The newly rebranded Renters’ Rights Bill (RRB), introduced by the Labour government, aims to implement sweeping reforms in the UK’s private rental sector. While still undergoing parliamentary review, the bill is anticipated to become law by summer 2025, though further amendments may be made before its final approval.
This legislation seeks to balance the rights of tenants and landlords, offering renters greater flexibility and security while maintaining critical protections for landlords regarding possession and rent adjustments. The goal is to foster long-term stability in the rental market for both parties.
Preparing for Change
Below is a summary of the key changes and their anticipated timeline. At Keller Williams Move we have the in-house experience and expertise to advise you every step of the way.
Will It Apply to All Rental Properties?
The RRB will impact most rental properties in England, particularly those with Assured Shorthold Tenancies (ASTs) where the annual rent is under £100,000. However, it will not apply to properties rented to companies or with rents exceeding £100,000 per year, as these fall under contractual or non-AST tenancies.
Positive Scenario:
Landlords with Assured Shorthold Tenancies (ASTs) will benefit from uniform rules that simplify property management across their portfolio, creating consistency and clarity in tenant relationships.
Landlords of high-value rentals or company tenancies remain exempt, allowing greater flexibility for properties outside the scope of the RRB.
Negative Scenario:
The vast majority of landlords, especially those with ASTs, will have to adapt to the new rules immediately, potentially disrupting their current agreements and operational strategies.
For smaller landlords, the administrative burden of compliance may feel overwhelming compared to those renting properties that are exempt.
When Will the Changes Take Effect?
Once the bill is enacted, the changes will apply immediately to all new and existing tenancies, converting them into rolling periodic tenancies. Existing clauses for future rent increases or break terms in current contracts will no longer be valid, as the new legislation will override them.
Positive Scenario:
Rolling periodic tenancies could reduce administrative costs and efforts for renewing fixed-term leases.
Tenants may appreciate the flexibility, potentially improving landlord-tenant relationships and encouraging longer stays.
Negative Scenario:
Existing agreements with future rent increases or break clauses will become void, possibly causing financial losses if landlords had planned for higher rents or flexibility to regain possession.
How Long Can Tenants Stay?
Under the new rules, tenancies will no longer have a fixed end date and will continue indefinitely. Tenants will enjoy a minimum 12-month protected period, after which either party can issue notice under the new guidelines.
Positive Scenario:
Tenants who feel secure in their housing may treat the property better, leading to fewer maintenance issues and fostering positive relationships.
Reduced tenant turnover may result in more consistent rental income and lower marketing costs.
Negative Scenario:
Landlords may face challenges planning for future property use or sales since tenants can remain indefinitely unless valid notice is served.
Reduced control over the property may discourage investment in the private rental sector, especially for new landlords.
Regaining Possession of Your Property
The current Section 21 notices will be abolished and replaced by the evidence-based Section 8 framework. Landlords can regain possession under specific circumstances, such as selling the property or moving in themselves or with family. These notices will require a four-month notice period, which can only be served after the first eight months of tenancy.
Landlords will need to provide evidence to justify possession and will be barred from re-marketing the property for rent for 12 months after the notice period expires. This measure ensures that such notices are legitimate.
Positive Scenario:
The revised Section 8 framework offers a clear and evidence-based path for regaining possession, which may discourage frivolous or baseless claims from tenants.
Longer notice periods (four months) may allow landlords ample time to prepare for property turnover or relocation plans.
Negative Scenario:
Abolishing Section 21 “no-fault” evictions limits a landlord’s ability to regain possession, particularly if the evidence required for a Section 8 notice is difficult to provide.
Prohibiting re-marketing for 12 months after serving a notice could lead to prolonged vacancies, especially in cases of urgent possession needs.
What About Break Clauses?
Tenants will have the flexibility to give two months’ notice at any time after moving in. While this may seem concerning, most tenants are unlikely to relocate frequently due to the costs and effort involved.
Landlords, on the other hand, will only be able to issue notices for breaches of contract.
Positive Scenario:
Two months’ notice from tenants offers landlords more predictability compared to shorter notice periods.
Since tenants typically prefer stability, most may only leave under compelling circumstances, mitigating concerns of high turnover.
