As we approach the latter half of 2023, the long-debated Renters Reform Bill has remained at the forefront of discussion within the property industry. First proposed over four years ago, this extensive legislation aimed at overhauling the rental sector has faced numerous delays and postponements over the years, leading many to speculate that it may never come to fruition.
However, this May brought renewed confirmation from the government that reforming and updating rental regulations still constitutes a priority. It is evident that transformative change is imminent for the UK rental marketplace.
From empowering renters with enhanced rights to imposing added responsibilities on landlords, the scale of these impending reforms has left letting agents and property owners alike questioning how their roles and businesses will be impacted.
Though uncertainty lingers regarding the bill’s final form, one thing is clear: all eyes are on the government as the rental industry awaits the shake-up that is soon to come.
What’s changing with the new Renters Reform Bill?
The Renters Reform Bill has resurfaced as the government’s solution for improving the often contentious landlord-tenant dynamic. While aimed at cracking down on the small number of unscrupulous landlords, the bill’s sweeping reforms promise to impact the entire private rental sector.
The end of Section 21 ‘No Fault’ Evictions
The headlining act of the impending Renters Reform Bill is undoubtedly the elimination of the controversial Section 21 protocol, more commonly known as the “no-fault” eviction provision. This monumental change will remove landlords’ ability to initiate eviction proceedings without establishing just cause.
Landlords will no longer be able to evict tenants without providing a reason. Instead, landlords will only be able to evict tenants if they have a legitimate reason, such as rent arrears, anti-social behavior or the need to sell the property. Landlords will also be required to give tenants more notice before they can evict them. This will give tenants more time to find a new home and to move out.
The abolition of Section 21 evictions is a major victory for tenants’ rights. It will make it more difficult for landlords to evict tenants without good reason, and it will give tenants more security and stability. Tenants should be aware of the changes that are coming and should seek legal advice if they are facing eviction.
Big changes to section 8
With Section 21 no-fault evictions slated for elimination, Section 8 repossession protocols will become landlords’ only recourse for ending tenancies. However, the criteria and procedures for Section 8 have undergone major renovations under the Renters Reform Bill.
The overarching ethos balances property owner rights with strengthened tenant protections. Landlords retain the ability to regain possession for sale, personal use or tenant violations like rent arrears and antisocial behavior. However, new limitations will be in place. For instance, evicting to sell or occupy is barred within the first six months, and requires two months’ notice. Similarly, repeat non-payers with two missed payments in three years now face mandatory repossession, even if balances are repaid before court.
By expanding mandatory grounds and expediting action for violations, the bill looks to filter out exploitative occupants while reassuring landlords that extreme issues can be decisively resolved.
Positive steps for leaseholders
The Renters Reform Bill is expected to make it easier and cheaper for leaseholders to extend their leases. Leaseholders will be able to extend their leases by a standard 990 years, with a ground rent of zero. This is a significant improvement on the current system, which only allows leaseholders to extend their leases by 90 years.
The calculation rates for lease extensions will be set and an online calculator will be available to make it simpler for leaseholders to find out how much it will cost to extend their lease. This will make the process more transparent and fairer. Marriage value, the increased value in the property once a lease extension has been completed, will be removed from the premium calculation. This tax is currently paid on lease extensions, and it can add a significant amount to the cost.
Removing it will make lease extensions more affordable for leaseholders. Overall, the Renters Reform Bill will likely have a positive impact on lease extensions, giving leaseholders more security and stability in their homes.
ASTs replaced by Periodic Tenancies
The impending Renters’ Reform Bill will dramatically transform one of the most common rental contract types – the Assured Shorthold Tenancy (AST). Under the new legislation, all ASTs will essentially convert to Periodic Tenancies upon expiration.
One under-the-radar change in the Renters Reform Bill targets lengthy rental agreements by revoking assured tenancy status for any fixed-term lease exceeding 7 years. This amendment aims to close loopholes that enabled mandatory repossession claims against tenants in arrears, even in unique cases like shared ownership and long leases with substantial ground rents.
By imposing a seven year assured tenancy cap, an important protection now extends to renters who previously resided in a precarious grey area. While impacting a narrow segment of typically long tenancies, this tweak proactively safeguards against potential exploitation of the system. Renters who previously had little recourse against eviction claims, despite extenuating circumstances, will now enjoy the same rights and due process afforded to standard assured tenants.
Though a subtle revision, extending assured tenancy protections to cover renters in lengthy or unconventional contracts is an important move to further strengthen tenant rights and standardise rules across all agreements. As the bill aims to even the playing field, this change closes another loophole that left certain renters exposed.
Changes to pet ownership rules
The upcoming Renters Reform Bill indicates that the tide is turning when it comes to landlords’ blanket bans on pets. The new legislation will make it much harder for landlords to prohibit pets without good reason. While the details are still in progress, it seems exceptions will be limited to valid concerns like allergies or pet impacts on flatmates. Landlords won’t be able to veto pets based solely on personal preference anymore.
There will be a clear process for tenants to request pets that landlords must respond to within 42 days. Unreasonable rejections can be appealed through a mediator but of course, responsible pet owners will still need insurance or pay a deposit for damages.
