Lettings regulation update with expert Andrew Culverwell

Get the latest on the Reading of the Renters (Reform) Bill and a succinct summary of where this key legislation now stands.

Read on below or listen to the interview here.

Now that we’ve had the latest reading of the Bill in the House of Commons, where does that leave this important piece of legislation?

The Bill had its 3rd reading in the House of Commons on April 24th. The next stage is the House of Lords, where it will go through a similar set of review stages before amendments are debated, and the Bill finally receives Royal Assent in the autumn. This could mean new tenancies could fall under the new Act in the Spring/Summer of 2025. This, however, is still uncertain and there are no clear dates on when it will receive Royal Assent.

What are the key takeaways from this latest Commons review?

To summarise the purpose of the Renters (Reform) Bill, its basic aim is to rebalance the private rented sector. It aims to ensure that both landlords and tenants are treated fairly when it comes to the key areas that matter to them, such as security in renting a home or enabling possession of a property under legitimate grounds. To counter those who say the Bill is too landlord-friendly, Michael Gove has commented that “a Bill that is bad for landlords is bad for tenants” as anything that risks driving landlords away from the rental market, reduces the number of homes available for rent.

What about Section 21 and ‘no fault evictions’?

One of the most publicised elements of the Bill was the removal of ‘no fault evictions’ under Section 21 of the Housing Act. Whilst this element of the Bill remains, it will now not be introduced until the Government has reviewed how the courts are operating. The aspiration here is that there will be an “online end-to-end” solution for landlords. The Government has committed £1.2 million towards this, which seems a paltry sum for such a transformative piece of software.

With timings being unclear, all that can be said at the moment is that there will be a phased approach to introduction.

How many months of notice must a tenant give their landlord, and what about student landlords?

Another amendment dealt with in the Bill concerns tenants being able to serve a two-month’s notice to end the tenancy and vacate the property. Tenancies will, under the change, run for a minimum of six months, excluding certain exceptions. Arrangements for student tenancies are also a little clearer so that landlords will be able to seek possession where it’s confirmed at commencement of the tenancy that all tenants at the property are students. Mixed occupancy households will be excluded.

What other points were discussed in the Renters (Reform) Bill?

Clarity was provided by the Government that it has no plans to end Selective Licensing and that the new landlord portal arguably fulfils the same purpose. The Government has committed to a review that ensures landlords won’t be regulated twice over in two different schemes.

Finally, two reviews are included within the Bill. One at 18 months to review how effective Section 8 (the only method by which landlords can gain possession), is performing, and another in 5 years to assess the number of dwellings let, their location and size. Presumably this is to assess what impact the Act has had on the private rented sector.

A reminder here that nothing is cast in stone at this stage, further amendments are possible.

Has the Labour Party proposed any amendments to the Bill?

Yes, the Labour Party has made a number of interesting points, which included:

• Preventing bidding wars on a rental property above the advertised price. This, however, could be difficult to achieve in practice. Labour suggested that requiring landlords to advertise the asking rent would prevent bidding wars.
• Preventing the requirement for a guarantor where a tenant fails to meet the necessary criteria for a tenancy. Again, it is unclear how this might work in practice and whether it would risk excluding potential tenants.
• A call for landlords to be prevented from seeking possession to sell their property during the first two years of a tenancy.

Are there other areas of the Bill that are still to be determined?

In practice, all of them. It is a widely held belief that certain elements of the Bill need much more detail. For example, the Decent Homes Standard is due to be implemented as part of the Bill. Here Jacob Young MP, Parliamentary Under Secretary of State (Department of Levelling Up, Housing and Communities) recently confirmed that he and his Department are currently working on a proposed standard, with details to be set out in due course.

And what elements of the Bill remain effectively as initially set out?

The Bill confirms that the Government will create a Private Rental Sector (PRS) Ombudsman designed to provide a redress scheme for tenants. It will be compulsory for all private residential landlords to register with the scheme. The Government stated last year that the Ombudsman will “tackle the root cause of problems, address systemic issues, provide feedback and education to members and consumers, and offer support for vulnerable consumers”. Landlords registered with the scheme will also feed into a new database for the future, currently labelled the “Privately Rented Property Portal service”.

Additionally, unlike recently used in Scotland, no rent caps have been included in the Bill. Landlords will be able to raise rents once a year to a market rate based on the rental price of similar properties in the local area. Landlords will also need to provide two months' notice of any increases to rent.

Are there any further updates from other parts of the UK?

Although, there isn’t too much movement at this point in time, there are some interesting early developments that are worth monitoring.

The Welsh Government is expected to come forward with a white paper setting out “proposals for a right to adequate housing, including fair rents and new approaches to making homes affordable for those on local incomes”. This follows on from a Green Paper in September last year which considered what could be a ‘Fair Rent’. There is no agreed definition of what a fair rent means, but the paper said that the government needs to consider “the economic challenges of the housing market, the financial sustainability of the rented sector and the real costs of living in a home in a specific place in Wales”. The recent White Paper is now the next step towards formulating further legislation. However, with the Renting Homes Wales Act only relatively recently enacted in 2022 and the rental sector arguably getting used to those changes, it may be some time before further laws come into place.

And how about in Scotland, what has happened in regards to the rent cap?

In Scotland, there has been a hard cap of 3% on rent increases in place since April 2023, as part of the Scottish Government’s temporary measures to deal with the cost of living crisis. This hard cap ended on March 31st and has been replaced with a new system that looks at the current rent, open market rent and the rent requested by the landlord. It includes a calculation known as ‘tapering’ to ensure tenants are not seeing unreasonable rent increases at a time when market rents in Scotland have reportedly been increasing 10% year on year since 2022. The tapering calculation itself looks at the difference between the current rent and open market rent to give a guide on what rent increase a landlord could reasonably apply. The calculation will be used by the First Tier Tribunal and Rent Service Scotland to determine an appropriate rent increase should a tenant challenge a rent increase notice in court.

New Scottish First Minister John Swinney has pledged to make housing one of his priorities. Propertymark, a leading membership body for the property sector, has urged Mr Swinney to “sort the SNP’s previous plans to bring in rent controls permanently, and must end the country’s Housing Emergency”. It’s still early days for Mr Swinney, and it will be interesting to see how policy develops over the coming months.

Wondering how all of this could be affecting your property investment and rental value? Chat to us today and book a free rental valuation to find out more.

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