There has been much talk on the Renters Reform Bill introduced in May 2023. The dialogue so far has been one-sided, as the reform has only been presented. To become law, it follows a process with future debate, a committee, and then a few more rounds that end with the House of Lords process and then Royal Assent. 

At the moment, the legislation is stage 1, proposed and as we always say, watch and wait for the facts; panic-led decisions without evidence never go well.

Let’s explore the key aspects of the Renters Reform Bill and its potential impact on the rental market.

rental properties

Will Section 21 be abolished?

Section 21, or “no-fault” evictions, are proposed to be abolished to provide greater security for tenants. 

This is, however, tempered with the introduction of more comprehensive possession grounds so landlords can still recover their property (including where they wish to sell their property or move in the close family) and to make it easier to repossess properties where tenants are fault. For example in cases of anti-social behaviour and repeat rent arrears. 

Short term, will we see a sharp rise in S21 evictions whilst landlords react to the bill? An ill-intentioned consequence of government manipulation in the rental sector, with one loser, the tenants.

rental paperwork

Other changes to the landlord rules

Open-ended tenancies with no minimum term are proposed, offering tenants the flexibility to stay in their rented homes for as long as they wish, as long as they meet their rental obligations. 

Why wouldn’t we want this for our tenants? If all parties are adhering to their contractual obligations, this shouldn’t be a problem. However, the potential removal of a minimum term for rental contracts may cause some unintended negatives for landlords, especially in the student market.

Rent increases; the bill proposes stricter regulations on rent increases. Rents will be tied to inflation, providing tenants with more predictable and affordable housing costs. 

Additionally, the bill enhances renters’ rights by mandating electrical safety checks, enforcing property standards, and establishing a national landlord register. Nothing to see here – safety in the PRS is a great thing, and rental increases could always be regulated by the Rent Tribunal in any case.

The Renters Reform Bill also strengthens redress mechanisms by proposing the creation of a Housing Complaints Resolution Service. This service aims to provide a faster and more accessible way for tenants to resolve disputes and hold landlords accountable for any breaches of tenancy obligations. 

There are some hefty fines and compensation mentioned in the reform, which will only affect a very small number, but the process around this needs to be tight to ensure protection for both landlords and tenants.

A new Ombudsman, regardless of whether landlords use an agent. It sounds great in theory; anyone with experience using Ombudsman services knows this is a long and underwhelming experience for all.

How can this impact the private rented sector?

The biggest impact of the proposed rental reform will be supply and demand; we already have a supply and demand problem in the private rental sector. More manipulation and government involvement will exacerbate this. 

Amateur landlords already suffering from section 24 and rate rises will fold and sell. Combine this with an unstable market due to inflation, rate rises, and economic performance and those in a buying position for the next 12 months will have great opportunities. 

Landlords in the PRS should always look at their properties, ensure they are safe and compliant and that the rental currently charged is at fair market value. 

At Property Wealth System, we always recommend six monthly portfolio reviews with more in-depth annual analysis; know your business, and you can look after it better when reforms like this happen.

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