Renters’ Rights Bill: A Win for Tenants, a Challenge for Landlords?

The Renters Rights Bill was introduced to Parliament today by Angela Rayner, the Minster for Housing, Communities and Local Government.

The Bill will no doubt provoke cheers from those in rented accommodation - particularly those who have little disposable income and no real prospect of getting on the housing ladder any time soon. Contrast this feeling with landlords and property investors who will probably feel a sense of trepidation washing over them.

So, what does it all mean for the housing market, and for those involved with it?

The key take aways from the Bill are:

1.?????? “Ban on rental bidding wars”.? Landlords and letting agents will be prohibited from asking for, encouraging, or accepting bids above the advertised rent price.? Does this mean that properties will simply be advertised for rent at a higher price to get this through the back door??

2.?????? Restrictions on Rent Increases.? Landlords will only be allowed to raise the rent once a year, and only to the market rate.? The notice period for a rent increase will double from 1 to 2 months too.? Tenants will be afforded a greater ability to challenge any rent rises via the First-tier Tribunal.? It will be interesting to see how Tribunals handle this as they are already extremely busy and opening up a new avenue for claims risks them becoming inundated.? Only time will tell if these referrals to the Tribunal can be dealt with quickly.

3.?????? Abolition of Section 21 Evictions.? The Bill is proposing to end “no-fault” evictions, meaning landlords cannot evict tenants without a valid reason.? The Bill sets out a limited number of grounds.? This change is designed to provide more security for the 11 million private renters in England.

4.?????? Creation of a Private Rented Sector Database. This database is designed to help both landlords and tenants by providing transparency and ensuring compliance with the new regulations.?

5.?????? Application of Awaab’s Law.? This law, named after a toddler who died from exposure to mould, will be extended to the private rented sector to ensure all homes are safe and habitable.? Nearly a quarter of private rented homes do not meet basic decency standards. Dilapidated homes are costing the NHS an estimated ￡340 million per annum.

The Government say that these measures aim to provide greater stability and security for renters, making it harder for landlords to exploit tenants through unfair rent practices.? However, there are a number of potential downsides for landlords:

(a)??? Increased Costs

Landlords may face higher costs due to the need to comply with the Decent Homes Standard and other new regulations.? These costs could potentially be passed on to tenants through higher rents, which might counteract the Bill’s aim to make renting more affordable.

(b)??? Reduced Flexibility in Managing Properties

The abolition of Section 21 “no-fault” evictions means landlords will have less flexibility in managing their properties.? Landlords will need a valid reason to evict tenants, which could make it more difficult to address issues like non-payment of rent or anti-social behavior.

(c)??? Potential Impact on Housing Supply

Some experts warn that stricter regulations could discourage investment in the rental market, leading to a reduction in the supply of rental properties.? There is already a huge shortage which is a reason why rents in some parts of the country are so high – driven by supply/demand.? This could exacerbate the housing crisis by making it harder for people to find affordable rental homes.

(d)??? Administrative Burden

The creation of a Private Rented Sector Database and other compliance requirements could increase the administrative burden on landlords.? Smaller landlords, in particular, might struggle with the additional paperwork and regulatory requirements.? Perhaps it drives out “amateur” or incidental landlords, and we end up with a rental market dominated by big funds or corporate landlords who then have a greater degree of control over the market forces.

(e)??? Market Distortion

Critics argue that rent controls and restrictions on rent increases could distort the rental market, leading to unintended consequences such as reduced property maintenance and investment.

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While the Bill aims to protect tenants and improve living conditions, these potential downsides highlight the challenges of balancing tenant rights with the interests of landlords and the overall health of the rental market.

?As the Bill makes its way through Parliament it will be interesting to see how it evolves.? There is no doubt it will end up on the statute books and have a big impact on the rental housing market – the big question is, who are the winners and losers?

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