With the Renters’ Rights Bill (RRB) flying through the reading stages, it won’t be long before landlords and brokers alike feel the impact.
Here’s an update on the latest changes and what to make of them.
In their manifesto pledges, Keir Starmer and Angela Rayner were clear: Section 21 had to go. Since then, Labour has wasted no time pushing the RRB through its first readings in the House of Commons and House of Lords.
With the second reading scheduled for early February, royal assent in the late spring looks increasingly realistic, with the bill expected to be implemented in late summer.
The government has been transparent in its approach to better supporting tenants with the RRB; however, the latest amendments from the House of Commons go further to disincentivise landlord clients.
To help clients mitigate the rising costs, it’s essential we find them the best rate for their needs
Intending to close any “loopholes” for landlords, the government has tightened the wording in the bill with two new major amendments.
Unsurprisingly, there have been no ‘pro-landlord’ amendments.
Rent in advance prohibited
Two new clauses have been added to the bill to ban the payment of rent in advance other than the initial period. Furthermore, landlords won’t be able to ask for advance rent in cases where the tenant doesn’t have a UK credit history (e.g. international students).
The biggest strain on landlords will be the higher running costs
The rules will restrict landlords to charging just one month’s rent in advance. But there are no restrictions on charging a security deposit of five to six weeks.
Vulnerable tenants will already suffer under the RRB with the abolition of Section 21 evictions. Our landlord clients will, understandably, be more vigilant about whom they let to. Now, with referencing challenges likely to take place due to the prohibition on rent in advance, it seems tenants will struggle further.
Student HMO possessions
Students typically sign rental agreements up to a year before the tenancy start date. However, the bill includes new grounds for possession under Section 8 that will allow HMO landlords to serve a Section 8 notice to expire from 1 June–30 September (between university terms) as long as the tenancy is not granted more than six months before it begins.
The latest amendments from the House of Commons go further to disincentivise landlord clients
The clause doesn’t ban the current practice of students signing up well in advance, but it disincentivises landlords. Landlords may struggle to provide student homes without the ability to recover possession. In contrast, the student rental market is set to become much more complex for tenants and landlords alike.
These legislative changes will revolutionise how our industry works, and our clients expect us, as trusted brokers, to know what’s happening and when. Below, we’ve set out a rough timeline of the next steps:
- 15 January–April 2025: House of Lords
This is where the RRB currently stands, with the second reading scheduled for 4 February.
Next, a committee of the whole House will thoroughly review the bill and debate further amendments. This will take place before the end of February, with the final stage in the House of Lords (the report stage) occurring after the Easter recess, from 3 to 22 April.
- Spring 2025: Royal assent
Once the bill receives royal assent, it will become the Renters’ Rights Act 2025.
- Summer/Autumn 2025: Commencement date of Renters’ Rights Act 2025 — coined the ‘Big Bang’ date
The changes will take place once the Renter’s Rights Act is enforced. From this date, landlords will no longer be able to serve Section 21 or current Section 8 notices. Transition arrangements will be made for any notices that have already been served.
Other provisions, such as the new ombudsman and online database, may not come into force until later.
What’s clear is that the government will need to publish and enforce regulations before the commencement date occurs.
How the bill will impact the market
The biggest strain on landlords will be the higher running costs. While mortgage rates are softening, landlords will be expected to foot the bill for court evictions, the new ombudsman and the landlord portal.
Unsurprisingly, there have been no ‘pro-landlord’ amendments
Moreover, with the amount of unpaid rent before landlords can serve notice rising from two to three months, many may face difficulties with their mortgage repayments.
That’s where we come in. If the government won’t look out for landlords, we will. To help clients mitigate the rising costs, it’s essential we find them the best rate for their needs. Our clients have never needed us more.
Jeni Browne is business development director at Mortgage Finance Brokers
This article featured in the February 2025 edition of Mortgage Strategy.
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