenants will be able to leave more easily, they will also be required to give two months’ notice, giving you more time to find new renters without losing out on income.

The abolishment of Section 21 is actually a good thing, too. Yes, it will put an end to criminal landlords evicting tenants if they dare to complain about mould or damp. But if you’re a respectable landlord doing everything above board, you have nothing to worry about. You can easily recover your property if you have evidence of tenants’ anti-social behaviour or purposeful failure to pay rent – and, if you want to move back in yourself or are planning to sell, you’ll simply give tenants two months’ notice before the keys to your house or apartment are safely back in your hands. You’ll even be able to put the property back onto the rental market after a three-month period if you change your mind.

No-fault evictions only refer to landlords requesting that their tenants leave, without giving sufficient notice or reason. Currently, even if model tenants have been paying their rent on time for years, people can simply tell them to up and leave at a moments’ notice, creating a significant amount of instability in their lives in the process. Sounds pretty unfair, right? What is also unfair, however, is upstanding landlords having to see their homes go to ruin in the hands of irresponsible and unruly tenants who care little about the property. Designed to protect both tenants and landlords, the Renters’ Reform Bill is here to change all that, bringing reduced notice periods for those who have damaged the property or continue to breach their tenancy agreement.

Of course, being able to evict anti-social tenants more easily also limits the amount of upheaval in your life as a landlord. You won’t pay as much in repair costs and won’t have to worry about appearing in court – especially given that the bill will also introduce a new Ombudsman, specifically dedicated to resolving disputes for as little as possible. A win-win, particularly when it comes to ensuring you receive due payment.

So, what about pets? Won’t they cause damage?

Well, it’s possible, yes. But if you want to remain competitive in an already challenging market, you should probably consider accepting furry friends, anyway. With 52% of British adults owning at least one animal[6], the increase in potential tenants would be huge if you were to accept pets. Plus, under the reform, you will also be able to make insurance for the pets obligatory, to cover any damages that might occur.

The Verdict

With 33% of private landlords in England and Wales planning on cutting the number of properties they rent out[7], there may be an increase in buy-to-let owners selling up. But it’s important to remember that it’s not all down to the reforms. There are plenty of personal reasons for selling a buy-to-let, from moving to a new area to reaching the natural end of your property journey. Plus, the UK has been suffering from record-high inflation rates and rising mortgage prices lately, with the uninformed panicking and looking for a quick out. The more astute among you will see this as an opportunity rather than a threat, as the desire for quick sales makes it a great time to grab a bargain.

With the majority of UK adults unable to save for a deposit and climb onto the property ladder, there has never been greater demand for rental property. This also means that most renters will be happy to remain long term, provided that you are a caring and attentive landlord who doesn’t go out of their way to discriminate or make life difficult for your tenants.

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