Renter’s Reform Bill Update
The private rental sector is currently expecting a huge shake-up brought in by The Renter’s Reform Bill which was proposed in May, with some crucial takeaways for landlords. Whilst there isn’t a clear timeline for when this will legally take effect, it is important for landlords to keep their eye on the latest Renter’s Reform Bill update so that you can be fully prepared for when it becomes official legislation.
Renter’s Reform Bill Update: October 2023
The Renter’s Reform Bill went through a long-awaited second reading on Monday, October 23 after delays stemming from Conservative push backs only heightened uncertainty.
The most recent Renter’s Reform Bill update saw the government put a halt on the most contested reform within the Bill: the abolishment of “No-Fault” evictions.
After months of push backs both within parliament and by landlord groups, Housing Secretary, Michael Gove, said it was vital to improve the justice system and court processes associated with property repossessions to gain the trust of landlords.
Despite months of pressure, this update is somewhat unexpected given the governments’ original pledge to ban the use of Section 21 back in 2019, which formed the foundations of the Renter’s Reform Bill.
SevenLiving CEO, Charlotte Thursfield said: “This decision may have a huge impact on the Bill moving forward, as banning the use of Section 21 formed a big part of the original pledge, and the government’s promise, to bring more security for renters to the private rented sector.
“It will take a while for any reforms to court procedures to be agreed, let alone take effect, so this decision only worsens uncertainty at a time where landlords already lack confidence in the Bill. It’s difficult for landlords to plan ahead and this deepens the risks associated with letting property.
“Ultimately, this is a big step backwards for what essentially aims to give more protections and create a more balanced system for both landlords and tenants.”
Landlord Sentiment
The Renter’s Reform Bill has been welcomed by many tenants’ groups and charities who argue that it will make the private rented sector fairer and more secure for tenants. However, some landlords’ groups have expressed concerns that the Bill will make it more difficult for them to manage their properties.
A survey of 2,000 letting agents, landlords and tenants conducted for The State of the Lettings Industry report revealed 25% of respondents felt “very” pessimistic and 29% were “somewhat” pessimistic about what was to come, while just 14% of landlords said they felt optimistic.
The National Residential Landlords Association believes the future success of the Renter’s Reform Bill depends heavily on the confidence of landlords, with Chief Executive, Ben Beadle, saying:
“As they consider the Bill, MPs and Peers will need to make sure it secures the confidence of responsible landlords every bit as much as tenants. Should the Bill fail to secure the confidence of landlords the shortage of homes will only worsen, ultimately hurting renters.”
So, let’s dispel the most pressing misconceptions:
Renter’s Reform Misconceptions
It is important to remember that the Renter’s Reform Bill is not just about protecting tenants. It is also about creating a more sustainable and balanced private rented sector, which means protecting landlords too. There are two major proposals that are causing concerns amongst landlords:
1) Abolishment of “No-Fault” evictions means less power for landlords
Although the government recently confirmed it will delay the abolishment of section 21 ‘No-Fault’ evictions, this continues to cause huge issues for the Bill as it makes its way through Parliament.
This reform was proposed because Section 21 “No Fault” eviction notices were considered a leading cause of homelessness in the UK, and the aim of removing this was to give tenants greater security and curb rising homelessness as a result. This particular reform simply follows the likes of Scotland and Wales, who banned Section 21 notices in 2017 and 2022 respectively.
In fact, the Renter’s Reform Bill simultaneously aims to protect and strengthen your right as a landlord to recover your property when you need to. For example, if you wish to move into your property, sell it, or your tenants refuse to pay rent, it will be easier to ask your tenants to leave.
Your right to repossess will be reinforced and the length of notice periods will also be reduced where tenants have been irresponsible or displayed anti-social behaviour, for example, breaching their tenancy agreement or causing damage to the property.
To give you better peace of mind, we recommend using a trusted letting agents to find you the most reliable and trustworthy tenants. All our service levels include comprehensive tenant referencing and a right to rent check, find out more about our landlord services here.
2) Switching from ASTs to Periodic Tenancy Agreements means less control and more risk
The Renter’s Reform Bill is proposing an end to Assured Shorthold Tenancies (ASTs), replaced by uniform two-month notice periods which can be served by either party at any time. Many landlords feel that they will have less control over their properties once the protections set out in standard ASTs are replaced by those set out in periodic tenancy agreements.
In reality, this primarily impacts landlords of student lets where it is common to issue 12 month fixed-term tenancies to cover the calendar year and eliminate vacant periods caused by the early end of the academic year.
For landlords of traditional AST properties, the concern should be minimal as it is very unlikely a tenant will want to leave within a short space of time, particularly without a valid reason. This means that, as long as a healthy relationship and positive communication between landlord and tenant is maintained, you can reduce tenant turnover and potential void periods.
The extension of the notice period from one month to two months could also benefit landlords by providing them with more time to secure new tenants.
Keep up to date with Renter’s Reform Updates
You should also be aware that the Renter’s Reform Bill is still at an early stage of its passage through Parliament, meaning that the details of the Bill could change before it becomes law.
Our team of professional letting agents are landlords themselves, so if you’re looking for clarity or advice on the upcoming changes to the private rental sector, please do not hesitate to get in touch and one of our team will be happy to help.
Alternatively, our flexible, online landlord services are catered to your individual requirements – whether you’re a hands-on landlord or you prefer to take a step back. We make lettings simple, and you can find out more about our landlord services here.