Following on from the long-awaited publication of the Renters' Reform Bill, new research from Finbri reveals that Landlords are wary of the proposed changes around section 21 and the new private rented ombudsman.
The Renters' Reform Bill signifies an overhaul of the Private Rental Sector, with the government stating the reforms “deliver a fairer private rented sector for tenants and landlords”. However, the bill has been subject to much debate amongst PRS landlords, with many expressing serious concern over their livelihoods.
The bill which carries out the Government's 2019 commitment to eliminate Section 21 no-fault evictions, which allowed landlords to terminate a tenancy without providing a reason, is not without controversy.
As described by the government: "Eleven million tenants across England will benefit from safer, fairer and higher quality homes thanks to a once-in-a-generation overhaul of housing laws."
And although the government claims that the introduction of this bill will benefit 11 million tenants, its implementation looks set to shock the private rental market as consequently landlords are looking to exit the rental market - raising the question of whether the lack of available rental stock will become a more dire issue
With the passage of this legislation, no-fault evictions would be abolished to empower renters to challenge landlords without fear of losing their home and there would be an end to landlords and agents refusing to rent properties to tenants receiving benefits.
The Renters' Reform Bill will:
- Abolishment of section 21 'no fault' evictions
- Introduce more comprehensive possession grounds so landlords can still recover their property and make it easier to repossess properties where tenants are at fault
- Provide stronger protections against backdoor eviction
- Introduce a new Private Rented Sector Ombudsman
- Create a Privately Rented Property Portal
- Give tenants the right to request a pet in the property
- It will now be illegal for landlords and agents to refuse to rent properties to people who receive benefits
- Give local authorities more power to enforce and protect renters' rights
Anti-landlord: how are landlords reacting to the introduction of the bill?
Finbri conducted a survey of over 1,000 UK landlords to gather their opinions on the bill. According to the findings:
- 48% of landlords are concerned that the reform makes it illegal for landlords and agents to refuse to rent properties to people who receive benefits
- 45% of landlords are concerned (23%) or strongly concerned (22%) that the reform stops section 21 'no fault' evictions.
- 44% of landlords are concerned that the reform introduces a private rented ombudsman to help enforce renters' rights.
- 43% of landlords voiced their concern that the reform requires landlords to legally register their property on the new property portal.
- 41% of landlords are concerned that the reform ensures all tenants have the right to request a pet in their house, which the landlord must consider and cannot unreasonably refuse.
Landlords are wary of the changes, which would eliminate certain fees and limit security deposits to a single month's rent. While some landlords are worried that these changes will cut into their income, others are concerned that it could lead to an increased risk of property damage and non-payment of rent. The bill has yet to pass, and landlords are eager to see if any amendments can be made in order to protect their interests.
The impact of the bill on tenants
The Renters' Reform Bill aims to improve the rights of tenants by ending 'no-fault eviction' and allowing them more time to challenge rent increases. The Bill would end the practice of landlords evicting tenants without a valid reason, while also providing tenants with longer notice periods for rent increases, so they have more time to dispute them if necessary.
Finbri surveyed over 1,000 UK renters, which discovered 19% of tenants have experienced unaffordable increases in rent and 74% are concerned about rent increases, therefore increased rights over rent increases will be a relief.
In the ongoing power struggle between landlords and tenants, the Reform Bill would mark a significant shift towards giving the edge to tenants.
What's expected to happen to the UK private rental sector?
Landlords across the UK are reacting with dismay to the Bill, expressing the feeling that the legislation, combined with tax changes and EPC requirements, is designed to bring about their demise. Despite the removal of section 21, the Bill claims to 'protect' the 2 million landlords in the PRS, yet quite how this will manifest itself has yet to be revealed.
With the blanket ban on renting tenants on benefits or those with children being illegal and a tenant's right to request a pet - landlords are concerned that these changes could lead to an increased risk of property damage and rental arrears.
Not only are landlords facing the introduction of the Bill and further legislative changes, but the probability of inflation reaching 5% in the Autumn is high, with estimates suggesting there is a one-in-four chance it could even go as 5.25%.
Another concern is that the implementation of the new law will cause an increase in rent prices, making it even harder for tenants to find affordable housing.
Stephen Clark, from property bridging finance broker Finbri, sums up:
“The Renters' Reform Bill has been dubbed a war on landlords. It's a huge shake-up to the Private Rental Sector, and it's clear that there are both positive and negative implications. On one hand, it could potentially reduce the number of evictions and help ensure that tenants have the security they need.
"On the other hand, it could lead to significant financial losses for landlords, with the main grievance being the abolishment of section 21. These changes could dissuade potential investors from entering the private rental market.”