The government has finally released its long-awaited Rental Reform White Paper for transforming the private rented sector, with big changes ahead for both landlords and tenants.
Originally proposed in 2019, the paper sets out a radical vision for a fairer and more secure rental market, with the aim of improving the rights and conditions for renters across the UK. It also wants to ensure every tenant lives in a ‘safe and decent home.’
But at a time when many landlords are really struggling, has the balance of power now swung too far in the tenant’s favour?
Here’s what landlords need to know about the proposals and how they can best prepare.
What’s Included In the Rental Reform White Paper?
Described by many as the biggest shake-up of the rental sector in more than 30 years, the ‘Fairer Private Rented Sector’ white paper includes a number of plans that are set to be made law under the Renters Reform Bill. These include:
- Abolishing so-called ‘no-fault evictions’ under section 21
- Applying the Decent Homes Standard to the Private Rented Sector for the first time
- A new housing ombudsman covering all PRS landlords and tenants
- The introduction of a new Property Portal for landlords
- The banning of children and pets to be outlawed
- Outlawing blanket bans on tenants on benefits
- Ending the use of rent review clauses
Section 21 To Be Abolished
‘No-fault’ Section 21 evictons are to be abolished, meaning landlords will no longer be able to end a tenancy without providing a reason.
Under the new plans, landlords will need to rely on Section 8 evictions. This means landlords must have ‘concrete and evidenced’ grounds for evicting a tenant from a property, such as:
- Rent arrears
- Regular failure to pay rent
- Neglect or damage to the property
- Anti-social behaviour
- Breach of the tenancy agreement
It is thought that Section 8 grounds will be amended under the final bill in order to make it easier for property owners to regain possession of a property when needed. At this stage, however, it is not yet clear what changes are going to be made or when they will be implemented.
The Decent Homes Standard
For the first time, the Decent Homes Standard is set to be applied to the Private Rented Sector, having previously only been applicable to social housing.
The regulatory standard sets out a number of criteria that a property must meet to provide a ‘safe and decent home.’ Landlords could face heavy fines if they fail to bring homes up to scratch.
Under the new standard, all properties must:
- Be free from serious health and safety hazards
- Have a reasonably modern standard of facilities and services
- Be in a reasonable state of repair
- Provide an adequate level of thermal comfort
New Housing Ombudsman for Private Rental Sector
The white paper also proposes a number of measure designed to offer landlords ‘greater clarity.’ This includes the introduction of a new Private Renters’ Ombudsman to facilitate quick out of court settlements to disputes between private tenants and landlords.
There will also be a new property portal to help landlords to properly understand and comply with all their responsibilities. This will also provide councils and tenants with information to deal with unscrupulous landlords.
Landlord membership of the ombudsman will be compulsory.
Outlawing of ‘Blanket Bans’ of People On Benefits
The Bill is set to outlaw the banning of tenants receiving benefits and those with children.
The courts have ruled that ‘No DSS’ and ‘No Benefits’ policies are unlawful because they are in breach of the Equality Act and unfairly discriminate against women, disabled people and the vulnerable.
Tenants’ Right to Keep Pets
All tenants will be required to have the right to request keeping a pet in their home, which cannot ‘unreasonably’ be refused by the landlord.
Tenants will also be required to have pet insurance to cover any damage to property under the Tenant Fees Act 2019.
Ending the Use of Rent Review Clauses
Under the reforms, rent review clauses will be banned. Rents will only be able to be increased once per year – and landlords will be required to give at least two months’ notice of any rent change.
How Can Landlords Prepare?
It’s a good idea for landlords to read the white paper in full. Doing so will give you a complete understanding of the proposals and how they’ll work.
It is not yet known exactly when these changes will come into effect, but be sure to keep an eye out for more details to be released in the coming months.
As for what it means for landlords, that will very much depend on the individual case. Some landlords may need to make property improvements in order to comply with The Bill, while others may need to revise their tenancy agreements.
A property professional should be able to advise you on how the reforms could affect you and any changes you need to make. It’s advisable to do this as soon as possible so that you can be properly prepared.
It’s likely that some landlords will consider selling up and moving away from buy-to-let altogether. These proposals come on top of the rising cost of buy-to-let mortgages and other factors that are negatively impacting many landlords.
Many will certainly feel that these proposals go too far and swing the balance of power too much in favour of the tenant.
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.