The biggest shake-up of the private rented sector in 30 years

The private rent sector is set to experience the most significant transformation in decades with the introduction of the new Renters Reform Bill.

Highlighted in July’s King’s Speech, the new legislation aims to “give greater rights and protections to people renting their homes, including ending no-fault evictions and reforming grounds for possession.”

The bill is a positive step forward and marks a critical turning point for the industry, creating a fairer, more transparent and regulated rental market, by closing the gap in regulation standards between private rent and social housing. With a move towards professionalisation, the bill will protect tenant rights and increase landlord accountability. These changes are extensive, and will result in a re-shape of the market, particularly with smaller landlords.

Here’s what you need to know to stay ahead of the curve and prepare for the changes ahead!

Abolishment of Section 21

One of the most impactful changes in the new bill is the shift to periodic tenancies as the new standard. This will abolish fixed term tenancies under Section 21 and give tenants the flexibility to end their lease with just one month’s notice at any point, starting from day one. This is a huge change for tenants, as it means increased control over their living situation and reassurance through protection against eviction without a valid reason.

However, for landlords and agencies, this change may raise challenges. A loss of fixed term tenancies will bring unpredictability, making it harder to forecast upcoming tenancy renewals and management of busy periods.

We will also see a huge focus on tenant satisfaction as landlords and agencies seek to sustain tenancies and reduce turnover rates.

Impact on smaller vs. larger landlords

Unfortunately, the bill is expected to disproportionately affect smaller landlords.

Maintaining profitability has become increasingly difficult for smaller landlords over the years, due to the recent new tax laws, legislation and compliance requirements. To meet these standards, along with the new requirements of the Rent Reform Bill, landlords will need to conduct property conditions, tenant checks, and obtain safety certifications which all require cost and resource, and are sadly not balancing the books.

On the other hand, larger corporate landlords and agencies, who have dedicated property management teams, will be better positioned to adapt to these changes.

This may result in a trend of smaller landlords choosing to work with agencies, such as Redwing, to manage properties on their behalf to ensure compliance with the new bill and while maintaining profitability. We expect this will lead to consolidation in the market, where professional landlords dominate, and smaller, individual landlords exit or partner with management agencies.

Changes to pet policies

Another significant change is the new policy allowing tenants to request to keep pets. This move aims to make rental homes more accommodating and personal for tenants, which could also enhance tenant satisfaction. While restrictions will still apply to prevent unreasonable situations, allowing pets is a step towards giving tenants more freedom and comfort in their homes.

What next? Preparing for the transition

The Renters Reform Bill will require a period of adjustment for us all.

With further details expected in October 2024 and implementation within 6-8 months, landlords, agencies, and developers should start preparing now to ensure a successful shift. This means understanding new compliance requirements, reassessing business models, and planning for the operational impact of these changes.

While the bill promises a very much needed fairer and regulated market, they also present challenges – particularly for smaller landlords. This is however a positive change, putting tenant safety and happiness at the forefront.

Whilst we await further information, we at Redwing are beginning our plans to adapt to these changes, ensure a smooth transition and that we can continue delivering an excellent service to our tenants, landlords and business clients.

The key features of the Rent Reform Bill can be found on GOV.UK