Understanding the Renters’ Reform Bill: Impact on residential and student lets

The Renters Reform Bill is expected to shake up the private rental market when it receives Royal Assent in 2024.

Landlords, estate agents, and renters alike should familiarise themselves with the upcoming changes and how they could be impacted.

In this article, we identify exactly how the Renters Reform Bill UK will affect residential and student landlords.

What is the Renters Reform Bill?

The Renters Reform Bill is a piece of legislation that is currently making its journey through parliament.

It aims to “bring in a better deal for renters”.

In November 2023, the bill went through the committee stage of its journey, and although we don’t yet have a date for when it will come into effect, it is expected to be late 2024, perhaps October.

Some of the reforms the bill will introduce include:

  • Abolishment of Section 21 ‘no fault’ evictions (now delayed)
  • Reformed possession grounds and notice periods
  • Introduction of a new Private Rented Sector Ombudsman
  • Ban on fixed-term tenancies
  • Enforcement of the Decent Homes Standard
  • Limit of one rent increase per year set
  • Right to request pets
  • No discriminatory bans on children or benefit claimants

One of the biggest reforms, abolishing Section 21 ‘no fault’ evictions, was delayed at the Committee stage.

It has been put on hold until the Ministry of Justice and HM courts have improved the court possession process to make it simpler for landlords to use.

What impact will the Renters Reform Bill have on residential lets?

The Renter Reform Bill aims to bring key changes to residential lets to improve tenant security and living standards. Let’s learn more about the impact the changes are expected to have.

  • Increased security for tenants – Once Section 21 ‘no fault’ evictions have been abolished, landlords can no longer evict tenants without valid grounds for doing so. This will provide tenants with better security and empower them to challenge unfair rent increases without fear of eviction.
  • More flexibility for tenants – After fixed-term tenancies have been banned, all tenancies will be periodic. This will offer tenants greater flexibility as they will only need to give two months’ notice to end a tenancy.
  • Simpler dispute resolution – Introducing the new Private Rented Sector Ombudsman should make it quicker, easier, and cheaper for landlords and tenants to resolve disputes.
  • Higher standards of living – Applying the Decent Homes Standard to privately rented property aims to improve living conditions in rental properties. Landlords will need to ensure their properties meet these higher standards, resulting in better living conditions for tenants.
  • Regulated rent increases – Landlords will only be able to raise the price of rent once per year, providing tenants with better financial stability.

What impact will the Renters Reform Bill have on student lets?

The Renters’ Reform Bill could significantly impact the student housing market, particularly student houses in multiple occupation (student HMOs). The changes introduced by the bill could have more pronounced and complex implications for student lets compared to residential lets.

While purpose-built student accommodation (PBSA) can still use fixed-term tenancy agreements, student houses in multiple occupation (HMOs) will need to move to periodic tenancies. This will provide more flexibility for student renters. However, it could lead to increased void periods for student landlords as students may choose to move in or out at different times.

This ban on fixed-term tenancies for student HMOs could disrupt the student housing market. The potential for increased void periods and the associated uncertainty could put landlords off investing in student HMOs and increase investment in the PBSA sector instead. Given the existing shortage of student housing, the changes introduced by the Renters Reform Bill could exacerbate the issue.

Renters Reform Bill: challenges and considerations

While there are many benefits to the changes proposed in the Renter Reform Bill, it could also introduce several challenges for landlords, including:

  • Difficulty evicting tenants – Landlords may find it more difficult to evict tenants after the abolition of Section 21 ‘no fault’ evictions.
  • Financial constraints – Restricting rent increases to once yearly could prevent landlords from responding to unexpected cost rises.
  • Reduced stability – Transitioning from fixed-term to periodic tenancies where tenants can hand in their notice at any time could lead to less stability for landlords.
  • Decrease in student lets – The financial uncertainty brought about by these changes could deter landlords from investing in student HMOs and exacerbate the existing shortage in student lets.

Landlords must plan and prepare for the Renters’ Reform Bill in 2024, adapting their strategies to the new regulations to minimise impact.

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