So-called ‘no fault’ evictions will be banned as part of a massive overhaul of the private rented sector, the UK government has announced.
In a move that legislates proposals set out in the fairer private rented sector white paper published last June, the no fault evictions ban means landlords will be prevented from evicting tenants without justification, allowing renters to challenge rogue landlords without the threat of losing their home.
But while the government claims the legislative reforms contained in the long-awaited Renters’ Reform Bill will deliver a “better deal for renters,” many are concerned the bill will force even more landlords to leave the market, thereby worsening the UK’s already chronic shortage of affordable rental properties.
Section 21: What Are No-Fault Evictions?
Under current legislation, Section 21 allows landlords to evict tenants and regain possession of a property without giving a reason.
The government says this allows some unscrupulous landlords to intimidate tenants by threatening eviction if they speak up about a property being in a state of disrepair. In a paper published back in March, it pointed to research showing that tenants are often reluctant to exercise their right to secure repairs because of the ease in which their landlord can evict them.
Now, as part of a larger package of rental reforms, the government will ban these so-called ‘no fault’ evictions, meaning landlords will only be able to evict tenants under certain circumstances – such as when wanting to sell the property.
Under the new laws, landlords will however have new powers to repossess properties from anti-social tenants and those with repeat rent arrears, with a reduction in the notice period for “irresponsible renters.”
The government also aims to provide tenants with stronger protection against backdoor eviction by ensuring they are able to appeal excessively above-market rents which it says “are purely designed to force them out.”
“As now, landlords will still be able to increase rents to market price for their properties and an independent tribunal will make a judgement on this, if needed. To avoid fettering the freedom of the judiciary, the tribunal will continue to be able to determine the actual market rent of a property.”
What Else Is Included in the Renters’ Reform Bill?
As well as the no fault evictions ban, the government has announced a wider package of measures in what has been described as a ‘once-in-a-generation’ shake-up of the UK rental market.’
This includes the introduction of a new Private Rented Sector Ombudsman which seeks to provide landlords with “fair, impartial, and binding resolution to many issues.”
There will also be a Privately Rented Property Portal to help landlords understand their legal obligations and demonstrate compliance, as well as providing information to tenants to help them make informed decisions when entering into a tenancy.
Other key reforms include giving tenants new rights to request keeping a pet in their home, which cannot be unreasonably refused by their landlord. Landlords can however request that tenants have pet insurance to cover any damage caused to the property.
The government also says it remains “fully committed” to other reforms outlined in last year’s ‘a Fairer Private Rented Sector’ white paper and will “bring forward legislation at the earliest opportunity.”
This includes the application of the Decent Homes Standard to the private rented sector for the first time, as well as making it illegal for landlords to have blanket bans on tenants receiving benefits, or those with children. It also plans to strengthen councils’ enforcement powers targeting criminal landlords.
Unveiling the bill, Housing Secretary Michael Gove said:
“Too many renters are living in damp, unsafe, cold homes, powerless to put things right, and with the threat of sudden eviction hanging over them.
“This government is determined to tackle these injustices by offering a new deal to those living in the private rented sector; one with quality, affordability, and fairness at its heart.
“Our new laws introduced to Parliament today will support the vast majority of responsible landlords who provide quality homes to their tenants, while delivering our manifesto commitment to abolish Section 21 ‘no-fault’ evictions.
“This will ensure that everyone can live somewhere which is decent, safe and secure – a place they’re truly proud to call home.
Reforms May ‘Exacerbate the Rental Housing Supply Crisis’
But while the bill seeks to transform the private rented sector for the better, many investors are concerned it will worsen the situation for landlords and force many to leave the sector at a time when there is already a chronic shortage of rental properties.
Ben Beadle, Chief Executive of the National Residential Landlords Association, said more detail is needed if the reforms are to work as intended:
“Responsible landlords need to be confident that when Section 21 ends, where they have a legitimate reason, they will be able to repossess their properties as quickly as possible. Without this assurance, the Bill will only exacerbate the rental housing supply crisis many tenants now face.
“Whilst we welcome the Government’s pledge to ensure landlords can effectively recover properties from anti-social tenants and those failing to pay rent, more detail is needed if the Bill is going to work as intended.”
Rental Reforms: What Should Landlords Do?
There is no escaping that landlords have had a tough time of it of late. Swimming against a tide of rising interest rates, soaring mortgage costs and ever-increasing maintenance costs, it’s unsurprising many are worried that the no-fault evictions ban is the final nail in the coffin of the buy-to-let sector.
If you are a landlord, it’s important to be aware of what’s included in the Renters (Reform) Bill and fully understand your legal responsibilities.
For investors concerned about the future of their investments or those considering selling because of the squeeze in profits, now may also be a good time to consider alternative investment options – including indirect investments without property ownership.
If you’d like to discuss the different investment options that may be available to you, please give us a call to speak with one of our property portfolio managers – or fill in our form to request a callback.
Important note: The information provided in this article is general in nature and does not constitute personal financial advice. If you are unsure whether an investment is right for you, please seek professional advice. If you choose to invest, the value of your investment can both rise and fall so you may get back less than you put in.