The Renters’ Rights Bill
The previous government initiated the Renters (Reform) Bill, but it failed to pass before the election. The Labour government built on this draft, releasing the Renters’ Rights Bill in September 2024.
- Evictions: The bill eliminates Section 21 or “no-fault” evictions, meaning landlords must now have a valid reason to reclaim a property. Examples include:
- Selling the property: Requires a 4-month notice, and it cannot take effect within the first 12 months of a tenancy.
- Serious rent arrears: Renters need to be at least 3 months behind (up from 2 months currently), and landlords must give 4 weeks’ notice (instead of 2).
This shift makes property management less “passive.” Landlords should be prepared for more proactive involvement and need well-documented records to justify tenant evictions.
- Tenancy Changes: The bill abolishes Assured Shorthold Tenancies (ASTs) and introduces periodic tenancies:
- No minimum term: Tenancies will no longer have a minimum duration.
- Tenant notice: Tenants can now provide 2 months’ notice from day one, potentially leading to higher tenant turnover and income instability for landlords.
- Professionalising Landlords: The bill introduces measures to make landlords more accountable, including:
- A new ombudsman: All private landlords in England must join the scheme before listing a property, facing fines for non-compliance. The ombudsman can issue rent repayment orders.
- A landlord database: Landlords must register themselves and each property on a database, providing transparency to councils, tenants, and authorities like HMRC.
These requirements could lead some landlords to exit the market, while others may welcome the increased professionalism and better rental standards.
- Additional Tenant Rights: Further changes include:
- Rent increase restrictions: Limited to once per year, with two months’ notice.
- Rental bidding ban: Landlords must advertise a fixed rent and cannot accept higher offers.
- Pets: Tenants may request consent for pets; landlords need a valid reason to refuse, as the decision can be appealed to the ombudsman.
- A Decent Homes Standard: Landlords will need to meet specified housing standards.
- Awaab’s Law: Landlords must address hazards like damp and mold within set periods.
- No blanket bans: Restrictions on tenants with children or those on benefits are prohibited.
The Budget
The recent budget brought mixed news for property investors:
- Capital Gains Tax (CGT): The expected increase did not apply to landlords, with rates remaining at 18% and 24%.
- Stamp Duty Land Tax (SDLT): A rise in SDLT on second homes from 3% to 5% was implemented immediately. First-time buyer exemptions will also roll back from April 2025, affecting 20% of first-time buyers and requiring a partial amount from an additional 14%.
- International Buyers: An extra 1% SDLT on international purchases means rates could reach up to 17% depending on the transaction’s specifics.
While the budget highlights the government’s commitment to housing investment, the specifics of the promised planning reforms remain undisclosed.
Final Thoughts from Milesh Lakhani
For professional landlords, many of these changes may feel familiar. However, the added complexity in tenancy and eviction laws makes self-managing properties more challenging. In my experience, it’s far more cost-effective to seek advice initially than to navigate costly issues later, especially given how long and difficult it can be to regain possession of your property now.
As demand for rental properties grows but supply may dwindle, the market still holds promise. For those entering or reviewing their property portfolios, this is an excellent time to refine your business model and ensure you’re maximizing the potential of your assets.
About the Author Milesh Lakhani, a seasoned property developer, investor, and business strategist, has over 20 years in the property industry, working with buy-to-let, HMOs, and both commercial and residential sites. Now the director of several companies, he leverages his extensive experience and a financial sector background to bring professionalism and strategic planning to property ventures. His latest venture, The Property Edge, empowers property professionals through networking, consulting, and resources, all designed to give them a competitive edge.
