The Renters Reform Bill Watered Down? Rental Crisis Update
There’s been a U-Turn on the Renters’ (Reform) Bill!
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Remember that Renters’ (Reform) Bill we’ve mentioned… hmmm… once or twice? Well, we’ve got another update for you… But that’s not all you need to worry about, as a recent poll appears to show just how much of a crisis the rental sector is in.
What is the Renters’ (Reform) Bill?
Just a very quick refresher for anyone who doesn’t know (although, how could you have missed it?!):
The Renters’ (Reform) Bill is a white paper that outlines government plans to reform the rental sector and it’s been pitched as one of the most significant pieces of legislation for the private rental sector in the past 30 years.
Reforms included, but were not limited to:
- Banning Section 21 ‘no fault’ evictions
- Changing legislation to make it easier for renters to keep pets
- Introducing an online property portal
- Creating a dedicated property ombudsman
Then Prime Minister Theresa May’s first announced the bill in April 2019, but 5 years, 1 pandemic and and 3 Prime Ministers later, the Bill has yet to become law.
So that brings us onto the latest updates…
Renters’ (Reform) Bill Update
The 20-plus groups, including including the London Renters Union, the Greater Manchester Renters Union and the National Union of Students, that make up the Renters Reform Coalition, who have previously spoken enthusiastically about the Renters Reform Bill has now changed its mind!
Let’s take a look at what they said on 15th April 2024 on the Coalition website:
It is also important not to lose sight of the bigger picture. That this government has brought forward legislation aimed at regulating the private sector, with the stated goal of improving the rights of tenants, is no mean feat – and it is in no small part down to the overwhelming public support for reform and tireless campaigning from the renters’ movement. There are those who would happily have let reform fall off the agenda, so the fact renting remains a key political issue heading into the next election, is due to the hard work and resilience of all those that have been part of the struggle for renters’ rights.
But, on the 24th April, barely 10 days later, the Coalition says their ‘concerns have not been taken seriously’ and that ministers have ‘met with lobbyists for landlords and estate agents twice as often as they have met groups representing renters.’:
Instead of engaging with us, the bill has been watered down again and again by the government, with several rounds of damaging concessions to backbench MPs that have fundamentally weakened it. The amendments tabled recently by the government are just the final straw.
So the Coalition have set out conditions for future reforms to win its support, as in its current guise, the Coalition believes the Bill ‘in fact it preserves the central power imbalance at the root of why renting in England is in crisis.’
Other amendments to the Bill
However, there are eight new amendments to the Bill, one of which would prevent landlords selling a property for two years after a tenancy has begun. This amendment was introduced by Labour’s shadow housing secretary Matthew Pennycook and the rule would only apply to landlords wishing to sell a property or move back in.
Other amendments to the Bill include:
- Preventing tenants from giving notice to quit until they have been in a property for four months, reassuring landlords that renters won’t be leaving a property for six months.
- And requiring landlords to pay renters 1-2 month’s rent if they ask them to leave a property within the first two years of a tenancy, depending on the reason given for the eviction.
Voted through…
As of Friday 26th April, the Renters Reform Bill WAS voted through, including the ‘landlord friendly’ amendments. BUT the Section 21 evictions ban.
So let’s start there…
There’s been plenty of back and forth on Section 21, with the ban kicked into the long grass until the courts are ‘ready’, followed by Michael Gove promising it would be gone before the next election. But on Friday 26th April MPs backed the amendment that requires the Lord Chancellor to assess the county court possession order process in England before we see the back of Section 21.
However, during the debate Housing Minister Jacob Young said they are exploring the possibility of prioritising serious eviction cases, such as anti-social behaviour, in court listings.
Other key updates included:
- Only allowing tenants to give notice after six months. Exemptions are being considered, including: death of a tenant or victims of domestic violence
- Altering the Housing Act 2004 so that both ‘superior’ landlords as well as rent-to-rent companies (the ‘immediate’ landlord) are both covered when served with improvement notices and could be liable for Rent Repayment Orders
- Mr Young committing to aligning the ombudsman with the online property portal so that landlords would only need to input their details once
- Mr Young also confirmed that the government would not be introducing Awaab’s Law to the PRS, as councils already have the power to fine landlords while the Bill introduced a decent homes standard and ombudsman.
But Labour’s Matthew Pennycook said that he felt the Bill wasn’t fit for purpose, particularly around Section 21, saying:
The Government can’t articulate what ‘ready’ means regarding the courts – it could be years before section 21 is abolished.
But that isn’t the only big news in the rental sector recently…
Tenants struggling
Reposit, a deposit alternative provider, commissioned a poll of 1,000 current renters which found that 38% were turning to friends and family, using credit cards, personal loans or dipping into their overdraft to cover the costs of moving home.
We all know that moving – whether buying or renting – is hugely expensive. That’s part of the reason it’s one of the most stressful things you can do! But this percentage has risen risen by EIGHT percentage points over the last 12 months which implies that tenants are struggling more than ever.
What is causing this? Well, according to Reposit’s data, in the same time period, average monthly rents also rose by 10% from £990 to £1,088. The increase in rental costs drives up the average five week cash deposit to £1,256.
Here’s the thing – tenants in crisis is not just bad news for tenants. It’s bad news for landlords too. After all, if tenants can’t afford to rent a property, it’s going to be empty until someone can afford it. And a void period costs landlords money. There’s also the fact that if tenants are scrimping so hard to get the property in the first place, there’s an increased risk of rent arrears, as they have to pay back the loans, as well as the monthly rent.
As Reposit Chief Executive Ben Grech says:
There’s a misconception that tenants who can produce a five week cash deposit of £1,200 are more financially reliable than those who would prefer not to commit this large amount of money.
If you are a landlord, affordability has never been a more important check, so make sure that you are getting the best reference possible, done by a specialist. If you are a self-managed landlord with too much on your plate, now is the time to start thinking about working with an agent, as this way you have additional support in a tricky financial climate. Book a call with us to learn more!
As you can see, it’s all go in the property sector at the moment – so let us know in the comments below what’s troubling you most!
