The rental market is constantly shifting, and there are several property bills currently being discussed in Parliament that landlords (and tenants) need to be aware of.
One of these, the Leasehold and Freehold Reform Bill, was introduced into the House of Commons in November 2023, with the aim of giving homeowners (and landlords) more rights and better protection over their homes. Meanwhile, the Renters Reform Bill is another new piece of legislation that’s being discussed in Parliament, which is all about giving tenants more security.
With these changes in mind, digital mortgage lender Molo has conducted a survey, to find out how landlords and tenants feel about both pieces of legislation, and what impact they think the bills will have. Experts at Molo have also suggested it’s important that both landlords and tenants are clued up on the new changes.
Less than half (45%) of tenants know about the Renters Reform Bill and what it means for them
The Renters Reform Bill was introduced into Parliament in December 2023, and it’s aimed at giving renters more security, with new rules around pet policies, short-term leases, and evictions.
One of the main proposals of the bill is to abolish section 21 notices, which effectively allow a landlord to evict tenants without giving an explicit reason. According to the survey, more than half (56%) of tenants believe that getting rid of ‘no fault’ evictions is a positive thing. A further 62% are hopeful that the proposed Private Rental Sector Ombudsman will be easier to use than the current court system when it comes to unfair removal and rental issues.
The legislation is also providing more comprehensive possession grounds so buy-to-let landlords can still recover their property if they face issues like recurring late payments, or badly behaved tenants. 48% of renters are concerned that this might give landlords more power to unnecessarily evict tenants. However, renters also feel that the new rules should prevent excessive above-market rents that are designed solely to force them out.
Despite the impact it will have on renters, less than half (45%) of the tenants surveyed in Molo’s study know about the Renters Reform Bill and what it means for them. It’s important that renters are clued up on their rights and the majority of landlords agree, with 69% think that their tenants should be aware of the potential legislation.
Having said this, more than one in 10 landlords (12%) don’t know about the potential impacts of the bill, even though they will need to be ready should it come into law.
In terms of when the bill might come into effect, if it doesn’t become law before the next general election, which is to be at some point this year, then it could get thrown out. According to the study, landlords are relatively hopeful that the bill will go through, with more than half (56%) thinking it will come into effect.
Landlords and tenants are unsure about how the Leasehold and Freehold Reform Bill should tackle ground rent
The Leasehold and Freehold Reform Bill would make it easier and cheaper for leaseholders to buy their freehold, and would also increase lease extension terms to 990 years (up from 90 years in flats and 50 years in houses) so leaseholders can enjoy secure ownership of their property.
One of the big topics of conversation in regards to the legislation is about ground rents becoming regulated. This is currently being discussed in Parliament, with the consultation period running until 17th January 2024. While the changes are mostly geared towards homeowners, 38% of all privately rented properties are leaseholds, so tenants renting this type of property also need to be aware of what this might mean for them, particularly in terms of potential lower costs if landlords pass ground rent fees on.
To find out more, Molo’s survey has delved deeper into how landlords and tenants feel about the five potential outcomes of the ground rent consultation that are currently being discussed in government. It reveals that both landlords and tenants are unsure on the best way to regulate ground rent, meaning that more guidance and education is needed on the topic.
| Outcome | % of landlords that agree | % of tenants that agree |
| Capping ground rents at a maximum figure (suggested £250) | 25% | 15% |
| Capping ground rents at a percentage of the property value (suggested 0.1%) | 24% | 17% |
| Capping ground rents at ‘peppercorn’. This would effectively mean all leaseholds have £0 ground rents | 21% | 21% |
| Capping ground rents at the figure it was when the property was first built | 14% | 17% |
| Freezing ground rents at their current figure | 13% | 20% |
The preferred outcome for a quarter of landlords would be if ground rents were capped at a maximum figure. The current figure being suggested by the government is £250 per year. However, this is the result that tenants and landlords disagree on the most, with only 15% of tenants agreeing with this outcome.
Perhaps unsurprisingly, the number one result for tenants would be a ‘peppercorn’ rate, which means the leaseholder pays no ground rent fee – so in theory, if they are currently covering ground rent, their rent may get reduced. 21% of renters say this would be their preferred result, with the same number of landlords agreeing – showing this is perhaps the option that will keep both tenants and landlords happy.
VP of Strategy at Molo, Mark Michaelides, says, “It’s important that landlords and tenants are fully aware of any upcoming changes to the property and rental market, and the impact that these will have on them. Government websites are a good place to start, and organisations such as Citizens Advice can provide support and guidance for renters.
“For landlords in particular, the Renters Reform Bill might require them to update their policies or rethink their tenancy terms, so it’s definitely not too early to start preparing for the new regulations.
“Tenants should also research into what the Renters Reform Bill means for them, and -ensure they are clued up on their rights. In particular, the bill will focus on abolishing ‘no fault’ evictions, preventing excessively above-market rental rates, and will also give tenants the right to request pets in a property.
“In terms of the Leasehold Reform Bill, depending on the outcome, this could mean amended costs for both landlords and tenants. Again, both parties should keep up to date with how the legislation is progressing through Parliament, and the changes that might happen in the new year, and beyond.”
