The Biggest Change In Renters’ Law In A Generation

27th October 2022

The new Renters Reform Bill changes the balance of power in favour of tenants, because it will increase their security and peace of mind. The new law could make it difficult and costly for landlords to evict tenants or sell their properties.

The Biggest Change In Renters’ Law In A Generation

The statement in the title is exactly what Prince Charles said when he delivered the Queen’s speech on May 10th, 2022: Section 21 in the UK government allows landlords to deliver eviction notices of just 2 months – once the tenants have served a fixed term of the tenancy.

Currently, landlords are able to take possession of their privately owned properties without any fault on the tenant. Hence, the name “no-fault evictions”.

The bill makes it easy for landlords to gain their property back whenever required. It strengthens their right to effectively and immediately sell the property if they like.

Why Abolish Section 21?

Short lease property

The abolishment of Section 21 means that the tenants’ rights and security will be strengthened and protected. The new law will offer more stability for renters as well as their families.

In addition, it will also make the rented housing sector a more attractive investment for long-term landlords who are in business for the long haul.

What Does This Mean For Tenants?

The biggest change for tenants is that they no longer have to worry about being forced out of their homes on short notice with no explanation. The new law gives them much more security and peace of mind, knowing that they can stay in their homes as long as they keep up with the rent payments and don’t damage the property. In addition, the new law also gives tenants protection against unfair rent increases.

Under the current system, landlords can increase rent as often as they like and by as much as they want, as long as they give their tenants two months’ notice. However, under the new law, landlords will only be able to increase rent once a year and by a maximum of CPI (Consumer Price Index) +1%. This will help to stabilise rental prices making them more predictable for tenants.

landlord activity in UK courts

What Does It Mean For Landlords?

The new law will give landlords more security as well. They will no longer have to worry about tenants who don’t pay their rent or damage the property, as they can be evicted for those very reasons.

In addition, the new law will also allow landlords to increase rent by CPI +1% once a year, which will help to offset any increases in costs that they may incur. While the changes to the law may seem like they favor tenants over landlords, it’s important to remember that both groups will benefit from the increased stability and predictability that the new law will bring.

In the end, everyone involved in the rented housing sector will be better off however there are problems that the landlords will now have to face.

court paperwork to evict a tenant

Cons To The Landlords

The abolishment means that the balance of power changes in favour of the tenants’ side. It is going to be harder for landlords to regain possession from model tenants who have not broken any rule and have adhered to their contract terms.

Abolishment of Section 21 forces landlords to follow the procedure in Section 8 which restricts them from evicting tenants without a reason for misconduct on their side. This includes everything from breach of contract to neighbour complaints, rent arrears, property damage, and more.

Section 8 notice can take almost a year to process and during that time, the tenant can still reside in the property. Not only will the landlord have a hard time regaining their property but also they will have to go through a very long and stressful legal process.

Moreover, with the new change in law, it is now the burden of proof on the landlords. They need to provide sufficient evidence that justifies their actions for eviction be it for any of the 18 grounds mentioned in Section 8. This makes it even harder for landlords as most of them don’t keep records or documentary proof of everything and anything that happens during the tenancy agreement.

What Does This Mean For The Housing Market?

Although the aim of this Renters Reform Bill is to protect the security of tenants, it holds a risk for landlords being forced away from the sector which in turn can lead to lack of sufficient housing and can greatly affect the housing market.

This is a result of the fact that many landlords are individuals who own just one or two properties which they rent out to supplement their income in retirement. The changes could make buy-to-let unprofitable for many of them, as they will no longer be able to evict tenants quickly and easily if they need or want to sell up.

The impact of the new law on the housing market is difficult to predict. It is possible that the increased security and predictability for tenants will lead to more people wanting to rent, which could help to increase demand and stabilize prices. However, it is also possible that the increased costs for landlords could lead to fewer people wanting to invest in buy-to-let properties, which could lead to a decrease in supply and an increase in prices. Only time will tell how the new law will impact the housing market.

Conclusion

In conclusion, the new Renters Reform Bill is a positive step for tenants. It will give them increased security and predictability. There are now increased risks for landlords, as the new law could make it more difficult and costly for them to evict tenants or sell their properties.

Only time will tell how the new law will impact the housing market as a whole. It is a fact that some countries that have the highest rate of private tenants also have great protection and security against eviction. Such countries include Austria & Germany. The UK can very well become one of them in the future.

All that needs to be done is to let the market stabilize after the implementation of this new law and allow the government to assess.

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