The Renters Reform Bill – What Lettings Agents and Landlords need to know. The Renters Reform Bill has been a much talked about topic in recent months between lettings agents and managers. In this article we have rounded up some of the most frequently asked questions, with of course, their answers.
Put simply, The Renters Reform Bill is a piece legislation that’s been proposed by the Government with the intention to reforming the private rented sector (PRS), to level up the quality of housing, and to provide a better deal for renters. It’s been said to represent the biggest shake-up of the private rented sector in 30 years.
The size and role of the Private Rented Sector has increased vastly over the last 3 decades. More people than ever have taken the opportunity to become Landlords. This has prompted the Government to expand and bring up-to-date legislation that was originally in place. The Government’s plan is to “bring in a better deal for renters” and to make certain that private rented homes meet basic standards. Additionally, the new laws that are being proposed are also there to “support the vast majority of responsible landlords providing quality homes to tenants while delivering our manifesto commitment to abolish Section 21 ‘no-fault’ evictions.”
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While no official date has been confirmed by the government, it is estimated that the Renters Reform Bill will come into law on 1t October 2024. Before then the Bill must be passed through both Houses of Parliament where amendments will be applied. Following this stage there will then be an implementation phase which is usual, before a Bill becomes law. Time is running short for the Government because there is already a busy schedule. Recesses, party conference season and preparations for a General Election also have to be allowed for. There is a possibility that the Bill will not make it in time. If this is the case, the whole process will start again when a new Government is formed.
The Government states that implementation will be rolled out in two stages, and at least 6 months of notice will be given of the first roll out date after which all new tenancies will be periodic and governed by the new rules, which will include the changes relating to renting with pets. The date of this will be dependent on when the Bill has received Royal Assent. To avoid a two-tier rental sector and to make sure landlords and tenants are clear on their rights, all existing tenancies will transition to a new system on the second implementation date. There will be a gap of 12 months between the first and second date.
If you are a letting Agent or Landlord, there is no action to take at this time. However, it’s beneficial to be up to speed with any possible implications that the Bill might have.
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The Renters Reform Bill is yet to become law, so at present Lettings Agents and Landlords are able to continue to serve the Section 21 Notice in line with both current legislation and their tenancy agreement.
If the Bill is passed, the way a Landlord regains possession of their property will change. Firstly the Landlord will have to give a specific reason stating why they are serving notice. There will be amendments made to the Section 8 Notice Process, it will be updated to include the specific reasons permissible within the new legislation. If the reasons the Landlord gives is not referenced within the amended notice then time frames could increase.
The government has stated that since every situation is different within the diversity of the private rented sector, it would not be possible to legislate across the board so Landlords will be expected to consider fully all requested on a case-by-case basis. If reasonable there will be situations where pet requests can be refused for example, when a superior Landlord prohibits pets. However, when a disagreement arises a tenant can approach the Private Rented Sector Ombudsman or the court, who will make a final decision based on the evidence provided by both parties.
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To protect the Landlord, the government is making amendments to the Tenant Fees Act 2019, so that landlords can require insurance to cover any damage caused by pets living in the property. In extreme cases when insurance does not compensate for the cost of damage, a landlord can take the tenant to court to recoup additional funds.
It will be a legal requirement for all Landlords to legally register their property on the Property Portal. They will be able to do this online. Enforcement action against private landlords that fail to join the Property Portal will be taken by Local councils. If a landlord lets or advertises a property without it first being registered on the Property Portal, they can be fined up to £5,000 by the local council.
Landlords will be required to pay a fee to register on the Property Portal. The cost of registering is still to be decided by the Government, however they say they will work to ensure that the fee is proportionate and will represent good value to Landlords.
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This Bill really shouldn’t make much difference to good landlords who are already letting professionally, although there will be the additional cost of joining the Ombudsman and registering on the portal.
