Renters Rights Bill update for landlords
Implementation could be as early as Spring 2025 for some elements. The Renters' Rights Bill passed the Third Reading and Report Stage in the House of Commons on 14th January 2025 and the First in the House of Lords' on 15th January. The Second Reading takes place on 4th February 2025.
The Renters’ Rights Bill 2025 is set to be the most significant reform to the Private Rental Sector (PRS) since the Housing Act 1988. Introduced to Parliament on 11 September 2024, the Bill has wide-ranging implications for landlords, tenants, and letting agents alike.
The Bill implements commitments made in the 2024 Labour Party Manifesto and builds on the Renters Reform Bill introduced by the conservative Government in May 2023, which was never progressed through all parliamentary stages.
What is the Renters Rights Bill 2025?
The Bill will transform the private rented sector as it proposes to:
- abolish section 21 notices being served (no reason needed for landlords to regain possession)
- remove fixed term assured shorthold tenancies (so everything will become monthly periodic)
- Introduce new grounds for possession (landlord needs to sell or move back in) and amends some existing grounds
- Extend Awaab's law (holding landlords accountable for addressing damp and mould) and the decent homes standard to the private rental sector
- Limit rent increases to once in a 12 month period
- Prevent 'bidding wars' with no offers permitted above the advertised rent
- Create a private rented sector landlord database- to hold information about landlords and their properties providing visibility on compliance
- Introduce a private rented sector landlord ombudsman for landlord/tenant issue resolution
- Make it illegal for landlords/ agents to discriminate against prospective tenants in receipt of benefits or with children
- Give local authorities increased enforcement powers for civil penalties
- Obtain higher rent repayment orders by extending them to superior landlords and doubling the maximum penalty
What happened at the 3rd reading and were changes made?
The Government made some amendments in the 3rd reading, including:
- Protections for bereaved guarantors - guarantors will no longer be liable for rent payments following the death of a tenant
- PRS database - It will hold landlord and managing agent’s name, address, and contact details, previous eviction notices served to tenants and enforcement action taken out against them
- Ombudsman fees - landlords will contribute to a national database, with fees directly funding the ombudsman
- Limit rent in advance - landlords will be banned from charging more than one month’s rent upfront
- Restrictions on advance rental agreements for students - students can no longer be locked into tenancy agreements more than six months in advance
What are the timings?
It typically it takes 9-12 months for a new Bill to pass into law. The process involves ‘Readings’ in both the House of Commons and the House of Lords giving opportunity for scrutiny feedback and amendments. The Bill has now reached the House of Lords which follows a similar process. Any amendments have to be agreed by both the House of Commons and the House Lords, after which the Bill can be sent to the King for Royal Assent and be passed into law. It will then become an Act.
What do Sandersons think?
We feel any existing landlords who are already adhering to best practice with maintaining their property, are well represented by a reputable managing agent to help choose the best tenants, manage the tenancy and maintain audit trails are likely to be unaffected. Fair landlords tend not to increase the rent more than once in a 12 month period so are again likely to be unaffected. For new investors looking to enter the rental market, we would provide reassurance that property remains a very worthwhile investment for long term capital growth.
The Act is designed to prevent malpractice and catch rogue landlords. We appreciate some landlords will be concerned by the new law and may decide to sell beforehand. We would advise landlords not to panic and talk to us about their options first. Unless purchased by other investors, this will have a simple supply and demand impact on the rental market for tenants. As a result, we would expect to see a higher demand for properties and a general increase in rents.
Would you like to know more?
- Click here to read our blog after it passed the Second reading in the Commons
- Let's talk- watch Pippa & Robin from the Leadership Team discuss the pro's and cons of the proposed legislation
- Please click here to read the full transcript of the Third and final reading in the House of Commons if you are interested in the finer detail and some rather lengthy bedtime reading!
- The Governments guide to the Renters Rights Bill is also available here
- Otherwise, please make sure you are registered for our monthly newsletter to receive relevant updates when they are announced with some context to the overall impact we, as letting professionals for 30+ years feel it will have on the market
Are you concerned and would like to have your say?
Industry professionals are advising anyone likely to be impacted by the Bill to share their feedback with their local MP. Click here to find out who your local MP is and write to them detailing who you are, your concerns, any examples relevant to you, potential solutions and ask them to escalate your opinions to Matthew Pennycook MP, Minister for Housing and Planning.
