The ‘Renters Rights Act’ is a piece of legislation originally brought in by the Conservatives as the ‘Renters Reform Bill’. Once we had the change in government, Labour relaunched this as the ‘Renters Rights Act’ and are pushing it through as quickly as possible.
The whole idea of the legislation is to essentially make things better for tenants.
At the time of writing this, it’s a bill, and will become an act once it is enforced. It’s now being discussed in the House of Lords and is at the committee stage. Once this is complete, it will move over to the report stage, 3rd reading and then to the final stages and would be granted Royal Assent.
As an agent, some of the points I agree with, other things are of more concern. There is a lot to take from this, so I’ll run through the key points.
You can watch Jonathan’s video below, or feel free to read on…
As part of the Renters Rights Act, fixed term tenancies will be a thing of the past. The whole concept of a 6 or 12 month fixed term tenancy will be going.
They’re talking about the act coming in Spring this year, but personally I imagine it will be Summer, or even Autumn at the earliest, as there are a lot of changes included, and there is still a long process to go through. Once it’s introduced, it becomes law on every single tenancy in existence, so even if you’ve already signed a tenant up, they’ll move over to the new arrangement.
If they were on a 6 or 12 month, or even a 2 or 3 year contract, they will move straight over to an assured tenancy rather than an assured shorthold tenancy. This means they can give just 2 months notice at any point on a rent day, regardless of any prior agreed fixed term… Essentially, the longest you can tie a tenant in will be 3 months.
I don’t imagine it will affect most tenancies, and in some ways it’s a positive, as it gives tenants the flexibility to stay as long as they want. However, for the more specialist tenancies such as student lets where they rent for an academic year, it will now go onto the rolling tenancy. This could create big problems with students potentially leaving halfway through an academic year. The landlords answer could well be to just put the rents up, which then goes against the intention of helping tenants with the act. I imagine this part of the bill will be amended for this reason.
At the moment when a landlord wishes to get their property back (a non fault eviction), they can give 2 months notice out of the fixed term. The tenant has to comply and leave when requested. Moving forwards, all evictions will be on what’s called a Section 8. Section 8s have been around for some time, and there are various grounds where you can ask your tenant to leave. The good news is that the Renters Rights Act will have some extra bits included in the Section 8. In certain circumstances, landlords will be allowed to ask their tenants to leave. The two most significant are:
You may be trying to think of loopholes around the situation, for instance, telling your tenant you’re going to sell, just to get them out. It’s not that simple… The committee have already considered this and will impose fines of up to £40,000 if you re-let the property within the following 12 months. You may also be required to contribute to the compensation to your tenants, which I’m told is up to 2 years worth of rent. It’s not worth the risk.
These are really the only two ways to evict your tenants, unless they are breaching their tenancy agreement. You can read each of the grounds on the Government website.
As an animal lover, I would openly say I would be happy to have some pets in my property. As a landlord, would I want someone with several animals in my property? No.
The current version is saying you need reasonable grounds to refuse pets. Reasonable grounds won’t be as simple as, ‘I don’t want my carpets to get ruined’. This will affect a lot of landlords. The whole Renters Rights Act is going to upset landlords so much, that many are already starting to consider backing out entirely. So although tenants will benefit from generally being allowed pets, I have a horrible feeling that landlords are going to be put off of letting out their houses if they feel pushed to do something they’re not comfortable with.
There is the addition in the bill that insists tenants take insurance against pets damaging properties, so there is a little reassurance in that for landlords.
A big thing is that Decent Homes Standards will be brought into the private sector. You may have heard of AWAABs Law, which is the law that says homes have to meet a certain standard. This was brought in when a little boy tragically died as a result of a property being damp and mouldy. It was a local authority property and they were found to be at fault in not maintaining the property to a certain standard. As a result, housing associations and local authorities need to meet certain standards for their properties. That is being rolled out to privately owned properties. It shouldn’t affect responsible landlords, but I’m hoping it won’t be abused with tenants pushing for things they wouldn’t otherwise get. But overall, I think this is a positive thing in the bill that a certain standard will have to be met by all rental properties.
