"The results from the LRG survey show that there are many factors at play affecting landlords’ sentiments towards the private rental market. While the bill is certainly taking a toll on decision-making, the cost-of-living crisis also affects the secto"
- Chris Martin - Skip Hire UK
The private rented sector is a vital part of England’s housing market. Around 4.6 million properties are privately rented, representing nearly one-fifth of households in England.
The Government is taking a closer look at the sector through the introduction of the Renters Reform Bill, which aims to improve conditions for both tenants and landlords. The reasoning behind this decision draws upon the fact that some renters face "a precarious lack of security" while landlords are being "undercut by a minority of criminal landlords".
Chris Martin, Sales Director at Skip Hire UK commented: “While the bill may pose some challenges for landlords, it is essentially aimed at improving the private housing sector and achieving long-term positive results.”
Understanding the Renters Reform Bill
The Renters Reform Bill is a comprehensive piece of legislation designed to bring about substantial changes in the rental sector. It was initially proposed in 2019, detailed in the 2022 Fairer Private Rented Sector whitepaper and finally presented to Parliament on May 17, 2023.
The bill aims to enhance the rights of the 11 million private renters and protect over 2 million landlords, improving the quality of rental properties and streamlining legal processes for both parties.
Some of the key components of the Renters Reform Bill include:
Abolition of Section 21 evictions
One of the most significant changes proposed by the bill is the abolition of Section 21, which allows landlords to evict tenants without a specific reason. The removal of Section 21 seeks to provide tenants with greater security and stability in their homes. Still, it also means that landlords must rely on legitimate grounds for eviction.
While the abolition of Section 21 seems to be the highlight of the Renters Reform Bill, supposedly posing the biggest challenge for landlords, a new study by Leaders Romans Group (LRG) found that a whopping 79% of landlords have never invoked Section 21. Historically, only 13% have used it, but not in the recent year. Some landlords have resorted to Section 21 due to lease violations.
Reform of Section 8 evictions
The Renters Reform Bill also seeks to reform Section 8, the process by which landlords can seek possession of a property on specified grounds. The aim is to expedite the eviction process for legitimate reasons, such as non-payment of rent or property damage while ensuring that tenants have sufficient safeguards against unfair eviction.
Improvement of property standards
The bill places a strong emphasis on raising the quality of rental properties. Landlords may be required to adhere to stricter property maintenance and safety standards, such as the Decent Homes Standard, ensuring that tenants have good quality and a habitable living environment.
According to the latest English Housing Survey, 23% of occupied private sector dwellings fail to meet the Decent Homes Standard, which is a higher proportion than in the social rented sector (10%) and in the owner-occupied sector (13%).
In order to comply with the Decent Homes Standard, landlords need to ensure that private rental properties are devoid of serious health and safety hazards, that there is decent noise insulation and adequate heating, as well as a range of facilities that help keep the property neat and clean.
Chris comments: “It’s important that properties adhere to certain standards to ensure the wellbeing of the tenants and the longevity of the property. While houses in bigger cities might benefit from easily accessible communal facilities such as recycling bins, landlords in smaller cities need to ensure that their tenants also have access to such facilities.
"For example, a skip hire in Solihull can make home renovation and moving out much more seamless, ensuring that any hazardous items are disposed of in a responsible and sustainable way."
Introduction of lifetime deposits
To simplify the rental process, the Renters Reform Bill proposes the introduction of lifetime deposits. This measure aims to reduce the financial burden on tenants by allowing them to carry over their deposits from one tenancy to another.
Nevertheless, such an introduction may impact landlords financially, as they will need to navigate the complexities of managing and transferring deposits between tenancies. This change could also have implications for cash flow and financial planning.
After the first reading, amendments were made to the Renters Reform Bill, including delaying plans to abolish Section 21, to be considered at the Committee stage in the House of Commons. The second reading will take place in 2024.
Impact on landlords
While the Renters Reform Bill is designed to enhance tenants’ rights and improve the overall rental experience, landlords have expressed concerns regarding how the bill will affect them. According to Goodlord and Vouch’s sixth State of the Lettings Industry report, 54% of landlords are pessimistic about the upcoming change.
Although the bill is aimed at improving the rental market for both tenants and landlords, new research by NRLA reveals the latter’s unfavourable attitudes towards the reform. 87% of the 3200 respondents believe that the Government’s representation of the bill is “hostile” towards landlords. They feel that their representation as an obstruction to a functioning private rented sector, based heavily on stereotypes, is not accurate.
There are also certain financial concerns, as 93% of landlords feel that the proposals will elevate the financial risk associated with renting private accommodations. Likewise, nearly 85% of landlords anticipate a detrimental impact on their cash flow due to the proposed reforms.
Would landlords sell their properties?
Despite the drastic changes and potential financial burdens, attitudes towards remaining in the rental market have remained relatively stable. According to the LRG survey, 68% intend to retain their current property assets, with an additional 6% considering expanding their portfolios.
For those landlords contemplating divestment, motivations vary. Policy shifts are cited by 52%, economic considerations by 25%, and "personal circumstances unrelated to income" by 23%.
Chris adds: “The results from the LRG survey show that there are many factors at play affecting landlords’ sentiments towards the private rental market. While the bill is certainly taking a toll on decision-making, the cost-of-living crisis also affects the sector.”
Conclusion
The Renters Reform Bill represents a landmark shift in the rental market, aiming to create a fairer and more balanced relationship between landlords and tenants.
Chris concludes: “It is important that the viewpoints of landlords are also taken into consideration and action while they proactively adapt their practices to align with the evolving legal landscape. Despite challenges that may arise, the ultimate goal is to create a rental market that benefits both tenants and landlords, fostering a more sustainable and equitable housing environment."
