October Property Update
Welcome to our monthly newsletter for property landlords. We hope you find this informative and please contact us to discuss any matters further.
Renters Rights Bill
On 11 September 2024, the Renters Rights Bill was introduced in the House of Commons. This bill follows the Conservatives’ Renters Reform Bill, which did not complete its passage through parliament before the General Election.
The bill is similar to the previous government’s bill but, as pledged in Labour’s manifesto, it includes further measures. The bill applies to England only and can be viewed here
The Renters’ Rights Bill:
- Abolishes section 21 (no-fault) evictions – Labour will implement this new system in one stage, giving all tenants security immediately. Landlords will also benefit from more straightforward regulation and clearer and expanded possession grounds;
- Ensures possession grounds are fair to both the landlord and tenant – The bill introduces new safeguards for tenants, giving them more time to find a home if landlords evict to move in or sell, and ensuring unscrupulous landlords cannot misuse grounds. Landlords will be able to recover their property when reasonable.
- Provides stronger protections against backdoor eviction – by ensuring tenants are able to appeal excessive above-market rents which are purely designed to force them out. As now, landlords will still be able to increase rents to market price for their properties and an independent tribunal will make a judgement on this, if needed.
- Removes fixed-term assured tenancies – Instead, all tenancies will be periodic, with tenants able to stay in their home until they decide to end the tenancy by giving 2 months’ notice.
- Introduces a new Private Sector Landlord Ombudsman and a Private Rented Sector Database.
- Give tenants strengthened rights to request a pet in the property – the landlord must cannot unreasonably refuse but can require pet insurance to cover any damage to their property.
- Applies the Decent Homes Standard and ‘Awaab’s Law’ to the sector, both of which aim to make homes safer.
- Makes it illegal for landlords and agents to discriminate against prospective tenants in receipt of benefits or with children.
- Ends the practice of rental bidding – Landlords and agents will be required to publish an asking rent for their property and it will be illegal to accept offers made above this rate.
- Strengthen local authority enforcement and rent repayment orders – by expanding penalties and introducing investigatory powers to councils.
There have been mixed reactions to the bill, with fears that a heavier compliance burden for landlords will only serve to increase rents.
Furthermore, it appears that the ban on section 21 evictions will come into effect on the day the bill receives Royal Assent. The Conservatives previously said this measure could not be implemented until the court system was ready and there are concerns surrounding how the courts will cope once the bill becomes law.
Immediate impacts could be a noticeable wave of section 21 evictions before they are outlawed.
For tenants, the bill offers increased protection and goes further than the previous government’s bill by applying the Decent Homes Standard and Awaab’s Law to the sector.
For many, regardless of their opinions on the contents of the bill, it gives them clarity. The sector has experienced a long period of uncertainty and the bill’s introduction can be viewed as ‘the beginning of the end’. The bill is scheduled to be debated in parliament this autumn.
Wales: controls on second homes and holiday lets
Since Welsh local authorities were empowered to charge a council tax premium of up to 300% on second homes, the number of second homes for sale has trebled in one area. Pembrokeshire local authority imposed a 200% council tax premium on second homes in April 2024, although owners can delay paying for up to one year if they put their property up for sale. According to a BBC article (see here), 135 Pembrokeshire second homes were for sale in July 2024, compared to 28 in July 2023.
The power to impose the premium was given to local authorities as a means of making it easier for local people to afford to buy a new home.
Other councils that charge a premium include Anglesey and Conwy (100%) and Carmarthenshire (50%). In Ceredigion, the premium is currently 100% but it will increase to 150% in 2025.
Cyngor Gwynedd charges a premium of 250% and is also the first local authority to introduce the ‘Article 4’ direction, which requires homeowners to gain planning permission in order to turn a home into a holiday let or second home from 1 September 2024. This is another measure aimed at making houses more affordable for local people and is viewed by some as essential to preserving communities and the Welsh language.
However, some are opposed to the new rules, citing a potential decline in tourism and a fall in house prices due to the market becoming smaller. Campaign group ‘People of Gwynedd Against Article 4’ are set to launch a legal challenge.