The Renters' Rights Bill

With reports of 100's of landlords leaving the buy to let sector because of the fear of the up coming Renters Rights Bill, and the proposed legislation that will follow, SPi delves into the Governments 'commitment to transform the experience of private renting' and what that means for tomorrows buy to let investor.

The idea behind the RRB (Renters Rights Bill) is to improve the system for both private tenants and the 2.3m landlords across England. Removing politics from the story, I am not going to delve too deep into the reasons why the government felt the need to 'shake up' the PRS, safe to say I'm sure we all have opinions as to why, but what are the proposals? the RRB list of legislation changes include but not limited to the following:

• Abolish section 21 evictions, this supposedly will provide more security for tenants, which will give power to the tenants to challenge unfair rent increases, and what they deem to be poor management of the accommodation that they live in. The government also proposes to end ASTs, assured shorthold tenancies, moving to a simpler tenancy structure where all assured tenancies are periodic. Periodic tenancies mean that the tenancy rolls over month to month, without a set end date. By abolishing section 21 evictions, they propose to ensure that grounds for possession by the landlord are fair to both parties, again, giving tenants more security during their tenancy, while landlords can still recover their property, when reasonable. The RRB will introduce safeguards for tenants, providing them with more time to find a new home if the landlord evicts to move in or sell, and means unscrupulous landlords cannot misuse the grounds for eviction.

  
  

• Tenants are able to appeal excessive rent increases purely designed to force them out.

  
  

• There will be the introduction of a Private Rented Sector Landlord Ombudsman, whose job it will be to provide fair, impartial, quick binding resolutions to tenants’ complaints. Bringing tenant-landlord complaint resolution on par with redress practices for tenants in social housing.

  
  

• There is to be the creation of a PRS database for all landlords even if their property is to be managed by an agent. It is to be set up to help landlords understand their legal obligations, ensuring compliance and providing better information to tenants. The database is to help local councils easily target complaints and bad landlords when required. Landlords will need to be registered in order to use possession grounds.

  
  

• The RRB also means tenants can request a pet in the property and the landlord cannot unreasonably refuse. Landlords will be required to have pet insurance to cover any damage to their property.

  
  

• The Decent Homes Standard will be applied to all properties in the PRS, giving tenants safer homes.

  
  

• ‘Awaab’s Law’ which is due to come into effect later in 2025, which is pertaining to serious damp and mould issues within properties, was initially targeting the social housing sector will also be applied to the PRS, it will set clear legal expectations on timeframes within which landlords must take action to remedy serious hazards such as excessive damp and mould. You can read further about Awaabs Law HERE.

  
  

• Tenants on benefits, and/or with children cannot now be discriminated against as it will be illegal for both landlords and agents to discriminate against prospective tenants who fall under these categories helping to ensure that everyone is treated fairly when searching for a rented property.

  
  

• It will now be illegal for landlords and agents to accept any offers of rent over the actual published asking rent for a particular property.

  
  

• The Renters Rights Bill will be expanding the civil rights and penalties of local authorities by introducing investigatory powers and requirement for the authorities to report on any enforcement it has undertaken.

  
  

• The bill is stopping the ability for landlords and agents to demand large amounts of rent in advance to secure a tenancy. The Renters’ Rights Bill will amend the Tenant Fees Act 2019 to stop landlords or letting agents from requiring or accepting any payment of rent in advance of the tenancy being entered into. Landlords will only be able to ask for one month’s rent (or 28 days’ rent for tenancies with rental periods of less than one month) once a tenancy agreement has been signed.

Now for many, the above, and other changes set out to the legislation of the Renters Rights Bill, have favoured the rights of the tenants way too much, shifting the risk for landlords way over tipping balance, with many predicting higher costs and making standard buy to let much more demanding. However it could be argued that for those investors who are remaining in the sector, as long as they consider it a long-term opportunity, then with reduced numbers of available properties, then rents will most certainly increase, and with it the returns.

The changes are going to affect single property landlords and those who have accidently fallen into becoming a landlord more than the larger portfolio landlords. It will become more important for those smaller landlords to understand the law and possibly consider a managing agent.

It is important to remember that landlords and the PRS have experienced changes before with the tenancy deposit system being introduced, GDPR compliance, the changes to HMO licensing, minimum EPC ratings amongst other sector legislation and regulations such as during Covid.

There have been recent other changes that also impact the ability to investors to profit from buy to let, such as the section 24 tax changes, landlords having to pay tax on rental income rather than profits made, the increases in Stamp Duty Land Tax, changes in Capital Gains Tax (CGT) allowances.

We spoke to Simon Hardingham, Director at Landmarka, who said, "I don't see the changes as a bad thing for the industry necessarily, though the Government has to realise that the regulation changes they state are there to help tenants, will actually impact them directly, with rents increasing, as smaller landlords leave the sector, meaning more strain on the supply."

To check the Government progress in relation to implementing the Renters Rights Bill please visit the link https://bills.parliament.uk/bills/3764