The Renters’ Rights Bill passed through its second reading in the House of Lords and has passed on to the committee stage of the process. The bill is set to come into law later this year, bringing in a slate of reforms for the private rental sector. This bill will significantly alter the private rental sector and will force buy-to-let landlords into changing their property strategy. In this article, we will explain what the bill is, the types of changes the bill will introduce and how you can adjust your property investment strategy accordingly.
What is the Renters’ Rights Bill?
The Renters’ Rights Bill aims to improve the private rental landscape for both tenants and landlords. It introduces measures to enhance tenant protections against unfair treatment from landlords.
Initially, the Conservative government planned to introduce the Renters’ Reform Bill, but it shelved the proposal just before the 2024 General Election. The new Labour government pledged to implement the bill as part of its manifesto and introduced it to Parliament in September 2024. The bill is expected to take effect in 2025, likely around Easter.
Key Changes
Abolition of Section 21 ‘No Fault’ Evictions
One of the bill’s major changes is the abolition of Section 21 evictions, commonly known as no-fault evictions. Under current law, Section 21 allows landlords to evict tenants without providing a specific reason, often to sell the property or move in themselves.
The new law removes landlords’ ability to use Section 21. Instead, landlords must follow the Section 8 eviction process, which requires proof that tenants have violated the terms of their tenancy agreement. Additionally, tenants will gain protection from eviction during the first 12 months of their tenancy if the landlord intends to sell or move into the property. After this 12-month period, landlords must give at least four months’ notice before evicting for these reasons.
The bill also extends eviction protections for tenants temporarily behind on rent, granting a three-month grace period before eviction, up from two months. Furthermore, the notice period for eviction increases from two weeks to four weeks, providing tenants with more time to resolve issues or seek alternative housing.
Periodic Tenancies
The new legislation abolishes fixed-term assured tenancies, which currently bind tenants to pay rent for a specified period. Instead, all tenancies will automatically convert to periodic agreements, operating on a rolling contract basis.
Tenants wishing to end the tenancy must provide a minimum of two months’ notice. Once the bill takes effect, all existing fixed-term tenancies will transition to periodic tenancies.
Rental Costs
The bill introduces measures to regulate rent increases, limiting them to once per year and ensuring they align with the market rate—the price of the property if it were newly advertised. Landlords must issue a Section 13 notice detailing the new rent amount and provide at least two months’ notice before implementing the increase. Tenants can challenge the rent increase at the First-Tier Tribunal if they believe it exceeds the market rate, with the tribunal determining the appropriate rent.
The bill also prohibits landlords from encouraging bidding wars or asking tenants to offer more than the advertised rent. While rent controls are excluded, these measures aim to foster a more transparent and fair rental market.
Landlords will also be restricted to requesting only one month’s rent in advance after the tenancy agreement is signed.
Private Rented Sector Landlord Ombudsman
The government will establish a new, independent Private Rented Sector Landlord Ombudsman Service, which all landlords with assured or regulated tenancies must join.
Tenants can use the service to file complaints free of charge, and the ombudsman can compel landlords to take remedial actions, such as issuing apologies, providing compensation, or making other changes. However, the service will not accept complaints from landlords about tenants but will offer free guidance on best practices.
Landlords who fail to register with the ombudsman will face penalties, including financial fines and possible criminal prosecution. Tenants can also pursue rent repayment orders against landlords who consistently neglect to join the service.
Landlords will likely need to pay a fee to join the ombudsman service. They must register as soon as their property hits the market and stay registered for a “reasonable period” after they stop being landlords, ensuring tenants can still seek redress even if the landlord is no longer renting the property.
Private Rented Sector Database
Landlords of assured and regulated tenancies must register themselves and their properties on the new Private Rented Sector Database. This platform will provide landlords with easy access to essential resources and guidance, while improving communication about their responsibilities.
The database will also increase market transparency for tenants, who can use it to file complaints with the ombudsman. Landlords who fail to register will face fines and cannot obtain a possession order, except in cases of tenant anti-social behaviour.
