Understanding the New Labour Government’s Renters’ Rights Bill and the Abolition of Section 21: Implications for Landlords and Tenants in Cheltenham and Gloucester

With the recent election of a Labour Government, the landscape of the UK rental market is poised for significant change. Central to this shift is the introduction of the Renters’ Rights Bill, which includes the abolition of Section 21, commonly known as the “no-fault eviction.” At RA Flatt Letting Agents in Cheltenham, we recognise the importance of these developments for both landlords and tenants. This blog will explore the pros and cons from both perspectives and assess the potential impact on the Cheltenham and Gloucester lettings market.

What Is the Renters’ Rights Bill?

The Labour Government’s Renters’ Rights Bill is designed to strengthen the rights of tenants across the UK, offering them greater security and stability. The most notable change is the abolition of Section 21, which previously allowed landlords to evict tenants without providing a reason, provided they gave two months’ notice. This change aims to end unfair evictions and provide tenants with more secure, long-term housing.

You could be forgiven for thinking haven’t we heard this all before as the previous Government had passed an Act of Parliament. that had been through the commons and was progressing through the Lords this Spring and it bore many similarities. The new bill is expected to be launched into Parliament in the Autumn.

The Pros and Cons for Landlords

Pros:

Encouragement of Long-Term Tenancies:

With tenants feeling more secure, landlords may benefit from longer tenancies, reducing the frequency and cost of finding new tenants. This stability can lead to better property care and a consistent rental income.

Potential for Enhanced Tenant Relations:

The removal of Section 21 could foster more positive relationships between landlords and tenants (although of course that does depend on your perspective). Without the threat of no-fault evictions, tenants may feel more confident in communicating issues or concerns, leading to a better-maintained property.

Cons:

Reduced Flexibility:

The abolition of Section 21 reduces landlords’ ability to regain possession of their property at short notice. This could be particularly challenging for landlords who need to sell or move into their property, or for those dealing with problem tenants who don’t fall under the specific grounds for eviction under Section 8.

Potential for Increased Legal Costs:

With landlords now required to use Section 8 for evictions, there is a risk of drawn-out legal battles if tenants contest the grounds for eviction. This could lead to increased legal costs and longer void periods, negatively impacting landlords’ finances. Services such as our rent protection and legal expenses cover are likely to prove to be more popular. Read more about this service here (link to be added)

Potentially reduced scope for increasing rents:

The new bill plans to only allow rents to increase in line with market rates. Previously there was no such restriction but the devil is clearly in the detail. Who determines what market rates are, how does this cope with reflecting rates in different parts of a town that might be geographically very close but nonetheless very different. How is the condition of a property reflected? Given that the number of people chasing every rental property is double pre-pandemic levels it is not clear how this will prevent bidding wars.

Tenants will have the right to request a Pet:

Landlords must consider the request and cannot “unreasonably” refuse. They can though request insurance to cover potential damage from pets, from what we understand this will about around £5,000 cover, which should cover any damages caused by pets if needed.

Applying “Awaab’s Law”:

This sets clear expectations for timeframes within which landlords must make homes safe, where they contain serious hazards.

The Pros and Cons for Tenants

Pros:

Greater Housing Security:

The abolition of Section 21 provides tenants with more security, allowing them to settle in their homes without the fear of sudden eviction. This stability is particularly beneficial for families, students, and professionals seeking long-term housing.

Potentially less chance of steep increases in rental costs:

The link to market rates may make it less likely that rental costs will climb steeply. Although in a market such as the one we are seeing in Cheltenham and Gloucester where availability is very tight – increases that are aligned to market rates may still climb steeply.

New Ombudsman Service:

This service will set out to provide fair, binding, impartial resolutions, reducing the need to go to court.

Cons:

Potential for Higher Rents:

Landlords may respond to the increased risks and reduced flexibility by raising rents to cover potential future costs and void periods. This could make renting in Cheltenham and Gloucester, already a competitive market, even more expensive.

Stricter Tenant Screening:

As a result of the tougher eviction process, landlords may become more selective in choosing tenants. This could make it harder for tenants with less-than-perfect credit histories or lower incomes to secure a rental property.

Impact on the Cheltenham Lettings Market

The Cheltenham lettings market, characterised by its mix of students, professionals, and families, is likely to experience notable changes due to the Labour Government’s Renters’ Rights Bill. Here’s what both landlords and tenants can expect:

Shift Towards Long-Term Tenancies:

The increased security provided by the abolition of Section 21 may lead to a shift towards longer tenancies. This could benefit tenants seeking stability but may also reduce the availability of short-term rental options. This could be a real headache as demand for rental properties already exceed supply. It is not unusual for us currently to receive 30 enquiries for a new rental property on the first day that is goes on the market.

Greater Demand for Professional Letting Services:

Navigating the complexities of the new Renters’ Rights Bill may drive more landlords who currently manage their own property or properties to seek professional letting services. RA Flatt Letting Agents can provide valuable support, ensuring compliance with the new laws while helping landlords maintain positive tenant relationships.

Rising Rental Costs:

As landlords adjust to the new regulations, there is likely to be upward pressure on rental prices. This could make Cheltenham and Cheltenham, already desirable location’s, even more challenging for renters, particularly those on a tight budget.

The Labour Government’s Renters’ Rights Bill, particularly the abolition of Section 21, marks a significant change in the UK rental market. While tenants in Cheltenham stand to gain on the face of it greater security and stability, landlords face challenges in terms of reduced flexibility and potentially higher costs.

At RA Flatt Letting Agents in Cheltenham and covering Gloucester, we are committed to helping both landlords and tenants navigate these changes. Whether you are a landlord looking to protect your investment or a tenant seeking secure, long-term housing, our expert team is here to provide the guidance and support you need during this transition.

For more information on how these changes could affect you, feel free to contact us today on 01242 250982.