The Renters’ Reform Bill has been on the agenda for UK Government since it was first proposed in 2019, but with Labour’s win in the 2024 general election, it looks as though it will be reprioritised by Keir Starmer’s party under a new name – the Renters’ Rights Bill.
And with the bill being brought forward by a left leaning party, it’s no surprise that the focus will be on providing more security and protection for tenants while ensuring landlords know their responsibilities.
In this post, we’ll explore the key elements of the Renters’ Reform Bill and what it means for property investors and residential landlords in the UK.
Renters’ Reform Bill Update
One of the biggest questions around the Renters’ Reform Bill since it was first introduced was ‘when will it be introduced?’.
Unfortunately the last Conservative government failed to provide an answer to that, but less than 2 weeks after Labour won the 2024 general election, it was raised as a priority in the King’s Speech on July 17th.
The name has been amended slightly to the Renters’ Rights Bill, and aims to ‘give greater rights and protections to people renting their homes, including ending no fault evictions and reforming grounds for possession’.
There are still no set dates for any of the proposed changes to become law, but with the promise in the Labour party manifesto to “immediately abolish Section 21 ‘no-fault’ evictions”, it’s expected that we’ll see some real progress towards this in the coming months.
Renters’ Rights Bill Summary
The Renters’ Reform Bill, now updated to the Renters’ Rights Bill in the 2024 King’s Speech, is a comprehensive piece of legislation designed to give more protection to tenants living in rented property in the UK.
It aims to balance the scales between tenants and landlords by introducing new rights for renters and stricter regulations for landlords.
The (somewhat alarmist) justification for the bill is that “More than 11 million people in England live day in, day out with the knowledge that they could be uprooted from their home with little notice and minimal justification”.
Whilst not strictly true (that number represents the entire tenant population in the UK, many on whom are in fixed term tenancy agreements which cannot currently be ended by a section 21 eviction during that fixed term), we still support more protection for tenants from no-fault evictions.
That’s one of the major changes that the Renters’ Rights Bill will introduce.
Here is the full list of changes outlined in the briefing notes from the King’s speech. Click any of the headings to be taken to more information on this page.
Renters’ Rights Bill 2024 Details
New rules on evicting tenants
One of the most notable and anticipated changes is the abolition of Section 21 ‘no fault’ evictions.
This will prevent landlords from evicting tenants without a valid reason, offering renters more stability and peace of mind.
Clear and expanded possession grounds will be introduced (most likely via the existing Section 8 eviction process), allowing landlords to reclaim their properties when necessary, such as in cases of non-payment of rent, anti-social behaviour, or if needing to sell (however restrictions will be put in place to ensure this isn’t abused).
Stabilising rents for tenants
The bill will also focus on stabilising rents, and protecting tenants from unfair rent increases. This change is seen as particularly important given the recent surge in rental prices across the UK, although data from Rightmove suggests that the pace of rent growth is slowing down in 2024 vs previous years.
By introducing measures to control rent increases, the government aims to make renting more affordable and predictable for tenants.
The bill also proposes legislation to end rental bidding wars, but how this will be introduced is unclear, and attempts to control rents in other places like Scotland and Northern Ireland, as well as globally, don’t often create the intended outcome.
Right to Request a Pet
Tenants will have the right to request a pet, which landlords ‘can’t unreasonably deny’, although they can insist on specialist pet insurance to cover potential damages.
This change acknowledges the importance of pets to many renters, but will surely be limited in cases where the property isn’t appropriate for animals to live, or where it could impact on other tenants, like in a HMO setting.
Applying a Decent Homes Standard to the Private Rented Sector (PRS)
The bill proposes to apply a Decent Homes Standard to the private rented sector, ensuring that all rental properties are safe, secure, and hazard-free.
This measure aims to tackle the issue of poor-quality homes and improve living conditions for tenants across the country, with data outlined in the King’s Speech Briefing Notes suggesting that 21% of rented homes in the UK are ‘non-decent’, and 12% contain a category 1 hazard such as severe damp or mould.
By setting clear guidelines for property maintenance and safety, the legislation seeks to protect tenants from substandard living conditions, such as inadequate heating, mould, and structural issues.
The ultimate goal is to create a healthier and more comfortable living environment for families and individuals renting homes, contributing to their overall well-being and quality of life.
Applying “Awaab’s Law” to the PRS
‘Awaab’s Law‘ will set clear legal expectations for landlords to make homes safe when they contain serious hazards.
This provision ensures that landlords address significant issues such as severe damp or mould within a specified timeframe, protecting tenants’ health and wellbeing.
By mandating prompt action, the law aims to prevent the adverse effects of unsafe living conditions, which can include respiratory problems and other health complications.
Additionally, it provides a mechanism for tenants to hold landlords accountable, fostering a safer and healthier living environment for all residents.
Creation of Digital National Database of Landlords and Properties
A digital national database will be created to bring together key information for landlords, tenants, and councils.
