On 1 May, millions of tenants across England were given a swathe of new rights, bringing in some of the biggest changes to the rental industry in recent history.
Landlords can now no longer issue so-called no fault notices to evict tenants, they will only be able to increase rents once a year using a formal 13 notice and fixed-term tenancies have ended – with all renters now on rolling contracts with no end date.
The Renters’ Rights Act, which became law last Friday, dictates that bidding wars should be banned and tenants should only be allowed to provide a maximum of one month’s rent up front.
The banning of Section 21 – the no fault eviction – is the cornerstone of the Act, and campaigners say it will immediately grant greater security to millions of renters.
However, many landlords have criticised the changes, saying the changes mean they will be forced to sell up, creating a supply vacuum that could ultimately push up prices for renters.
But what do the new laws mean in practice, how will they affect the market and could they reshape renting?
What have the new rules meant for renters
Many renters will find the reforms provide a sense of security and the promise of a well looked after home.
For others, it will erase the fear of being evicted, something Dawn Bessant, 61, knows all too well. She has moved five times in the past five years after receiving multiple Section 21 notices – and is delighted that the new rules end them.
Dawn, from Suffolk, has rented all her life but says in the past five years her experience has been an “absolute nightmare”.
She says she has moved home every two years on average, leaving some properties after less than a year.
Dawn says her mental health was impacted from constantly having to moveDawn was very limited in what properties she could go for as she has two dogs – with many landlords having ‘no pets’ as a condition for accepting offers.
However, the new rules have now prevented this – renters have the right to request a pet with landlords having to consider the request fairly.
Experts say this sort of change underpins how the act changes lives for many tenants.
Mark Foxcroft, partner and co-head of the housing management and property litigation team at law firm Devonshires, said: “Pets in rented accommodation have long been a point of contention, and many tenants have been obstructed by blanket ‘no pets’ policies. The Act entirely rebalances this.”
Dawn said that having to constantly uproot and move was a stressful process and she was glad the Acts rules would give renters extra protection from this.
Talking about being evicted in the past, she explained: “You have to pay for removal men and and when you move, your stuff doesn’t really fit in with the new space. So you have to buy new stuff, and sometimes buy appliances.”
“Then you have to constantly be changing your address and everything just costs money. Frankly, I don’t have the money for that. If I did, I wouldn’t have been renting. It’s a humiliating experience,” she added.
The new rules will protect thousands of people like Dawn, according to Sarah Elliott, the chief executive of Shelter.
She said: “With Section 21 abolished, gone are the days when tenants could be evicted for no reason whatsoever and with only two months’ notice. More than 2,000 households a month will now be protected from the threat of homelessness directly caused by no fault evictions.”
What have the reforms meant for landlords
A key part of the lead-up to the new laws being implemented has been landlords warning that they will sell their properties and exit the market.
There are expected to be around 220,000 fewer homes to rent by the end of the year, according to the research by mortgage lender Pepper Money. The true impact remains to be seen and the jury is out on what this means for rental costs although less supply and continued demand could mean there is an increase to prices.
Landlord Ilyas DeGia is one of those preparing to sell his rental property after nearly three decades, citing rising regulatory pressures alongside longstanding financial considerations.
The 55-year-old has owned a three-bedroom terraced house in Newham since 1997. But he says recent reforms have pushed him to exit the market permanently.
Ilyas DeGia said he is looking to sell his rental property in light of the new changes due to the increasing burden of complianceIlyas argues that the growing burden of compliance is the biggest concern. While the changes are designed to improve standards for tenants, he believes they risk making smaller-scale landlording increasingly unviable.
“The aspect of the legislation that concerns me most is compliance costs. Being a landlord is now less viable than it used to be and it’s not worth the effort,” he said.
“The assumption is that landlords are raking in cash and living on a beach somewhere. But the reality is that many of us are barely making ends meet, whilst providing a valuable service to the rental market.”
Some landlords are also facing higher management charges from their agents as a result of the new rules, with agents citing higher costs associated with meeting the rules.
The stakes are high for non-compliance, with councils in England given £60m in funding to enforce the rules, with landlords facing charges of thousands of pounds in the worst cases if they fall foul. There could be legal challenges to evictions, rent increases and more.
The i Paper has seen some estate agencies charging ‘compliance’ fees in excess of £800 because of the administration involved in the transition.
Experts say that there could be a shifting in the landlord profession towards larger portfolio landlords.
Edward Heaton, founder of buying agent, Heaton & Partners, said: “It is the accidental landlords, such as those who inherit a property or have a surplus home after meeting a new partner, who are much more likely to be exiting as landlords. They, along with those who may only own one or two properties, are tending to either sell their properties or switch to an alternative, such as holiday lettings.”
He said that the extra regulation could put off some in the industry.
“There is, sadly, a small minority of renters who simply abuse the system, often costing landlords tens of thousands of pounds in the process. These are the people who will move into a house, pay no rent until court papers are served, and then pay just enough to minimise the likelihood that a judge will throw them out on the street.
“These are the same tenants who often wreck their homes and play the system to their advantage. The cost of evicting them can be enormous, and on the latest changes, I predict this process will get longer still and ever more expensive.”
What happens next
Industry figures say it is still unclear how effectively the legislation will be implemented in practice, with concerns around court capacity, enforcement, and how quickly landlords and agents will adapt.
Greg Tsuman, at Martyn Gerrard Estate Agents, said: “The shift away from Section 21 will make regaining possession a much more involved and costly process, pushing more cases through an already stretched court system where delays are almost inevitable.
“At the same time, increased regulation and reduced flexibility mean landlords will start pricing in that additional risk. That could mean higher rents, being more selective on tenants, or stepping away from certain parts of the market altogether.
“If enforcement and capacity don’t keep pace, there’s also a risk of more informal or unregulated arrangements creeping in around the edges, which ultimately undermines the very protections the Act is trying to introduce.”
Nathan Khider, owner of Nathan K Real Estate – a lettings and estate agency – believes the rules will ultimately be enforced, but warns the transition could be difficult. He thinks landlords may struggle to adapt to the new rules, particularly when they are trying to evict tenants using the new legislation and the case ends up going to court.
He said: “The first couple of [legal] cases are going to be really difficult, and judges will throw things out unless everything is correct and fully compliant. If landlords do not have every detail right, I think early cases will be rejected.”
On positive long-term impact, he said rogue landlords could be forced out of the market, improving standards, particularly around issues such as mould and poor property conditions.
Ben Beadle, chief executive of the National Residential Landlords Association, said there was more change to monitor.
He said: “Other important parts of the Act, including the planned Decent Homes Standard, the private rented sector Ombudsman and the PRS landlord database, have yet to be implemented.
“It is therefore vital that landlords continue to keep on top of how these remaining reforms will be rolled out to ensure they remain compliant with their legal obligations.”
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