The landscape for residential tenancies in England is set for major reform with the Government’s Renters’ Rights Bill (“the Bill”).
At Swinburne Maddison, we represent many landlords in the private rented sector, and it is essential that they are fully informed about what is likely to be the most significant overhaul of residential letting laws in decades.
The Bill was introduced by the previous Government, with its supporters arguing that it will help address the imbalance between residential landlords and tenants by strengthening tenants’ rights and security. Below, we outline some key proposed changes likely to affect landlords and offer practical advice on preparing for the new legal regime.
It’s important to note that these reforms are still proposals. The final detail will be determined by the legislation once passed by Parliament.
Possession and the abolition of Section 21: The end of ‘No Fault’ Evictions
The most headline-grabbing change is the proposed abolition of Section 21 of the Housing Act 1988. This would remove the ability for landlords to evict tenants without giving a reason, meaning all future evictions must be based on specific legal grounds to gain possession, rather than simply deciding to give two months’ notice to expire upon a fixed term ending.
Landlords will instead only be able to rely on Section 8 of the Housing Act 1988 when serving an eviction notice, or new additional grounds which the Bill introduces. There will be changes to Section 8 as we know it as well. For example, the threshold for mandatory eviction due to rent arrears will increase from 2 months to 3 months of unpaid rent. The notice period for this will also increase from 2 weeks to 4 weeks.
Notably, landlords issuing Section 8 notices without proper grounds could face fines. However, the Bill is expected to introduce new legitimate grounds for possession, such as a landlord needing to sell their property or moving in a family member. There is also anticipated to be a quicker process for evictions due to anti-social behaviour or repeat rent arrears.
As a result, these changes are likely to lead to landlords taking a more cautious approach to tenant selection, with thorough referencing becoming even more critical. While evictions will remain possible, landlords will need to rely on specific, evidence-based grounds. The days of simply serving notice at the end of a fixed term based upon procedure will soon be over.
Periodic tenancies as standard
The Bill proposes that all assured shorthold tenancies will begin as periodic tenancies, effectively ending the use of initial 6 or 12 month fixed terms.
This gives tenants the flexibility to leave with just two months’ notice, right from the start of the tenancy. The Government argues this is justified because “Fixed-term tenancies mean renters are obliged to pay rent regardless of whether a property is up-to-standard, and they reduce flexibility to move in response to changing circumstances, for example after relationship breakdown, to take up a new job or when buying a first home.”
With this comes more uncertainty for landlords when planning their finances, requiring them to budget for potentially higher tenant turnover and associated costs. Increased tenant turnover may lead to higher void periods, more frequent re-letting, and increased agency fees, with fresh charges being applied for every new tenancy.
Restrictions on rent increases
Under the proposed changes, the Bill also introduces restrictions on how and when landlords can increase rent. The Government states that these changes aim to provide tenants with greater stability and predictability whilst ensuring rent rises are fair and transparent.
The current position for assured shorthold tenancies is that rent increases can be made through a rent review clause in the tenancy agreement or by serving a Section 13 notice after the fixed term ends. Under the Bill there are some rules which will apply regardless of what the tenancy agreement states by way of a rent review clause:
- Rent may only be increased once every 12 months.
- Increases must reflect market rent.
- At least two months’ written notice must be given.
- Tenants may challenge increases at the First-tier Tribunal.
Those in favour of these changes argue that some landlords currently use rent increases as a backdoor method of eviction. Whether or not that’s truly widespread, landlords will lose flexibility around bespoke rent review clauses and will need to plan ahead, taking cost increases into account well in advance. Clear communication with tenants about potential rent changes will also be more important to avoid disputes.
Timescales
Although the Bill has yet to be passed, we expect the timetable will broadly be as follows:
- Mid 2025: Bill passed through Parliament.
- Summer 2025: First implementation phase for new tenancies with new rules immediately applying to new tenancies.
- Mid to late 2026: Second implementation phase for existing tenancies, with landlords having a transition period of several months to bring current tenancies in line with changes.
Looking ahead
Landlords who take a proactive approach and prepare early will be best positioned to adapt to the upcoming changes. While the Government aims to create a rental market which they say will be fairer, and it may indeed have a beneficial effect, it will also require landlords to be more mindful of how they manage their tenancies.
The significance of the Bill will understandably bring about concerns for landlords about safeguarding their investments in buy-to-let properties. At Swinburne Maddison, we are assisting landlords in understanding and preparing for these reforms.
For tailored advice on how the Bill could affect you, please contact David Low at david.low@swinburnemaddison.co.uk or Lewis Brown at lewis.brown@swinburnemaddison.co.uk or call 0191 384 2441 to speak with a member of our team.
