What could the Renters’ Reform Bill mean for the rental market?

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  • What could the Renters’ Reform Bill mean for the rental market?

The Queen’s Speech dominated the headlines in May, when – during the traditional formal opening of a new session of Parliament. She announced a white paper outlining the government’s commitment to reform the private rented sector. Ensuring to ‘deliver a better deal for renters’.

Set to be published in the autumn, the white paper should flesh out the government’s plans for widespread rental reform, which has been much talked about since it first appeared in the Conservative Party’s December 2019 general election manifesto.

The major element of the proposed Renters’ Reform Bill is the removal of Section 21 eviction notices.

The Bill also includes proposals for a new ‘lifetime’ tenancy deposit model, as well as reform that would ensure landlords’ rights to regain possession of their property when it is fair and reasonable for them to do so.

The ceremonial event included proposals that amounted to some of the biggest changes in the private rented sector for over 30 years.

Below, we outline the key housing announcements and how this could impact landlords operating in the private rented sector.

Renters’ Reform Bill back on the agenda

The controversial Renters’ Reform Bill was not explicitly mentioned by name. The government had suggested in advance that the Bill will be the vehicle for reform.

The Bill is expected to abolish Section 21 eviction powers for landlords and agents, but to strengthen the Section 8 eviction process.

It will also introduce the concept of ‘lifetime deposits’, allowing deposit payments made in relation to one property to be converted to another; the aim of this is to speed up and reduce the cost of moving rental properties for tenants.

Reforms include ensuring all tenants have a right to redress, and ensuring well-targeted, effective enforcement that drives out criminal landlords, which could potentially involve requiring all private landlords to belong to a redress scheme.

The Bill is also expected to explore improvements and possible efficiencies to the possession process in the courts, to make it quicker and easier for both landlords and tenants to use.

Her Majesty also said ministers would establish a new Building Safety Regulator to ensure ‘the tragedies of the past are never repeated’. A reference to the Grenfell Tower disaster.

At this stage, it is unclear whether the government still intends to abolish Section 21. Or whether its reform of the sector will extend to other measures such as lifetime deposits and a landlord register.

Lifetime deposits to aid tenants

In the past year, tenants have seen rental costs increase by 10%. Averaging to £821 pcm, according to Halifax.

On top of rising rents, a common challenge facing renters is the size of the deposit. This is an average of £1,000, according to official figures. Ensuring this is paid before they receive their old deposit back from their previous landlord.

It is speculated that lifetime deposits – a transferable sum of money which follows tenants through their rental journey – will reduce the hurdles of moving home. Improving tenants’ financial circumstances.

While the government is yet to release any information on how lifetime deposits might work, potential issues have since been raised.

The first is what would happen if the previous landlord wanted to make reductions. Would the new landlord receive a lower deposit, or would the tenant be expected to top it up?

Additionally, Money.co.uk’s review of the lifetime deposit idea points out that not all moves between rental properties are seamless. Gaps and overlaps between contracts. Therefore, it needs to be made clear what happens to the deposit in these circumstances.

The launch of the white paper will shed some light on how lifetime deposits could be implemented effectively.

What do landlords need to do?

It is clear that rental sector reform is at the top of the agenda of the government. What that reform will look like and when it will happen remains uncertain.

Landlords will need to watch out for the launch of a government White Paper. Which could be followed by further consultations of the launch of a version of the Renters’ Reform Bill to Parliament.

With much to anticipate, it’s important for landlords to keep an eye on the news. Focusing on their existing compliance obligations.

Meanwhile, working with a proactive letting agent can help to ensure that your property is in the best hands. Also, you’re kept up to speed with rental sector changes at all times.

Here at Harringtons Lettings, we offer this and more, helping to advise you on any part of the lettings process for properties in Brighton and Hove. For more information on the services we provide, particularly under current Covid-19 restrictions, please get in touch with us today.

We also offer a free online lettings valuation. This gives you an estimate of how much you could be charging in rent each month.

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