The 1st of May is fast approaching, and that will bring with it the Renters’ Rights Act becoming law.
But in the words of Dad’s Army’s Lance Corporal Jones, our message to landlords is ‘don’t panic, Mr Mainwaring!’ The Renters’ Rights Bill has sent shockwaves through the lettings industry; it’s claimed to be the biggest change to the Private Rented Sector in recent history. However, as always, the devil is in the detail, and when we really look closely at the proposed reforms, it could well be that the results are not as negative for landlords as were first expected.
What the government appears to have forgotten here is that a large proportion of properties in the private rented sector are owned by occasional, one-off landlords, not always large-scale investors. Many of our landlords are day-to-day people, with a couple of houses which they may have bought as investments decades ago, or with properties inherited from family and which need to pay their way. For the good landlords out there, the Renters’ Rights Act shouldn’t need to cause a state of alarm.
When we really pick apart the detail from the reforms, they are unlikely to make a huge amount of difference to the everyday landlord. Firstly, periodic tenancies will no longer be fixed for a set period of time, and rather they will run monthly. This gives tenants greater flexibility to give notice; however, there will still be a period of eight weeks which has to be given to the landlord in order for them to find a new tenant. This is actually an increase in notice period, giving landlords more time to find new tenants and hopefully decreasing void periods.
When it comes to rents, these will still be able to be increased once every twelve months to a maximum of the market value. This is not a great change to current market conditions, where landlords can already increase rents this way or may be reliant on rent increase clauses – which can in turn limit the top value for which a property can be rented.
However, there are two changes which might make a difference. First is that the way in which a landlord can ask a tenant to leave a property is changing. They will no longer be able to serve Section 21 notices – otherwise known as no-fault evictions – rather they will need sufficient grounds for serving notice, such as rent arrears, or that they need to sell the property because they want to move themselves or a family member into the home. Currently, landlords do not need to have grounds to end a tenancy by serving a Section 21 notice – so there is certainly a change here – but we find that the majority of landlords only really look to move a tenant on in these types of circumstances anyway.
Tenants are also now going to be able to request pets, and a landlord can only refuse if they have a valid reason, such as the property being unsuitable or if there is a head lease prohibiting animals. The landlord does have the ability in this scenario to require the tenant to take out pet damage insurance. While this may appear daunting for landlords, should the correct insurances be put into place, hopefully there will be minimal disruption caused by pets at a property. There is also a broader point here: happier tenants tend to stay longer. And in a market where void periods are costly, that stability has real value.
In order to protect tenants’ quality of living, there will also be the introduction of Decent Homes Standards, which implements minimum health and safety requirements for rental properties, and Awaab’s Law will apply to these, which ensures that landlords have to address serious issues in a stricter timescale. Again, this shouldn’t be a concern for the good landlords in the market. We find that the majority of landlords will already comply with these new changes. They keep their properties in good repair and maintain high standards.
There is, of course, likely to be some fallout. Tighter regulation may push out a minority of poorly performing landlords. But that is not necessarily a bad thing. A more professional, transparent sector benefits both tenants and responsible landlords alike.
The real risk lies in overreaction. If too many landlords exit prematurely, supply could tighten, pushing rents higher, which is an outcome that helps no one.
So, what should landlords do now?
Preparation, not panic, is the answer. Speak to your agent. Review compliance. Ensure properties meet required standards. Consider stronger referencing processes, along with rent protection and legal expenses insurance. And be ready for the introduction of a new landlord database aimed at improving transparency and reducing fraud.
Above all, remember this: landlords will still be able to regain possession when they need to, whether to sell, move in, or address a breach of tenancy.
For tenants, too, the fundamentals remain. Notice periods still apply. And requests, including those for pets, must follow the proper process.
The Renters’ Rights Act will undoubtedly reshape parts of the market. But it is evolution, not revolution. And for those already doing the job well, there is every reason to keep calm and carry on.
By Sarah Bush, Head of Residential at Cheffins
Speak to Cheffins for tailored advice