Navigating the Renters’ Rights Bill: What Landlords Need to Know

The Renters’ Rights Bill, part of a larger legislative agenda designed to reform the private rented sector (PRS), has been a hot topic for landlords across the UK. With significant changes on the horizon—such as the abolition of Section 21 ‘no-fault’ evictions and the introduction of mandatory periodic tenancies—many landlords are understandably concerned about how these reforms will affect their business.

In the North West, where demand for rental properties is particularly high, landlords are already facing rising costs and growing responsibilities. Understanding the key provisions of the Renters’ Rights Bill and how to navigate them is essential for staying ahead in this changing landscape.

What Is the Renters’ Rights Bill?

The Renters’ Rights Bill is part of the Labour government’s wider plan to improve housing conditions, protect tenants’ rights, and create a fairer, more transparent rental system. The Bill aims to:

• Abolish Section 21 ‘no-fault’ evictions: This change would prevent landlords from evicting tenants without giving a reason, fundamentally altering how evictions are handled.
• Introduce periodic tenancies: All tenancies would automatically become periodic, meaning tenants can end the agreement with appropriate notice, providing them with greater flexibility.
• Strengthen tenant protections: Other changes include clearer rules around rent increases, the right to keep pets, and a new ombudsman service to handle disputes.

While the intentions behind the Bill are to make renting more secure for tenants, these changes present challenges for landlords, particularly in terms of how they manage tenancies and handle potential disputes.

Abolition of Section 21: What It Means for You

The proposed abolition of Section 21 ‘no-fault’ evictions is arguably the most significant change in the Renters’ Rights Bill. Traditionally, landlords have used Section 21 to regain possession of their property at the end of a tenancy without needing to provide a reason. Under the new rules, this option will no longer be available.

• Impact on the North West: In the North West, over 69% of landlords believe abolishing Section 21 will have a negative impact on the private rented sector. Many landlords fear that losing the flexibility to regain possession of their property could make it harder to manage problematic tenants or adjust their rental portfolio.
• New Grounds for Eviction: While Section 21 will be removed, the Bill introduces clearer and stronger grounds for eviction, such as for rent arrears or property damage. However, landlords may face a longer and more bureaucratic process to regain possession of their properties.

Mandatory Periodic Tenancies: Flexibility for Tenants, Less Security for Landlords

Another major change proposed in the Renters’ Rights Bill is the introduction of mandatory periodic tenancies. This would effectively eliminate fixed-term tenancies, giving tenants the freedom to leave the property with minimal notice after the initial term.

• Impact on Landlords: Many landlords in the North West, especially those with student or short-term lets, are concerned about the impact of periodic tenancies. Nearly 60% of landlords believe this change could destabilise the rental market, particularly in areas like Manchester, where a regular influx of students relies on fixed-term contracts. That said, there are plans to address specifically student tenancies in relation to bringing these to a close at the end of the fix term, though these have not been confirmed.
• Managing Turnover: Periodic tenancies could lead to increased tenant turnover and shorter stays, potentially increasing vacancy rates and administrative burdens for landlords.

Tip for Landlords: While you can’t prevent tenants from leaving under periodic tenancies, consider offering incentives for longer stays, such as slight rent discounts for longer-term agreements or improvements to the property that encourage tenants to renew. Establishing a positive relationship with tenants can also increase the likelihood of them staying for longer periods.

Rent Increases and Pets: Striking the Right Balance

The Renters’ Rights Bill also addresses concerns around rent increases and tenant rights, including the right to have pets in rental properties.

• Controlled Rent Increases: While the Bill doesn’t set a cap on rents, it does propose stricter rules around how and when landlords can increase rents. Rent increases must be reasonable and can only occur once per year, with tenants having the right to challenge unreasonable hikes.
• Allowing Pets: The Bill introduces measures to prevent landlords from unreasonably withholding consent for tenants who wish to keep pets. 47.4% of tenants in the North West said they would like to keep a pet if the rules were relaxed, so this change is likely to be popular among renters. However, many landlords are concerned about the potential for property damage and added wear and tear.

How to Prepare for the Renters’ Rights Bill

While the Renters’ Rights Bill presents some challenges, there are several steps you can take to prepare:

1. Stay Informed - As the Bill progresses through Parliament, it’s important to stay up to date with any changes or amendments. Knowing what’s coming will help you make informed decisions about your rental properties.
2. Work with a Letting Agent - With the regulatory landscape becoming more complex, partnering with a trusted letting agent, such as Property Genius, can help ensure you remain compliant with all new laws. 63% of landlords in the North West currently use a letting agent for their properties, and compliance is a key reason for doing so. Letting agents can handle the administrative burden, allowing you to focus on managing your properties.
3. Review Your Portfolio - The abolition of Section 21 and the introduction of periodic tenancies may mean it’s time to review your portfolio. If you have properties that are more difficult to manage or are in areas with higher tenant turnover, consider making upgrades or adjusting your rental terms to attract longer-term tenants.

Conclusion: Navigating the Renters’ Rights Bill

While the Renters’ Rights Bill introduces significant changes, being proactive and staying informed will help you navigate these challenges. By reviewing your tenancy agreements, staying on top of compliance, and working closely with your letting agent, you can continue to operate successfully in the evolving private rented sector.

If you have any concerns or questions about how the Renters’ Rights Bill will impact your rental portfolio, get in touch with us. We’re here to provide advice and ensure your properties remain compliant and profitable.

Source of Data:

The statistics and insights mentioned in this article are based on findings from Goodlord’s State of the Lettings Industry Report 2024, focusing on the impact of the Renters’ Rights Bill on landlords in the North West.