We’re keeping a close eye on the new Renters’ Rights Bill as it progresses through parliament to keep M A S O N S landlords and tenants up to speed on what to expect once it becomes law.
First there was the Renters Reform Bill put forward by the last Conservative Government (which we explored way back in June 2023). Now that Labour are in power the Tory bill is dead, and it’s down to the new Renters’ Rights Bill to fix the record rent prices and surging homelessness levels that tell us all is not well in England’s private rental sector.
Broadly speaking the Renters’ Rights Bill builds on the Conservative’s Reform Bill. It made its debut in the House of Commons on 11 September 2024, with Secretary of State for Housing, Angela Rayner, stating that it will ‘overhaul renting’ and ‘rebalance the relationship between tenant and landlord’.
Of course, it’s essential to remember that as the Bill reaches the House of Lords, before receiving Royal Assent – there is scope for change to occur, especially given the varying political perspectives in the Lords.
So, here’s a summary of the key changes you can expect, as things currently stand:
Abolishing Section 21 ‘no-fault’ eviction notices
While the end of Section 21 ‘no-fault’ evictions may sound concerning to landlords, it will still be perfectly possible to regain possession of a rental property under reasonable circumstances.
For instance, if a landlord requires a property back or a tenant has caused damage, an eviction notice will still be served. However, the notice periods will be extended slightly, which, in most situations does benefit both landlords and tenants, as it gives all parties more time to prepare.
Periodic tenancies: a potential challenge
We think one of the more contentious elements of the Bill is a shift to periodic tenancies. A periodic tenancy is a rolling tenancy agreement with no fixed end date. It means tenants can end a periodic tenancy at any time, by providing just two months’ notice in writing.
Potential impacts include a higher turnover of tenants – for example, those seeking short term lets whilst awaiting a property purchase. Should this happen, landlords may face an increase in costs associated with re-letting properties more frequently. This in-turn will likely drive rental costs up.
For tenants seeking long term security, being unable to secure a longer tenancy period is also a concern. With periodic agreements, landlords can sell up at any time after an initial 12-month period. In our view, adding further insecurity and unpredictability into the market is not a good idea.
Fair rent increases
For us, we see the introduction of regulated rent increases based on the Consumer Price Index (CPI) as a positive move. It allows tenants to plan ahead for any changes to their rent and prevents sudden, unaffordable hikes. In fact, the rent increase clause in our tenancy agreements is based around CPI and we already advise all our landlords to cap increases using CPI, as it provides a balanced and fair approach for both parties.
Landlord ombudsman: a positive step
The proposal to establish a Landlord Ombudsman is a welcome one, particularly in providing tenants with better protection against negligent landlords. We think this system will likely help to improve standards across the private rental sector – something we should all welcome.
This will be accompanied by greater enforcement powers for local authorities to tackle rogue landlords and a proposed digital private sector database.
Rental bidding: not a major concern
Some have raised concerns about rental bidding wars becoming problematic. In our experience, when tenants offer a rent over the odds it can be a sign that they have been turned down elsewhere.
So, we always advise caution when accepting bids that are over the odds. A rise in rental bidding wars isn’t something we’re overly concerned about.
Renting with pets: a welcome adjustment
Another change involves renters with pets. While the government has prohibited landlords from requesting additional deposits, we do think it is sensible for landlords to require tenants to take out pet insurance to cover any potential damage.
This requirement offers some peace of mind for landlords while giving tenants the flexibility to have pets. However, landlords can still decline pets in specific situations, such as severe allergies, phobias or a head lease that places a restriction on all pets.
Grounds for possession: extended eviction timeline
The Bill proposes extending the mandatory threshold for eviction due to rent arrears from two to three months. This is a little concerning, as considering the time required for court proceedings and bailiff actions, it could take 8-10 months to remove a tenant who is not paying rent.
For landlords, it underscores how important it is to consider putting in place rent guarantee insurance. It also means that robust tenant referencing procedures are even more critical … that’s the secret behind our track record of zero evictions due to arrears in any M A S O N S managed properties!
So, on balance, there’s still not too much to be worried about…
For responsible landlords, the Renters’ Rights Bill doesn’t present anything too concerning. Changes such as abolishing Section 21 and rent control, offer a balanced approach, levelling up the rights of tenants.
Other measures, like periodic tenancies and extended eviction timelines, will potentially require some adaptation and planning by landlords – but if you ensure tenancies are well established and managed, and have the appropriate insurance in place, there’s nothing to be losing any sleep over.
As always, M A S O N S is here to help you navigate these changes – with practical solutions on hand for reviewing tenancy agreements and setting up appropriate insurance cover. Stay tuned for more updates as the bill becomes law and if you have any concerns, then do drop us a line.
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 – so if you want to talk landlord insurance, then drop us a line at 01462 557 477 or [email protected]
Please note: this article should not be interpreted as legal or financial advice.
