New protections for renters have moved closer to reality as the controversial Renters Rights’ Bill progressed through the House of Lords this week.
The Renters’ Rights Bill will introduce a ban on no-fault evictions and in-tenancy rent rises in England, as well as banning fixed-term tenancies, among the key changes.
It is another blow to buy-to-let investors.
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The Bill passed its second reading in the House of Lords in February and peers have been considering amendments during the committee stage of the legislation this week.
It comes amid warnings from Tory peers and landlords that it is being rushed and could drive landlords out of the market, pushing rents up further.
Research by flat share website SpareRoom claims 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,
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”.
Rather than typical 12 month contracts, all new tenancies will be automatically converted to a periodic tenancy.
Tenants will still be able to end the agreement with two months' notice but landlords will require a legitimate reason for eviction.
Will the Renters’ Reform Bill be good for tenants and landlords?
Rental reform campaigners have, perhaps unsurprisingly, welcomed the reforms as they give tenants more security.
But landlord groups and some members of the House of Lords still have concerns, particularly on the end of fixed term tenancies, which supporters claim provides more certainty for property investors.
There are warnings that this could hit student accommodation, especially as there will be more requirements for serving an eviction notice.
There is an exemption in the legislation that allows landlords to regain possession of properties let to students in line with the academic calendar but only where the property is a house in multiple occupation (HMO) with three or more bedrooms.
The National Residential Landlords Association (NRLA) warns that this excludes many landlords with smaller properties.
Ben Beadle, chief executive of the NRLA, said: “If landlords are not confident they can regain possession in time for the next academic year, many will stop letting to students altogether. The result will be fewer homes, higher competition, increased rents, and less choice for students.”
Rents could end up rising as a result of the new legislation, lettings platform Goodlord has warned, especially as bidding wars will be banned, while new eviction rules could actually be detrimental for tenants.
Oli Sherlock, managing director of insurance for Goodlord said: “The ban on bidding wars could unintentionally cause a rapid increase in average rent prices as soon as the new legislation comes into effect.
“With landlords forced to accept no more than the advertised rent, many will understandably be tempted to up their prices from the off.
“When it comes to Section 21, there is a real risk that removing this power from landlords may lead to more rental disputes going to court. This could see thousands more tenants receiving County Court Judgements for issues such as rent arrears – damaging their credit scores and potentially restricting their access to properties further down the line.”
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