The private rented sector is heading for a brave new world and we need to embrace the change. Good landlords and letting agents should not fear the political moves to introduce higher standards, warmer homes and to regulate the sector more thoroughly, this can only be a good thing. The residential lettings sector is very resilient, we have been hit previously with numerous changes to tax regulations and new legislation to get acquainted with.
Buy to let remains a strong investment and one that should be taken with a longer term view and despite a few ups and downs the returns are constantly good. Rental properties are in short supply, demand remains strong and yields healthy.
According to recent figures from Uswitch a third of first time buyers are aged over 35, 20% are aged 35 to 40 years old and 13% are over 45. This shows that people are staying in the private rented sector longer now and we are clearly seeing individual tenancy lengths increasing.
The Renters Rights Bill was passed into Parliament on 11th September 2024 and if passed without amendment, the bill will overhaul the structure of our sector. Section 21 notices (no fault eviction notice) will be repealed alongside a number of other measures including the removal of fixed term tenancies. There are numerous hurdles the bill has to clear in order for it to gain Royal Assent and to be passed into law, with the suggestion of it being passed by next Spring and being implemented into law by the late summer of 2025.
Rent increases will be allowed annually up to the market rate (defined as the price that would be achieved for the property as a newly advertised let) We will be able to issue a Section 13 notice to increase the rent, as we do now which sets out the new rent and gives the tenant at least two months notice before it takes effect.
The Decent Homes Standard is proposed, we have long since held the belief that tenants should be able to live safely in a property that is of an acceptable standard, there should also be a requirement for people managing property to be qualified. Landlords will need to become members of an Ombudsman scheme which will provide a complaint resolution service for tenants. Registration schemes like this are already compulsory in Scotland, Wales and Northern Ireland and have generally been successful. We would obviously help and guide our clients through this should it be passed into law.
Guidance on the bill states that the Government intends to level the playing field for tenants and crack down on a minority of unscrupulous landlords and agents who exploit the housing crisis to increase their rental income. The banning of bidding wars for potential tenants is important. As an agent we will be required to publish the asking rent and not encourage or demand people to bid above this price. For me it is about obtaining the best tenant for you rather than the one who is prepared to pay the most rent. Landlords and their agents will always have the final say about who rents a property and checks will be based on affordability and it will be illegal to refuse a tenant purely on the basis that they receive benefits or have children.
Strengthened rights for tenants to request a pet are proposed in the Renters Bill, a landlord will have to consider the request and cannot unreasonably refuse. To support landlords they will be able to require a pet insurance from their tenant to cover any damage. Given the current deposit protection rules of allowing compensation for damage caused by pets, with these proposals an insurance policy should cover the repair or replacement in full, we have already started talks with insurance providers over this.
Be assured that despite the abolishment of section 21, landlords will still be able to regain possession of their property when they need it, with new possession grounds that are to be fair to both parties. The Government state that they value the contribution made by responsible landlords who provide quality homes for their tenants and believe that landlords must enjoy robust grounds for possession where there is good reason to take the property back.
At Barbers we will endeavour to keep you informed of developments with this bill and how it will affect your rental property and the timescales for implementation . If you have any questions or concerns, please do not hesitate to contact me on r.heath@barbers-online.co.uk or call our main office on 01630 652314
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