What Does the Rental Reform Mean for Landlords?
After much deliberation, the government has confirmed it will focus on rental reform in the coming sessions of parliament.
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But what does the news mean for landlords, and are sweeping changes in store for the private rental sector?
Rental reform from the Queen’s mouth
The Queen’s first speech of 2021 lasted for around 10 minutes and took place in front of the House of Lords. In it, she highlighted 30 laws that ministers intend to pass in the coming year, including topics on infrastructure, the armed forces and, of course, rental reform.
In her own words, her Majesty said that her government would help more people to own their own home while “enhancing the rights of those who rent”. And while the topic of rental reform was only on the agenda for a few seconds, it reverberated around the rental sector, with many wondering how the landscape may look by the end of the year.
What is the Renters Reform Bill?
Although not mentioned by name, the Queen’s comments surely related to the Renters Reform Bill. It had been suggested in advance that the bill will be the vehicle to reform the private rental sector.
The bill is expected to abolish Section 21 eviction powers for landlords and agents while simultaneously strengthening the Section 8 eviction process. Another key focus of the bill is the lifetime deposits, which will allow security deposit payments to transfer from one property to another, thus speeding up the process of moving and reducing the cost for tenants.
Is the Renters Reform Bill new legislation?
The concept of the Renters Reform Bill first appeared in the 2019 Conservative General Election manifesto. That was a little over 18 months ago, and the Queen even included it in her speech in late 2019.
Plans were in place to bring the bill through parliament in 2020, but the pandemic put paid to any immediate reforms. As a result, it was delayed indefinitely as the UK faced an unprecedented health crisis. Of course, that’s all changed with the latest Queen’s Speech, and the Renters Reform Bill is very much back on the cards.
What does the rental reform bill mean for landlords?
Right now, the details are somewhat thin on the ground around the specific details of the Renters Reform Bill. The abolishment of Section 21 will leave some landlords wary about the potential implications on bad tenants, though enhancements to Section 8 will hopefully allay many of those fears.
Changes to security deposits, however, could benefit both landlords and tenants. Renters often struggled to find the funds for a security deposit, especially before the Tenant Fees Ban was introduced in 2019. Initially, they could be asked to pay up to eight week’s worth of rent in advance.
The ban reduced the amount to five weeks, but it still means that renters may need to fork out more than a thousand pounds before they even move in. Under new rules, renters could use a lifetime deposit that transfers from one property to another, meaning they would only ever need one deposit.
However, much of this could be rendered obsolete with the increasing popularity of deposit replacement programs. Over the years, a growing number of tenants and landlords have opted for deposit-free renting, with the replacement programs giving landlords the same protection as traditional security deposits.
All change with the Renters Reform Bill?
Since it was first announced in 2019, it was only a matter of time before the Renters Reform Bill became a reality, even with the Covid delays. A government White Paper is expected in the autumn and will be followed by formal legislation starting its route through parliament.
As always, we’ll keep you updated with all the breaking news about the Renters Reform Bill and other important news in the rental market.
