Blog: A New Era in the Rental Sector is Coming
In June, the long-awaited government White Paper, ‘A Fairer Private Rented Sector’, was finally released.
As many of you will already be aware, the paper sets out a 12-point action plan containing the Government’s proposals for a fairer private rented sector. Amongst other significant changes, it confirms the abolition of Section 21 meaning in the future, landlords will always need to provide a reason for ending a tenancy, such as wishing to sell the property or wanting to move back in.
Many of the changes essentially map out the future of evictions and how that process will work, but the impact of the changes is difficult to predict at this stage.
Whilst I believe some landlords will be unnerved by the announcements and decide this is the final straw, others will digest the changes and realise that there is still very much a place for the private landlord. The implementation of more mandatory grounds for possession under Section 8 supports landlords and should also strike a chord with tenants, demonstrating that rent arrears, criminal and anti-social behaviour will not be tolerated.
Much of what has been announced was already expected, and the best course of action now is for landlords to learn what the changes mean for their own circumstances. Knowledge is power and understanding changes to legislation enables landlords to make an informed decision about the future of their investment.
Here are the proposed changes and what they mean:
- Abolishing Section 21 ‘no-fault’ evictions and transitioning all tenants under assured or assured shorthold tenancies to one system of periodic tenancies. This means that a tenant will be able to leave at any time by giving two months’ notice. However, landlords will have fewer options to remove tenants because the end of Section 21 means they will be required to present ‘reasonable circumstances’ in which to end the tenancy. These include wishing to sell the property, move back in or have close family members move into the property. Landlords will not be able to use this in the first six months of a tenancy.
- On a positive note for landlords, there will be a new ground for possession for repeated serious rent arrears so that a mandatory possession order is granted. This means a judge has to grant possession as long as the requirements are met and evidence provided. However, in order to exercise this, a tenant must have been in at least two months of rent arrears three times in the previous three years. Personally, I think twice should be sufficient enough. It is also disappointing that the notice period for the existing arrears eviction ground will be increased from two to four weeks.
- The ‘Decent Homes Standard’ currently used in the social renting sector will now apply to the private rented sector for the first time. This is only a cause for concern for those unscrupulous landlords who are more concerned with income than providing quality accommodation and I welcome this change, which will improve the quality of rented accommodation.
- A restriction on rent review clauses and provisions that allow challenges to rent increases by application to the first tier tribunal.
- Introducing a new Property Portal to help ensure that tenants, landlords and local councils have the information they need to understand their obligations.
- Local authorities will be able to take enforcement action against private landlords that fail to join the portal.
- A bar on landlords unreasonably preventing tenants from keeping pets in their home, with the tenant able to challenge a decision. Landlords will also be prevented from excluding tenants with children or those in receipt of benefits, and the Government also proposes to improve support to landlords who do rent to benefit claiming tenants. I think it is unfair to force landlords to allow pets. Most people are responsible pet owners but there is no doubt that a property housing, for example, two large dogs, is going to be subject to greater wear and tear than a person who does not have pets. That is a cost that will undoubtedly end up being picked up by the landlord. For this reason, this is an area of contention, and there must be means for landlords to protect themselves against extra cleaning and excessive wear or damage at end of tenancy in the final legislation e.g. pet damage insurance.
- Introducing a mandatory Ombudsman covering all private rented sector landlords and which will be able to provide various forms of redress for tenants. Whilst it will be mandatory for landlords to pay and join, it is possible this change will play a significant role in ensuring issues are resolved quicker and easier than if they were taken to court. The current court system will simply not cope with the increase in cases without reform. Again, I believe the introduction of an Ombudsman is a positive as it will help to elevate the reputable landlords in the industry and deter the rogues.
It is positive news that the changes have not been rushed in and the transition will be in two stages with at least six months' notice of the dates when they will take effect, and at least 12 months between the two dates. As ever, the devil will be in the detail of the legislation, which will be in the Renters’ Reform Bill. This was due to be heard in this current parliamentary session, however, with the Prime Minister’s resignation and significant changes in Cabinet, it is possible these changes will once again be delayed.
Remember this is only a White Paper. As NRLA members, you should be taking time to ‘look under the bonnet’ to understand these possible changes and try and shape how it looks in the future through engagement with your local MP and by joining campaigns.
Let’s also remember, whilst it will take time to adapt and understand the new rules, you are professional landlords, you’re adaptable and resolute. Furthermore, with a dwindling housing stock, rents are at an all-time high meaning tenants are fighting it out to rent your properties. So, as with everything, after the period of change, I am confident that the market will adjust and find its new norm.
