Renters Rights Bill: What It Means For Renters And Landlords

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The new Labour government has introduced a Renters Rights Bill aimed at addressing the needs of renters and landlords alike. Richard Donnell, our Executive Director of Research, offers a detailed analysis of how this legislation could impact both parties and what changes may be on the horizon.

Key takeaways

The new Renters Rights Bill aims to enhance protections and rights for tenants, with a particular focus on improving the quality of rented properties. While these measures are intended to benefit renters, the long-term solution lies in increasing the supply of rental homes. Landlords who view renting as a business should not be unduly concerned by these changes.

The overall experience of renting is positive but its poor for a significant minority

Rental reform is back on the agenda with the introduction of the updated Renters Rights Bill, which revives many proposals that were under consideration before the election.

Although discussions often highlight instances of poor practice, most private renters report a satisfactory experience. A recent survey revealed that 85% of renters are satisfied with their overall experience, and 86% are happy with the condition of their homes.

Nevertheless, there are still some properties in poor condition where renters are dissatisfied. The reforms aim to address these issues by improving standards, while also promoting investment to increase the availability of rental homes, both private and social.

Static number of homes for rent making problems worse

The stock of social rented homes has been static for over 20 years. As a result, the private rented sector has had to accommodate an increasing share of demand from those in greatest housing need.

At present, a quarter of private renters are on low incomes and receive either full or partial housing benefit. This shift has put additional pressure on the private rental market to meet the housing needs of these individuals and families.

Consumers recognise the problems facing renters and want reforms

We conducted a pre-election survey with Ipsos to gauge what the new Government’s priorities should be regarding renting.

Controlling the rate of rent increases ranked as the fourth most important issue, while enhancing renters’ rights and protections was the tenth. However, the top priority, across all responses, was to build more homes.

What is in the proposed Renters Rights Bill?

The new bill primarily targets rental practices in England, with some provisions extending to Wales.

Scotland and Wales have already implemented changes to enhance renter protections, so this bill focuses mainly on improving the rental sector in England.

Key proposals include ending Section 21 ‘no-fault’ evictions, while still providing grounds for landlords to regain possession. Renters will also gain the right to challenge rent increases and request pets, with landlords required to consider these requests and provide reasonable reasons for any refusals. Landlords can request insurance to cover potential pet-related damages if necessary.

However, the bill’s effectiveness in addressing ‘bidding wars’ remains uncertain, as the current demand for rented homes is high, with 15 people competing for each available property—double the number seen before the pandemic.

In addition to better protections for renters, the bill includes measures to improve the quality of rented properties. This includes establishing a new rented property database and introducing a Decent Homes Standard for private rentals. Zoopla’s lettings advisory board supports these measures, believing they will enhance rental standards and eliminate rogue landlords who provide substandard housing.

What is missing from the Renters Rights Bill?

These reforms provide a step towards better balance between landlords and renters, though they do not offer the same level of security of tenure as seen in Scotland and Wales.

The Government has not proposed rent controls, which, while seemingly beneficial, could deter investment in new rental properties. Increasing the supply of rental homes is the most effective long-term solution for controlling rent increases.

Additionally, while mandatory training for those involved in property letting and management is already available and utilised by many agents, it could be expanded to cover the entire market.

What impact does the Renters Rights Bill have on landlords?

Landlords have been dealing with higher taxes and stricter regulations for several years, making property renting a complex venture. Coupled with rising mortgage rates, this has led some landlords to sell their properties. While there isn’t a mass exodus, those who don’t view renting as a business and find the costs and risks too high are opting to exit.

Despite these challenges, the cash flow from renting remains robust, although business costs have increased. Landlords who consider renting as a business should not be overly worried about the proposed reforms.

The key for landlords will be to focus on acquiring properties in high-demand areas that are in good condition, with low maintenance and running costs, to maintain rental income.