Good morning, #StoreTroopers everywhere.
Unless you’ve been living on a desert island for the last six months, and let’s face it, that’s not a bad option, the UK government's new Renters' Rights Bill was introduced in September 2024. It is set to bring substantial changes to the private rental sector, which will significantly impact landlords. So, what does it mean for you as a private landlord, and what should you be doing right now? Let’s find out, shall we?
What’s Changing?
The End of Section 21 'No-Fault' Evictions: Perhaps the most significant shift is the abolition of Section 21, commonly known as "no-fault" evictions. This means landlords will no longer be able to evict tenants without providing a reason. Instead, you’ll have to rely on specific grounds, such as rent arrears or breaches of the tenancy agreement. While this aims to provide tenants with greater security, it adds layers of complexity for landlords. Be prepared for potentially longer eviction processes, as the courts are expected to be inundated, and delays may become common.
New Grounds for Possession: Although Section 21 is scrapped, you can still regain possession under revised Section 8 grounds. These now include reasons such as wanting to sell the property or moving in yourself (or a close family member). However, the tenant must have lived there for at least 12 months, and there’s a four-month notice period required. Furthermore, the bar for certain breaches, like rent arrears, has been raised—three months' arrears are now required, instead of the previous two.
Periodic Tenancies: Fixed-term tenancies will be abolished, meaning all new tenancies will be periodic. This means they will roll on a week-by-week or month-by-month basis. Tenants can also terminate their agreements with just two months’ notice. This will give them more flexibility, but for landlords, it may introduce more uncertainty.
Rent Controls and Challenges: Rent increases will now be limited to once per year and must be in line with market rates. Tenants will also have the right to challenge unfair rent increases. This means you’ll need to be more strategic when setting your initial rent, ensuring it reflects the market value, as mid-tenancy hikes will no longer be an option.
Pets in Properties: Under the new rules, tenants will have the right to request a pet in their home, and landlords must reasonably consider such requests. While you can still refuse, it must be on reasonable grounds—property size, suitability, or for instance if the leaseholder specifically doesn’t allow pets. This change is expected to be a hot topic, as many renters have been keen to see more flexibility around keeping pets. Although, as I have always said, allowing pets in the home tends to mean your tenants are happy to stay on longer.
Awaab’s Law and Decent Homes Standards: Following tragic events linked to poor housing conditions, landlords will be held to stricter property standards. You’ll be required to address any reported issues within 14 days, and failure to meet the Decent Homes Standards could lead to hefty fines, up to £7,000. This could mean higher maintenance costs for landlords, especially as demand for contractors may rise. Giving simple advice to your tenants on cleaning and airing the property can help with this. White vinegar is a super cheap but highly effective product for removing mould.
What Should Landlords Do Now?
Review Tenancy Agreements: With no-fault evictions off the table, it’s time to comb through your tenancy agreements. Make sure they are watertight in terms of addressing potential issues like rent arrears, anti-social behaviour, and property maintenance. Keep clear records of any tenant-related problems to protect yourself if disputes arise.
Prepare for Rent Challenges: Since tenants will be empowered to challenge rent increases, it’s essential to set your rents correctly from the outset. Research market rates and factor in any potential costs from stricter property standards or the loss of bidding wars (which will also be banned.
Keep on Top of Maintenance: The new Decent Homes Standards are not something to take lightly. Ensure your properties meet these standards and respond swiftly to any maintenance issues to avoid fines. Regular property checks and a proactive approach will help you stay compliant.
Plan for the Long Term: While some landlords may be considering exiting the market due to these new challenges, others may see an opportunity. If you decide to stay, invest in understanding the new regulations and take advantage of the changing landscape. With higher standards, you may attract more reliable tenants in the long run, and the housing market is expected to adjust.
In summary, while the Renters' Rights Bill brings more security for tenants, it also means more responsibilities for landlords. By staying informed and proactive, you can navigate these changes and continue to thrive in the UK’s evolving rental market. Keep an eye on further updates, as the Bill is expected to pass into law early next year.
Until next time, keep your investment compass steady and your dreams of property prosperity alive!
The Anonymous Investor.
*This blog post is for general information only and is not financial advice. Always speak to a financial advisor for guidance on your specific situation.
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