With the Renters Reform Act expected to come into force this year, clarity as to the exact changes this legislation will bring has come under scrutiny by landlords and lenders.
The government’s aim is to reform the system for both private renters and landlords with some of the headline changes being:
1) Abolish section 21 evictions.
2) Implement comprehensive possession grounds.
3) Protection against backdoor eviction: Tenants will be able to appeal excessively above-market rents which are designed to force them out of the property. This will not prevent landlords increasing their rent to market price, it will only aim to provide a fair judgment where the rent increase is excessive.
4) A new Private Rented Sector Landlord Ombudsman.
5) Collaboration of information: A new Privately Rented Property Portal will be created to ensure landlords, tenants and council have access to a central platform that states their legal obligations, information on tenancy agreements and enforcement activity. Lenders will also have better visibility over compliance which could help speed up secured lending transactions.
6) Allow tenants the right to request pets in a property.
7) Prevent discrimination by making it illegal for landlords and agents to have blanket bans on renting to tenants in receipt of benefits or with children.
8) Apply the Decent Homes Standard to the private rented sector with the aim to give renters safer and better value homes.
The new legislation will likely be implemented this autumn, but it is not the first legislative piece to make changes to the rental sector.
Wales introduced the Renting Homes (Wales) Act 2016 that came into effect December 1st 2022.
Having supported clients through the transition brought about by this act, there are several lessons that may be worth bearing in mind as England prepares for its reforms.
The introduction of the occupation contract (replacing the Assured Shorthold Tenancy agreement) was designed to simplify and standardise rental agreements in Wales, making them easier to use and provide increased consistency.
With a guidance document being 250 pages and the actual contract being described as ‘massively long in some circumstances’ by a participant within the referenced report below, unfortunately it is widely considered that the opposite outcome has been achieved with the introduction.
Another point of friction was around service of notice for tenants to vacate. Many landlords, understandably, placed heavy reliance on their letting agents to manage this. We have seen cases where errors in service have led to significant delays and unexpected costs for the landlord.
However, a significant benefit to the Renting Homes (Wales) Act 2016 is the increased awareness within the sector to their rights and obligation.
Evaluations from the Renting Homes (Wales) Act Evaluation: Phase 2 Report have shown awareness has increased among stakeholders, landlords and tenants. This allows more transparency and improves the overall reputation of the sector which benefits all parties seeking for stability in the markets long-term.
It is clear there are some issues for the Welsh government to consider but positively, the same report goes on to suggest there has not been a negative impact on the sector. Housing remained affordable, landlords adapted or experienced minimal changes and the market has remained resilient to the changes.
For landlords in England, there is much to learn from the Welsh experience and reason to believe that the changes, while significant, can be managed without undermining investment confidence.
From my experience in advising landlords when refinancing across Wales, those accepting and implementing the necessary changes as early as possible, benefited most.
