Navigating the Renters' Rights Act: A Guide for Forward-Thinking Landlords
This article provides a comprehensive overview of the upcoming Renters' Rights Act and its implications for landlords. It will outline the key changes to legislation, such as the end of fixed-term tenancies and new rules regarding rent and evictions, and offer actionable advice to help landlords prepare for these changes.
If you're reading this, chances are you're like me, trying to get your head around the upcoming Renters' Rights Act and what it means for your property portfolio. You might be feeling a bit confused, maybe even a little concerned – and that's perfectly understandable. But hopefully, this blog will help clarify things and put your mind at ease.
As you probably know, the Renters' Rights Bill is nearing the end of its journey through parliament and is likely to become the Renters' Rights Act very soon. This new legislation is going to usher in a new era for England's private rented sector, and it's bringing a fair few challenges for us landlords. There will be new rules to follow, and let's face it, probably some additional costs.
But it's not all doom and gloom! There will also be opportunities for those of us who are willing to embrace a positive mindset, maintain high standards, and provide better quality tenancies. As some landlords decide to exit the market, the demand for rental properties will likely be high. This means we'll be able to be more selective, choosing the best quality tenants, and potentially see rents and yields appreciate.
Now, I know what you're thinking: "What exactly is going to change?" Well, at the time of writing (March 2025), the details of the Renters' Rights Act are still being finalized. But in this blog post, I'll outline the key planned changes and suggest some actions you can take now to prepare for a smooth transition to the new regulations.
I hope you find this helpful! And remember, if you need any assistance with your property letting and management needs, don't hesitate to get in touch with us at Courtyard Homes. We're here to help!
Key Changes and What You Can Do About Them
1. End of Fixed Term Tenancies
- What's changing: Assured shorthold tenancies (ASTs) for fixed terms will be abolished. All tenancies will become periodic, rolling over from month to month. Tenants will be able to leave with two months' notice.
- The silver lining: Tenants will have greater security, and if you already have good, long-term tenants, the impact should be minimal.
- Your action plan: Existing tenancies are expected to automatically convert to periodic tenancies when the Act comes into force, so make sure you're aware of what this means for you. Focus on attracting and keeping good, long-term tenants to minimise turnover and void periods.
2. Changes to Rent and Guarantors
- What's changing: Landlords will only be able to request one month's rent in advance, and this can only be taken on signing the tenancy agreement. (You can also take a deposit of up to five or six weeks' rent). If you require a guarantor, their liability will be capped at six months' rent, and they will no longer be liable after the tenant's death.
- The silver lining: If you don't usually ask for more than one month's rent in advance or deposits larger than this, the impact should be small.
- Your action plan: Ensure your processes for taking advance rent and deposits comply with the new rules. Consider whether landlord insurance could help mitigate the risks of rent arrears or reliance on guarantors.
3. Introduction of an Ombudsman and Redress Scheme
- What's changing: Landlords will be required to join the new ombudsman scheme and pay a fee. Tenants will be able to make complaints to the ombudsman, who will have the power to order landlords to rectify issues, pay compensation, or even overturn decisions. Landlords will not be able to make complaints to the ombudsman.
- The silver lining: While it will be easier for tenants to complain, this could also lead to quicker and cheaper resolution of disputes, potentially avoiding legal action.
- Your action plan: Details of the new scheme are still to be released, so stay tuned for updates and be prepared to register when it opens.
4. Introduction of a Private Rented Sector Database
- What's changing: Landlords will need to register with a new PRS database and pay a fee.
- The silver lining: This should negatively impact poor landlords, which is ultimately a good thing for the sector. Good landlords should benefit.
- Your action plan: The specifics of the database haven't been released yet, so keep an eye out for developments and be ready to register.
5. Changes to Possession Grounds
- What's changing: Section 21 'no fault' evictions will be banned. Landlords will need specific grounds to evict a tenant, as defined by the new law. There will be a reformed Section 8 evictions process with clearer grounds for possession, which will be either mandatory or discretionary for a court. Notice periods will vary between two weeks and four months, depending on the ground. Landlords can regain possession to sell the property or move in themselves, but not within the first 12 months of a tenancy, and four months' notice must be given.
- The silver lining: The impact of this change might be less dramatic than some predict, as most landlords rarely evict tenants. It should, in theory, be easier to evict tenants who breach their tenancy agreements, especially in cases of rent arrears or antisocial behavior. You can still sell your property and leave the market if you wish.
- Your action plan: Focus on attracting and retaining good tenants. We can help you with this!
6. The Right to Have Pets
- What's changing: Tenants will have the right to ask to keep a pet, and landlords cannot unreasonably refuse.
- The silver lining: Landlords can still refuse unreasonable requests and insist on suitable insurance (paid for by the tenant) to cover potential pet damage.
- Your action plan: Start thinking about your 'pet policy.' Consider the suitability of your property for pets and what types of pets you might allow.
7. Ban on Rental Discrimination
- What's changing: Discriminating against prospective tenants (e.g., refusing to consider tenants on benefits or those with children) will be illegal.
- The silver lining: You can still decline prospective tenants if the property is unsuitable for them or if they fail affordability or referencing checks.
- Your action plan: Develop a marketing/application policy to ensure you don't discriminate against prospective tenants. We can help you with this too.
8. Extended Local Authority Enforcement
- What's changing: Local authorities will have increased powers to investigate breaches of housing law and demand information. Civil penalties will rise to a maximum of £7,000 for initial breaches and up to £40,000 in more serious cases. Rent repayment orders will be available for more breaches of the law, and for up to two years of rent. Company directors and superior landlords will be liable in some cases.
- The silver lining: The impact should be minimal for compliant landlords. This will likely push bad landlords out of the market, which is a positive outcome.
- Your action plan: Regularly inspect your property and review your systems to identify any potential issues. Seek expert advice when needed.
9. The Decent Homes Standard
- What's changing: This sets minimum property standards, already applied to the social rented sector, and will now apply to private rented property. Awaab's Law will require landlords to address damp, mold, and other defects promptly.
- The silver lining: Higher property standards will benefit compliant landlords, helping them attract good tenants and potentially command higher rents.
- Your action plan: Conduct regular property inspections and address any issues promptly.
10. Ban on Rental Bidding
- What's changing: It will be illegal to encourage prospective tenants to bid above the initial asking rent.
- The silver lining: Landlords who set their rent at the appropriate level should not be affected.
- Your action plan: Set rents at the optimal level. We can provide guidance on this!
Need More Help?
We have a dedicated team ready to answer any questions you may have about the Renters' Rights Bill. Call us today for advice on how to best prepare for these and other regulatory changes.
