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Understanding The Renters’ (Reform) Bill of 2023: What You Need to Be Aware of – Part 1

 

“Here to get you there: Kellett & Co”

The Renters’ (Reform) Bill has been announced to Parliament, promising to deliver a fairer lettings system for tenants and landlords.

As per the government’s assertion, this Bill represents a “landmark transformation of housing legislation.” Landlords have been closely monitoring the bill’s provisions, as it will enact the following changes:

    • More difficult to evict tenants.

    • Easier for tenants to have pets.

    • It is now illegal for landlords to issue blanket bans on letting to those on benefits

So what is the Renters’ (Reform) Bill?

The idea of a Renters’ (Reform) Bill was first introduced in 2019 by the now Ex-Prime Minister Theresa May but has faced a number of delays, mainly due to the Covid-19 pandemic.

The Bill’s aim is to address what the government described as an ‘imbalance’ between tenants and landlords, providing more security for tenants and improving standards in the Private Rented Sector.

How will the Renters’ (Reform) Bill affect landlords?

The Renters’ (Reform) Bill will affect landlords in a variety of ways, including:

    • The end of fixed term tenancies.

    • The end of blanket bans on tenant specific demographics.

    • Changes to how rents are reviewed and increased notice periods.

    • The end of section 21.

    • The Decent Homes Standard.

    • A landlord portal and a requirement to join a new ombudsman scheme.

    • Changes to landlord grounds for possession.

Goodbye to Section 21 – No More ‘No Fault’ Evictions

The most important change is the removal of section 21, also known as ‘no fault’ evictions.

From now on, all evictions must be based on valid reasons provided by the landlord through a notice under section 8 of the Housing Act 1988.

The structure of section 8 is quite similar, although the grounds for possession outlined in Schedule 2 of the 1988 Act have undergone extensive revision, which requires careful cross-referencing.

Why was this change implemented? According to the government, the abolition of section 21 aims to “empower renters to challenge poor landlords without fear of losing their home.”

This means tenancies will only end if the tenant decides to leave or if the landlord has legitimate reasons for possession under section 8.

What does this mean for landlords? We believe the impact should be minimal. Since only about 6% of tenants are evicted using section 21, this change shouldn’t significantly affect landlords. Moreover, the Bill promises to strengthen grounds for possession and enhance court processes, enabling landlords to swiftly and effectively regain access to their properties when tenants fail to fulfil their obligations and duty of care for the property.

An end of fixed term tenancies

The Bill will abolish all fixed term tenancies, replacing them with periodic agreements right from the start. Under the new rules, tenants will be required to provide landlords with a notice period of two months to end their tenancy, and any notice periods longer than two months will be deemed illegal.

Why was this change introduced? The elimination of fixed term tenancies aims to grant tenants the freedom to give notice at any point during their tenancy, providing them with greater flexibility compared to the current system.

What does this mean for landlords? Landlords will have the option to give tenants a two-month notice if they intend to sell the property or move into it themselves. Notice periods for other reasons, such as anti-social behavior or rent arrears, may vary. If a landlord attempts to establish a fixed term tenancy or issues a notice to quit, they can face penalties imposed by the local authority.

But should landlords be worried? Again we believe there isn’t much cause for concern. When a similar change was implemented in Scotland, it had minimal impact on landlords since moving can be costly. Tenants will need to secure another deposit and arrange their utilities all over again… amongst other reasons.

Renting to tenants with pets

One of the most attention-grabbing aspects is that all tenants will have the right to keep a pet if their landlord agrees. Moreover, consent cannot be unreasonably denied or withheld. Landlords must provide their decision in writing to the tenant within 42 days of the tenant’s request for permission.

Why was this change implemented? The Renters’ (Reform) Bill aims to ensure that landlords cannot unreasonably refuse permission when tenants ask to have a pet. Tenants will also have the ability to contest such refusals, granting them more control over their rental arrangements.

What does this mean for landlords? Landlords now have the option to require tenants to obtain pet insurance. This is positive news for landlords since it means they are not automatically obligated to allow pets.

However, further clarification is necessary, especially regarding properties where pets are prohibited in the headlease or in Houses in Multiple Occupation (HMOs) where the needs of other tenants must be taken into consideration.

Thank you for reading…

As with any introduction of new regulations it may take some time for those changes to be implemented. For example the ‘Private Rented Sector Ombudsman’ will be chosen and approved once it receives the Royal Assent approval.

Stay tuned for Part 2

Why choose Kellett & Co?

