How will the Renters’ Rights Bill affect landlords’ plans?

The Renters’ Rights Bill is moving rapidly through the UK’s legislative process and could become law in England by summer 2025.

As we discussed in our previous article on the topic, the Bill is the Government’s attempt to ‘rebalance the relationship between tenant and landlord’. But significant changes, including abolishing ‘no-fault’ evictions and removing fixed-term tenancies, may have left some landlords debating the impact of extra administration and costs.

At a recent roundtable event, Investec consulted landlords, along with experts in commercial property and law, to understand how the Bill has been amended and what it could mean for those with buy-to-let investments.

Proposed amendments to the Bill

The Renters’ Rights Bill is arguably the most significant change to the letting regime in England in the last 40 years.

Under the proposals, fixed-term, assured shorthold tenancies (ASTs) will be replaced by periodic contracts, which can be ended with a two-month notice period. Landlords can no longer enforce no-fault evictions (Section 21 Notices) and rental bids above the asking price are banned.

Since the Bill’s introduction in September 2024, there have been several amendments and suggestions tailored in parliament.

What are landlords’ outstanding concerns?

1. Landlords may feel they have lost control: With strict requirements to provide sufficient grounds to evict tenants, landlords may feel they have lost an element of control over the properties they own, says Michael Tatters, a commercial property litigation specialist at Thrings Solicitors. “The AST model seemed to create the right balance. Tenants had the certainty of a fixed term but at the end of that term, the landlord could decide whether to end the tenancy.”
   
   
2. Delays to rent increases: Under the new rules, landlords can only increase rents once a year and they must give two months’ notice of the rise (the current notice period is just one month). Tenants can challenge the rise at a tribunal. Michael adds: “The tribunal is not allowed to impose a higher rent. It can only impose whatever the landlord had suggested for a lower rent and that new rent will not start until the tribunal has made that decision.”
   
   
3. Student lets could be complicated: Landlords of student houses of multiple occupation (HMOs) will be able to reclaim possession at the end of the academic year. They will have had to serve notice at the start of the year and give tenants four months’ notice before the eviction date. But there’s an added complication. If this agreement has been made six months before the tenancy starts, it does not provide sufficient grounds for repossession. Michael adds: “The criteria is meant to avoid people being required to enter into tenancies far too early, but it’s confusing.”
   
   
4. Increased administration and costs: Legislation will apply retrospectively, so all tenancy agreements, old and new, are covered. Landlords are concerned about the extra time and costs they will have to spent on administration, including serving specific notices and the potential for disputes with the new ombudsman. Michael adds: “I don't come across many landlords who are just evicting tenants for no good reason. What I see is landlords serving section 21 notices as a tidy, easy way to remove a tenant.”
   
   
5. Court backlogs: Michael says: “It's fine bringing in the new rules, but if that results in a court system that's already overloaded getting far more disputes, everything could grind to a halt.”

What do landlords plan to do?

The potential changes could make some landlords more cautious when choosing tenants. Some might avoid those they see as ‘higher risk’ or only target tenants with higher incomes. Others might want to sell up, especially if they are nearing retirement age or feel the rules make managing a portfolio more time-consuming.

Michael Tatters’ advice is to be prepared. He adds: “Most of the cases I deal with involve landlords who have not dealt with their paperwork correctly. So, they should be alive to the new legislation and what the requirements are. Everyone’s going to have to be on their toes, particularly for student lets, where landlords may have to serve a notice within one month of the new legislation.”

Landlords also need to be very clear when communicating with their tenants about rent prices, or when asking their tenants to leave. “Landlords need to record their decision-making process, just in case something happens in the future. If an applicant has a family, or has pets, they can’t just be refused for that reason. There should be some legitimate reason documented for not choosing them.”

How could the bill impact the property market?

The Bill has the potential to impact supply levels, rents and valuations in the UK property market.

Firstly, it could motivate landlords to sell. Michael Henretty, from Carter Jonas, says it is already happening. “Tenants are coming in saying ‘our landlord just told me they’re selling their flat because of the new legislation’. A lot of these are generational landlords who may have owned these properties for 30 years.”

This sentiment could further reduce housing supply – and unintentionally increase rent prices. As Leslie Schroeder, also of Carter Jonas, explains: “It’s difficult to see a scenario where we’re not going to lose some stock in the private-rented sector. Over the last three years, demand has skyrocketed. Rents have gone up as much as 20% in most locations across the UK, because there's a lack of properties to satisfy that level of demand.”

The changes could also affect property valuations and the willingness of some lenders to provide financing, as the new rules could impact the perceived risk and stability of rental incomes.

However, Michael adds: “If we are valuing a property, particularly if it’s whole blocks or a portfolio of single assets, we will generally add some level of discount to reflect they are tenanted. In theory, that discount represents the fact that you can't sell it for 12 months, or anyone buying it can't access it for 12 months. While a periodic tenancy would allow access sooner, if a tenant doesn’t want to move out, it could add complexity.”

Will the Bill be law by summer 2025?

Both Conservative and Labour governments have supported reforming the rental sector. The previous administration failed to pass its own legislation, the Renters (Reform) Bill, before the last election.

Labour’s new-look bill has already passed its Second Reading in the House of Lords, where members made comments but did not vote. It will now go through the Lords’ committee stage before it goes back to the House of Commons for a Third Reading.

With a large enough majority to push the legislation through, it could be law by summer 2025. 

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