Renters Reform Act – What it Means for Private Landlords
The UK rental market is on the cusp of significant change. The Renters Reform Bill, which is currently going through its penultimate stage of approval in the House of Lords, aims to rebalance the relationship between landlords and tenants. These changes represent the most substantial overhaul of the private rental sector in decades. For landlords and Build-to-Rent (BTR) developers, understanding the implications of the legislation is crucial.
In this blog, we will outline what the Act entails and how best to prepare.
What is the Renters Reform Act?
The Renters Reform Act is a key component of the UK government's broader Levelling Up agenda, designed to make renting fairer, more secure, and of higher quality. The legislation builds on the White Paper titled "A Fairer Private Rented Sector" and introduces a range of new regulations aimed at improving standards and tenants’ rights. Though still moving through the legislative process, the Act is expected to pass in the near future, and landlords should begin preparing for compliance now.
Key Changes Landlords Should Know?
Abolition of Section 21 (‘No Fault’ Evictions)
Perhaps the most talked-about change is the abolition of Section 21, which currently allows landlords to evict tenants without providing a reason. ‘This landmark change means landlords will no longer be able to evict tenants without providing a valid reason,’ explains Duncan Lewis solicitors. Under the new system, landlords will only be able to evict tenants using Section 8, which requires specific grounds, such as rent arrears or antisocial behaviour. This change aims to provide tenants with more stability but reduces landlords' flexibility to regain possession of their property without cause.
Strengthening of Section 8 Grounds
To counterbalance the removal of Section 21, the Act will expand and strengthen the grounds under Section 8. There are 26 ‘Mandatory Grounds’ for possession of the property, including issues such as repeated rent arrears, serious antisocial behaviour, and situations where the landlord wishes to sell the property or move back in. There are a further 11 ‘Discretionary grounds’ for possession of the rental home, including issues such as deterioration of the property caused by the tenant, less extreme cases of antisocial behaviours, perpetrators of domestic abuse if the victim has fled, and rental arrears. The new grounds aim to protect landlords' interests while maintaining fairness for tenants. Depending on the reason for eviction, landlords will need to give between 2 weeks and 4 months notice before possession of the property.
Introduction of a Decent Homes Standard in the PRS
The Decent Homes Standard, previously applicable only to social housing, will be extended to the private rented sector (PRS). According to Landlord Vision, ‘A government consultation on the private rented sector (PRS) found that 21% of properties currently do not meet the Government’s Decent Homes Standard.’ Privately rented properties will need to meet a minimum quality threshold, including safety, warmth, and repair standards. Landlords may need to invest in property upgrades to meet these criteria, and in systems to ensure timely repairs to maintain their stock.
Introduction of a Property Portal
A new digital Property Portal will be established to streamline compliance and improve transparency. ‘This portal will serve as a singular "entrance," aiding landlords in grasping their duties while granting tenants deeper insight into their landlords' adherence,’ reports estate agents, D B Roberts. All landlords will be required to register their properties and provide up-to-date information. The portal is intended to aid enforcement efforts and help tenants make informed decisions. For landlords, this represents an additional administrative task but also a chance to demonstrate high levels of tenant care and professionalism.
Ban on Blanket Bans (e.g. No DSS, No Pets)
The Act will prohibit blanket policies that discriminate against tenants on benefits or with children, and it will also restrict blanket pet bans. ‘In the English Private Landlord Survey 2021, 44% of landlords canvassed said they were unwilling to accept tenants in receipt of housing benefit or Universal Credit,’ reveals Total Landlord Insurance. Landlords will be expected to consider each application on a case-by-case basis and to provide reasonable justifications for refusing tenants in these categories. This shift aims to make the rental market more inclusive but may require changes in policy and mindset.
Periodic Tenancies Only
‘The Bill also proposes to end fixed-term tenancies and move to periodic tenancies, which do not have an end date,’ explains Letting a Property. Tenants will be able to leave with two months' notice at any time, while landlords will still need valid Section 8 grounds to end a tenancy. For Build-to-Rent operators and landlords accustomed to fixed-term arrangements, this represents a substantial shift in tenancy management and planning.
What Does This Mean for Build-to-Rent Operators?
While the increased regulation may initially seem burdensome, Build-to-Rent (BtR) operators are arguably well-placed to adapt. Their professional infrastructure, focus on tenant experience, and economies of scale make compliance more manageable. Moreover, as smaller landlords potentially exit the market due to rising compliance demands, BtR developments may enjoy a competitive advantage by offering high-quality, well-managed accommodation that aligns with the spirit of the reforms.
Risks and Challenges for Landlords
Landlords face several potential challenges under the new regime. The loss of Section 21 reduces flexibility and may increase the likelihood of legal disputes. Meeting the Decent Homes Standard could require significant investment, especially for landlords with ageing portfolios. The added administrative burden of registration and compliance may also be taxing for smaller landlords who self-manage properties. Navigating these changes will require careful planning and possible shifts in strategy.
Opportunities and How to Prepare
Despite the challenges, the Renters Reform Act offers landlords an opportunity to professionalise their operations and build stronger relationships with tenants. Now is the time to review tenancy agreements, eviction procedures, and property conditions. Investing in property management systems and seeking professional advice can ease the transition. At Spaciable, we have been helping landlords in both the social and private sectors achieve exceptional levels of tenant care, improve their response times to maintenance issues, ensure they meet their legal obligations, and greatly increase tenant satisfaction and survey scores. Landlords who adapt early will be better positioned to thrive in a more regulated, tenant-focused market.
The Renters Reform Act marks a pivotal moment for the UK private rental sector. While it introduces significant challenges, it also presents opportunities for landlords and developers to modernise and differentiate themselves. Those who proactively engage with the changes will be best placed to succeed in the new landscape. Staying informed, compliant, and tenant-focused is key to navigating the future of renting in the UK, and we can help. Please get in touch here, to find out more.
Summary
The Renters’ Rights Bill
The Renters’ Rights Bill was briefly introduced during the King’s Speech on 17 July 2024 and is expected to serve as Labour’s counterpart to the earlier Renters (Reform) Bill. Its goal is to overhaul the private rental market in England, offering stronger protections for tenants and ensuring fairer practices from landlords. Key proposals include:
Ending Section 21 Evictions
The Bill proposes removing Section 21 ‘no fault’ evictions, replacing them with a clearer and more robust set of legal grounds that allow landlords to reclaim their properties when there’s a valid reason.
Strengthening Tenant Protections
Tenants would gain greater rights, including the ability to challenge unreasonable rent hikes and an end to bidding wars that drive up rental prices.
Permitting Pets in Rentals
Landlords would be required to give reasonable consideration to tenant requests for keeping pets, with the option to ask for pet damage insurance if needed.
Introducing a Decent Homes Standard in the PRS
For the first time, the private rental sector would be held to a legally enforceable Decent Homes Standard, ensuring safer and better-quality housing.
Implementing ‘Awaab’s Law’
This would establish clear legal responsibilities and deadlines for landlords to address issues such as mould and disrepair, aiming to prevent tragedies linked to poor housing conditions.
Creating a Centralised PRS Database
A new digital platform would be introduced to provide streamlined access to essential information for landlords, tenants, and local councils.
Setting Up a New Ombudsman Scheme
A dedicated ombudsman would be created to offer tenants and landlords a fast, low-cost, and legally binding route to resolve disputes.
Banning Discrimination
The Bill would make it unlawful for landlords to refuse tenants based on their receipt of benefits or because they have children.
Boosting Local Council Powers
Local authorities would receive enhanced powers to track down and take action against rogue landlords, making enforcement more effective and proactive.