With the Renters’ Rights Bill entering the Committee stage in the House of Lords this month, it’s expected to become law by October or November. The Renters Rights’ Bill is currently in the Committee Stage in the House of Lords
The upcoming Renters’ Rights Bill is set to reshape the UK rental landscape, and while much of the focus has been on landlords, tenants – all 4.7 million households in England’s Private Rented Sector, according to Statista – are facing big changes too.
While the Renters’ Rights Bill aims for a fairer rental sector, offering tenants greater security and rights, it also introduces potential hurdles. Reduced flexibility and the possibility of stricter referencing requirements mean renters should pay close attention to how the upcoming changes will affect their living arrangements.
Abolition of Section 21
For tenants, the Renters’ Rights Bill’s key promise is the end of Section 21 ‘no-fault’ evictions. This change fundamentally alters the power dynamic, requiring landlords to have legitimate reasons for eviction. Prior to this, renters faced the potential threat of being asked to leave with just two months’ notice, regardless of their actions, creating a sense of uncertainty for renters.
Recognising that landlords’ circumstances can also change, the Renters’ Rights Bill includes provisions allowing property reclamation for legitimate reasons, such as sale or personal occupancy. To safeguard tenants, a 12-month protection period at the tenancy’s start prevents these evictions. Landlords must provide four months’ notice in such cases, offering tenants more time to secure alternative housing.
While the abolition of Section 21 is the headline change, renters need to understand the other ways this bill will affect them.
Minimum 12-month tenancies
One of the most significant changes coming into play is the mandatory 12-month minimum tenancy. This seemingly simple rule throws a spanner into the works when it comes to more flexible tenancies that many renters rely on.
This rigid structure ignores the reality of many renters’ lives, including those on temporary work assignments, those relocating for specific projects, or those seeking short-term accommodation while settling into a new area or even between moving houses.
For example, even if a tenant wants to secure a six-month contract and the landlord is happy with the length of a short-term tenancy, it would not be allowable under the proposed rule change.
While aiming for stability, this could limit flexibility for tenants needing shorter-term accommodation. Plus, an overall lack of reliable data on short-term rentals further complicates the issue, highlighting a potential disconnect between policy and reality.
Restrictions on taking rent in advance
While intended to shield tenants, the ban on taking rent in advance could unintentionally shut doors for those with unconventional financial situations.
This could disproportionately affect tenants with fluctuating incomes, those returning from abroad without established credit histories, or those who previously relied on paying rent upfront.
This restriction is also causing apprehension among landlords, who will be limited to collecting a deposit in advance, increasing their potential financial risk. “You’ve got to agree to sign the property over to somebody without taking any rent in advance,” explains property expert Kate Faulkner to UK Property News.
The ban on rent in advance, coupled with the proposed three-month delay for eviction proceedings due to non-payment, introduces a level of risk many landlords will find unacceptable.
Landlords will naturally seek to safeguard their rental income due when letting their properties out, which will likely see a significant tightening of referencing, potentially limiting access for a significant portion of tenants.
Balancing tenant protection against the unintended exclusion of renters with unconventional finances poses a long-term challenge for tenants and landlords alike.
Increased competition in the rental market
The combination of these changes could lead to a decrease in available rental properties. As landlords grapple with increased regulations and financial pressures, some may choose to exit the market altogether.
With less available properties on the rental market, coupled with the potential for stricter referencing, could create a more competitive and challenging environment for tenants.
And, whilst the Renters’ Rights Bill aims to eliminate rental bidding wars, instead setting fixed asking rents to protect tenants from being outbid, the bill’s broader impact could create a double-edged sword for renters.
Landlords may compensate by setting higher fixed rents, potentially pushing affordable housing further out of reach for tenants.
Renters’ Rights Reform tips for tenants
Despite its tenant-friendly focus, the Renters’ Rights Bill carries potential drawbacks. The risk of landlords leaving the market, shrinking the rental pool, and the rigidity of 12-month tenancies could negatively impact certain renter demographics.
While the Renters’ Rights Bill aims to protect tenants, it is essential to understand the potential consequences. Landlords will adapt, but tenants could face increased competition and stricter requirements.
Moving forward, the Renters’ Rights Bill aims to create a fairer rental market, but tenants should be proactive in understanding how these changes will affect them.
Landlords have had enough!
A leading property industry figure has said that a growing number of landlords within the private rented sector have ‘had enough’ and are quitting the market.
The comments have been made by Paul Shamplina (main image, right), founder of evictions specialist Landlord Action, during an appearance on the Ian Collins Talk TV show.
Shamplina said that "the many landlords he’s spoken to in recent months have said they want out and that, as well as widespread industry data that suggests more landlords are quitting than joining the sector, the Government is creating problems for itself further down the line."
The star of TV show Nightmare Tenants, Slum Landlords told Collins that the Renters’ Rights Bill has been the final straw for many landlords with just one or a handful of properties after they have faced increased local licensing efforts by their council, the removal of tax relief on mortgage payments, being taxed on turnover rather than profit and the evictions ban during Covid.
RAFT OF CHANGES
Landlords now face a further raft of changes within the Bill, which is being debated in the Lords this week, which Shamplina predicts will make evicting tenants who build up rent arrears more difficult, expensive and time consuming.
“At Landlord Action the average time to wait for landlords seeking to evict a tenants is now 15 months during which they are often paying the mortgage while the tenant isn’t paying the rent,” he says.
Landlords also face an increase in the amount of red tape they face including restrictions on how they negotiate multiple bids for a property but also higher interest rate rises; greater pet rights for tenants; and higher fines and Rent Repayment Orders for non-compliance with selective and HMO licensing.
And that all comes on top of tougher EPC rules for rented homes in 2030.
“The unintended consequence of all this that the Government don’t realise is that more tenants are being asked to leave their properties as more landlords leave the sector,” says Shamplina.
“When these tenants then realise there are few affordable properties to rent in their area, this puts extra pressure on local councils to provide temporary accommodation and makes council housing waiting lists even longer.”
LANDLORDS LEAVING
Shamplina’s comments are echoed by new research this week from BTL mortgage firm Together, which reveals that new regulations are pushing a considerable percentage of landlords out of the buy-to-let marke.
It says rising taxes such as Capital Gains Tax, and expenses caused by new governmental regulations such as the Renters’ Rights Bill are likely to be causing landlords with smaller portfolios to sell some of their properties, or exit the market completely.
Together’s research revelas how more than a tenth (12%) of buy-to-let landlords will be offloading properties this year, with 11% planning to exit the market altogether. 8% of BTL landlords admit they don’t foresee any opportunities in the next 12 months and will pause their investment activity and wider property plans.