This database will aim to provide transparency and help inform tenants’ choices when entering new tenancies by potentially offering insights like the rental history, property condition, and landlord reputation.
It also promises to assist landlords in understanding their obligations from a legislation and compliance perspective, ensuring that they provide safe and suitable living conditions.
Much of this is already in place to protect tenants, with gas safety certificates, fire safety regulations, etc. It’ll be interesting to see whether this goes any further to solving the problem with rogue landlords, or just creates more red tape for already compliant landlords to deal with…
Additionally, councils are said to benefit from this centralised information by gaining easier access to critical data needed for monitoring and enforcement, ultimately fostering a more accountable and well-regulated rental market.
Private Rented Sector Ombudsman
A new ombudsman service for the private rented sector will be established, offering fair, impartial, and binding resolution to disputes between landlords and tenants.
This service aims to address issues such as rent arrears, property maintenance, and deposit disputes, providing a quicker and cheaper alternative to costly court proceedings.
Additionally, it will offer guidance on best practices and rights, ensuring that all parties are well-informed and supported throughout the resolution process.
This could be a benefit to both parties, but from our perspective particularly to landlords who have genuine cause to pursue tenants for arrears or other issues. The current process is slow, and often painful as a result, and any improvements would be welcome.
Anti-Discrimination Measures
The bill also includes measures to make it illegal for landlords to discriminate against tenants receiving benefits, or those with children.
This change is intended to ensure that no family can be denied a home based on their financial situation or family status, thereby promoting fairness and equality in the rental market.
Again, more detail needs to be shared on how this will be implemented, as often decisions like these are enforced by mortgage lenders and/or insurance companies, so the solution won’t be as easy as saying landlords can’t discriminate.
It will ultimately come down to affordability in a lot of cases as well, where the cost of renting simply doesn’t tie up with the level of benefits provided to those who need help with housing.
A broader solution that sees benefits increased (unlikely) or more social housing being built (more desirable but, unfortunately, equally unlikely based on past performance) would be better than trying to fix a bullet wound with a sticking plaster.
New Local Council Enforcement and Investigatory Powers
Local councils will receive new enforcement and investigatory powers to identify and fine unscrupulous landlords who fail to meet legal standards.
These robust powers include the ability to conduct thorough inspections, demand necessary documentation, and impose significant fines on those who neglect their responsibilities.
By driving bad actors out of the sector, these measures aim to ensure that all landlords adhere to the required standards and provide safe, decent housing for their tenants.
This initiative is part of a broader commitment to improving living conditions and protecting tenants’ rights across the country.
Anything that goes towards improving living conditions, and especially punishing rogue landlords is a positive step. The local authorities need more resources to identify and pursue these culprits though, as without that, the changes
New Rules for Landlords in Renters’ Rights Bill
So with all that being said, what do we need to be mindful of as landlords and property investors, assuming something closely resembling the Renters Rights Bill / Renters’ Reform Bill comes into effect during this government?
I think the main implication for us will be any attempts to control rents. The problem here isn’t ‘greedy landlords’ despite what politicians (and that charity who claim to offer shelter but are really just a lobbying group) claim.
The problem is a gross undersupply of housing, and until that’s resolved, economic laws of supply and demand will trump any legislation, but that’s not to say that it won’t hurt select landlords as a result of any attempts or trials to control rent, whether things like inflation and interest rates are left to operate freely.
The most talked about but, in my opinion, less concerning change will be the removal of no-fault evictions.
As we become more and more of a society of renters rather than owner-occupiers (I write this from the house I currently rent, despite owning multiple investment properties), protecting genuine, law-abiding tenants in their own homes is of paramount importance.
There proposes to be an improved route for section 8 evictions, which will also be welcomed. And ultimately this leads us further towards a professionalised rental market where part-time or accidental property investment makes less sense, but those who run their portfolio as a business should have little to fear.
And what could potentially be the most impactful changes from an administrative perspective are those relating to further licensing and red tape – the national database, and increased enforcement powers, for example.
On paper, these sound good. And no self-respecting landlord should be concerned about them in principle, but history has shown that new licensing schemes are more of a stealth tax on genuine landlords than going any way to actually solve the problems they set out to.
Has the Renters Reform Bill Been Passed?
Originally proposed in 2019, and first read in parliament in 2023, there has been a lot of speculation and anticipation around the Renters’ Reform Bill.
Following the change of government and the introduction of the revised Renters Rights Bill 2024 during the King’s speech, there is still no date or clear timescale shared about when these changes will come into effect.
It’s fairly certain that with a strong Labour majority, the Renters’ Rights Bill will be prioritised and will become law in the not too distant future, but whether that’s by the end of this year, into 2025, or even beyond, remains unclear.
It certainly wasn’t the ‘immediate’ promise that was part of Labour’s manifesto leading up to the election.
Source link: https://www.insidepropertyinvesting.com/renters-rights-bill/ by Inside Property Investing at www.insidepropertyinvesting.com