Published: 13/02/2025 By WIGMORE JONES
Guide to The Renters Reform Bill
The Renters Reform Bill is currently progressing through Parliament and is expected to become law in 2025. This legislation aims to reshape the private rental sector, balancing the rights and responsibilities of landlords and tenants. We understand you may have questions about how these changes could affect you, and this email provides an overview of the key proposals and how Wigmore Jones is preparing to support you.Who is Affected?
The bill impacts all Assured Shorthold Tenancies (ASTs), both new and existing, but excludes company lets, licenses, premium leases, and properties with rents over £100,000 per annum.Current Status:
The bill is currently at the committee stage in the House of Lords, where it is being scrutinised and amended. It will then return to Parliament for further consideration. While the exact timeline is subject to parliamentary procedures, it is anticipated to become law later in 2025.Key Proposals and Their Potential Impact:
- End of Fixed-Term Tenancies: Fixed-term ASTs will be replaced with periodic tenancies from the outset. Tenants will be able to end their tenancy with two months' notice at any time.
Our perspective: While this change may seem significant, our experience indicates that tenants typically stay in their rented properties for at least two years and are more likely to serve notice on the landlord.
- Abolition of Section 21 Evictions: "No-fault" evictions under Section 21 will be abolished. Evictions will still be possible under Section 8 grounds, including rent arrears, repeated late payments, antisocial behaviour, or breaches of the tenancy agreement. These grounds will be expanded to include situations where the landlord or a family member wishes to move into or sell the property.
Our perspective: This change emphasises the importance of careful tenant selection and thorough referencing.
- No Bidding Wars: Landlords will not be permitted to accept offers above the advertised asking price.
Our perspective: This may initially lead to some market adjustments. We could see asking prices rise and/or prospective tenants offering below the asking price as the market adapts. During this period, accurate valuations will rely heavily on local market knowledge and expertise in specific property types.
- Rent Increase Limits: Pre-agreed future rent increases will be invalid. Rent increases will be limited to once per year, using a Section 13 notice, and must reflect market rates. Tenants will have the right to challenge increases they deem unfair.
Our perspective: Rent increases generally reflect prevailing market conditions, therefore we expect minimal impact from this change. It's also important to remember that tenants already have the right to challenge rent increases by applying to the First-Tier Property Tribunal.
- Right to Request Pets: While landlords can still advertise properties as "No Pets," they can only refuse a tenant's pet request under specific conditions, such as restrictions in the Head Lease, severe allergies, or the tenant's refusal to obtain pet insurance.
Our perspective: We are monitoring how this new right will be exercised by tenants. In leasehold properties, pet licenses are often required by management companies and include agreements about pet behaviour and compliance with lease terms.
- Restrictions on Advanced Rent Payments: Tenants will no longer be allowed to pay more than one month's rent in advance (e.g., quarterly, six-monthly, or annually). Existing arrangements will need to transition to monthly payments. Private guarantors will still be an option.
Our perspective: We are carefully considering the potential impact of this amendment, particularly on students, international tenants, and those who lack guarantors. We are currently collaborating with our rent guarantor partners to investigate potential insurance solutions to address any challenges this may present.
Future Legislation:
The following legislation will be phased in at a later date:- Digital Database and Property Ombudsman: A database of landlords and properties will be created, and an independent ombudsman will be established to handle tenant complaints.
- Decent Homes Standard: A new Decent Homes Standard will set minimum standards for privately rented properties, addressing issues like damp, mould, and other substandard conditions.
- Protection from Discrimination: Landlords will be prohibited from discriminating against tenants based on their receipt of benefits or having children.
Get Ready for Upcoming Changes
Although the new legislation isn't expected to take effect until Spring 2025, there are proactive steps you can take now:- Tenant Selection: Securing optimal rent has always been a priority, but now, selecting the right tenant is more crucial than ever. A robust tenant vetting process with thorough referencing is essential to identify responsible individuals who will fulfil their obligations and treat your property with respect.
- Rent & Legal Protection: This essential service offers peace of mind and substantial support, covering up to £100,000 in rent arrears and up to £100,000 in legal expenses. This valuable protection is available for tenants who pass affordability checks. For tenants who pay rent in advance, we can secure a legal guarantee covering eviction costs should non-payment occur.
Staying Informed:
The Renters Reform Bill is currrently progressing through Parliament and may be subject to futher revisions. We are closely monitoring its progress and will keep you informed of any updates as they are released.Although the precise impact on the rental market remains uncertain, we are dedicated to supporting you through these changes and ensuring your continued success as a landlord.
Feel free to contact us with any questions.