Looking to rent your property quickly, easily and cost-effectively? Look no further than your local online estate agency. We can offer monthly management fees from as little as 7% without affecting the service you would normally receive from an agent with an office. In fact, by operating without the overheads that come with a physical office, we’re able to offer our customers the cost savings on the monthly management fee.

Interested? Call today 01772 284898 or email Stephen at lettings@kellettandco.co.uk

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Buy To Let Advice

Considering a buy to let and taking the leap into becoming a landlord? Our buy to let tips provide you with everything you need to know before making your investment.

buy to let advice
“When you want an all-star estate agent think: Kellett & Co”

Be sure you know what investing in a buy to let property involves

Focusing solely on rental income can be tempting, but investing in a buy-to-let property requires a business-oriented mindset. It’s important to consider whether you can comfortably make mortgage payments and handle any potential stress that comes with managing the property yourself. Additionally, it’s wise to analyze the current market conditions and determine whether property values are on the rise. Furthermore, it’s important to decide whether you intend to let the property for the short or long term.

Make sure you understand the tax implications

Although rental income is subject to taxation, landlords are eligible to claim certain expenses as tax deductions. In addition to income tax, landlords are also required to pay stamp duty upon purchasing their property and capital gains tax when selling it. To learn more about the taxation of rental income, landlords can refer to the Property Income Manual, which is published by HMRC

It’s important to familiarise yourself with the legislation for buy-to-let properties.

Landlords have to comply with a wide range of legislation, much of which has changed in recent years, especially relating to tenants’ rights. Keeping up to date with the latest regulations and best practice will make you a better landlord and your properties more attractive to tenants.

  • Electrical safety standards – the new electrical safety regulations came into force in April 2021 and mean landlords have to ensure that all fixed electrical installations and wiring is checked and tested by a qualified electrician. This is more often referred to as a EICR.
  • Right to Rent – landlords need to check if a prospective tenant has the legal right to rent a property in England. This usually means checking passports and ID documentation to confirm a tenant’s immigration status.
  • Eviction rights are changing – reform is promised on issues affecting tenants such as Section 21 notices, so make sure you know the current legislation before preparing a tenancy agreement
  • Gas safety certifciate – prior to moving a tenant in and during the tenancy it is important to keep an up-to-date gas safety certiciate. Kellett & Co can provide this service to ensure you meet your legal obligations and protect your tenants and property with as little fuss as possible.
  • Energy performance certificiate – It is a legal requirement under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015. The purpose of the EPC is to assess the energy efficiency of a property and provide recommendations on how to improve its efficiency. This information can help tenants make informed decisions about their energy use and expenses, and can also help landlords identify areas where they can make improvements to save money and reduce their environmental impact.

Consider all the costs including landlord insurance

What will your costs be? As well as your mortgage payments, you will need to cover the following costs:

  • Buildings insurance
  • If your property is furnished you may wish to consider contents insurance too
  • Costs associated with maintenance
  • Periods when you are receiving no rental income because the property is empty or the tenants have fallen behind with their payments
  • Increases in your mortgage repayments due to a rise in interest rates, which you may not be able to recover immediately from rental yields or rent increases

Pick low-maintenance properties

Assessing the condition of a property is essential before making a buy-to-let investment. Well-maintained properties are easier to manage and are generally more in demand than run-down properties. As a result, it may be advisable to consider investing in a newer property if you have limited time or no interest in DIY. By doing so, you can save yourself the hassle of repairs and upkeep, and potentially attract more tenants to your property.

It may be beneficial to consider the use of a lettings agent to oversee the management of your property.

Managing the property yourself can be challenging – you will have to deal with all the maintenance issues and any disputes with tenants. Being on constant call might not be for everyone.

At Kellett & Co we offer a range of lettings packages. Landlords can choose from:

  • Affordable monthly management –  Kellett & Co looks after every aspect of the letting experience
  • Let only – advertising, viewings, reference checks, tenancy paperwork. Landlord would deal with all rent arrears, disputes and maintenance issues
  • Rent only – we will advertise the property, conduct viewings and reference checks on tenants and prepare tenancy agreements. We then only manage the rent received along with providing monthly and annual statements.

Why choose Kellett & Co?

Looking to rent your property quickly, easily and cost-effectively? Look no further than your local online estate agency. We can offer monthly management fees from as little as 7% without affecting the service you would normally receive from an agent with an office. In fact, by operating without the overheads that come with a physical office, we’re able to offer our customers cost savings that we can pass onto them.

Interested? Call today 01772 284898 or email Stephen at lettings@kellettandco.co.uk