Rental sector shake-up

The Renters (Reform) Bill has finally been introduced into Parliament, almost five years after it was first promised. It will only apply across England, because various reforms have already been introduced in Scotland and Wales.

Scotland

Changes to Scotland’s tenancy regime in 2017 did away with fixed-term tenancies and also ended no-fault evictions. More recently, Scotland has introduced a cap on rent increases and a freeze on evictions.

• Although intended to be temporary, these measures have already been extended, with a second extension proposed to 31 March 2024.
• Rent increases are now mostly capped at 3%.

The rent cap has somewhat perversely led to Scotland seeing the UK’s highest rent increases, with landlords putting up rents significantly between tenancies.

Wales

Wales has recently put in place various changes for landlords. From this June, the notice period for a no-fault eviction is extended from two to six months. The Welsh government is also consulting on possible rent controls.

England

Similar to Scotland, the Renters (Reform) Bill, if enacted, will do away with fixed-term tenancies and end no-fault evictions.

• Fixed-term tenancies normally run for 6 or 12 months, after which the contract is either renewed or switched to a periodic tenancy. The proposal is that all tenancies will be periodic, running from month to month.
• No-fault eviction, known as a section 21 eviction, currently means a landlord can easily obtain possession of a rental property once the fixed-term contract has come to an end. The change will leave landlords relying on a section 8 eviction, so a landlord will have to have a legal reason for ending a tenancy.

The grounds for a section 8 eviction will be expanded to include repeated rent arrears, the landlord intending to sell the property, the landlord or a close family member wanting to live in the property, or where the property is to be redeveloped.

Alongside reforms to the taxation of rental income, the bill’s provisions could change how attractive buy-to-let remains for landlords.