Agents might stand to lose approximately £400 million due to the Renters' Rights Act
The UK government has taken a significant step towards enhancing renters' rights with the publication of the Impact Assessment for the Renters Rights Bill this month. The bill, expected to become law in Spring 2025, aims to provide more individuals with security at home and will have implications for letting agencies, landlords, and tenants alike.
Adapting to the New Legal Framework
Letting agents must undertake comprehensive operational changes to align with the new legal framework established by the Renters Rights Bill. Key strategies include revising tenancy agreements to accommodate the abolition of assured shorthold tenancies (ASTs) and fixed-term tenancies, as all tenancies will become periodic with greater security of tenure for tenants. Agents must ensure eviction processes strictly follow the new "no-fault" eviction ban, limiting evictions only to specific legal grounds such as rent arrears or anti-social behaviour.
Agents also need to manage rent increases carefully, adhering to the rule that rent can only be increased once per year. They should prepare for potential tribunal challenges from tenants and integrate the new enforcement regime, understanding the powers local authorities will have to inspect properties and request landlord information, alongside being ready for fines and prosecutions for non-compliance.
Embracing Transparency and Anti-Discrimination Measures
Agents must comply with the ban on rental bidding wars by publishing clear asking rents and not accepting bids above these prices. They should adapt to new rules banning discrimination against tenants receiving benefits or with children, and accommodate tenant pet requests more fairly.
The Private Rented Sector Database and Ombudsman
The Private Rented Sector Database and Ombudsman, crucial aspects of the Renters Rights Bill, require further clarity from the government. Letting agents require detailed guidance on the practical implementation timelines, data access rights, privacy safeguards, and how disputes will be handled through the Ombudsman to ensure fair, transparent, and efficient resolution processes.
Opportunities for Forward-Thinking Agents
Neil Cobbold, commercial director of Reapit, claimed that there are opportunities for forward-thinking agents to adapt. He suggested converting let-only landlords into fully managed clients as a strategy and providing value-added services such as compliance management, rent collection, and tenant communication to mitigate potential revenue loss. Neil emphasized that demonstrating the value of an agent's expertise in delivering a better rental experience for landlords and tenants will be critical.
The Renters Rights Bill, first introduced into the House of Commons on 11 September 2024, has entered the report stage. With the main aim of abolishing section 21 evictions, the bill is expected to have significant implications for the planning and adaptation of the industry. The significant financial loss to letting agencies, estimated at £391.7 million over the next ten years, is 40% higher than the projected £278.7 million if the Conservative-led Renters (Reform) Bill had been introduced.
In summary, letting agents must undertake comprehensive operational changes embracing enhanced tenant security, stricter eviction and rent increase rules, anti-discrimination measures, and transparency obligations, while awaiting detailed government guidance on the PRS database and ombudsman functions to fully operationalize these reforms. These adaptations will involve revising contracts, renewals, tenant communications, and compliance systems to align with the new legal framework established by the Renters' Rights Bill.
- Local government authorities will gain new powers to enforce the rules set by the Renters Rights Bill, including inspecting properties, requesting landlord information, and imposing fines or prosecutions for non-compliance.
- Businesses in the housing sector, such as letting agents, will need to modify their operations, including revising tenancy agreements, adhering to stricter rent increase rules, and integrating the new enforcement regime.
- The introduction of the Private Rented Sector Database and Ombudsman, as part of the Renters Rights Bill, will require detailed guidance from the government on practical implementation timelines, data access rights, privacy safeguards, and dispute resolution processes.