Decent Homes Standards
The bill introduces Decent Homes Standards (DHS) to ensure tenants have access to safe, well-maintained housing. The new law extends Awaab’s Law, previously applicable only to social housing, to the private rented sector. This law allows tenants to challenge hazardous living conditions like mould and damp, compelling landlords to take prompt action. Landlords who neglect these issues will face criminal penalties.
Tenant Pets
Landlords must now consider tenant requests to keep pets on a case-by-case basis and can no longer automatically reject requests without a valid reason. If a landlord unreasonably denies a pet request, the tenant can escalate the issue to the ombudsman, who will make the final decision. This change ensures a fairer process for tenants while protecting the landlord’s property rights.
What Does the Renters’ Rights Bill Mean for the Property Market?
The Renters’ Rights Bill introduces a range of significant changes that could transform how rental properties are managed, tenancies are handled, and landlords interact with tenants. Many landlords have warned that these changes could lead to higher rental prices for tenants as the market adjusts. While the bill aims to offer greater security for tenants, landlords may need to adapt their investment strategies to maintain consistent returns.
Buy-to-let investors can prepare for the bill by:
- Registering with the Private Rented Sector Database: This will ensure you avoid any potential criminal or financial penalties and will improve your property’s viability to tenants.
- Registering with the Private Rented Sector Landlord Ombudsman: Protect yourself from financial and criminal penalties by staying in line with the new regulations.
- Researching local market rates: Research the local area to ensure that you are maximising your return on investment by keeping your property’s rent in line with the market rates.
- Maintaining your property’s condition: Make sure that your property is in good condition so that it meets the Decent Homes Standard.
- Assessing your long term investment strategy: Figure out if the upcoming bill impacts your investment strategy and consider if you would like to explore alternative investment models.
Alternative Strategies
Short-term Lets
For buy-to-let investors looking for alternative strategies, exploring different property management models could prove lucrative. Short-term lets are exempt from the Renters’ Rights Bill and often generate higher yields than Assured Shorthold Tenancies (ASTs). For example, our short-term let property in Red Wharf Bay, Anglesey, delivers a 10% yield and is stamp duty exempt—substantially higher than the national average of 5%. Moreover, short-term lets simplify tenant management since tenants typically stay for shorter periods, eliminating concerns about early departures from long term tenants.
Student Accommodation and Fully-Managed Property
Maintaining a strong and transparent relationship with tenants is crucial, but it can be time-consuming for investors who prefer a more passive approach to their investments. Choosing fully-managed properties or choosing to work with a management company allows investors to make their money work for them, while ensuring they promptly address tenant concerns and maintain the property well. This proactive approach helps minimise disputes, promotes tenant satisfaction, and supports long-term retention, ultimately ensuring stable returns.
Purpose-built student accommodation (PBSA) is an excellent option for those seeking a hands-off investment, as these properties are typically fully-managed. With a 3:1 ratio of students to available beds in the UK and over half a million international students arriving annually, demand for student accommodation remains high. The seasonal tenant shift—September to June— provides investors with the reassurance of a consistent tenant cycle, ensuring a steady demand for housing throughout the academic year. Both options provide peace of mind, safeguard consistent rental income, and help secure long-term financial growth.
If you would like to learn how to invest in student accommodation, download our free guide that details the key facts.
High-Quality Property
Another effective strategy is diversifying your portfolio with high-quality properties. Investing in premium properties enables you to attract tenants willing to pay higher rents and commit to longer tenancies. Targeting prime investment hotspots such as Liverpool and Manchester can yield consistent rental demand, as these cities are highly attractive to professionals and students.
Overseas Property Investments
International property investments present another option, particularly as the Renters’ Rights Bill applies only in the UK. By exploring high-potential locations abroad, such as Marbella, Spain, investors can tap into markets driven by tourism and long-term rentals. However, due diligence is critical, as legal requirements can differ significantly across countries. We recommend consulting one of our property investment experts before investing overseas.
Click here to explore our range of properties in Marbella
How Can Advantage Investment Help You?
The Renters’ Rights Bill marks a significant shift in the property market, and Advantage Investment is here to guide investors through these changes. Our property investment consultants can provide detailed insights and strategies to help you navigate the evolving UK property market. If you’re interested in learning more, get in contact with us for expert advice.
