The new year has seen us get a better insight into the Government's Renters' Rights Bill, which was successfully passed on the 14th of January. The Bill has passed its second reading in the House of Lords and will now go to the Committee stage, with the aim to become law in the spring.
The Bill has created a new layer of uncertainty for owners and residents in the property industry as they try and navigate the changes the Bill could create for them. Although the fine print of the Bill is yet to be confirmed, we thought we’d highlight the key points of what they are currently likely to introduce.
Let's start with the main aim of the Bill.
The main goal of the Bill is to re-establish a relationship between the owner and the resident, which will increase security for the resident and hold owners up to a higher standard of responsibility.
This will hopefully mean renting becomes more accessible to a wider range of people, and more residents will come forward to landlords looking for properties. This will be done by increasing affordability as well as variety in the criteria for rentals.
What is the Bill likely to introduce?
The Bill will aim to increase the quality of the renting industry for residents and is likely to introduce the following criteria that landlords must adhere to:
1. The end of no fault evictions
Under Section 21 of the Act, residents will be prevented from being evicted unfairly, and landlords must provide a reason to evict a resident at any time during their tenancy, a change that has been on the cards for several years.
For owners with a genuine reason for needing their property returned, then you can still do so via a Section 8 notice, which will be strengthened to include grounds for owners wanting or needing to sell their property, or for owners needing to move back into their property. There will be an increased notice period of 4 months to do so, and notice can’t be served within the first 12 months.
Hopefully, only owners using Section 21 notices as a tool to evict residents who complain about living standards or request repairs, or to try and perpetually achieve a higher rent will be affected. Those wishing to retain long term residents, at a market rent should be fine. There will be some increased planning required if selling is on your mind, however, our team can help put together roadmaps for your property to ensure that you are able to gain the outcome you need, when you need it.
2. The end of discriminatory selection of applicants
The Bill aims to reduce the discrimination against resident applicants by banning policies such as ‘no DSS’ (no renting to people receiving benefits) and ‘no children’. This will mean that more people will be able to get on the renting ladder, and hopefully improve the quality of living for many people across the UK.
Having to take offers at face value will promote a more even playing field for those previously perceived to be at a disadvantage. This doesn’t mean that anyone will be able to rent your property, or that you can’t insist on a level of referencing or checks to be upheld.
3. No more refusal of pets
Another way the Bill will increase the pool of residents is that landlords will not be able to put a blanket ban on allowing pets, unless the building establishes the ban. If you have a furry friend, now you are entitled as a resident to request permission to have pets in the property.
We have encouraged owners for years to move away from this old fashioned view of restricted living. You want people to feel at home in your property, and tenancy agreements have robust clauses to cover any damage at the end of the tenancy. People in pet-friendly properties will stay longer as they won’t want to keep uprooting their furry friends.
4. The end of receiving rent up-front
A limitation on how much an owner can request upfront from a resident is set to be introduced once the Bill comes into law. It means that owners will only be able to charge one month’s rent upfront, which should open the possibility of letting to a wider range of residents as well as increasing the option of properties.
We await a decision on how this will work, as this decision will particularly affect the overseas student market. For now, thorough referencing would be useful, placing more emphasis on previous landlord references and looking at a person's renting history as opposed to looking just at self employed vs employed.
If you are in the habit of asking for rent up front where residents pass referencing, this should stop, and you should be looking at rent guarantee options if you are still wanting to give yourself extra peace of mind.
5. The ability to only increase rent once in a year, and the application of a fair rent tribunal
One of the most notable changes the Bill will introduce is preventing owners from increasing rent prices more than once in a year, as well as giving their residents two months notice. If residents feel the need to challenge increases in rent, they also have the right to do so through a tribunal.
For us, this is standard practice so our owners should not be affected. An annual increase is fair and reasonable, any more than that is overkill.
Residents will have the right to challenge a rent via a first tier tribunal service - who will determine whether a proposed rent is indeed, market rate. The rent won’t take effect until this has been determined. The government needs to offer more information as to how this will work in practice, and how this system will sustain the increase in applications for determining fair rent.
6. The end of fixed term tenancies
This feature of the Bill gives residents periodic, flexible tenancies from the start and means that residents can terminate their contract at any point as long as two months’ notice is given. This will mean we’ll have to be agile and fluid with marketing - being ready to find new residents at all times of the year.
We have unique and bespoke marketing plans for each rental property that we receive notice for, so we don’t foresee this as being an issue. Demand hopefully will increase with supply if residents all have the flexibility to move.
Making sure you have the best presented property, priced correctly will ensure yours is the property everyone wants to make the move to, and stay put in!
What does this mean for the owners?
For owners, the new Bill may mean you have to make some changes to the way you operate. If you price your property accurately from the start, and respect your residents' right to notice for any major changes such as rent prices or eviction, the Bill may not change much to your financials or operations.
However, owners will need to make sure they adhere to the guidelines such as registering through a new digital property portal as well as making sure they handle each of their residents' requests ethically.
How can owners limit the impact the Bill will have on them?
The primary rule for owners is to select your residents carefully. If you have a resident where there is a balanced relationship, then the process is much more likely to run smoothly as the respect goes both ways, regardless of the Bill's introduction.
A great way to get the best residents is to present your property well. This starts with making sure there is no mould or damp, and that your property is fresh and up-to-date. At Paramount, our maintenance team can help you transform your property and attract the best residents.
Choosing a trusted and reliable agent to work with will ensure you are supported appropriately through the process and be honest about what the Bill could change for your individual situation.
At Paramount, we pride ourselves on staying up-to-date with all property news, and adjusting our services to suit the current market. From advice on rental yields, intricacies of legislation, maintenance and referencing, we are well prepared to support owners ready for when the Bill becomes law.
Contact us here at Paramount to discuss further how the Renters’ Rights Bill might affect you.
