Yesterday, members of the House of Lords began their four-day committee stage reading of the Renters’ Rights Bill, as industry insiders debate the level of impact it will have on investment.
A piece of legislation that could change the way landlords and tenancies operate continues to make its way through Parliament, with the House of Lords now working through each of the clauses of the Renters’ Rights Bill while considering any amendments needed.
The four dates of the committee change are expected to conclude on 6th May (subject to change), after which it will move through to the report stage, offering another chance for House of Lords members to examine and make any changes to the final bill. It will then face a third and final reading, before passing to the final stages and ultimately being granted royal assent.
The Renters’ Rights Bill contains multiple proposed changes to the country’s rental market, including abolishing fixed-term tenancies and assured shorthold tenancies, instead replacing them with rolling-style contracts. Eviction rule changes are also in the bill, which is set to do away with the Section 21 ‘no-fault’ eviction and replacing it with an updated Section 8 eviction option.
Ideally, the bill is set to improve conditions for tenants, but not to the detriment of ‘good’ landlords, creating a fairer rental sector with higher standards and more security for all parties overall. However, it has faced criticisms and concerns from some in the industry who fear it could put buy-to-let landlords off the sector due to increased legislation.
Renters’ Rights Bill: the current debate
The proposed changes put forward by members to debate during the committee change include alterations to the suggested two-month notice periods; fixed tenancies for students; and voluntary extension agreements.
A more comprehensive list of the main measures that would be introduced by the bill are as follows:
- Abolish section 21, so-called ‘no-fault’ evictions, and move all new and existing assured tenancies to periodic rather than fixed term agreements with no end date.
- Reform possession grounds to allow landlords to regain possession of their properties in various circumstances whilst ensuring tenants’ rights.
- Allow for appeals against excessive above-market rents and end rental bidding by prohibiting landlords from asking for offers above the advertised rent.
- Introduce a new private rented sector landlord ombudsman.
- Create a private rented sector database to help landlords demonstrate compliance, inform tenants, and support local authority enforcement.
- Apply the decent homes standard to the PRS and ‘Awaab’s Law’ setting requirements over how landlords must tackle hazards in their properties.
- Outlaw discrimination against prospective tenants in receipt of benefits or with children, and strengthen tenants’ rights to have a pet.
- Strengthen local authority enforcement by expanding civil penalties and introducing a package of investigatory powers.
- Strengthen rent repayment orders.
Arguably, little has changed within the Renters’ Rights Bill since it was first drafted as the Renters’ Reform Bill under the Conservative government. However, while it never came to pass under the previous government due to the general election, in now looks likely that it will be made into law before the end of this year.
Changes “will not hamper profitability”
One of the biggest sticking points surrounding the introduction of the Renters’ Rights Bill is actually linked to the uncertainty surrounding it, as opposed to the changes being made. Landlords and property investors are accustomed to staying ahead of various rule and regulation changes over the years; but there is currently a lack of clear guidance as to the steps that landlords should be taking now, some argue.
Goodlord Group managing director of insurance Oli Sherlock says “significant questions” remain over the impact of the Renters’ Rights Bill with regard to evictions, with the removal of Section 21 potentially leading to more rental disputes going to court, he believes.
“This could see thousands more tenants receiving county court judgments for issues such as rent arrears — damaging their credit scores and potentially restricting their access to properties further down the line.
“The extension of the notice period in the event of arrears [increasing from two months to three months] may seem favourable for tenants but the reality is that by the time tenants are in two months arrears it is often hard to reverse their position.
“Adding a further month to this process will inevitably lead to larger personal debt. Such measures should be focusing on speedy resolutions for both parties, not extensions.”
Separately, Bekki Leaves of FCC Paragon, said: “The Renters’ Rights Bill will not hamper the profitability of being a buy-to-let landlord. Nor will it slow the rising price of rent in Britain.
“With regards to rent prices, the key focus of the Renters’ Rights Bill appears to be stopping landlords from forcing evictions by increasing rent to an unacceptable level that is out of step with fair market rates. But by no means does it mean that landlords cannot increase rent for existing tenants to match increases in that fair market value.”
