New laws to protect renters moved one step closer to becoming a reality, with long-awaited housing sector reforms passing their second reading in the House of Lords on Tuesday (04 February).
The Renters’ Rights Bill will introduce a ban on no-fault evictions and in-tenancy rent rises in England among the key changes.
It is another blow to buy-to-let investors.
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The law will also cap advance rent payments at one month’s rent. There is currently no limit on how much rent a landlord can request upfront.
The Bill passed its second reading in the House of Lords, despite warnings from Tory peers that it is being rushed and could drive landlords out of the market, pushing rents up further.
Speaking during the debate, Baroness Scott said: “The Bill is counter-productive and, while the government may have good intentions, they will drive landlords from the market, reducing choice and putting up rents for the tenants they seek to protect,” she said.
Research by flat share website SpareRoom this week revealed that two thirds of UK landlords plan to leave the rental sector or reduce their portfolios this year with 88% expressing no confidence in the rental market in 2025,
The proposals are expected to become law as soon as March and while renter associations have backed the plans, landlords have stressed they will need time to digest the reforms.
Ben Beadle, chief executive of the National Residential Landlords Association, said: “The end of Section 21, ‘no explanation’ repossessions represents the biggest change to the sector for over 30 years. Once the bill is passed, it is vital that sufficient time is provided to enable the sector to properly prepare.
“Over 4.5 million households will need tenancy agreements updating, letting agent staff and landlords will need to undertake training and insurance and mortgage providers will need to adjust policies and rates. None of this will happen overnight and the government needs to publish guidance.”
Housing minister, Matthew Pennycook, said: “The Bill will modernise the regulation of our country’s insecure and unjust private rented sector.
“It will empower renters by providing them with greater security, rights and protections so they can stay in their homes for longer, build lives in their communities and avoid the risk of homelessness."
What is the Renters’ Rights Bill?
The legislation intends to introduce a range of new requirements in the hope they will more comprehensively protect tenants in private rented homes.
It goes further than the previous Tory government's Renters' Reform Bill, which had said it would delay scrapping Section 21 notices.
This Bill would ban no-fault evictions and also prevents landlords from blocking tenants on benefits or with children.
It introduces fines for landlords of up to £7,000 if homes do not meet a “decent standard”.
Landlords would additionally only be able to raise rents once a year, and only to the “market rate”.
Campaigners have welcomed the reforms but would like the government to go further.
Nick Ballard, head organiser at Acorn, a community union that campaigns on rental and housing issues, said: "It's good to see that the new government is acting with speed where the last government failed, but it is worth noting that this bill would not have happened without years of campaigning from the organised tenant movement.
“We welcome the much-needed end to Section 21 evictions and legal requirements for improved standards. However, if it is to deliver the change renters need the government must introduce open-ended tenancies so tenants can plan for a long-term future in their home but have the flexibility to leave if they want.”
Section 21 of the Housing Act has allowed landlords to break contracts without good reason, leaving tenants with just two months to find a new property.
Changing this will give tenants protection and security, but Matthew Lesh, director of public policy and communications at the Institute of Economic Affairs, points out it could make it harder to rent.
“Landlords will inevitably be more selective about who they offer properties to and charge higher rents when they cannot quickly evict bad tenants," he said. "That is likely to disproportionately hurt those who are poorer, younger, and from minority communities.”
The latest amendment means landlords will no longer be able to demand multiple months’ rent in advance as a condition for securing a home. The government says some renters are being asked to pay up to a years’ worth of rent upfront.
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