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With its origins in 2019 and uncertainty brought on by a series of delays, many parties in the property profession, including letting agents, thought that the proposed Renters Reform Bill (RRB) had been postponed indefinitely.

However, recent announcements made in May 2023 have shown that this piece of legislation is firmly on the Government’s agenda.

Bringing sweeping changes to the shape of the residential market in the UK, property professionals have naturally wondered how these seismic reforms will affect them and their lettings agency practice.

Here at Inventory Base, we’re here to answer your questions so letting agency professionals can best advise and manage your clients. After all, equipping them so they’re aware of the facts can only lead to a better service.

Summary of the Renters Reform Bill

The Government has presented the Renters Reform Bill as the solution to better tenant-landlord relations. It continues the Conservative Government’s aim to bring about better housing in the private rented sector (PRS), as reflected in their Levelling Up White Paper (2022).

Michael Gove the Secretary of State for Levelling Up, Housing and Communities claimed within the whitepaper’s foreword that “more than 2.8 million of our fellow citizens are paying to live in homes that are not fit for the 21st century. Tackling this is critical to our mission to level up the country”.

The bill aims to remove the criminal minority of landlords which would be a positive move in enhancing the reputation of private landlords. The majority of whom provide safe and comfortable properties to their tenants. However, this improved status doesn’t come without several significant rent reform changes that’ll affect landlords.

In summary, the Renters Reform Bill would introduce several key changes across the sector:

  • The end of ‘no-fault’ Section 21 evictions
  • Landlords “cannot unreasonably refuse” pets
  • Landlords could no longer request benefits-holders
  • Landlords could no longer refuse tenants with children
  • Each privately rented residential property must conform to the Decent Homes Standard
  • Landlords would have to become members of a private rental Ombudsman.

Letting agents and landlords based within the private rented sector can discover more details about the proposed changes by reading our recent article Renters’ Reform Bill (RRB): Key Updates for May 2023.

How will it affect Lettings Agents?

Letting agents can expect to face mixed fortunes in the wake of these proposed amendments to the private rented sector. Even today, before details have been confirmed in many areas of its policy, letting agents need to stay informed on the latest developments concerning the Renters Reform Bill. They need to soften the blow of this legislation by mitigating distress and uncertainty amongst landlords.

Professional landlords of varying portfolio sizes are already looking to them for answers regarding the new introduction of a Property Ombudsman and property portal, to name just two recent changes. Letting agencies need to respond with clarity and increase their knowledge of the Renters Reform Bill. There is some cause to celebrate, however. Those letting agents who become known for providing the highest levels of service and expertise could improve their profile with more enquires made for their services.

However, optimism remains scarce given the current property climate. Many letting agents including Graham Wood, MD of Home Sales & Lettings, have already voiced their concerns towards the “constant attack on landlords” over the last five years. Wood comments how their long-held fears towards scrapping Section 21, besides the abolishment of tax advantages for landlords opting for a buy-to-let mortgage (since April 2017), has “sufficiently frightened numerous landlords into selling their rental properties”. Previously, interest and other costs of borrowing could be deducted against the income of long-term let residential properties.

Both of these shifts are fundamental changes that lettings agency firms need to be aware of if they’re to continue to support landlords operating in the private rented sector. Carefully considered research into the effects of this new rental landscape will be required. Although this may still fail to halt the mass exodus of private UK landlords from an increasingly unattractive landscape. Wood reveals that “approximately 10 per cent of our managed properties have been sold in the last 18 months. We anticipate this will increase to 15 per cent by the end of 2023”.

Landlords Quitting the Market will Mean Less Work for Agents

If the upward trend of landlords selling perfectly good rental properties continues, it follows that letting agents across the country will retain fewer landlords on their books. Having less work and fewer potential landlord clients to support will in turn diminish their revenue. Indeed, the increased over-regulation and current tax system could have a negative ripple effect for all parties including tenants who’ll be left with a lower supply of private rented properties.

What Agents need to communicate to their Landlords

Currently, lettings agents can offer advice to landlords such as 8 Top Tips for New Landlords to Succeed. However, the extent of this advisory role looks set to increase with the Renters Reform Bill, notably before it becomes law.

Ben Beadle, the CEO of the National Residential Landlords Association (NRLA), confirms that all agents have “a huge part to play in terms of keeping up with the ever-changing nature” of the sector. For example, if the Renters Reform Bill is passed, private residential landlords will have to demonstrate that their properties comply with the Decent Homes Standard or face fines for non-compliance. Proactive letting agents should see this as a golden opportunity to expand their services and offer enhanced guidance to landlords.

Beadle’s views here can give reassurance to letting agents, stating how this renters reform could be “an opportunity for them” with landlords feeling overwhelmed and seeking professional advice from a well-informed lettings agent. Beadle argues that in today’s market you “could do with the need of a letting agent to guide and support you on the best type of property” in areas such as location, tenant demographic and tax. In theory, the reforms could prove lucrative for lettings service providers provided that the numbers of landlords in the private rented sector is workable.

However, being able to explain the details of the landmark changes above could be easier in theory than practice. The bill has been criticised by the NRLA for the absence of detail concerning these major changes to letting out property. One example of this concerns the fine print of the safeguards that’ll allow residential landlords to reclaim their house or apartment from tenants. The association has reservations that “Whilst we welcome the Government’s pledge to ensure landlords can effectively recover properties from anti-social tenants and those failing to pay rent, more detail is needed if the Bill is going to work as intended”.

Is the Renters Reform Bill a cause for concern?

The general consensus of the property industry finds little to be optimistic about in terms of this new legislation for landlords or tenants. Indeed, few parties could benefit from the Renters Reform Bill, with the exception of letting agents who’ll step up to assist their weary landlord clients. Provide them with answers and there’s real opportunity for growth.

Inventory Base is here to support letting agents with smart property management solutions. Visit the letting agents section of our dedicated professionals page to learn more about the features and templates we can provide as you navigate these uncertain housing waters.