The second reading of the proposed Renters Rights Bill was held by Deputy Prime Minister and Housing Minister Angela Rayner on 9/10/2024. This was the first time it has been debated by other parties since it was first introduced less than a month previously.

Angela Rayner announced the main goal of the Renters’ Rights Bill is to ensure that all tenants can live “in a decent, safe and affordable home” with the aim of eliminating the “bad apples” in the sector. As a result, the good landlords who already follow best practice should be unaffected.

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 but never progressed through all parliamentary stages.

In our first blog in this series (CLICK HERE TO READ) we looked at the proposed changes in more detail with a focus on abolishing section 21 notices. We also shared our own opinion as an agent on the impact it is likely to have on the sector.

Abolishing Section 21 "no-fault" evictions was a focal point of the second reading which the law will bring to all new and existing tenancies at a date to be confirmed, likely summer 2025. The intention is that it will provide stability to renters as they wouldn't be in fear of receiving a section 21 notice to vacate or unfair rent increases if they report maintenance, mould, damp or other issues with the property.

At the same time, all new and existing tenancies would become periodic (month to month) which means an end to the fixed term tenancy. This is to give tenants more flexibility should they wish to move on as only 2 months notice is required. If landlords wish to regain possession they need to serve a section 8 with 4 months notice citing one or more of the grounds relevant to a breach of tenancy, or one of the proposed new grounds should the landlord wish to sell or for a family member to move into the property. The new clauses for selling the property or moving back in can't be exercised within the first 12 months. If the tenants fail to vacate at the end of the notice period, they would apply to court for possession as with the existing system.

The existing fast track possessions based on failing to vacate after an expired section 21 would be abolished but it has been suggested the court process could be digitised to help speed up the process. The new PRS Landlord Ombudsman will also help to reduce strain on the courts by resolving tenant-landlord issues before they escalate to legal proceedings.

To improve case processing, courts are likely to demand robust paper/written records and will be less willing to spend time arguing between parties. There is talk of a pre-court mediation which is reliant on documentation and evidence over a lengthy oral discussion/debate. This is one of the many reasons that appointing a proficient property management agent with advanced record keeping on all aspects of the tenancy is imperative should it result in a court order for possession.

The bill states rents can only be increased once in a year to the market rent and with 2 months notice. The tenant is able to challenge this via a tribunal (which already exists and used in minority of cases) if they feel it is not in line with market rent. We don’t yet know what resources and funding are being put into the tribunals if there is likely to be an increase in tenants challenging rents. We do however agree that no tenant should be paying above what is considered a fair market rent and subject to unfair increases more regularly than on an annual basis.

It will become illegal for there to be a bidding war and anything above the asking market rent advertised can’t be accepted. This is likely to be more common in cities or areas with low rental stock supply attracting significantly higher levels of applicants per property. At Sandersons, we don’t tend to get bidding wars as we do our market research along with local knowledge so properties are priced fairly and correctly from the outset. With several proceedable applicants to choose from, we present our landlords with the options to allow them to make a decision.

Tenants will have the right to request a pet which "will not unreasonably be refused". A response is likely to be needed within 28 days. There will be some further guidance on what that means and what is considered reasonable/unreasonable. They will likely amend the Tenant Fees Act 2019 to allow a higher deposit again, or enforce the tenant to take out insurance, or the landlord does so and charges it back to the tenant. The act is ultimately about being reasonable for a standard request for a domestic pet to make where they live into a long term, desirable family home. If a landlord/agent can demonstrate why a pet can't be considered with evidence and specific rationale then that can be reasonably considered as appropriate. E.g. a small flat, a term of the headlease, dog too large for the type of property, outside space, rural area with livestock etc.

It will be illegal to refuse to consider anyone on welfare benefits or with children. That will need to be extended to any clauses in mortgages, insurance and any superior leases. The Bill is about dealing with every applicant in the same consistent manner. Agents/landlords will need to be more open minded and demonstrate reasonableness on what is appropriate. In many areas however, the local housing allowance is far from the market rent so often it isn't about discrimination at all, it is affordability and the availability of a guarantor.

There is often a requirement for rent in advance, particularly with overseas students, lack of full accounts to show affordability for self-employed applicants, incomplete income verification etc. This was debated at the latest reading and we are still awaiting more detail in the act for how this will be managed and how it would be calculated if there is no fixed term to take advance rent for.

We are fearful of how the already over pressurised court system will handle a likely increase in repossession orders. Landlords/agents already face long waits of up to 12 weeks for bailiff warrants. To gain support, landlords need reassurance the court system will be improved and simplified should they need to regain possession as a result of a tenant breach. To overcome this also, we would strongly recommend landlords put a rent guarantee and legal protection insurance in place to cover any tenancy defaults, rent until possession and legal costs in the event they need to go to court.

At Sandersons, we don't recall ever having a situation where a rent is increased more than once in a 12 month period anyway or above a fair market rent. Our landlords are reasonable and rents are always in line with the current market so we feel most landlords who are already adhering to fair practices will be unaffected by this change.

With regards to bidding wars, this will be a case of some adaptation to how agents advertise properties. We do however anticipate it might push rents up as Landlords/agents will advertise at the upper tier of the rent they were hoping for allowing for offers below. If demand is high, they may to achieve the advertised rent. When it comes to rent reviews, they are likely to be based on the advertised rent of similar properties and if they are slightly higher to allow for offers below that amount it will ultimately drive rent prices higher. This is good news for landlords but may not be in the tenants best interests.

We would favour an option of mediation to resolve issues before court and this is where the role of an agent is critical in the process. We have confidence in our robust record keeping which would be relied upon in this situation. Our approach to technology aligns with one of our values whereby we are progressive in our outlook and methods investing in the best tools to represent our clients and manage their assets. This is critical should any aspect of compliance and communication need to be proved in mediation or later in court.

Overall, we feel the existing landlords who are already adhering to best practice with maintaining their property, are well represented by an agent to help choose the best tenants, manage the tenancy and maintain audit trails are likely to be unaffected. 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.

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.