If you’re reading this, it’s most likely because you’re a landlord asking yourself one key question: what will the Renters’ Rights Bill mean for my property portfolio? You may be feeling confused or concerned (or both). So hopefully this guide will clarify the situation for you and put your mind at ease.
As you probably know, the Renters’ Rights Bill is now entering the final stages of the parliamentary process and is likely to become the Renters’ Rights Act within a short timeframe. The legislation will herald a new era for the private rented sector in England and will bring many challenges for landlords. There will be new laws to abide by and additional costs.
Yet there will also be opportunities for positive-thinking landlords in Leicester who are committed to maintaining high standards and creating better quality tenancies. And as some landlords will exit the market, demand for available rental properties will be high. Landlords will be able to choose from the best quality tenants. Rents and yields may well appreciate as a result.
At the time of writing, the eventual shape of the Renters’ Rights Act has still yet to be finalised by the legislators. However, in this guide, we will summarise what the key planned changes to the law are likely to be. And we will suggest actions you might consider taking now to help you prepare and ensure a smooth transition to the new regime.
Section 21 ‘no fault’ evictions will be banned. Landlords will require specific grounds, as defined in the new law, to evict a tenant.
There will be a reformed Section 8 evictions process. Grounds for possession will be defined more clearly. They will be either mandatory or discretionary for a court to decide. They will have notice periods between two weeks and four months, depending on the ground.
Landlords will be able to regain possession of their property if they wish to sell it or move in themselves. (However, not within the first 12 months of a tenancy, and four months’ notice must be given.)
✅ The impact of this change may be less than many people have suggested. Most landlords evict tenants very rarely. It should, in theory, be easier to evict tenants who break their tenancy – particularly in the case of rent arrears or antisocial behaviour. You can still sell your property and exit the market should you wish to.
Assured short-hold tenancies (ASTs) for fixed terms will be abolished. All tenancies will be periodic tenancies. These will roll over from month to month. Tenants will be able to leave with two months’ notice
✅ Tenants will have greater security of tenure while the impact on landlords with good, long-term tenants should be low.
Landlords will need to register with a new PRS database. A fee will be payable.
✅ Poor landlords are likely to be negatively impacted. Good landlords should benefit.
Local authorities will have more powers to investigate breaches of housing law and demand information. Civil penalties will increase to a maximum of £7,000 for initial breaches and up to £40,000 in more serious cases. Rent repayment orders will be available for more breaches of the law, and for up to two years of rent. Company directors and superior landlords will be liable in some cases.
✅ The impact should be low for good landlords who are compliant. Bad landlords are more likely to be pushed out of the market.
Landlords will have to join the new ombudsman scheme. A fee will be payable. Tenants will be able to take complaints to the ombudsman. The ombudsman will be able to order landlords to put things right, pay compensation or overturn them. Landlords will not be able to take complaints to the ombudsman.
✅ While tenants will be able to complain more easily, it may be easier and cheaper to resolve complaints. Legal action may be avoided.
Landlords will only be able to request one month’s rent in advance and on signing of the tenancy. (As well as a deposit of up to five to six weeks rent.) Where guarantors are requested, their liability will be capped at six months’ rent. They will no longer be liable after the death of a tenant.
✅ This rule should have a low impact on landlords who do not usually require advance rent and deposits in excess of these amounts.
Tenants will have the right to ask to keep a pet. Landlords will not be able to refuse unreasonably.
✅ Landlords will still be able to refuse unreasonable requests. Landlords will be able to insist on suitable insurance to cover against pet damage, which the tenant will pay for.
It will be illegal to encourage prospective tenants to pay above the initial asking rent by engaging in a ‘bidding war’ with other tenants.
✅ Landlords who set their rent at the right level should not be impacted.
This sets minimum property standards, and already applies to the social rented sector. It will apply to private rented property too. A new law called Awaab’s Law will require landlords to deal with damp, mould and other defects in a timely way.
✅ Rising property standards should benefit compliant landlords. They will be able to attract good tenants and may earn enhanced rents.
Discriminating against prospective tenants, for example, by refusing to consider tenants on benefits or those with children, will be banned.
✅ It will still be legal to decline prospective tenants if you feel the property is unsuitable for them or if they fail affordability or referencing checks.