The Renters Reform Bill
If you're a landlord in the UK, you've likely heard about the Renters Reform Bill. But what exactly is it, and how will it impact you and your tenants? We answer all of this in today’s blog…
What is the Renters Reform Bill?
The Renters Reform Bill is a proposed law aimed at changing certain rules about renting homes in the UK to work towards a fairer and more equitable private rented sector (PRS) that ultimately enhances the overall quality of housing.
Presented to parliament on May 17, 2023, the Bill is currently going through an extensive parliamentary procedure in the House of Commons, before it is enacted. It has already gone through significant stages of scrutiny and amendments. The Renters Reform Bill is the most significant piece of legislation in the last 30 years that impacts both private renters and landlords. It covers various aspects of the rental process, from the duration of tenancies to standards of living conditions.
The intention is to pass the bill into law before the next General Election (autumn of 2024). Some policies may come into effect gradually as some elements will require further regulations and preparations that won’t realistically be in place by this timeframe.
The Renters Reform Bill is being introduced for a number of reasons, but to cut a long story short, the private rented sector in the UK is unbalanced and affects a huge amount of the population. It provides 11 million renters with homes and 2 million small-scale landlords, with an income. it can no longer be ignored. There are millions of properties being privately rented in the UK; some renters feel inadequately protected under current legislation, while responsible landlords face a constant battle fighting against a stereotype that’s been created by a minority of irresponsible landlords.
There’s been a monumental amount of back and forth already with the passing of this Bill, and some have even dubbed it ‘the biggest shake up in 30 years’ - to say the anticipation over the final product is palpable is putting it lightly. When you consider what the Renters Reform Bill is, it’s important to appreciate that there are two sides to the coin; there are some genuine positive points to celebrate in the bill, particularly when it comes to tenants’ rights. Landlords have had some serious concerns about the softening of some areas such as the ability to evict anti-social tenants or those who consistently miss rental payments.
What's Included in the Bill?
Honest truth - too much for one article but here are the key points you need to know for now:
Property portal
The government refers to it as a 'rental portal' which will be managed by local authorities. Landlords must register themselves and their properties on a property portal. Tenants, council officers, and the police will have access to verify if a landlord is registered and to review any previous issues, such as inadequate maintenance or overcrowding.
Longer Tenancies:
One major change could involve implementing longer tenancy agreements, allowing tenants to stay for extended periods without landlords having the ability to request them to vacate using Section 21. This change aims to streamline current tenancy setups by transitioning all leased properties from fixed-term agreements/assured short-hold tenancies (ASTs), (e.g., 6 or 12-month contracts) to a unified system of rolling contracts without set end dates.
Rent Increases:
Limits might be introduced on how often and by how much landlords can increase rent during a tenancy.
Improvement Standards:
Landlords may need to ensure their properties meet certain standards for safety and comfort as well as adhering to the new rules about the proposed. The government says 500,000 of the 11m private rental homes pose “an imminent risk to tenants” with issues like damp and mould. Now the Bill will make a Decent Homes Standard (currently existing for council and housing association homes) apply to private rental flats and houses.
Property Ombudsman
The Renters (Reform) Bill proposes the introduction of a new Government-approved ombudsman. All landlords are required to register for this new redress scheme, regardless of whether they employ a letting agent. It will require landlords who are at fault to make amends, whether that involves an apology, corrective measures, or compensation.
Evictions:
Changes to the eviction process, affecting Section 8, might offer more protections for tenants and impose more responsibilities on landlords to follow procedures. In contrast to this, the Bill proposes measures to simplify the process for landlords to reclaim their properties in cases where tenants are responsible. This includes expediting evictions for anti-social behaviour and introducing additional reasons for repeated rent arrears. However, there are exceptions where landlords cannot utilise these grounds in the initial six months of the tenancy, such as cases involving property relocation, sale, or redevelopment.
Pets for Lets
Landlords must not unreasonably deny a tenant's pet request. Yet, regulations might require renters to purchase insurance in case of pet-related damages like a dog chewing the carpet or a cat scratching the sofa. The honest truth is that we don’t engage with people who penalise tenants for having pets. In our experience, it’s actually kids that do more damage than house pets. When you consider the number of domestic pets in the UK - there are approximately 10 million cats and 25 million dogs - this is a staggering amount of households that will be impacted and therefore considered a positive when this element comes into force.
How do landlords feel about it?
Opinions among landlords are divided. Some are pessimistic about the changes, while others see opportunities for improvement. According to a recent survey, 43% of lettings agents feel negatively about the Renters Reform Bill. Letting agents seem to be more optimistic about the reforms as it should, long term provide more structure and clarity once the legislation has been passed.
The road ahead
Unless key structural issues that are impacting the rental market are addressed, we cannot reasonably expect to achieve a true reform or strengthening of the lettings market any time soon. In the last 12 months especially we’ve seen an increasing number of landlords choose to reduce their stake in the market or leave it entirely. The knock-on effect of this, when paired with the obvious lack of new rental homes being built, is the undeniable supply and demand issue. This has caused the continued hike in rental prices which has then painted a very bleak landscape for tenants looking for new homes. The main criticism that the Bill is facing is that the passing of this legislation won’t be able to fix the wider issue but some argue that it is a step in the right direction. The Government would benefit from seeing the publication of this legislation as exactly that, and appreciate the long line of other urgent changes that need to be addressed and implemented.
A healthy rental market requires empowered, protected tenants as well as fair-minded, incentivised landlords in order to function. Any legislation that addresses one without the other won’t make the difference it needs to.
A thriving rental market needs tenants who feel empowered and protected, alongside landlords who are treated fairly and motivated. Legislation that only focuses on one side of the equation won't bring about the necessary changes.