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Renters’ Rights Bill: What Landlords and Investors Need to Know

The recently announced Renters’ Rights Bill, which aims to overhaul the private rental sector, has sparked widespread debate, particularly due to its proposal to abolish Section 21 “no-fault” evictions. This development could significantly alter how landlords and property developers manage their portfolios and approach future investments.
The bill, hailed by the government as necessary reform, is designed to give renters greater security, combat substandard housing and eliminate discriminatory practices. However, for those on the other side of the equation – landlords and investors – the new legislation raises concerns about the practicalities and long-term effects on the market.
Key changes affecting landlords
- Abolition of Section 21 Evictions: Under the reforms, section 21 evictions, which currently allow landlords to evict tenants without providing a reason, will end. Instead, landlords will need to rely on Section 8, requiring justifiable grounds such as rent arrears or antisocial behaviour to give notice. While this aims to offer tenants greater security, it adds more hurdles for landlords trying to take back control of their properties.
While the immediate focus of the Renters’ Rights Bill is on the private rented sector, the government has committed to abolishing Section 21 “no-fault” evictions in the social rented sector as well. However, this change will be implemented at a later date to allow time for the Regulator of Social Housing to update its Tenancy Standard. The transition will be phased in to avoid any immediate disruption to existing systems and regulations within social housing.
Sam Reynolds, CEO of Zero Deposit, voiced his concern: “Labour’s decision to force through the ban on Section 21 evictions seems a tad knee-jerk… Today’s decision is likely to deter more landlords from the sector… further reducing the levels of quality accommodation available to tenants and driving rents ever higher in the process.
- Move to periodic tenancies: All tenancies will be periodic, which means tenants can remain in the property until they choose to give notice of a minimum of just 2 months. Traditionally, landlords and tenants would agree on a set period – usually six or twelve months – during which the tenant would rent the property. This change will mean landlords will lose the certainty of fixed periods, which could complicate financial planning and reduce predictability for investors.
- New grounds for possession: The bill strengthens tenants’ rights while expanding legitimate grounds for landlords to regain possession. These include situations where landlords wish to sell or move into the property themselves, but new protections mean landlords will need to give four months’ notice and cannot evict within the first 12 months of a tenancy.
- Rent increases and tenant challenges: The bill will also streamline the process for rent increases, limiting them to once per year and ensuring that increases are in line with market rates. Tenants will also have the right to challenge rent hikes through a tribunal if they believe the new rent exceeds market value. This will likely lead to more disputes, further increasing the administrative burden on landlords.
Guy Gittins, CEO of Foxtons, commented: “It remains to be seen whether the court system is adequately prepared to deal with the ban on Section 21 evictions, or how the government intends to police changes to asking rent requirements.”
- Decent Homes Standard and Awaab’s Law: The Decent Homes Standard will be applied to private rentals for the first time, ensuring properties meet certain criteria around safety, repair and quality. Additionally, Awaab’s Law will require landlords to address hazards such as mould within specified timeframes or face legal action. For developers and investors, these regulations mean higher compliance costs and the need to regularly upgrade properties to avoid fines or tribunals.
- Prohibition of discrimination based on benefits or family status: Both social and private landlords will be prohibited from discriminating against tenants or prospective tenants based on whether they receive benefits or have children.
Other proposed changes
- New private rented sector landlord ombudsman: A new ombudsman will be introduced, requiring all private landlords to join. This service will offer tenants a way to resolve disputes and complaints without resorting to the courts. Landlords who fail to join the ombudsman could face fines of up to £7,000 or up to £40,000 for repeated offences.
- Private rented sector database: All landlords will be required to register themselves and their properties on a national database. This database aims to improve transparency and provide local authorities with better data to enforce housing standards. Landlords who fail to register could face financial penalties or be barred from reclaiming possession of their property in certain circumstances.
- Pets in rental properties: The bill will introduce new rules making it harder for landlords to unreasonably refuse tenants’ requests to keep pets. Landlords will be able to require tenants to obtain pet insurance to cover any damage caused by animals, but they will need to provide legitimate reasons if refusing a pet request.
- End to rent gazumping: Rental bidding wars, where prospective tenants offer more than the asking price for a property, will be outlawed. Landlords and agents will be required to list a set asking price and it will be illegal to accept offers above this amount.
- Stronger local authority enforcement: The bill will expand the powers of local authorities to investigate landlords and enforce compliance. Penalties for non-compliance will be significantly increased, with maximum civil penalties reaching up to £40,000 for serious or repeated violations. Local authorities will also have new investigatory powers, including the right to demand information from third parties, such as banks and accountants.
A bleak outlook for landlords?
Many industry leaders have expressed concern about the cumulative impact of these reforms on landlords and the wider market. There is a growing belief that such measures could deter investment in the private rented sector, ultimately worsening the supply-demand imbalance, which is already driving rents higher.
Marc von Grundherr, Director of Benham and Reeves, stated: “Time and time again, we’ve seen quality landlords exit the sector, stock levels dwindle and tenants pay the price… Intensifying the landlord exodus is all part of the plan, as in doing so they are able to boost housing market stock levels to satisfy homebuyer demand.”
Is this the beginning of the end for the smaller landlord? Only time will tell, but as regulations tighten, we could well see a shift in the market that prioritises larger corporate landlords over individual investors.