Reform has been on the horizon since 2019 when the conservative government made a manifesto commitment to make wide spread changes to the Private Rental Sector (PRS). They ran out of time before the election and the bill failed.

Over the coming weeks we will go through the changes in greater detail and share our thoughts on the impact this is likely to have on landlords, tenants and the market as a whole. Here's a summary of the main changes the Bill proposes to introduce:

The main topic on everyones mind is the first one surrounding abolishment of section 21 so we will delve deeper into the subject below.

At the moment, the Housing Act 1988 enables landlords/their agents to give a minimum 2 months written notice on an Assured Shorthold Tenancy to regain possession of their property at the end of a fixed term or at any point on a Statutory Periodic Tenancy. The notice served is called a Section 21 using a prescribed Form 6a. It is also referred to as a “no fault eviction’ as landlords do not need to give tenants a reason (even if there is one!) for serving notice on them.

Currently, if a tenant wishes to terminate a tenancy, they need to wait until the end of the fixed term and don't legally need to give notice they intend to vacate. Otherwise, under a Statutory Periodic Tenancy ("rolling") they only need to give a minimum of 4 weeks notice or in line with the rental payment period on the contract. If they wish to end the contract early, they need to exercise a break clause (if there is one) or reach an agreement for an early termination with the landlord, typically covering some of the landlords costs for finding replacement tenants as they are the party breaking the tenancy.

A landlord can only ask a tenant to leave during the fixed term with a Section 8 notice if they have certain reasons (‘grounds’). For example, they are behind with rent payments (‘in arrears’), they've used the property for illegal purposes (e.g. selling drugs) or have damaged the property.

Assured tenancies are not covered by the Housing Act 1988 so there is no provision to serve a Section 21. The new proposals intend to make all tenancies “section 4a assured tenancies” so landlords can’t issue a section 21 notice- this gives tenants a greater feeling of security. It is also designed to “empower tenants to challenge bad practice without fear of retaliatory eviction” and “end the injustice of tenants being trapped paying rent for substandard properties” (source: gov.uk).

All tenancies will therefore be periodic from the outset, including existing tenancies, giving tenants flexibility should they need it to bring a contract to an end with just 2 months notice. Tenants will benefit from a 12-month protected period at the beginning of a tenancy, during which landlords cannot serve a notice to move in or sell the property (new ground being introduced under the Act). In the event of a tenancy breach by the tenant, Landlords will need to provide 4 months’ notice citing the relevant grounds, giving tenants more time to find a new home.

As with the current system, if tenants fail to vacate, the landlord would need to go to court for possession of the property. They will need to provide evidence that the ground is met. For mandatory grounds, the court must award possession if the ground is proven. For discretionary grounds, the court can consider if eviction is reasonable, even when the ground is met.

Protections will be introduced for tenants who temporarily fall into rent arrears, supporting both parties by preventing tenancies which are otherwise viable from ending. They will increase the mandatory threshold for eviction from 2 to 3 months’ arrears and increase the notice period from 2 weeks to 4. This will allow tenants more time to repay arrears and remain in their homes. Landlords can also continue to use the discretionary rent arrears grounds, for example if rent is repeatedly late.

The Conservative Government introduced the concept via the Renters (Reform) Bill, which has been revised to the Renters Rights Bill under the new Labour Government. The new law was introduced to the House of Commons on 11/09/24 but it will take time for the 200+ page bill to go all the way through parliament and gain Royal assent, so an exact date is yet to be finalised. It is predicted by industry experts that within the next 4 months it is likely to pass parliament (potentially by January) then a date will be set for some point in summer 2025 when the law will come into force. Some things are likely to take longer to create and implement such as the landlord database so this might not be ready for Summer 2025.

There will be a period where we can work with our landlord clients to establish what to do and review any existing tenancies. Beyond the implementation date, existing tenancies will become new indefinite tenancies and overrule any break clauses and end dates already in place.

We anticipate any landlords with tenants proving to be slightly troublesome at this stage may be considering serving a section 21 while they can still do so without giving them a reason and it is still permitted to seek new tenants before the law is changed.

We think more landlords are likely to consider a rent guarantee and legal expenses cover if they don't already have one in place. This will cover their costs in the event the tenants fall into rent arrears or for any other breach and they need to go to court for possession. Our current policy providers will be busy reviewing the policy terms to adapt it to the new legislation.

Ultimately, if you are a good landlord who maintains your property well and are seeking long term, good tenants you are likely to be unaffected. The changes are designed to target the unscrupulous landlords who don’t maintain their properties well and threaten tenants with eviction if they raise concerns. There are very few landlords who want regular changes of tenants as it increases void periods, costs, wear and tear on the property and is an additional stress or hassle.

We know that most landlords invest in property for the long term capital growth and on the whole, seek long term tenants so we feel it will continue to be a sound investment. It might impact accidental landlords more who are undecided how long term they wish to let for but when you choose to invest in property which is someone’s home rather than something shorter term, it isn’t that unreasonable to give them guaranteed 12 months where notice cant be served if you wish to sell or move in.

Some landlords will be concerned by the new law and may decide to sell beforehand. 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. This would be welcomed by many landlords who have already seen increased costs due to other legislation changes and mortgage rate rises. There is still opportunity if they want to sell as they have an avenue to do that in ground 1a which doesn’t currently exist so they can cease to be a landlord after if they want. They just can't use that ground within the first 12 months.

Owning a property is effectively a business and change is often needed so we need to learn to adapt. The speculation we’ve had over the last few years can come to an end as there is now certainty on what will be happening.