It's been a while since I last wrote for LandlordZONE, but with significant changes on the horizon, now is the perfect time to dive back in.
The biggest news to hit the private rental sector in 25 years is here: the Renters' Rights Bill. Scheduled for its second reading today, 9 October, this Bill is poised to reshape the landscape for landlords and tenants alike.
I’ve been deeply involved in this for the past five years, ever since the White Paper was first introduced in 2019 - yes, before Covid, which now feels like a lifetime ago. Unfortunately, the previous Government failed to push their version of the Bill, the Renters (Reform) Bill through before the end of the Conservative Government.
Now, Labour’s version, the Renters' Rights Bill represents a "levelling up" for renters, broadly supported by cross-party consensus (though maybe not so much by the Reform Party). For many voters, housing has understandably become a top concern.
A lot has happened in recent years:
• The removal of mortgage interest relief
• An increase in capital gains tax
• Stamp duty changes
• Covid-era eviction suspensions
• Rising interest rates since late 2022
These changes have put immense pressure on landlords, who have proven resili-ent, flexible, and adaptable. And we’ll need those traits now more than ever as we prepare for what’s coming next.
In 2019, I was part of a working group advising civil servants on the concept of ‘housing courts.’ We hosted meetings at my Landlord Action offices to discuss the practicalities and issues with the court system, specifically how it was failing land-lords, even back then.
The group worked closely with The Lettings Industry Council, a group comprised of lettings experts from across the industry, who formed following the dramatic number of changes to letting rules and regulations and the resulting implementation issues. We commissioned research with the London School of Economics on the impact of abolishing Section 21. You can find the report titled ‘Beyond Section 21’ for a deeper dive.
Our main recommendations included:
• Improving court resources, especially through digitisation
• Hiring more judges and bailiffs
• Promoting mediation
• Strengthening Section 8 grounds
• Allowing landlords to use High Court Enforcement Officers when arrears ex-ceed six months, to alleviate bailiff backlogs
I warned then about the risk of a landlord exodus and, unfortunately, I was right. The combination of Section 24 (which scrapped mortgage interest relief), rising in-terest rates, and the disastrous September 2022 budget under Liz Truss all contrib-uted to a growing number of landlords selling up. At Landlord Action, we’ve seen a spike in landlords serving Section 21 notices as they look to exit the market.
The decision to scrap housing courts from the original Renters (Reform Bill was, in my view, a huge mistake. If they had been implemented five years ago, we might have more confidence in the system today. Instead, I’m seeing confidence at an all-time low in my 24 years of working with landlords.
I’ve long argued that the abolition of Section 21 would be one of the most signifi-cant shifts in our sector. Many landlords have relied on it as their fallback, particular-ly when dealing with tenants in arrears. Without it, landlords may be less inclined to pursue rent owed, opting instead to let tenants go and assist them in being re-housed by councils—a problem exacerbated by the failures of the social housing system.
The Renters' Rights Bill is now moving forward, and it represents a significant ad-justment – not only due to the impact of Section 21 going, but also the introduction of the Decent Homes Standard to the private rented sector, changes to the rent in-crease process, and the abolition of fixed term tenancies. And of course it will be harder to evict tenants who are in rent arrears, with the doubling of the notice period and the increase in the amount of time the tenant will need to have been in arrears from two months to three months.
While the second reading is taking place on 9 October, many details at this stage still remain unclear. What we do know is that change is coming, with Matthew Pen-nycook hinting that the new laws could be implemented by summer 2024. My big-gest concern is that everything might be introduced at once, without a transitional period for landlords to adjust.
As I write this on a train to Newcastle - my fifth speaking engagement this week after stops in Beverley, Manchester, and Bristol - I’ve been training and educating land-lords on these changes. I understand why many smaller landlords are exiting the market, either because they’re being forced to sell, or because rising costs have made it necessary to increase rents. Historically, landlords haven’t been inclined to raise rents, but today, good tenants are often asked to leave for these reasons.
To all landlords, my advice remains: Hold your nerve. Watch, wait, and don’t panic. Yes, interest rates rose sharply at the end of 2022, but the current base rate of five per cent is actually quite normal. Many of us remember the days of 16% interest rates back in 1990, and believe me, landlords survived that. It's also worth noting that nearly 40% of landlords don’t have mortgages, so they remain unaffected by rising rates.
Despite the challenges, it’s not all doom and gloom. According to Benham and Reeves, house prices have risen by 54% in the last decade, and rents have in-creased by 34% since 2014. Tenant demand is at an all-time high, with properties attracting an average of 20 prospective tenants. Void periods are shrinking, and landlords still have a pool of tenants to choose from.
As I’ve been saying in the media and at my talks, 2024 marks the shift towards pro-fessional landlords. The days of amateur, hobbyist landlords are over. With tenants now paying an average of 25% of their wages towards rent, they expect more from their landlords. Being a landlord is now a profession, and society needs to recog-nise that. Unfortunately, landlords don’t do enough to highlight the great work they do in looking after their tenants, and that’s where our industry falls short. It’s time to change the public’s perception.
Having a safe, compliant home is not too much to ask in 2024. But I cannot stress enough the importance of landlords educating themselves on the new regulations. Those managing their properties independently, without the help of an agent, need to be particularly vigilant as the changes roll out, possibly as early as next summer.
The worry is that many of the 2.7 million landlords, especially those with just one or two properties, won’t be aware of the changes or won’t be prepared when they come into effect. Clear government messaging will be crucial, as well as emphasis-ing the vital role landlords play in housing.
So again, my message is simple: Stay calm, look past the headlines, and stay in-formed. Keep updated through LandlordZONE, the National Residential Landlords Association, and other trusted sources. The road ahead will be challenging, but with the right preparation, landlords can adapt and thrive.
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