In yesterday’s speech, King Charles III revealed the Government’s plans and priorities for the upcoming parliamentary season. What was announced for landlords, and how will these plans impact the private rental sector (PRS)?
The past year has seen significant legislative changes in the PRS. With the publication of the Renters’ Reform Bill in May and the scrapping of planned changes to EPC regulation, landlords need to be up to date on legislation like never before.
With a general election on the cards for some time next year, the Government will look to pass the announced Bills as part of its wider legislative agenda before the election takes place. So, what was announced for landlords, and how will this impact the buy to let market?
Renters’ Reform Bill
In the run-up to the King’s Speech, it was understood that the Renters’ Reform Bill would be one of many to receive a ‘carry-over motion’. With the Bill only at its second reading stage and with plans to abolish Section 21 on hold, it’s unclear when this Bill will be passed.
Unfortunately, the Bill was skimmed over and mentioned very briefly: “Renters will benefit from stronger security tenure and better value, while landlords will benefit from reforms to provide certainty that they can regain their properties when needed”.
This, of course, alludes to the plans to abolish Section 21 ‘no fault’ evictions, which were just recently put on hold until improvements were made to the courts. What landlords need now is further details on when these reforms will take place, so we know when to expect to see Section 21 abolished.
Further issues in the Renters’ Reform Bill, such as periodic tenancies and changes to landlord’s ability to deny pets, will also need to be fleshed out more thoroughly to give landlords time to prepare. For a full analysis of what’s included in the Renters’ Reform Bill, click here.
Important Changes to Leasehold System
One new announcement was a Leasehold Bill, which comes as part of Michael Gove’s plans to eventually abolish leaseholds. The Bill means all new houses in England and Wales will have to be sold as freehold properties as the Government attempts to phase out the “feudal” leasehold system. Flats will still be able to be sold on a leasehold agreement.
The aim is to make it easier and cheaper for leaseholders to purchase their property’s freehold. The Bill will also overhaul the process of extending leases.
The Government has already put legislation in place to cap ground rents on new properties, as well as capping all existing ground rents to a “peppercorn” rate. By limiting ground rent charges, leaseholders will see significant reductions in the cost of purchasing the freehold of their property.
This Bill is expected to be one of the first pieces of legislation introduced before Christmas.
What do these announcements mean for the sector?
Despite the announcement of the Leasehold Bill, which could be highly positive for the sector, clear details about what landlords can expect were few and far between. On the one hand, it’s disappointing that there was no further clarity around key issues such as the court reforms for Section 21.
However, fewer changes in the pipeline do mean landlords and property investors can now look forward to a period of less turbulence. Whilst this doesn’t mean an end to surprise U-turns, there seems to be a pause on tough legislation for property investors for the time being. As such, landlords can instead focus on enjoying and benefitting from the low house prices and high rental yields on offer. When we hear more about the Renters’ Reform Bill or the Leasehold Bill, we will let you know.
8th November 2023