The first thing to say is DO NOT PANIC!!!!!! Although there has been a lot of media and industry coverage of the rent reform proposals, the draft Bill has only just been introduced in Parliament on the 17th May 2023. Bills tend to take up to and beyond a year to become law – 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. It is also our opinion that even if the proposed changes take effect as drafted, they will have little impact on the conscientious landlord wanting to offer decent homes and who already operate within the rules.
But, for now, what elements of the current proposals do landlords need to consider carefully, and what’s not really going to make much difference in practice?
Abolition of Section 21
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 notice to do so. The go to notice has been to use Section 21, primarily because it’s easier to move to a possession claim if the tenant doesn’t leave. The reality is that landlords don’t go around evicting tenants for no reason, and under the new 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 damaged the property, 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 so in some ways this reform can be seen as a positive.
Abolition of Fixed term tenancies
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 of Student accommodation 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.
Landlords of ‘single let’ properties really shouldn’t be concerned as tenants don’t tend to ‘hop’ from one rental property to another without a good reason. Indeed average tenancy terms have been on the increase year on year. It’s actually tenants that should be concerned, as having to give two months’ notice instead of the current one month could make it harder for them to move if they want or need to – meanwhile, it’s good news for landlords, as they’ll have more time to line up a new tenant.
Other proposed changes
Stricter rules around rent reviews are also proposed however in our view we feel these are fair as our rent review system already operates within the proposals.
The blanket “No Pets” clause is also proposed to be removed and replaced with Pets can be kept with landlords consent and that consent cannot be unreasonably withheld. To compensate however tenants must prove they have taken out pet insurance to cover landlord for any pet damage.
The proposals also include the requirement for all private landlords to register on a Landlords portal and a new Ombudsman is proposed to help arbitrate when disputes arise between landlord and tenant.
In a nutshell for the private landlord, particularly those using a managing agent, the proposals should have little impact on their property and whilst they may take a little getting used to they will soon become the norm. Private Landlords play a vital role in the UK housing market and provide homes to those unable to, or not wishing to, own their own property and we have no doubt this will continue for many many years to come.
If you have any questions regarding the Rent Reform Bill then please contact Lee Bilbrough on 01535 980060 or firstname.lastname@example.org