Renters (Reform) Bill: should landlords be concerned? - Total Landlord Insurance

October 31, 2023
Total Landlord Insurance
Renters (Reform) Bill: should landlords be concerned? - Total Landlord Insurance

Note: Articles on the Renters (Reform) Bill will be continuously updated as details emerge


Updated 31 October 2023

Read an interactive and user-friendly version of this guide below.

Renters (Reform) Bill update: Second reading

Although the Renters (Reform) Bill was introduced to Parliament on 17 May 2023, there was a lengthy delay before the second reading of the Bill, which finally took place on Monday 23 October 2023. The Bill will now progress to the committee stage – the third of five stages in the Commons - where a cross-party group of MPs will review the legislation in detail, propose new clauses and vote on any proposed changes. The committee stage is due to be completed by Tuesday 5 December.

It’s predicted that significant changes to the Bill are likely during its next stage as it progresses through Parliament. For an overview on likely changes to the Bill, head over to our Renters (Reform) Bill hub, where you’ll also find links to each section of the Bill.

Initial reaction to the Renters (Reform) Bill

The first thing to say is that, although there was a lot of media and industry coverage of the rental reform proposals when the draft Bill was introduced in Parliament on 17 May 2023, bills tend to take up to and beyond a year to become laws – during which time the contents can change, sometimes significantly - and then the Act generally comes into force around six months after that.

And when it comes to the rental market, there’s often a phased approach, with new tenancies being subject to the new laws first, and existing tenancies a year or so later. That means it’s likely to be at least 18 months before any of these proposed reforms come into effect and the proposals may undergo numerous amendments over the coming months.

But, for now, what elements of the current proposals do landlords need to be concerned about and what’s really not going to make much difference in practice?

Read on for our analysis, and watch this video with Sean Hooker, Head of Redress at the Property Redress Scheme and property expert, Kate Faulkner OBE, who discuss their biggest concerns and offer advice to landlords and agents on how they can prepare for the changes.

Scrapping Section 21 notices

Although there’s been some widespread pushback from landlords about losing the right to take back their properties at two months’ notice and without having to give a reason, the reality is that most do have a good reason to evict their tenant – whether they use a Section 21 or a Section 8.

Many choose to use Section 21 either because it’s easier to move to a possession claim if the tenant doesn’t leave, or because the tenant has requested it so that they can apply for local authority housing.

The reality is that landlords don’t go around evicting tenants for no reason, and under the proposals they will still be able to take their property back if they need to via Section 8, including if:

  • The tenant is in rent arrears
  • The tenant has caused nuisance or property damage, broken the law or been involved in domestic violence
  • They want to sell
  • They want to move themselves or close family into the property

The Government is also assuring landlords they will make it easier to repossess properties where tenants are at fault.

The main way this move could negatively impact landlords is if the court system remains unchanged and becomes overwhelmed with possession claims, as every one of them will require a court hearing if the tenant challenges the eviction. However, at the second reading of the Bill on 23 October 2023, the Government confirmed the need for improvements to the courts before Section 21 can be abolished.

This means that the Government will not proceed with the abolition of Section 21 until reforms to the justice system are in place.

Read more on this in our separate Renters (Reform) Bill articles, ‘What’s happening to evictions and Section 21?’ and '‘Will the court process for evictions be improved?'

One final thing to note is that the rules on issuing prescribed information to the tenant – such as the Energy Performance Certificate (EPC), gas safety certificate and deposit protection information - will have to change. Currently, this must be issued in order for a Section 21 notice to be valid, but it’s not yet clear what will come into place in relation to these documents (if anything) when Section 21 disappears.

Making all tenancies periodic and introducing two-month notice periods for tenants

As the proposal stands, abolishing Assured Shorthold Tenancies (ASTs) and introducing blanket two-month notice periods for tenants is primarily an issue for landlords of student properties. Currently, they can issue tenancy agreements for a 12-month fixed term, to make sure the property remains tenanted for the whole calendar year, not just the academic year.

But if students can give notice at any time, they will be able to leave before the summer holidays or potentially after only a few months in the property – for example, if they give up their course or fall out with housemates. Given the difficulty of finding students that need accommodation in the middle of the academic year and the cost of having to carry out additional referencing and other admin for replacement tenants, landlords are understandably worried.

And with demand for student rentals already exceeding supply in many university towns and cities, the last thing the industry needs is a mass exodus of landlords, so this is one proposal in the Bill that’s highly likely to be reviewed. And indeed, at the second hearing of the Bill in October, Secretary of State, Michael Gove, offered reassurance that this proposal will be reviewed at the committee stage. He acknowledged that the Bill as it stands would pose problems for the student market, and committed to proposing a new ground for possession for student landlords.

