How Might The Renters Reform Bill Impact Lettings Agents?
Initially proposed in 2019, but delayed numerous times, many property professionals believed that the Renters Reform Bill would be postponed indefinitely. But in May 2023, the UK Government announced that they still intended to move forward with these legislative changes and it was back on the agenda.
With big changes on the horizon for the rental market, it has naturally led many letting agents and landlords to wonder how these changes will affect them and their businesses.
What are the changes to the Renters Reform Bill?
The Renters Reform Bill is being presented by the Government as a solution to improve relations between tenants and landlords. The primary goal of the bill is to eliminate the small fraction of criminal landlords, thereby improving the reputation of private landlords as a whole and minimising disputes. The majority of landlords already provide safe and comfortable properties for their tenants but these positive changes come alongside significant rent reform measures that will impact landlords.
The proposed changes for the Renters Reform Bill include:
- End to 'no-fault' Section 21 evictions
- Landlords aren’t legally allowed to unreasonably refuse tenants with pets
- Landlords can’t reject tenants on benefits
- Landlords must not discriminate against tenants with children
- All privately rented residential properties have to meet the Decent Homes Standard
- Landlords must become members of a private rental Ombudsman.
The Renters Reform Bill is being introduced to improve the private rented housing sector in the UK. The private rental market makes up a significant portion of housing in the UK, with over 4 million properties being privately rented, a number that has doubled since 2004.
The Government has identified several issues with the current private rented legislation. First, some renters face uncertainty and lack of security in their housing, particularly due to Section 21 ‘no fault’ evictions that allow landlords to evict tenants without cause. Secondly, responsible landlords face difficulties competing with criminal landlords who break the rules. One examples might be not respecting a tenant’s right to be asked before permitting landlords legitimate access to a property.
While the Renters Reform Bill aims to address some of these issues, the Government has further goals for improving the private rented sector. Nearly a quarter of private rented homes do not meet basic standards of decency, and the Government hopes to implement the Decent Homes Standard for private rentals in the future to improve quality and conditions.
How will the changes affect Letting Agents?
The Renters Reform Bill will bring mixed effects for letting agents. While details remain unconfirmed, letting agents must stay up to date and help landlords understand the changes. Landlords with portfolios of all sizes are already asking letting agents about new measures like the Property Ombudsman and property portals, so agents must respond knowledgeably about the Renters Reform Bill. Some may even benefit by becoming experts, attracting more business in the future.
However, the outlook is uncertain given the market. Many agents worry about the constant attack landlords may face, and the impact this will have on the buy-to-let market or even the profitability of a rental investment in the long-term. If more landlords sell quality rentals, letting agents will have less work and revenue, while regulation and taxes could hurt tenants with lower rental supply.
While some letting agents may gain by helping landlords adapt to the Renters Reform Bill, there’s a risk that the impact could be negative if many landlords sell in response to the reforms. Support for landlords may be letting agents’ best strategy in this time of change.
Updating landlords on the changes
At present, letting agents have the ability to offer advice to landlords, including helpful tips for new landlords to succeed with the proposed changes on the horizon. However, the scope of their advisory role is expected to expand significantly.
According to the National Residential Landlords Association (NRLA), letting agents have a crucial role in keeping up with the ever-evolving nature of the sector. If and when the Renters Reform Bill becomes law, private residential landlords will be required to demonstrate compliance with the Decent Homes Standard or face fines for non-compliance. Letting agents can even view this as an opportunity to broaden the services they offer and provide enhanced guidance to property owners in light of the changes to come.
The renters reform can present a real opportunity for agents. Landlords may feel overwhelmed and seek professional advice from well-informed letting agents. In today's market, having a letting agent to provide guidance and support on property types, locations, tenant demographics and tax considerations is invaluable.
However, effectively explaining the intricacies of the significant changes outlined above may prove more challenging in practice. The NRLA has criticised the Renters Reform Bill for its lack of detailed information regarding these major property letting changes, fearing that the proposed ruling may not be robust enough. They believe that more detailed information is needed to ensure the bill functions as intended, though they welcome the Government's commitment to enabling landlords to regain their properties in such situations.
What can landlords do to prepare?
Landlords will be required to meet new minimum standards when it comes to property maintenance, which means fixing any lingering repairs and issues as soon as possible. In particular, if those repairs pose a health or safety risk, such as damp or gas and electricity issues, they need to be dealt with immediately to improve living conditions for tenants.
Landlords should also review tenancy agreements to ensure the properties in their portfolios meet the new requirements for repairs and ongoing maintenance.
One of the biggest changes landlords can make to prepare for this new legislation is to ensure that they communicate effectively with tenants as to their rights under this new ruling. Seeking advice from letting agents but also professional bodies such as the NRLA will help landlords to comply with these requirements.
The Renters Reform Bill will have a huge impact on the private rental sector, and both letting agents and landlords need to stay up to date with the proposed changes to ensure they’re legally compliant. The changes may be significant but they hopefully will improve the renting experience for everyone and make this sector more stable and secure.