Just recently, the UK government introduced the Renters Reform Bill to Parliament. The Bill, aimed at improving tenants’ rights and the quality of rental properties will have a big effect on the private rented sector once it becomes law.
While significant changes are expected, there is no need for landlords to panic. Read to learn more about how the Renters Reform Bill relates to landlords.
The Renters Reform Bill, introduced in 2019 by then PM Theresa May, is aimed at improving the standards in the private rented sector (PRS) by addressing the imbalance between landlords and tenants. The jury is still out there as to when the Bill will come into law, but estimations point to 1 Oct 2024.
Main Highlights: Renters Reform Bill
| Renters Reform Bill Highlight | Landlords Peace of Mind |
| End of fixed term tenancies | Tenants must give 2 months notice period. Landlords can avoid lengthy void periods.
Note: it is not easy or cheap to move around in the UK. Tenants will need to find a new deposit and set up their utilities all over again. |
| Removal of Section 21 Evictions
(Tenants cannot be evicted without specific, and legal reason) |
Improved Section 8 Evictions: strengthened grounds for possessions
Note: Not much impact expected for landlords as only 6% of tenants are evicted this way. Under the new Section 8, landlords can quickly and effectively regain access to properties when tenants fail to meet their obligations. |
| Rent Increase Limitations | Landlords can increase rents once per year.
Note: Raising rental rates annual is reasonable, ensuring landlords get their dues, while protecting tenants from sudden & unreasonable hikes. |
Another highlight is the introduction of the Decent Homes Standard, which imposes minimum standards so that tenants live in safe and habitable properties. And, for the sake of accountability, private landlords will need to register their properties and themselves on a publicly-accessible landlord database as well as join the government-approved ombudsman scheme.
Note: similar schemes have been in effect in Northern Ireland, Scotland and Wales for some years now and have not proven to be an issue or barrier for landlords. Foreign landlords typically use agencies to manage their properties, and already benefit from this mandatory redress scheme.
Hidden Benefits of the Renters Reform Bill for Landlords
There is a lot to gain from the Renters Reform Bill, not just for renters, but also for landlords. Here are the top benefits of the Bill for landlords:
i) Increased Tenant Stability
While the introduction of indefinite tenancies and the abolition of Section 21 eviction notices allows tenants to leave within a shorter period of time, it also means they can opt to stay much longer. Moving is not easy and tenants typically prefer to stick with a good landlord, thus reducing turnover and potentially minimising void periods.
ii) Enhanced Reputation
Landlords that adhere to new regulations and who provide high-quality, well-maintained properties will be well esteemed among the wider tenant community. This leads to increased demand for their properties, which means constant rental income flow.
iii) Improved Property Standards
The improvement in the overall quality of the rental market because of the Bill’s focus on advancing rental property standards is a boon to landlords. Good living standards attracts tenants and helps increase property values in the long run.
iv) Clearer Regulations
With clearer regulations, the Bill makes it easier for landlords to navigate the rental market as it reduces confusion, ensures compliance and minimises the risk of unintentional legal violations.
v) Streamlined Redress Mechanisms
The requirement for landlords to join an ombudsman scheme means simpler and more accessible redress mechanisms for tenants’ complaints, leading to more efficient resolution of disputes and avoiding prolonged legal battles.
Conclusion: Landlord Wins
The provisions of the Renters Reform Bill seem reasonable enough. Responsible landlords should have no issues with the Bill as it aims to check unfair practices by landlords. There are also protections for landlords provided by existing legislations. Hence, while 11 million private renters in England are rejoicing over the tenant security coverage under the Bill, 2.3 million landlords also stand to benefit.
Here’s another takeaway: with 11 million private renters in England and only 2.3 million landlords, demand clearly supersedes supply. For landlords, this is a good thing as it means less void periods and steady rental income—but ONLY if you pick the right location to invest in.
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Note that the Renters Reform Bill may undergo revisions or changes as it progresses through the legislative process. It is essential to stay updated with the latest developments and final provisions of the bill to have the most accurate understanding of its significant points.
By Vivienne Pal
Sources:
- https://www.gov.uk/government/news/government-introduces-landmark-reforms-to-deliver-fairer-private-rented-sector-for-tenants-and-landlords
- https://www.parkersproperties.co.uk/news/the-renters-reform-bill-and-how-it-could-affect-you-as-a-landlord
- https://www.propertyrescue.co.uk/useful-guides-articles/when-will-the-renters-reform-bill-become-law-2023-update/
- https://www.martinco.com/news/the-renters-reform-bill-what-you-need-to-know-as-a-landlord
- https://www.totallandlordinsurance.co.uk/knowledge-centre/renters-reform-what-landlords-need-to-know
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