The two most significant benefits are probably the strengthened grounds for possession and the Government’s pledge to prioritise serious court cases, meaning landlords should be able to evict tricky tenants more quickly.
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Recent media attention has reported recently that many landlords have made the decision to sell their Buy-to-Let properties. Some have taken the decision due to tightening legislation and increased taxation. Others have bowed out due to the increase in mortgage rates and uncertainty surrounding the Renters (Reform) Bill, which is estimated to come into law on 1st October 2024 (which initially, will only affect new tenancies). There’s no denying the challenges that have driven numerous landlords to leave the market. Rising costs, surging interest rates, and tightening regulations have made being a landlord more complex and financially demanding than in previous years.
The Renters Reform Bill - What Lettings Agents and Landlords need to know. The Renters Reform Bill has been a much talked about topic in recent months between lettings agents and managers. In this article we have rounded up some of the most frequently asked questions, with of course, their answers.
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Affordable and efficient property management solutions
Download the Renters Reform Bill
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Arrears are an unfortunate fact of life in the world of lettings. Never more so than during a cost of living crisis. We all know that there’s a lot that an Agent and landlord can do to mitigate the cost of rent arrears. (The most obvious solution being Rent and Legal Protection). But what do Move Lettings do when we are first aware of rent arrears and how successful are we in minimising the downside for everyone? Our first task is to engage with the tenant as soon as possible. It’s a much easier subsequent call to our landlord if we’ve already taken action and the solution’s already in place. Tenants that are in arrears are not always keen to speak to us, so we always start by reassuring them that we want to help. We use email, text and phone calls in a structured way so that if the case reaches a court room, we can provide an audit trail of contact. We understand that It’s really important to keep our landlord informed regularly so that they know we are doing all that we can to fix the problem.
Tenants have never been better informed than they are today, and that’s generally a good thing. But, there are organisations who actively encourage tenants to make complaints and claim compensation from landlords and Agents. They have email templates available to make things even easier. Local Authorities will regularly advise tenants that they will not help with social housing until the legal eviction process has been completed….and that can take months. There’s no thought at all for landlords who have tried to get things right, but made a simple procedural mistake. It’s not just the financial impact of successful claims from tenants that landlords and Agents should be wary of. It’s the reputational damage that can result if the tenant takes their story to social media and the press. Move Lettings exists to give high quality advice to Agents and landlords. You can trust us to work with you and your customers to keep you safe. A great reputation is hard won…why risk it?
So many people in the Lettings world dismiss Rent and Legal Protection (RLP) as another ‘insurance’ that customers can do without. To be completely honest with you, when I let a property for a friend or member of my family, there’s no way in the world I let them do it without RLP. Admittedly, I’ve been in the business a long time, but I’ve seen so many examples of good tenants falling into significant arrears over the years causing stress and hardship to landlords. The most frustrating thing is that it’s completely unnecessary. The best agents I’ve every worked with routinely (strongly) recommend RLP. By doing so they understand that they are looking after their customer and protecting their income at the same time. One final thought: If a tenant that you have introduced falls into arrears and your landlord has to go to court to evict them at great expense, it’s logical that they might think twice before instruction you the let their property again. With RLP, the landlord is much more relaxed and you will almost certainly get the relet!
Arguably, many property professionals are hesitant about building a lettings business because they are less confident discussing a tenure that they have less experience in. Perhaps the biggest misconception is that we can make a choice between Lettings and Sales because so often, eventually, we can have both. Vendors let their property and landlords sell. We should ask ourselves a question or two: Why in ‘Generation Rent’ would an Agent ignore such a significant and lucrative market? Why are ambitious Estate Agency businesses hoovering up lettings businesses as fast as they can? Move lettings are dedicated to removing the fear factor for you. We will help you every step of the way and would be very happy to demonstrate to you how, by leveraging your existing relationships, you can pay yourself a significant passive income for as long as you choose. At the same time, you will be adding significant value to your business.