Want to know what it is how it impacts Landlords? Give this a quick read.
What is it?
A bill introduced by the new Labour Government as a revision of the Conservative’s “Renters’ Reform Bill,” aimed at updating the Housing Act, which currently governs the majority of residential tenancies in the UK.
What does it mean?
- No more “Fixed Terms” – This particularly poses issues to Landlords in the student sector, who may no longer be able to demand 50 week terms. The final legislation may include special measures to balance tenant flexibility with the practicalities of renting to students but this has not been confirmed. It could also pose significant expense to Landlords with tenants change over.
- Section 21 Abolished – Section 21, often known as “no-fault notice,” will no longer be available for landlords to use in order to gain possession. However, in practice, landlords rarely seek possession without valid reason. As such the NRLA have been actively lobbying to ensure the reforms include an expansion of the grounds for eviction, providing landlords with a fair and balanced process when necessary.
- Reform of Section 8 – In order to abolish Section 21 notices, the government have assured they will be introducing more grounds to the Section 8, to ensure Landlords can serve notice in reasonable circumstances, for example wanting to sell. However the notice terms will be changed and extended to give tenants longer to leave.
- A digital private rented sector database –with information and support for landlords, tenants, and councils
- A new ombudsman service – To provide impartial resolutions to both landlords and tenants, reducing the need to go to court
- You can serve notice to sell or move back in – But Landlords cannot use grounds like selling or moving in during the first 12 months and will have to provide four months’ notice
- Notice Term for Rent Arrears will be longer – The mandatory rent arrears ground will require three months’ arrears and four weeks’ notice
When will it apply?
Depending on the amount of time this takes to get through Parliament, the changes are expected to apply to both new and existing tenancies at the same time, by summer 2025
Should Landlords be concerned?
Yes, landlords may have valid concerns about the Renters’ Reform Bill, as it introduces significant changes to the private rental market. Recent reforms have made it increasingly difficult for temporary or accidental landlords—such as those renting out their primary residence or inherited property. Section 24 already taxes landlords on total income rather than just profit, making it financially unfeasible for many to hold rental properties in their own name. The Renters’ Reform Bill further complicates short-term rentals, making it less attractive for those without alternative financial resources.
For professional Landlords and Investors these changes will be adaptable, and in fact are not too dissimilar from the protections for tenants put in place during the COVID epidemic. Exiting the market will be harder, and these reforms will make possession via the courts far less attractive. In saying this, court action is already very expensive and we always recommend clients only really consider this route when there are no other options; these changes just promote negotiation for mutual ending of tenancy rather than obtaining court orders.
This change will make obtaining insurance on tenancies far more attractive however, and we expect insurers will change their policies to include negotiation to end tenancies, where it does not already, with this likely being a far more cost effective and practical solution to ending tenancies reflective of these changes.
However, when court orders are required, we do have significant concern regarding the potential strain on the court system, as was experienced during the COVID-19 era, which may lead to delays in securing court dates when needed.
With this in mind, one other issue we can foresee from this reform is Landlords being unwilling to ignore affordability criteria’s to take the risk by accept tenants with government supported income, who often do not meet thresholds to afford private housing and as such cannot be insured by Landlord insurance schemes. These tenants are typically told to “stick put” by their local authorities when served notice, with temporary housing only available to them on receipt of a court-ordered possession notice, and with threats their housing allowance will be cut and support refused if they “make themselves homeless” by leaving prior to this time, making negotiating ending a tenancy even more difficult.
With the housing shortage worsening, the government not making any significant pledges to provide social housing, and the social housing sector demolishing and selling more than it builds, these reforms put in place by the Government will likely end up having the most significant negative impact on those Tenants who rely on the state and the Landlords who take the risk in housing them. Baring in mind, according the Shelter, 35% of tenants in the UK claim housing benefit or support in some way, this doesn’t make up a majority but is still a large portion of tenants who are likely to be negatively impacted.
