Buy-to-let and the rental reform

May 23, 2023

As the Renters Reform Bill is making its way through Parliament, how will the legislation changes impact the private rented sector and buy-to-let investors and what does it mean for the property investment landscape?

After some delay, Housing Secretary Michael Gove recently published the long-awaited Renters Reform Bill. This piece of legislation has been rumbling on in the background for a while now.

The bill involves some big adjustments to the private rented sector, so it’s important for buy-to-let investors to understand what this means for them and the private rented sector as a whole.

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Changes to evictions

One of the most talked-about parts of the Renters Reform Bill is the abolition of Section 21 evictions. This has been the easiest and quickest way for landlords to regain possession of their properties without having to provide a reason.

While this type of eviction is set to end, the government plans to increase the scope of Section 8 evictions. This will include if the tenant has been in at least two months of rent arrears at least three times in the past three years.

There are also amendments to the anti-social behaviour grounds to ensure landlords can recover properties from anti-social tenants. It will require landlords to show evidence that the tenant’s behaviour is capable of causing nuisance instead of likely to cause a nuisance.

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A new ombudsman

The rental refrom is also expected to introduce an ombudsman that will help settle disputes between tenants and landlords. All landlords in the private rented sector will be required to join the ombudsman.

There will also be a new digital Property Portal that will list all of landlords’ obligations and help tenants make better decisions when signing a tenancy agreement.

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Updated rules on allowing pets

There are set to be changes to the rules on tenants with pets as well. The bill looks to prevent landlords from outright banning pets from properties and introduces the right for all tenants to be able to request a pet in their home.

This means landlords won’t be able to unreasonably refuse a pet request. You’ll be required to respond to pet requests within a certain amount of time. This will normally be within 42 days, but landlords will be given additional time if you request additional information or need to speak to your freeholder.

With this upcoming change, landlords and investors should start considering whether it would be reasonable to allow a pet in your properties.

Timelines on the legislation taking effect

The bill must pass through parliament before it comes into force, and it could be subject to change as the legislation progresses. It started in the House of Commons with the first reading having taken place on Wednesday 17 May, and the second reading phase is the next step. However, a date for this has not been announced yet.

It will then go to committee stage, report stage, and third reading before going through all of these phases in the House of Lords. The final stages will then include consideration of amendments and Royal Assent.

The National Residential Landlords Association has said: “Since the Renters’ Reform Bill is likely to contain a considerable number of changes to current legislation, it is unlikely – though possible – that it will reach Committee Stage before Summer Recess, with Royal Assent and implementation more likely to be in the latter part of this year or early next.”

You can follow the progress of the Renters Reform Bill on the Parliament website. There is additional legislation impacting the private rented sector that is expected to come later on, such as the Decent Homes Standard.

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The prospects and opportunities for buy-to-let investors

While the Renters Reform Bill will have an impact on how buy-to-let investors operate and may change their decision-making moving forward, the future of property investment in the private rented sector still looks bright.

The UK property industry has faced some hurdles in recent years, but it’s proven to be remarkably resilient. And the sector has even led economic growth for the past year with a 5.1% increase in the number of enterprises across the industry.

The strength of the sector is mainly down to the fact that there’s a major supply and demand imbalance. This is expected to continue with the private rented sector expected to grow even more in the coming years. Over the past five years alone, demand for rental properties has spiked by a whopping 57%.

Because of this, UK property remains one of the most reliable investments as it can hold steady through external headlines like economic turbulence and uncertainty. And the buy-to-let market is providing strong returns as the lack of supply creates opportunities for investors to bring forward more high-quality rental properties.

If you want to know more about the property investment opportunities we have available at The Prestbury Advisory, get in touch with our team today on 01625 725 779, or email us at contact@theprestburyadvisory.com.