In June 2022, the Government published its ‘A Fairer Private Rented Sector’ White Paper, which sets out its long-term vision for the private rented sector. It proposes the biggest changes to the sector in more than 30 years. This includes plans to:
- Abolish Section 21 and introduce new possession grounds for landlords.
- Convert assured and assured shorthold tenancies into periodic tenancies, giving tenants the power to give two months’ notice on their tenancy.
- Apply the Decent Homes Standard to the PRS.
- Create a Private Renters Ombudsman to settle disputes.
- Introduce a new Property Portal.
- Abolish rent review clauses, whilst retaining the ability to increase rents annually.
- Outlaw blanket bans on renting to families with children or tenants in receipt of benefits.
- Incentivise landlords to accept tenants with pets.
- Reform the court system and speed up the repossessions process.
1) The length of the tenancy will no longer be a minimum of 6 months. It will be a periodic tenancy which runs from month to month, with the tenant having to give at least 2 month’s notice to quit.
2) You will not be allowed NOT to let to families
3) You have to give reasonable consideration to letting to tenants with pets.
4) You can only increase the rent once per annum
If you have an HMO, there are some obvious challenges here! Not least of which is how we can accommodate children and pets in HMOs. I expect that others will have had the same thoughts and will be pressing for exceptions in shared housing. There will be admin changes if the Bill goes through parliament, and may have the impact of reducing initial stays in HMOs. However, you may be interested to know that the analysis we carry out each month on our property management statistics shows that those tenants who initially take a 3 month tenancy tend to stay longer than those who take a 6 month tenancy! This indicates that shorter tenancy agreements (periodic rather than AST) which will become the norm, may lead to longer tenancies in the long run.
Given that HMOs already are heavily regulated to meet Housing Standards, we think it unlikely that there will be further health and safety requirements beyond those already necessitated through the licensing schedule. Which is one piece of relatively good news.
It will mean however, that you as a landlord will have to be registered on the new property portal, along with your property (ies) even though you are using a managing agent. There will be a new private renters ombudsman created to help settle rent disputes, and a commitment from the government to improve the speed of possessions through the overworked court system.
The Bill will take some time to become statute, and in that time there will be amendments and changes. We will keep you abreast of details and ensure that any impacts to you are minimised. These changes have ramifications across the property industry so will be carefully scrutinised by MPs across all parties to ensure that they improve the Private Rental Sector and don’t further exacerbate the problems we currently see.