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How the controversial Renters’ Reform Bill could affect landlords

The long-awaited Renters’ Reform Bill is apparently still on the cards in this parliamentary session, so what do prospective and existing property investors and landlords need to be aware of?

For a huge number of property investors in the UK, private rental sector performance is a key consideration, with many opting to rent their properties out to tenants in order to maximise returns over the long run.

There are myriad rules and regulations to keep abreast of in the buy-to-let sector, with numerous changes both planned and upcoming for landlords and investors to know about. One major legislative change that has been rumbling in the background since 2019 is the Renters’ Reform Bill.

It is a radical plan that sets out some big changes in the real estate industry, along with new rights for tenants. While many of the proposed adjustments are viewed as positive for the sector, in terms of raising standards, others are less popular among those who feel that landlords are being targeted at a time when they are more essential than ever in providing homes for millions of people.

What’s in the Renters’ Reform Bill?

Only a couple of weeks ago, housing secretary Simon Clarke confirmed that the Renters’ Reform Bill would be introduced during the current parliamentary session.

However, what will ultimately form the final legislation remains uncertain, with ousted Prime Minister Liz Truss allegedly suggesting that one of the biggest parts of the Bill, the abolishment of Section 21 eviction powers, would not go ahead.

  • Section 21 (no fault) evictions: At present, landlords can evict a tenant at the end of a fixed term tenancy, or during a rolling periodic tenancy, without giving a reason. This move has come under criticism from some landlord bodies and industry members, as it could make it harder for landlords to remove tenants. The idea is that there will be a reformed set of grounds for possession, which could protect landlords in circumstances such as rent arrears, or wishing to sell the property or move back in.
  • Periodic tenancies: These could replace Assured Shorthold Tenancy Agreements, which is currently the most common form of tenancy. The government’s white paper states this will mean that “both parties will better understand their rights and responsibilities”, while providing “greater security for tenants, while retaining the important flexibility that privately rented accommodation offers.” It adds: “This will enable tenants to leave poor quality properties without remaining liable for the rent or to move more easily when their circumstances change, for example to take up a new job opportunity.”
  • Rent review clauses: These will be abolished under the Renters’ Reform Bill, meaning landlords will only be able to put their rents up once per year. They will also have to give two months’ notice of a rent increase. Realistically, the majority of landlords would not increase their rents more frequently than this anyway within a tenancy agreement, but it is a move to protect tenants from “unscrupulous landlords”.
  • Accepting pets and people on benefits: Under the Renters’ Reform Bill, landlords will no longer be able to apply “blanket bans” to their listings that automatically reject certain types of tenants. This is to make it fairer for tenants who claim benefits or those with pets, and reduce discrimination in the sector.

While the current political landscape is uncertain, meaning a date for the Renters’ Reform Bill being introduced is yet to transpire – and which could also see certain parts of the bill tweaked or even scrapped – it is important for landlords to be aware of the potential changes in the industry.

It is hoped that improving standards and fairness across the private rented sector will make it a more appealing situation for tenants, while clearing the way for responsible, law-abiding landlords and property investors to flourish.

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