Overall, this long-awaited change reflects growing recognition of the mental health benefits of pets. As many people see their beloved animals as family, arbitrary “no pet” policies are rightfully on their way out. This looks to be a positive step towards modernising rental policies to catch up with societal views on responsible pet ownership.
Landlords need to be on the Lettings Database
A key part of the Renters Reform Bill is the creation of a comprehensive online Lettings Database for England. This publicly searchable portal will hold profiles on all landlords with details of their rental histories and track records.
Participation in the database will be mandatory for all landlords. They’ll need to actively update their profiles with current information or risk being labeled inactive, unable to rent out properties until their details are provided.
Importantly, the database will clearly flag any confirmed past rental violations by landlords. This transparency will empower renters and local councils to make fully informed decisions when evaluating potential landlords.
The overarching goal is to promote greater accountability and ethics in rentals through openness. Renters can better vet landlords while those with poor records may face consequences like suspended listings. Ultimately, this database aims to cultivate a fairer rental market by shining a light on landlord conduct.
An end to blanket bans
Among the most controversial aspects of the rental market have been the ubiquitous “No DSS” and “No Children” stipulations permeating rental listings. However, the Renters Reform Bill takes decisive aim at eliminating this systemic discrimination, making it easier for families to find their perfect home.
Under the new legislation, landlords will be expressly barred from imposing blanket bans against benefit recipients, families with children or other demographics. Rather than rejecting applicants sight unseen, owners must duly consider all prospective tenants through the same unbiased lens.
By dismantling historic prejudices around renter profiles, the bill opens rental access to demographics long obstructed through no fault of their own. With subjective screening criteria removed from the equation, tenants can expect consideration based on legitimate factors like ability to pay and rental history rather than identity.
While equality won’t materialise overnight, this prohibition on exclusionary advertising represents an important step toward a more inclusive rental sector. As the market adjusts to non-discriminatory practices, millions stand to gain fairer treatment and expanded options.
As the rental market’s primacy continues to solidify, the Renters Reform Bill represents the first of many steps toward a modernised framework designed to improve experiences and upgrade standards for the millions navigating this increasingly pivotal housing pathway.
How will Letting Agents & Landlords react?
With sweeping changes around property portals, ombudsman membership and tenant rights on the horizon, landlords of all scales are already leaning on agents to decode forthcoming regulations and implications. Though the specifics continue to evolve, agents staying abreast of the latest proposals will be best equipped to provide value-adding counsel.
In fact, those who become experts on seamlessly adapting to the new regime may gain competitive advantage and attract expanded business. However, the interplay of enhanced tenant protections and landlord obligations could also introduce fresh complexities and liability considerations for agents.
As the rental industry stands poised for disruption from the Renters Reform Bill, letting agents & landlords find themselves on the frontlines of navigating uncharted territory. Per the National Residential Landlords Association, agents will be instrumental in assisting landlords to achieve compliance under new legislation, whether that’s in person or utilising social channels to educate followers.
Here are some ways that impacted parties may respond to the upcoming changes:
- Educate themselves about the changes. The Bill is still in the process of being finalised, so it is important for letting agents and landlords to stay up-to-date on the latest developments as they evolve. Clients are likely to have questions in the coming months and agents need to be able to respond with accurate information. Lettings firms should familiarise themselves with the new rules and regulations, so that they can advise their landlord clients accordingly and be a constant source of up-to-date advice.
- Become more tenant-friendly. The Renters Reform Bill is designed to give tenants more rights and protections, so agents & landlords should respond to this by becoming more tenant-friendly. This could involve providing tenants with more information about their rights or offering them additional services, such as mediation or dispute resolution. Anything your agency can do to help landlords and tenants alike should be considered.
- Offer new services. The Renters Reform Bill is expected to change the way that landlords and tenants interact. Lettings agents can stay ahead of the curve by offering new services that meet the needs of both parties. For example, they could offer landlord property management services, or they could provide tenants with help with finding affordable housing.
- Become more tech-savvy. These changes are expected to make the private rented sector more digitally focused and agents can respond in advance by becoming more tech savvy now in preparation. This may involve using online platforms to market properties or, implementing software to manage tenancy agreements and rent payments. The earlier these systems are put in place, the easier it will be for agents to adapt when the Bill is finalised.
By taking these steps, letting agents & landlords can position themselves for success in the post-Renters Reform Bill world. In addition to these tips, agents should also be prepared to be more proactive, flexible and positive in their response to the changes. The Renters Reform Bill is a major piece of legislation that is likely to have a significant impact on the private rented sector. By being prepared for change, agents can ensure that they continue to provide excellent service to their clients.
This legislative change promises a seismic impact for the private rental sphere, mandating sweeping adaptations for both letting agents and property owners. With overhauls to tenant rights, landlord obligations and sector oversight on the table, stakeholders must vigilantly track updates to guarantee compliance once reforms materialise.
While the scale of change may seem daunting, these measures aim to cultivate a rental landscape benefitting all participants. By closing gaps around security and quality, elevating baseline standards and balancing stakeholder equities, the goal is to transform an often fractious domain into one defined by greater stability, fairness and functionality.