Negative Scenario:
Landlords cannot serve notices to terminate tenancies except in cases of breach, significantly reducing their ability to plan for property re-letting or redevelopment.
Greater tenant flexibility could mean landlords face unexpected void periods if tenants choose to move out with short notice.
Rent Payments and Arrears
Under the new rules:
Rent payments must be made monthly; advance payments will no longer be allowed.
Landlords can serve notice if a tenant accrues three months of arrears, with a four-week notice period required.
Positive Scenario:
Monthly rent payments ensure a predictable income stream and simplify financial planning.
The three-month arrears rule allows landlords to serve notice in cases of prolonged non-payment, providing a clear recourse.
Negative Scenario:
Prohibiting advance payments removes an option for landlords to mitigate risks, particularly in high-turnover or high-risk markets.
Waiting three months before addressing arrears might lead to financial strain for landlords reliant on timely payments to cover mortgages or other expenses.
Students and Overseas Tenants
The same rules will apply to student and overseas tenants, despite the perceived higher risk in these markets. Landlords are advised to consider rent protection insurance or guarantors for added security.
Positive Scenario:
Landlords can still secure guarantors or rent protection insurance, ensuring some level of security in markets perceived as higher risk.
Clarity on the applicability of the law reduces confusion in these specific rental markets.
Negative Scenario:
The inability to tailor tenancy terms for students or overseas tenants could make renting to these groups less appealing, particularly for landlords in university towns or cities with a high expat population.
Higher risks without tailored safeguards might discourage landlords from participating in these markets altogether.
Advertising and Rent Increases
Landlords must advertise properties at a set price and cannot accept offers exceeding this amount.
Rent increases can only be proposed annually via a Section 13 notice, with two months’ notice given to tenants.
Tenants can challenge increases through the First-Tier Tribunal (FTT) if they believe the new rent exceeds market rates. The FTT can only approve the proposed amount or lower it, and rulings may take up to six months.
Positive Scenario:
Transparent pricing during advertising ensures fairness and can build trust with potential tenants, enhancing a landlord’s reputation.
Annual rent increase provisions allow landlords to keep rents aligned with market rates, provided they follow the proper process.
Negative Scenario:
Restricting rental offers to advertised prices could limit landlords’ ability to maximize rental income in high-demand markets.
The six-month timeline for First-Tier Tribunal (FTT) rulings on rent disputes may delay income adjustments, creating financial strain if landlords were relying on higher rents to cover costs.
Pet Policies
Landlords will no longer be able to refuse pets without good reason. However, tenants will be required to obtain pet insurance to cover potential damages.
Positive Scenario:
Allowing pets could open up a larger tenant pool, as many renters value pet-friendly accommodations.
Requiring tenants to obtain pet insurance reduces the risk of damage to the property.
Negative Scenario:
Even with insurance, pet-related damage could exceed coverage, leaving landlords out of pocket.
Landlords with allergy concerns or properties unsuitable for pets may face challenges refusing such requests without “reasonable grounds.”
Penalties for Non-Compliance
Non-compliance with the new rules could result in penalties of up to £7,000 for first-time offences and £40,000 for repeat violations.
Strict penalties may encourage landlords to maintain high standards of property management, fostering a professional rental market.
Landlords who comply with the regulations can avoid penalties and attract responsible tenants who value compliant properties.
Negative Scenario:
The high fines for non-compliance, especially repeat offences, could create financial stress for landlords who unintentionally breach the rules due to unclear guidance or administrative errors.
Smaller landlords may feel disproportionately affected compared to larger landlords or agencies with more resources to navigate compliance.
In Conclusion:
While the Renters’ Rights Bill introduces significant changes, the focus is on creating a fairer system for all parties involved. Landlords are encouraged to stay informed and seek professional advice to navigate these changes smoothly.
By understanding these potential scenarios, landlords can better prepare for the changes and mitigate risks while leveraging the opportunities presented by the Renters’ Rights Bill.
If you are a landlord and want to discuss your portfolio please get in touch to see how I can help you stay ahead of any legislation updates.
Paul Childs - A New Style of Estate Agency