So as the English private rental sector waits for clarity on when the Bill will come into action, what does it involve? And what can lettings agents do to protect themselves when the Bill goes live?
What’s happened?
Nobody really knows. The former Junior Housing Minister Kelly Tolhurst told the House of Commons that they “will introduce a renters’ reform Bill very soon.”, but her replacement Eddie Hughes has not yet provided clarity.
The Bill is unlikely to be ditched entirely – it will be too popular with PRS tenants to ditch after 15 months of rumours – but perhaps other legislation will take precedence while the government deals with the pandemic and Brexit.
But the government has remained coy on possible rollout dates for the Bill.
A savvy politician will see that the longer the pandemic goes on, tenants will become more financially vulnerable as purse strings tighten. This “tenant-first” Bill would be a nice bargaining tool for the electorate, so don’t expect the Bill to disappear forever.
Section 21 – the biggest talking point
The most important part of the Bill will restrict a landlord’s right to evict a tenant after the end of a fixed-term contract. For better or worse, this is a controversial piece of legislation.
Meanwhile, the government has extended a tenant eviction ban in England until March 31. The original planned date was 21 February.
This means that landlords have very little idea on when they will be able to serve a Section 21 (s.21) again – if at all.
Lifelong Deposits – everyone’s a winner?
These will allow tenants to transfer their deposit from once tenancy to the next – without having to save for a new one.
Lifelong deposits also save tenants time when moving – saving money for a deposit can be time-consuming, so landlords will certainly prefer this initiative to the removal of S.21.
David Smith, Policy Director, Residential Landlords Association, says: “We have long argued that deposits should be transferable. It will make renting cheaper and easier for tenants.”
The biggest doubts surround deposits.
For example, what happens in cases where a previous landlord makes a deduction from the original deposit before transferring it to a new landlord, who inherits a smaller amount?
As deductions happen in most cases, this is a big sticking point for landlords, who may still be hurting from the revocation of s.21.
What will happen when the Bill goes live?
Nobody knows. However, landlords will be more inclined to serve Section 8 (s.8) eviction notices to repossess their rental property. For context, s.8 eviction notices require the landlord to provide legal grounds for repossession – so they significantly limit a landlord’s ability to regain their property compared with s.21 notices.
Meanwhile, the launch of the bill could result in a surge of BTL properties being put up for sale as landlords cash in on their property after the pandemic.
Assuming not all rental properties are immediately put back on the market, a small spike in average monthly rents could occur as tenants fight over a smaller selection of rental properties… but time will tell.
How will the bill affect tenants?
The abolition of s.21 means tenants won’t have the fear of an unexpected eviction notice hanging over their heads. They will have more security in their homes, and it would be incumbent on landlords to provide grounds for eviction through Section 8.
The bill will also give tenants a bit more power. Saying “no” to a proposed rent increase is much easier when your landlord can’t evict you for putting up a fight!
However, tenants will still have a responsibility to play by the rules. s.8 notices will be more popular without the safety net of s.21, and landlords may look harder at things like noise complaints, the property’s condition or falsified background checks when looking to repossess their properties.
What can landlords and letting agents do?
The difficulty lies in the wider context of the pandemic and the potential economic downturn. Tenants around the country are facing extreme pressure to keep up with rental payments, some while on furlough or on reduced hours.
Landlords and letting agents should keep an eye on all their tenancies. Ensure rental payments are being paid in full on the same day of each month for obvious signs of financial insecurity, or even message tenants to see how they are coping with work and their financial situation (but be tactful!)
For those who originally planned to repossess their property via a s.21 notice, any abolition of s.21 will mean they need to provide grounds for repossession via s.8 instead. Updating inventories and performing property inspections will provide clarity on the property’s condition and the overall “health” of the tenancy.
For now, what does seem certain is that the rental sector will continue to see further changes (many introduced with little notice!) to the rules governing possession procedure and evictions as the Government continues to respond to the changing UK economy and landscape.
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