Last month’s parliamentary launch of the Renters (Reform) Bill put forward new regulations for the private rental market. Here, we unpick the expected changes and how they might impact landlords.
Our first message to buy-to-let landlords in Hitchin and Herts is: don’t panic. At least not yet! When it comes to passing proposed legislation into law, the wheels of Westminster turn quite slowly. It’s anticipated that it will take another 12-18 months for the Renters Reform Bill to be passed into law – giving landlords plenty of time to prepare.
What changes can we expect?
The Bill puts forward many recommendations from the Government’s 2022 white paper that outlined suggestions for creating a fairer private rental sector. It’s worth noting that as the Bill passes through parliament, we can expect further amendments – so none of the proposed changes are set in stone yet.
At the launch of the new Bill, the Housing Secretary, Michael Gove, stated that the legislation aims to improve the quality of rental properties, creating a fairer market for renters, because: “Too many renters are living in damp, unsafe, cold homes, powerless to put things right, and with the threat of sudden eviction hanging over them.”
One headline measure in the Bill is the scrapping of Section 21 notices for eviction, which aims to remove the ‘threat of sudden eviction’. Taking away one of the current methods landlords use to regain possession of properties is perhaps the most concerning element of the Bill, so let’s explore this in a little more detail first.
Bye bye Section 21
Currently, landlords use Section 21 ‘no fault’ notices to give tenants two months’ notice to vacate a property without stating a specific reason for issuing the eviction order.
Under the new Renters (Reform) Bill, ‘no fault’ Section 21 evictions will be banned. This will force landlords to use a Section 8 notice which requires them to select at least one of 18 pre-defined reasons for removal.
Removing Section 21 responds to campaigns from organisations such as Shelter that have provided examples of landlords misusing the notice to evict tenants in unjust circumstances. For example, there are examples of landlords issuing a Section 21 if tenants request repairs. These so-called revenge evictions are possible because landlords are not required to cite a valid reason.
How will the removal of Section 21 impact landlords?
Although this change might sound worrying, in practice, good landlords will usually have a valid reason for evicting a tenant. For example, under the Section 8 system, you will still be able to regain possession of a property for all the typical scenarios, including:
- Your tenant is in arrears
- Your tenant has caused a nuisance or damaged the property
- Your tenant has broken the law or been involved in domestic violence
- You want to sell the property
- You or your close family wish to move into the property
Why are some landlords voicing concerns?
If a tenant refuses to leave, regaining possession through the courts using a Section 21 notice is quicker and easier than with a Section 8 one. So, understandably, some landlords are concerned about the additional cost and time that might be incurred.
It’s also possible that England’s court system will be overloaded with new Section 8 repossession claims – resulting in an even longer eviction process, which landlords are obviously keen to avoid.
The government has stated that we can expect to see further changes that make the eviction process quicker and easier if the tenant is at fault. This will address some of the concerns over switching to Section 8 notices.
Landlords also want clarification on the tenant documents currently required to support a Section 21 notice. Will these now be required for a Section 8 notice? At present, this isn’t clear, and again, we won’t know the answer until the nitty-gritty of the Bill is ironed out.
What else is in the Renters (Reform) Bill?
The Bill covers a range of other measures, and the following proposals will impact all landlords. The proposed changes include:
- Rent increase controls. Landlords cannot increase a property’s rent more than once every 12 months, and any increases require two months’ notice.
- Challenges to rising rent. There are plans to make the process for challenging rent increases digital and more accessible for tenants to complete.
- Landlord registration. It is proposed that landlords will register their details and properties on a new online portal. The government suggests there will be a proportionate fee for this service. The amount has yet to be set, but landlords will be expected to pay this.
- Ombudsman scheme. This will link to the landlord registration portal to provide tenants with a formal process for lodging complaints. Again, a fee may apply to register with the scheme.
- Notice for ending a tenancy agreement. The minimum notice period required to end a tenancy will be extended to two months minimum.
- Landlords will have to provide a good reason for refusing permission for tenants with pets and can request that tenants prove they have adequate insurance to cover pet damage.
- Tenants receiving benefits. Landlords cannot place a blanket ban on renting properties to tenants receiving benefits.
- Decent Homes Standards. This guidance will be extended from social housing across the private market to define a minimum quality standard for all rental housing.
If you rent out properties to students, the proposal to abolish Abolishing Shorthold Tenancies (ASTs) is a big deal, as it will allow students to end tenancies earlier at the end of the academic year – rather than paying for a 12-month AST. The government is expected to address this loophole to keep the student market feasible and buoyant.
There are also plans to increase enforcement powers for local councils. So, landlords who fail to register with the newly proposed schemes could face fines of up to £30,000, and repeated offenses could lead to a Banning Order. That said, councils already have powers to fine bad landlords up to £30,000, but a lack of local government resources currently results in little or no enforcement action.
Do I need to worry?
Overall, if you rent properties of a high standard and are already up to date with all current rental market regulations, we don’t see anything significant to worry about in this forthcoming legislation.
“Our new laws will support the vast majority of responsible landlords who provide quality homes to their tenants.” Michael Gove
If you feel unsure whether you’re fully up to date on your current legal responsibilities as a landlord and want to feel prepared for what lies ahead, give us a shout. We offer property management services in Hitchin, which means we’re very familiar with all the current responsibilities and the best ways to keep on top of them.
M A S O N S is a leading letting agent in Hitchin, covering rental and buy-to-let properties in Hertfordshire. Founded on award-winning lettings experience, we specialise in property management, buy-to-let in Hitchin, and residential lettings – drop us a line at 01462 557 477 or [email protected]