Understanding the 'Renters Reform Bill': What London Landlords Need to Know
This article will provide you with a simplified overview of the Renters Reform Bill and its implications to you as a London Landlord..
The Renters Reform Bill is an upcoming legislation that aims to introduce significant changes to the rental market in the UK. As a London landlord, it's essential to stay informed about these reforms to ensure compliance and understand their impact on your rental properties.
The draft bill has been ‘published’, however is only currently had it's first in Parliament, therefore it could be months until is reaches Royal Assent for final signing. See here for live updates on how far it has passed so far.
An End to Section 21: ‘No Fault’ Evictions
The Renters (Reform) Bill plans to abolish section 21 ‘no fault’ evictions, creating a more secure tenancy structure for tenants. It aims to provide a balance, assuring landlords that they can reclaim their property when necessary while offering tenants better security.
This legislation seeks to challenge the small fraction of landlords providing substandard housing by empowering tenants to question such conditions without fear of 'no fault' eviction.
Switch to Periodic Tenancies
The Bill aims to end fixed-term tenancies, transitioning to periodic tenancies with no set end date. This move is designed to offer greater security to tenants while still maintaining the flexibility of private rented accommodation.
Tenants will have the freedom to leave properties of poor quality without remaining responsible for the rent. It also allows them to relocate more effortlessly if their circumstances change. Tenants can stay in their homes until they choose to end the tenancy with a two-month notice, or if landlords provide a valid reason for possession. For the first six months, landlords cannot claim possession on grounds of moving in, selling, or redevelopment, providing tenants with increased security.
"There are and will be lots of questions surrounding the introduction of periodic tenancies if this is passed, especially in London. The bill specifies that no payable rent will be able to exceed one month. 65% of renters in Central London pay 6 or 12 months rent in advance in order to secure properties as they do not have a suitable guarantor and are unable to be fully referenced.
Will insurance companies pick up on this new risk and provide some insurance for landlords who accept these tenants on a periodic tenancy?"
Megan Cutforth, Director of Residential at Greater London Properties.
Safeguarding Landlord's Rights: Fair and Efficient Grounds for Possession
With the removal of section 21, the Bill recognises the importance of landlords regaining their property if their circumstances change or tenants fail to meet their obligations. It aims to streamline this process by introducing comprehensive, fair, and efficient grounds for possession.
This will expedite the eviction of disruptive tenants and introduce a new ground for consistent rent arrears. The Bill also safeguards landlords' rights to sell or move into their property when required.
Preventing 'Backdoor' Evictions: Fair Rent Increases
To prevent tenants from facing 'backdoor' evictions through excessive rent hikes, the Bill sets guidelines for rent increases. While landlords can raise rents to market value during a tenancy, this will require completing a form which will be made available on gov.uk. Tenants can challenge any rent increase they believe does not reflect market value at the First-tier Tribunal.
Landlords will maintain the right to increase rents to market price, and the independent tribunal will assess this if needed. To respect the autonomy of the judiciary, the tribunal can determine the actual market rent of a property.
The government has undertaken a comprehensive review of the grounds for possession, influenced by a consultation that garnered nearly 20,000 responses. These grounds cater to all plausible circumstances under which a landlord may need possession.
Should court action be required, landlords must provide evidence supporting their selected ground for possession. Grounds can be either mandatory or discretionary, with mandatory grounds guaranteeing possession if evidence is provided, while discretionary grounds allow the judge to consider whether it's reasonable to award possession, even when the ground is met.
The Bill makes it a default right for tenants to keep a pet in their rented dwelling. However, this doesn't imply an absolute right; the tenant must first request your consent. As a landlord, you must not unreasonably refuse consent. You must respond in writing to the tenant's request within 42 days.
If, at the time of giving consent for a pet, the landlord informs the tenant that they must maintain pet damage insurance, or pay your reasonable costs of maintaining pet damage insurance, the tenant must comply.
Additionally, the bill may introduce measures to improve the quality of rental properties, such as stricter standards for property conditions and maintenance.
Insight from Rob Hill, Director at Greater London Properties, Central London’s Residential Agent.
“The Renters Reform Bill reflects the ongoing efforts to strike a balance between tenant rights and landlord responsibilities. While it provides increased protection for renters, landlords need to be aware of their obligations and adapt to the changing landscape. It is however becoming ever harder to be a landlord and subsequently if this bill does go ahead, we will see a lot of landlords selling up, which will potentially have a negative effect on the London Property Market and tenants as the supply of rental property diminishes.
My advice to all our landlords is to stay informed and keep an eye out for our blogs and newsletters which will cover all aspects of the bill and how it will affect them. It is now more important than ever to maintain well-presented and well-maintained properties, as tenant satisfaction and compliance with regulations will become even more critical in the evolving rental market”
In Summary
The Renters Reform Bill brings significant changes to the rental market in the UK, impacting both tenants and landlords. As a London landlord, it's crucial to understand the implications of this legislation and adapt your practices accordingly. Stay updated on the latest developments and consult our team at Greater London Properties to ensure compliance and maintain a successful rental business in the evolving rental landscape.
We are always here to offer advice and support to Landlords and Tenants, please give our residential team a call on 0207 734 4062.
If you wish to receive a sales valuation please contact our sales manager Dan Edwards directly
Warm Regards
Megan Cutforth, Director of Residential