There are also Anti Discrimination measures being introduced, so landlords are not going to be able to discriminate against people on benefits, although I am told anyone will still need to meet affordability criteria. So although they can’t discriminate on where the money is coming from, they can still only let properties out if people can afford it. This is a good safeguard for both tenants and landlords all-round.
On top of that, you can’t discriminate against people with children, which for some properties will be absolutely fine, however, there are some properties that are not a good fit for children. If you have a top floor flat with poor sound insulation, this wouldn’t be ideal and may cause problems.
Finally, you can’t discriminate against people with pets. As discussed previously, you have to give reasonable consideration to pets and this part of the bill says you can’t discriminate against them as well.
The good news for landlords is that they can still increase rents using Section 13s. They can do this once a year by serving the Section 13 Notice to increase the rent in line with market value, nothing has changed there. What has changed is that if the tenant appeals the rent increase, then the rent increase can’t go ahead until it has been to the first tier tribunal. When, and only when, it has been to the first tier tribunal, can the rent increase.
This is a concern to me, because it will potentially take anywhere from 4, 6 or 8 months to go to a tribunal, and the landlord cannot backdate increase in rent. So, in my mind for every case when the landlord chooses to put the rent up, it is a no brainer that it will go to appeal. Say it were going up £100 per month which is not uncommon for a rent increase, that’s 6 months where the tenant is going to save themselves £600 in total. It’s almost inevitable.
I think every rent increase will end up going to appeal. Then of course, the tribunals will get backed up and could take even longer to get to a tribunal (if they don’t put in extra tribunals), and the landlords still then can’t backdate it. So if they were perfectly justified in putting the rent up, they will be the ones to take the hit, with the tenants getting a huge bonus.
I think there could even be a cost for the landlords as well, because every agent in the country is not going to do this free of charge… it’s quite an intensive process going to a tribunal, you’ve got to pull comparables together, it takes a few hours.
The only outcome of this bit of legislation is that rent increases are going to be more difficult, meaning rents will likely go up again, because landlords will put rents up at every opportunity to compensate for this.
It’s a nice idea that it will help tenants, in reality it’s going to do completely the opposite.
All this is set out on the gov.uk website if you did want to read it. Be aware, it is quite a chunky document!
Landlords won’t be able to accept offers from tenants that are more than the advertised monthly rent. This is just going to mean that landlords put the advertised monthly rent up and expect tenants to bid under the advertised rent.
Will it help tenants? I suspect it will only help the tenants that are brave enough to negotiate, leaving probably the most vulnerable tenants still paying the advertised higher rents. The overall affect will be it puts rents up, again!
Every landlord will be required to register. I expect every landlord will need to go through a vetting process where you’ll probably have to do a fit and proper test to prove you are capable of being a landlord, and maybe even pay a subscription fee. Again, what will the landlords want to do with anything extra they have to pay? They’ll want to make the money back on the rents.
That’s a very brief summary of the bill, it’s being pushed forwards at a rapid rate. I’ve not seen legislation go through this quickly for anything similar before. It worries me that things are not going to be considered carefully. It’s currently being discussed with the House of Lords, once this stage has passed it will get Royal Assent and everyone will have to comply.
If you want to dispute this in any way, don’t hold back. Write to your MP and tell them about any concerns you have. There will be concerns as it will affect a lot of people with all the changes in one go. It will make a huge impact to the whole industry.
My overall feeling is that it will affect tenants more than it will affect anyone else. They’re going to be the ones in the long run who are penalised about this idea of the ‘perfect rental sector’ when at the end of the day, landlords rent out their properties voluntarily.
A lot of people are burying their heads in the sand. Now is the time to think about what you want to do with your rental properties in the long run, because I think there will be a shortage of rental properties in the future. It might be that tenants won’t want to leave a rental property until they have another long-term one to go to, as I think there’s just going to be greater shortage.
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February 2025