This week, the government introduced a major overhaul of the rental sector. So what can be in store for landlords and tenants? Annabelle Dixon is watching.
You’re unlikely to miss the headlines this week that the government has introduced a long-awaited tenant reform bill in Parliament.
The National Residential Landlords Association (NRLA) called it the biggest shake-up in the private rental market in decades. The reforms have been in preparation for several years. It is reported that five years.
So what is the bill all about? It aims to improve the market for 11 million private tenants and 2.3 million landlords across England “through a once-in-a-generation overhaul of housing law”. According to the government, the bill will include:
- Repeal of section 21 on no fault eviction and transition to simpler types of tenancy.
- Providing more complete grounds for ownership to make it easier for landlords to reclaim property.
- Introduction of a new dispute resolution commissioner
- Creation of a new portal to provide information to both landlords and tenants
- Giving tenants the right to ask to have a pet in their home, which landlords “may not unreasonably refuse”.
Here’s what the bill could mean for different corners of the housing market.
What the landlord reform bill means for people who rent
Renters will “benefit from safer, fairer and better quality homes” thanks to the shake-up, the government said.
Dan Wilson Crowe, Acting Director of Generation Rent, calls it a “huge opportunity” for renters.
“Canceling them [section 21 evictions] will remove much of the stress associated with renting and improve communication and trust between tenants and landlords,” explains Wilson Crowe. “A new real estate portal and ombudsman could make it much more difficult for criminal landlords.”
“This will force landlords to be much more careful about who they rent to.”
David Hanna, chairman of the Cornerstone Group, agrees that the no-fault eviction ban will give tenants “better peace of mind.”
But Emily Williams, a housing researcher at Savills, thinks the real problem is likely to be in the lower end of the housing market.
“This will actually force landlords to be much more careful about who they rent to and really do due diligence with their tenants,” she notes. “This is likely to make life harder for people who are either on universal credit or have to use local housing allowance to get private rent.”
What the Landlord Reform Bill Means for Landlords
The Article 21 no-fault eviction ban is considered one of the most important measures in the Tenant Reform Bill. But Foxtons CEO Guy Gittins says it’s unlikely to change the relationship between the “overwhelming majority” of landlords and tenants.
He explains: “In our experience, landlords rarely evict tenants who are paying rent on property in London.”
However, Ben Beadle, chief executive of the NRLA, points out on his website that landlords need to be confident that once Section 21 is repealed, if they have a legitimate reason, they will be able to get their property back as quickly as possible.
“Without that guarantee, the bill will only exacerbate the rental housing supply crisis that many renters are now facing,” he says.
“The uncertainty he created for landlords […] could mean landlords pulling out of the sector and worsening housing shortages.”
Laura Southgate, a partner in property litigation at Cripps, says the bill is generally a positive development as it aims to address the housing crisis.
But she warns that “the uncertainty this has created for landlords needs to be addressed by the government.” Otherwise, the opposite effect is possible: the withdrawal of landlords from the sector and, as a result, an increase in the shortage of housing.”
RICS voices similar concerns, pointing out that reforms should be carried out in such a way that landlords do not leave the sector.
For Hannah, landlords and tenants “should remain on an equal footing.” He explains: “The most important thing is to balance the rights of tenants and the obligations of tenants and ensure that landlords retain some of their powers. I welcome the proposed tenancy change and agree that tenants need protection, but ultimately landlords need rights too.”
What the Landlord Reform Bill Means for the Real Estate Market
The unveiling of the much-discussed landlord reform bill provides some clarity for the housing market, in particular for tenants, landlords and letting agents. This could potentially put downward pressure on property prices, with commentators recently noting an increase in new buyers entering the market driven by all-time highs in rental prices right now. A burst of sanity in the rental market could mitigate this effect.
However, don’t expect it to be a big deal anytime soon: the new bill has to pass through parliament before it becomes law. Even a cursory glance at this week’s news coverage of the bill reveals many strong opinions about it. Looks like we’ll hear or read more about it in the coming weeks and months.