Renters’ Rights Bill Moves Forward: Key Changes Landlords Need to Know

Yesterday, Peers in the House of Lords debated the Government's proposals for the private rental sector (PRS) during the second reading of The Renters' Rights Bill. Several important themes emerged, including student tenancies, the issue of supply and demand, pets in rental properties, and enforcement concerns. Despite the lively debate, many questions remain unresolved, and some aspects of the Bill are expected to become law by Spring 2025.

Below is a summary of the key points discussed and what landlords should keep in mind as the Bill progresses.

The second reading is the initial stage in the House of Lords where Peers discuss the main principles and objectives of the Bill. It’s also an opportunity to raise concerns or propose changes. Baroness Taylor of Stevenage, the Labour Parliamentary Under-Secretary for Housing, Communities and Local Government, led the debate. While no immediate amendments were made, this stage indicates which areas are likely to attract more scrutiny as the Bill advances.

The proposal to abolish Section 21 no-fault evictions dominated the discussion. However, several concerns were raised about its potential impact on landlords and the rental market:

Concerns Over Court Readiness
Despite reassurances from Baroness Taylor that the Government is working closely with the Ministry of Justice, many Peers worry that the court system may not be equipped to handle the anticipated increase in disputes once no-fault evictions are removed.

Impact on Small Landlords
Smaller landlords expressed concern about the extended time and legal processes involved in removing tenants, particularly if problematic tenants are difficult to evict under the new rules. This could result in significant challenges for those with fewer properties.

Pets in Rental Properties
The proposed allowance for tenants to request pets in rental properties was widely supported by Peers due to its positive mental health implications. However, landlords raised concerns about the lack of a comprehensive pet damage insurance scheme, which could expose them to financial risks if pets cause damage to the property.

Enforcement Challenges
Local councils are set to gain new powers to enforce rental regulations. However, many Peers highlighted that local authorities are already underfunded, which could limit their ability to effectively implement and oversee the changes, leading to concerns about how the Bill’s provisions will be enforced.

Bidding Wars and Rent Increases
The Bill seeks to ban rental bidding wars, but there are fears this will result in higher asking rents, as landlords may adjust their initial rent prices to compensate for the changes. This could affect rental affordability and increase financial pressure on tenants.

Student Tenancies and Exemptions
While purpose-built student accommodation (PBSA) will be exempt from the Bill’s reforms, some Peers argued that landlords renting one- and two-bedroom flats to students should also be excluded from the new rules. These exemptions are still being discussed.

The Impact of a Decreasing PRS
Some Peers argued that a reduction in the number of properties in the PRS may not be a negative development, especially if social housing supply is increased to make up for the shortfall. However, how the Government plans to address this shift remains unclear.

Section 21 Abolition – Lessons from Scotland
The abolition of Section 21 in England has garnered attention, especially since Scotland already operates without no-fault evictions. Many Peers suggested that England could benefit from observing how Scotland has adapted to this system to avoid potential pitfalls.

Affordability of the Decent Homes Standard
The Bill includes measures to extend the Decent Homes Standard to the PRS, ensuring that rental properties meet specific safety and quality criteria. While many support this idea, there are concerns about how smaller landlords will be able to fund the necessary improvements without passing the costs onto tenants.

Upfront Rent Payments and Their Impact
The Bill will also ban landlords from requesting large upfront rent payments. This change could negatively impact self-employed and international tenants, who often rely on upfront payments due to challenges in proving affordability.

Landlord Exodus Fears
There is widespread concern among landlords that the Bill could push them out of the sector, exacerbating supply and demand issues in the rental market. However, some argue that these concerns may be exaggerated and that landlords will adapt to the new regulations.

Concerns Over the Speed of the Legislation
Conservative Peers voiced criticism of the Government’s approach, accusing them of rushing the legislation through without adequate consultation. They stressed the importance of ensuring thorough analysis before implementing such significant changes.

The Bill will now proceed to the Committee Stage, where further amendments are likely to be proposed and debated. As it progresses through the Lords, key aspects—such as the abolition of Section 21 and the new tenancy structures—could become law by Spring 2025.

As a landlord, it’s essential to stay updated on the developments of this Bill. If you have concerns or need advice about how these changes may affect your rental properties, feel free to contact Stewart’s Estates for professional guidance and support.