Landlords of ‘single let’ properties shouldn’t be too concerned, as tenants don’t tend to ‘hop’ from one rental property to another without a good reason. The abolition of ASTs should actually encourage landlords and tenants to have a good relationship throughout the duration of the tenancy, rather than the focus being on the end of the tenancy. If you’re a landlord who is in regular contact with your tenants and carries out repairs promptly, it's unlikely that your tenant will want to leave unless they have to, even if they can in theory give notice at any time. And having to give two months’ notice instead of the current one month is good news for landlords, as they’ll have more time to line up a new tenant.

The other change to tenancies is that rental periods will be restricted to either one month or 28 days – but the vast majority of landlords already charge rent on a monthly basis, so won’t be affected. Read more on this in our separate article, 'How are rental tenancies changing?'

Introducing landlord registration

There are two proposed elements to this:

  1. Privately Rented Property Portal – a publicly-accessible database of landlords and their properties that will also provide information to help landlords understand and comply with their legal obligations
  2. Private Rented Sector Ombudsman – a government-approved scheme that will allow tenants to seek redress if they have complaints about their landlord

All private landlords will be required to register themselves and their properties on the portal and join the Ombudsman scheme. Although there will be a fee for each, the proposals state that these will be “proportionate and good value”, and the Government intends to link the two schemes so that landlords only need to enter their information once.

Similar registration schemes have been in effect in Scotland, Wales and Northern Ireland for a number of years already and have not proved to be an issue or barrier for landlords.

In terms of penalties for non-compliance, if landlords advertise or let any property without it being registered with the portal, or they fail to join the Ombudsman, the local authority will be able to fine them up to £30,000. For repeated offences, they could face criminal charges and a Banning Order.

As with so much in this Bill, these changes really shouldn’t concern law-abiding landlords who take a professional approach to letting their property.

Tightening up the rules around rent increases

Landlords will not be able to increase the rent more than once every 12 months and must give tenants two months’ notice via a Section 13 notice.

While this probably won’t make much difference to most landlords, there may be an increase in the number of tenants challenging an increase. That’s because the Bill proposes digitising the first-tier property tribunal process to make it easier for tenants to access.

Other proposed changes that will make little difference to most landlords…

Local authorities are being given more powers to fine criminal landlords, but that overlooks the issue of resources. Councils can already fine landlords up to £30,000 without having to go to court, and yet there has been relatively little action taken to use this power, simply because they don’t have enough money or people to make the checks required to root out bad landlords. This funding problem is really what the Government needs to address.

Blanket refusals to accept tenants that receive Universal Credit or housing support are being outlawed, with landlords being encouraged to make decisions on a case-by-case basis. However, the reality is that because local housing authority rates are capped, tenants on benefits often simply struggle to afford private rents in many areas. For more on this, see our article, ‘Are no DSS tenant blanket bans being outlawed?’.

Finally, landlords won’t be able to turn down a tenant’s written request to keep a pet without a good reason. Many landlords already allow suitable, well-behaved pets and the good news is that pet insurance will become a ‘permitted payment’ under the Tenant Fees Act, meaning landlords will be able to insist on their tenant obtaining insurance to help cover the cost of any damage to the property. This does not mean however that a landlord can’t refuse pets!

All in all, the majority of the changes proposed in this Bill will make little difference to most landlords and agents, who let property legally and safely. Strengthened Section 8 grounds for eviction may actually make it easier for landlords to regain possession of their property if a tenant stops paying rent or is behaving in an anti-social way. The new Ombudsman may result in quicker dispute resolution and could be cheaper than going to court, while the property portal is likely to be a valuable resource that makes it easier for self-managing landlords and agents to keep up with legal changes.

However, if you currently self-manage and you feel you need some help navigating all these upcoming changes, it may be time to consider working with a qualified letting and managing agent. In that case, check out our ‘Ultimate landlord guide to choosing a letting agent’. On the other hand, if you have enough time to dedicate to being a hands-on landlord and want to self-manage, read our ultimate landlord’s guide to rental property management – it covers all the key elements of successfully managing both the tenancy and your property, to help make sure your rental investment journey is as rewarding as possible – both personally and financially.

Listen to our bonus episode of The Property Cast with Sean Hooker, Head of Redress at the Property Redress Scheme, and leading property expert Kate Faulkner OBE, for their initial reactions to the Renters (Reform) Bill – will it deliver what tenants need and will it have unintended consequences? Tune in to find out what the experts think. Watch this video excerpt to hear their discussion on whether the Bill really is a game-changer.

Keep up to date on the Renters (Reform) Bill

Our media partner, LandlordZONE, offers exclusive insights and breaking news on the private rented sector. Keep up to date with everything you need to know by subscribing to LandlordZONE, the UK’s largest online landlord property news website.

You can also visit Total Landlord's Renters (Reform) Bill hub which will be regularly updated as more details emerge.

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