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The Renters’ Rights Bill could be in force within six months, so now’s the time to talk to buy to let clients about it, says Nicola Goldie, head of strategic partnerships and growth at Aldermore.
The Renters’ Rights Bill is the biggest shake-up to the private rented sector (PRS) in the last 10 years. And that’s saying something: it’s been a busy decade.
The aim of this new legislation is one we can all agree with: clear and robust protection for the 11m people living in the private rented sector.
The Bill addresses the insecurities faced by tenants by reforming the sector and the quality of homes in it, while cracking down on unscrupulous landlords.
So far, so good, but the devil is in the detail and many landlords are concerned about unintended consequences of the Bill, as yet more costs and work get heaped upon them.
Brokers are in a unique position to guide landlord clients through these changes and make sure they are ready for the challenges ahead.
The Renters’ Rights Bill aims to overhaul the private rented sector, giving greater rights and protections to people renting their homes, while ensuring landlords operate fairly and transparently.
Here are the key measures:
It’s potentially more work and added cost for landlords, although there are some likely benefits involved.
Landlord benefits: Many of the measures could boost trust and satisfaction among tenants, leading to longer tenancies, fewer void periods and fewer rent arrears. Upgrading properties could also mean higher property values.
Admin: Landlords will need to spend time updating tenancy agreements, ensuring compliance with new legal requirements and possibly upgrading properties, as well as registering on the national database.
Tenancies: It will be harder to evict tenants and regain possession of a property. The court system is already overwhelmed and without significant improvements, long delays seem likely.
Impact on rents: If landlords can’t increase rents or accept higher offers, they could be more likely to price their rents higher in the first place, pushing up costs for tenants.
Cost pressures: Higher quality properties are undoubtedly a good thing, but some landlords might decide to exit the market because of added costs, squeezed profit margins and more complexity.
It’s important that landlords are aware they need to be preparing for this now.
There isn’t a fixed timescale, although the Bill is likely to become law this year, with October having been mooted as a possible date, but it could be earlier.
Here’s where to start:
Get in touch with all your buy to let clients to make sure they know about the Bill.
Detail the main changes and how they are likely to affect landlords. Remind them to ask you any questions and signpost them to accurate information, such as the government’s guide to the Bill.
Landlords might be reluctant to make any investments into their property or processes until they know exactly what is coming. But if they need to upgrade properties for example, they might want to start looking at funding options now.
One cost-free exercise could be to go through existing tenancy agreements and contracts to see what needs to be changed to be in line with the proposed Bill.
Landlords might need help with their longer-term investment strategy as a result of the Bill. Help them review their portfolios, looking at any properties that are underperforming, or that might not meet the new expectations. They might decide to restructure their portfolio by selling properties.
It’s not all doom and gloom. Remind your landlord clients that they probably already work to many of the new standards proposed in the Bill. There will be extra admin and some landlords will experience more significant change. But the goal is happier tenants that hopefully stay longer, have fewer arrears and live in safer properties that better hold their value.
Stay up to date with the progress of the Bill, any further amendments and their impact on landlords. Attend lender or distributor workshops and training sessions to stay informed so you are better able to support your clients.
There’s no denying the Renters’ Rights Bill introduces significant changes and challenges, in particular the removal of Section 21.
There’s a risk of unintended consequences if landlords exit the market and rents rise, but the overall aim to protect tenants and boost quality in the PRS is something we all want.
Luckily, landlords are experts at overcoming regulatory hurdles. They’ve had to be in the last 10 years and I’m confident they will adapt their strategy, knuckle down and thrive under the new rules.