What do we expect from the Renters Reform Bill 2023?
The Renters Reform Bill 2023 is designed to improve the rights and protections of tenants. This is what we expect the bill to contain and how landlords are likely to be impacted.
All tenancies will be periodic
Instead of having fixed-term tenancies with a specific end date, all tenancies will be periodic or ‘rolling’.
This will spell the end of shorthold tenancies. Landlords will no longer be able to contract tenants to 12, 18 or 24-month tenancies. Tenants will be able to leave a property at any time by serving just two months’ notice.
The idea behind this change is to ensure tenants can leave poorly maintained properties or move house when their personal circumstances change without being liable for rent.
Rolling tenancies mean tenants can remain in a property as long as they like. This has caused panic amongst student landlords who will be unable to guarantee tenancies to new students at the start of each academic year. Only landlords of purpose-built student accommodation will be allowed to continue offering fixed-term tenancies.
No blanket bans on families or those receiving benefits
Landlords will not be able to refuse tenancies to families with children and those who rely on benefits for their income. The aim is to eliminate discriminatory practices in the rental sector and to promote equal opportunities.
However, there are many reasons why landlords are reluctant to rent their properties to those who claim benefits. For one thing, buildings and contents insurance premiums can be higher, and for another, rent is paid in arrears rather than in advance.
Doubling notice periods for rent reviews
Landlords will only be able to increase rent once a year. They will also have to give two months’ notice before increasing rent, instead of just one month.
This change is to protect tenants during the cost-of-living crisis so they can make informed decisions about their housing costs and budget accordingly. But, of course, landlords are impacted by the cost-of-living crisis too!
No fault evictions will be abolished
Currently, under Section 21 of the Housing Act 1988, landlords have the right to evict tenants without providing a specific reason.
By abolishing ‘no fault’ evictions the Renters Reform Bill 2023 aims to provide greater stability for tenants. Landlords will only be able to evict tenants in reasonable circumstances, which will be defined by law. Reasonable circumstances will be rent arrears, breach of a tenancy agreement or other specified grounds.
This means landlords will have to collect enough evidence to prove they have grounds to evict difficult tenants.
However, the government is expected to reform Section 8 to make sure landlords are protected in the case of criminal or serious antisocial behaviour.
Tenants will have more rights to keep pets
Landlords will not be able to automatically refuse to allow tenants to keep pets. If a landlord does refuse permission, the tenant will have the right to challenge their decision.
Pets can cause additional wear and tear to a property. Although landlords can claim money from a deposit, it can still mean additional financial cost and stress. Long lasting smells, fur and stains are difficult to eliminate.
What are the financial consequences for landlords?
For landlords, the Renters Reform Bill 2023 is likely to mean greater wear and tear on their properties, steeper insurance premiums and a higher turnover of tenants.
Tenants will be able to service notice at any time. If a couple split up, don’t like the neighbours, or have just seen a better property, they can leave after just two months.
Landlords will be more vulnerable to tenants who threaten to leave early unless the rent is dropped, fixtures are upgraded etc.
Plus, people who have sold their own home and are looking for a stop gap will no longer have to find an expensive Airbnb but can rent any property they choose.
How Rockett Home Rentals can help you
Under the Renters Reform Bill 2023, landlords could have two or three tenancies a year. Since the tenant fee ban, landlords have not been allowed to pass any of the costs related to setting up a tenancy on to tenants.
Nearly all letting agents charge set up fees for every change of tenant. This can range from 50% to 100% of one month’s rent, plus additional charges.
Rockett Home Rentals charge a transparent, annual fee regardless of how many tenant changes, inventories, checkouts etc. that we do per year. This means we bear all the costs of tenant changes and you do not get any expensive surprises.
Our fee is 10% + VAT of the monthly rent and an annual administration fee of 8% including VAT of one year’s rent.
We know how expensive it is to be a landlord today, and we want to help. With us, it’s even cheaper than managing a property yourself. So, next time you need a tenant, please contact us on 01782 638111 to discuss being one of our managed landlords.