The Renters' Right Bill: What Landlords and Tenants Need to Know

The recent introduction of the Renters' Rights Bill on 11th September 2024 marks a significant, but not unexpected, shift for the UK's private rented sector. The bill promises to improve tenants' rights and simplify the rental process, and it is important that landlords understand these changes. Here’s a breakdown of the key changes.

Key Changes Under the Bill

One of the most crucial reforms is the abolition of Section 21 evictions, also known as "no-fault" evictions. This means landlords will no longer be able to evict tenants without providing a valid reason. Instead, tenants will remain in their homes until they choose to leave, giving them more security. However, landlords will still be able to reclaim their properties if they provide evidence of valid grounds for possession, such as breach of contract, selling the property or the wish to move a close family member in.

The move to rolling periodic tenancies is another major change. Under the new system, tenants will only need to give two months' notice when they decide to move out, while landlords are expected to have to give four months’ notice to move in or sell. This offers more flexibility for tenants, but landlords need to be mindful of the new 12-month protected period at the start of the tenancy.

Another notable change is the ban on rental bidding wars. Under the new rules, landlords and letting agents will be legally unable to accept bids above this amount. Mid-term increases are also expected to be limited to ‘market rate’. While this rule aims to create fairness in the market, many in the industry are questioning how enforceable it is in practice. The concern is that this may drive initial rent prices higher, as landlords look to mitigate potential risks of being unable to adjust rents in the future.

For many landlords, these changes aren’t as surprising as they may seem. After all, the industry has been expecting the end of fixed-term tenancies and Section 21 evictions for several years. The transition to periodic tenancies, while new to some, is in line with current market practices. In fact, most landlords already prefer longer tenancies and the required four-month notice to sell aligns with the average property sale time.

However, the potential strain on courts could be problematic. With the removal of Section 21, landlords may face a lengthy process to reclaim properties, even in cases of tenant misconduct. The bill’s promise to speed up this process is being questioned, as the court system is already stretched.

The expansion of Rent Repayment Orders for non-compliant landlords is seen as a step forward. These penalties only impact bad landlords, while those providing quality housing have little to worry about.

Landlords: don’t panic! We have been expecting these changes and preparing for them over the last few years. Clarity on the changes is welcome and a confirmed timeline will reduce much of the uncertainty that has plagued the industry for the past few years. We stand ready to advise and support clients on these changes as more information becomes available.