Last post: Mar 5, 2025
The upcoming changes to legislation regulating short term lets in the private rented sector will be significant. Particularly so for anyone who may want to regain possession of their property in the future, as the right to possession will soon be limited to circumstances that fall within the limited Section 8 grounds. Even if able to rely on those grounds, notice periods and the time to obtain possession will likely significantly increase. Landlords should, therefore, be aware of the changes and carefully consider their existing rentals to remove any unwanted tenants using the “no-fault” grounds as soon as possible. Landlords should also ensure that they are fully prepared for the new legislation before it “bites” (expected to be in the next 4/5 months), given the significant penalties for breach.
What is the Bill?
The Renters' Rights Bill ("the Bill") is new legislation currently passing through Parliament and will completely transform how residential tenancies are managed and terminated. It will give significant additional rights to tenants in the private rented sector.
The Bill will not apply to tenancies which are not Assured Tenancies.
When is it coming to force?
The Bill is expected to come into force as early as Spring 2025.
At the time of writing the Bill was at the Committee Stage in the House of Lords. Implementation is a case of "when" not "if" and the Bill is not expected to undergo any major changes before receiving Royal Assent.
What Key Changes does the Bill make?
- Assured Shorthold Tenancies ('ASTs') will cease to exist and any in existence will automatically become Assured Tenancies.
- Fixed term tenancies will cease to exist. Assured Tenancies will be periodic in nature.
- "No fault" evictions will be abolished. If a landlord wants to terminate an Assured Tenancy, it will have to rely on grounds justifying why it should be entitled to possession. The grounds expand and amend the existing section 8 grounds, many of which now have significantly increased notice periods.
- Landlords will need to join the newly created Private Rented Sector Database.
- It is intended to introduce a new Private Rental Sector Ombudsman to deal with tenant complaints.
- The Decent Homes Standard is being extended from social housing to the entirety of the Private Rented Sector. Stricter requirements on landlords to deal with health hazards, such as damp and mould are also being introduced.
- Tenants can ask to keep pets, which cannot be unreasonably refused. This right will be implied into every tenancy and landlords will be under a time limit to respond.
- Landlords cannot outright refuse to rent to families or those in receipt of Universal Credit.
Does the Bill impact how much rent I can charge?
'Bidding wars' will no longer be allowed. In their advertisements, Landlords and agents will be required to publish an asking rent for their property and will be prohibited from asking for, encouraging or accepting any bids above this price. Rent will be limited to market rent and can only be increased once a year, which must be in line with the open market rent.
To increase the rent notice needs to be served or determined by the First-tier Tribunal. Rent review clauses in tenancies can no longer be relied on.
The amount of rent a landlord can ask for in advance is limited to one month's rent and that rent cannot be paid until the tenancy is signed.
The Bill increases the likelihood that tenants will challenge proposed increases in rent as they will no longer risk eviction through the "no fault" route if they refuse to agree to a rental increase.
Can landlords be penalised for not following the rules?
Yes - in addition to not being entitled to possession if certain requirements are not met, landlords and agents can also be fined up to £40,000 for non-compliance. However, the effectiveness of enforcement for non-compliance is likely to be directly impacted by how well funded the enforcement bodies are, the resources available to the local authorities and the efficiency of the Ombudsman scheme.
How can we help?
If you have any queries in relation to the Bill and/or obtaining possession of rented accommodation, we have extensive experience in this area across a range of sectors.
Key points to consider:
- Many of these changes will be immediate with no lead in time for landlords to prepare once the Bill is passed.
- Landlords are encouraged to 'get their house in order' now, particularly if they are considering terminating a tenancy.
- Compliance with some key aspects of the Bill is a pre-requisite for being able to serve a valid notice to terminate a tenancy under most of the section 8 grounds, so landlords are urged to get ahead of the curve so they are in a position to serve notice when needed.
With thanks to "HCR Law" for providing an insightful article on the importance of the upcoming changes in the new Bill and for allowing Choice Business Loans to share this with our customers. If you would like assistance with serving notices and help with obtaining possession on your behalf, feel free to contact Tahlia Woollatt at twoollatt@hcrlaw.com or India Huggett at Ihuggett@hcrlaw.com. You can also visit their website at https://www.hcrlaw.com/office/thames-valley/.
Alternatively, Choice Business Loans is happy to discuss your requirements and make an introduction.
Contact us at 01494 410125 or email: info@choicebusinessloans.co.uk
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