15th March 2024

A guide to the rental reform bill and new rules for landlords 2024

Despite economic challenges and a new rental reform bill, the rental market is still thriving with over 4.5 million properties let, presenting landlords with ample opportunity to diversify their property portfolios and maximise income. However, with changing legislation it can be difficult for landlords to keep up with the latest news and compliance requirements. 

To help you navigate the ever-changing regulations, we’ve identified the key points of the Renter’s Reform Bill that landlords should be aware of in 2024. Keep reading as we discuss how your income may be affected, as well as new rental laws that will affect the rights of both yourself and your tenants.

What is the Renter’s Reform Bill?

The Renter’s Reform Bill is marked as the biggest shake-up to the private rental sector in thirty years, it outlines new guidelines for landlords as part of the government’s bid to level up housing and offer fairer and more high-quality standards of living to tenants, whilst also protecting the rights of lawful landlords and penalising those who fail to meet the necessary compliance. 

When will the Renter’s Reform Bill take effect?

The bill is expected to be implemented in the latter half of 2024 after entering its committee phase in November 2023. It is currently in the final stages of debate before entering the House of Lords to be passed. It should be noted though that if the bill does take effect this year, it is not likely that all changes will be implemented at once as this would cause too much disruption, particularly to new tenancies. Therefore, we can expect many of these new landlord regulations to be introduced gradually. For example, certain rules may only apply to new tenancies in phase one whereas existing tenancies will have to comply at a later date during phase two.

This also means that whilst the planned regulations listed in this blog have a high probability of going ahead, there may be some additional changes or new laws introduced during the third and final reading of the bill.

Financial outlook for landlords

It is no secret that the housing market has been turbulent over the past couple of years, with mortgage rates, rental and sale prices all heavily impacted by inflation, the cost of living crisis, a pandemic and Brexit. As a result of these factors there are financial implications for landlords as well as tenants. The reform bill will also introduce new systems and regulations regarding tax, and it is essential that landlords are aware of these expected financial changes.

What could this mean for landlords?

Of course, with any financial outlook there can only be predictions and what we may see could change or be affected by other external factors. However, the following points are certainly worth keeping in mind when streamlining your portfolio.

• Mortgage costs – Buy-to-let mortgages are slowly dropping, but this isn’t likely to have any significant impact on finances and rates remain quite high which could impact the profitability of investment.
• Rents are continuing to rise -The demand for rentals is greater than the supply, partially due to high mortgage rates which deter tenants from purchasing a property. This means that rents are set to continue increasing.
• Investment opportunities – High interest rates can affect the prices of property, making homes available for lower prices. These lower property prices are often very attractive to landlords who want to increase their property portfolio, satiating the demand for rental units.
• Tax – Capital gains tax is set to be halved in 2024 meaning that investors who are selling properties will need to pay tax on capital gains profits over £3,000. In addition to this, it is worth noting that the digitisation of tax has been delayed by two years, but from 2026 landlords earning over £50,000 in income will be required to submit digital tax records to HMRC every three months in place of the self-assessment tax return.

Blanket bans are now prohibited

The Rental Reform Bill aims to provide fairer and higher-quality housing to tenants, helping to eliminate discrimination within the rental market. This means that landlords are no longer able to issue blanket bans on groups of people such as those with pets, those with children, and those who receive benefits. This of course does come with caveats, for example, landlords are not obliged to immediately start accepting tenants with pets but they must be able to provide reasonable grounds for rejecting an application for keeping a pet. Landlords must familiarise themselves with these rules in order to remain compliant.

What does this mean for landlords?

• Scotland is currently exempt – This part of the reform applies to properties in England and Wales, but it will be applied to Scotland at a later date. If you have properties spanning the varied countries, you’ll need to act accordingly to remain compliant. This does not apply to properties in Northern Ireland.
• Bigger deposits – Landlords may be able to request additional deposit fees when accepting pets, so long as this does not breach the cap.
• Pet ban on leasehold properties – If your buy-to-let property is a leasehold, it may be written in the contract that the leaseholder prohibits pets. As such, you may need to check your agreement if you receive requests from tenants with pets.

Energy performance changes have been scrapped

Many landlords had already started preparing for the new legislation in energy efficiency laws. Whilst EPC certificates and all other safety certificates are a legal requirement, plans to make rental properties EPC rating C by 2028 have been scrapped for fear that costs would be transferred to renters. It is no longer a legal requirement for landlords to improve their rating and make properties more energy efficient.

With this in mind and despite not being a mandatory obligation, landlords are still encouraged to look at improving their properties to make them both more cost-efficient and of higher quality for tenants. The latter point bears particular importance as the new renting laws require landlords to adhere to a Decent Homes Standard, of which the rules are frequently updated. This includes a “reasonable degree” of heating and insulation, which may require rental properties to be upgraded to a more energy-efficient level.

Are there any other new rules for landlords?

There are a few other notable changes and delays in the reform bill that landlords should be aware of. For example, the bill’s flagship notion of abolishing Section 21 no-fault evictions has been indefinitely delayed, so evictions under this category will continue as normal until the courts have been adequately simplified for landlords to use. There is an indication that in place of abolishing Section 21, Section 8 will be strengthened, which gives landlords more power to end a tenancy if they have a legally valid reason, or if they wish to sell the property.

In addition to this, some other changes have been put forward and will come into place when the reform is in full effect. These include:

• No more fixed-term tenancies – Under the new reform bill, fixed-term tenancies that offer rental properties for a set length of time and a set monthly cost will be banned and replaced by rolling tenancies. Rolling tenancies can then be terminated by giving the landlord two months’ notice or if the landlord evicts the tenant. 
• Limits on rent increases – Landlords must give tenants two months’ notice of a price increase, and rent may only be increased once per year.
• Private rented sector ombudsman – There are plans to create a new ombudsman service which is responsible for enforcing these new regulations and for resolving low-level disputes without the need for tenants and landlords to take the matter to court. It currently appears that membership to this ombudsman service will be mandatory for landlords.
• A new one-stop digital portal – It has been suggested that a new portal system will be mandatory for landlords, they will need to legally register their property and demonstrate compliance. Tenants will be able to use this portal to check that the landlord and property are up to standard. Though further details on this are still to be made available.

Keep up to date with landlord regulations with SDL Property Auctions

As our property auctions attract a large and diverse number of buyers, including both current and prospective landlords, we aim to keep you informed of the latest developments in the industry. These informative articles will help you to make the right decisions when it comes to diversifying or refining your property portfolio. 

If you’re a landlord looking to sell up before the reform bill takes place, download our guide to selling to learn about the process or contact a member of our team for more information. Alternatively, if you’re looking to increase your rental income, you may wish to read our blog on the highest rental yields within the UK or browse through our auction catalogue to find your next property.