Government plans to shake-up the private rental sector will mean significant changes for landlords and tenants when the measures become law.

The Renters (Reform) Bill aims to deliver on the Government’s commitment to “bring in a better deal for renters”.

The draft legislation includes abolishing ‘no-fault’ evictions and reforming landlord possession grounds. It also seeks to create a landlord database to enable landlords to understand their obligations and help tenants make better decisions when signing a new tenancy agreement.

What is the Renters (Reform) Bill?

On 17 May 2023, Housing Secretary Michael Gove introduced his long-awaited Renters (Reform) Bill to Parliament. The proposals are part of the Government’s plans to “level up” across the country.

The Renters (Reform) Bill will:

  • Abolish section 21 ‘no fault’ evictions and move to a simpler tenancy structure where all assured tenancies are periodic – providing more security for tenants and empowering them to challenge poor practice and unfair rent increases without fear of eviction.
  • Make it easier for landlords to recover properties when they need to – so they can sell their property if they want to, move in a close family member, or when tenants wilfully don’t pay rent.
  • Broaden the disruptive and harmful activities that can lead to eviction and make it quicker to evict a tenant acting anti-socially.
  • Provide stronger protections against backdoor eviction by ensuring tenants can appeal excessively above-market rents that are purely designed to force them out. As now, landlords will still be able to increase rents to market price for their properties and an independent tribunal will make a judgement on this, if needed. The tribunal will continue to be able to determine the actual market rent of a property.
  • Introduce a new Private Rented Sector Ombudsman to provide fair, impartial, and binding resolution to many issues, and prove quicker, cheaper and less adversarial than the court system.
  • Create a Privately Rented Property Portal to help landlords understand their legal obligations and demonstrate compliance (giving good landlords confidence in their position), alongside providing better information to tenants to make informed decisions when entering into a tenancy agreement. It will also support local councils – helping them target enforcement activity where it is needed most.
  • Give tenants the right to request a pet in the property, which the landlord must consider and cannot unreasonably refuse. To support this, landlords will be able to require pet insurance to cover any damage to their property.

What else do you need to know?

Alongside the bill, work is underway to digitise and modernise the court system for evictions that end up in court.

Meanwhile, the Government insisted it was “fully committed” to further reforms to support both landlords and tenants. It pledged to bring forward legislation at the “earliest opportunity” to:

  • Apply the Decent Homes Standard to the private rented sector to give renters safer, better value homes and remove the blight of poor-quality homes in local communities.
  • Make it illegal for landlords and agents to have blanket bans on renting to tenants in receipt of benefits or with children – ensuring no family is unjustly discriminated against when looking for a place to live.
  • Strengthen local councils’ enforcement powers and introduce a new requirement for councils to report on enforcement activity – to help target criminal landlords.

Our thoughts on the plans

The Renters (Reform) Bill is in its early stages and is yet to become law, so it’s likely there will be amendments as it travels through Parliament.

If you’re a private landlord, it’s important for you to be aware of the proposals and to make sure you’re prepared. One thing you should do – regardless of the bill – is to check your tax affairs are fully up to date and in order.

One aspect of the bill that stands out is the proposed creation of a landlord database. But this measure doesn’t come as a surprise, as we’re living in an increasingly digital and transparent world.

A few years ago, it would have seemed impossible to create a register of all trusts, let alone also a register of overseas entities owning UK property. But both these registers do now exist, despite them being huge endeavours that are still, to a certain extent, ‘works in progress’.

So, it would seem sensible for the authorities to work towards a database for residential landlords at the same time HMRC is preparing for Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA).

And it makes sense HMRC would require some type of database to check whether all relevant landlords are abiding by the new rules. But it will be a massive task.

However, knowledge is power, and the more HMRC knows about taxpayers’ activities, the easier it will be to monitor them.

Property tax advice for landlords

Our team of professional tax consultants will help ensure your property business is tax efficient and compliant with the law. Call us today on 07813 434195 or email: stephanie.churchill@churchilltaxation.co.uk

Steph Churchill

Stephanie Churchill

Managing director & co-owner of Churchill Taxation