The Intermediary – April 2025 - Flipbook - Page 26
BUY-TO-LET
Opinion
Renters’ Rights
for new
I
t oen feels like there is a
whirlwind of legislation
floating around the private
rental sector (PRS) at any
given time, particularly
when it comes to the rules
and regulations that landlords are
subject to.
For the past 10 to 15 years,
Governments of all different colours
appear to have had the private landlord
in their sights, with some warranted
legislation aimed at them, and let’s be
frank, some unwarranted.
There has been no let-up in the past
year, as the Labour Government has
not eased back, with its own Renters’
Rights Bill containing a significant
number of changes that are likely
to impact hugely on landlords.
Nevertheless, it feels like the Bill
is going slightly under the radar
at present.
It might be understandable if your
existing landlord clients haven’t given
this too much thought yet, given
that the Bill has yet to pass through
Parliament, but it’s not like we have
years to wait.
As I write this, the Bill is at the
report stage in the House of Lords;
however, the anticipation is that it will
become law by this summer, which –
by the time this is published – means
that we will have mere months to wait
before we see some significant changes
for landlords to get their heads around
and implement.
So, what are they? Well, one of the
main ones is that the Bill will end
Section 21 evictions and will limit
the grounds on which tenants can be
evicted full stop. However, where I
think there is the greatest potential
for sizeable changes in the PRS is
in the changes to the law around
rental increases.
Let’s be frank here, the Renters’
Rights Bill outlines a much more
prescriptive, and dare we say
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The Intermediary | April 2025
restrictive, process for how and when
landlords can introduce rent increases
at their property.
Rent increases
Under the new rules contained in the
Bill, landlords will only be allowed
to raise the rent once per year using a
Section 13 notice, which tenants will
be able to challenge if they believe the
increase is above the market rate. The
notice must expire at least 52 weeks
aer the last rent increase, and it will
only take effect at the start of the next
tenancy period.
Very soon, a landlord will only be
able to increase rent to a maximum
level determined by the current
market rate, and if the tenant feels any
proposed increases are over and above
this, then they can challenge this at
a First Tier Tribunal. On top of this,
rent increases can’t be backdated, and
therefore if they are challenged, but
the Tribunal agrees in the landlord’s
favour, the higher rent will only apply
from the decision date.
On the face of it, it will therefore
‘pay’ for the tenant to challenge their
rent increase, because depending on
how long the Tribunal takes to come
to a decision, the tenant is going to
be paying a lower rent up until that
point, rather than the higher one from
the point the landlord would like to
introduce it from.
Interestingly, if the Tribunal feels
the rent increase is below the market
rate, it can’t increase it above the
amount proposed by the landlord.
Plus, the Tribunal can defer any
increase in rent by up to two months
if it believes the tenant is in financial
hardship. There is also a limit on the
amount of rent the landlord can ask
for in advance.
Given all of this, and as mentioned,
the fact that – to a large degree – the
ability to increase rents to a level the
landlord needs is being significantly
LOUISA RITCHIE
is national account manager
at Fleet Mortgages
restricted, it is perhaps not surprising
that there has been further talk about
the disincentive this might apply to
ongoing property investment.
My expectation is that landlords
will need to be much more cautious
when increasing rents, ensuring
they have strong evidence that the
proposed increase is justified by the
current market conditions.
Now is the time to
communicate with clients
about the Bill”
It seems likely that tenants are
going to want to challenge rent
increases a lot, given the state of grace
they will get on any rise while the
Tribunal makes its decision. Again,
this will need to be weighed up by
landlords – they are much more likely
to accept a smaller rent rise at the
immediate start of the next tenancy,
rather than potentially waiting
months to get a Tribunal decision.
The other big question will be
around how the Tribunal is going to
function, how resourced it will be to
