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The Renters (Reform) Bill is on its way: what needs to be done to protect landlords?

by | May 22, 2024

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Leaders Romans Group (LRG) Advocates for Fairness in Rental Legislation Following Landlord and Tenant Surveys

As the Renters (Reform) Bill progresses, Leaders Romans Group (LRG) is leading discussions to ensure that the Bill incorporates fair measures for landlords and tenants. Through surveys and engagements with both groups, LRG has collated insights, advocating for amendments to the Bill that ensure a balanced and fair approach to rental legislation, safeguarding both landlords and tenants.

LRG, which includes the brands AcornGibbs GillespieHose Rhodes DicksonJohn PayneLangford RussellLeadersNorthfieldsPorticoRomans and Scott Fraser carried out the research among 630 landlords in England during March 2024. 

 
 

Impact of tenant arrears on credit rating

Rather than being significantly worried about the imminent legislation, landlords’ concerns are mostly financial, relating to high mortgage rates, the cost of bureaucracy and regulations, increased taxes, the cost of overheads such as service charges and maintenance costs, and VAT on contractors’ fees. In response, landlords are calling for measures to enforce tenant financial responsibility. Notably, 70% of landlords support the initiative to link tenant arrears to credit ratings, emphasising its potential to deter late payments. “Rent arrears should affect a tenant’s credit rating,” one landlord noted, while another stated, “Credit checks to protect landlords, bad tenants need to be identified” – highlighting the need for mechanisms that ensure tenants are accountable for their financial obligations. One tenant commented on the suggestion of tenant arrears linked to credit ratings: “Rental being on credit score will help those who pay on time.”

In addition to rental payment arrears being linked to tenants’ credit ratings, 45% of landlords agree that a tenant register should be introduced, whereby those who have previously been in arrears or have caused damage to a property are identified. This is captured in comments from several landlords: “Having had one bad tenant, I think it would be good to have a register so future landlords could be aware of previous issues so they can make an informed decision on whether to take the tenant on”; “I am currently applying through court for repossession due to a tenant failing to pay rent for the last four months. The current system is too slow and not fit for purpose. A tenant register would hopefully ‘black list’ those who default on rent or cause nuisance so they are unable to re-rent with a different landlord.”

 

Tenants were also surveyed on their opinions on the Bill. 45% felt that a tenant register would help them, with only 2% saying it would be bad for tenants. One tenant commented, “Rental being on credit score will help those who pay on time”.

Separate housing court

Furthermore, the survey underscores a broad consensus for enhancing the efficiency of legal processes in the rental market. A significant 61% of landlords advocate fast-tracking landlord cases in court via a separate housing court, reflecting a widespread demand for quicker dispute resolution. “Having a separate court would speed up the process involved,” suggests a landlord, pointing to the urgent need for a dedicated legal framework to address property disputes more effectively. Tenants’ responses to the suggestions were also positive with 47% agreeing with the idea of fast-tracking cases in court and 44% that a separate court for rental disputes was positive. One tenant stated, “The court for rental disputes will be a positive on both sides as both parties will get a faster resolution”.

 
 

Section 21 

The debate over Section 21 reveals a divided sentiment, with 42% of landlords emphasising its importance for maintaining management flexibility. This provision is essential for the market’s self-regulation. “Good tenants have nothing to fear by retaining it. The system has been self-regulating for years,” remarked a landlord, underlining the significance of Section 21 in ensuring effective management.

Landlords were keen to stress that the minority of ‘rogue landlords’ had resulted in a ‘bad press’ and that ‘good’ landlords had nothing to fear from the proposed changes.  One landlord commented, “Good landlords are rarely mentioned in the press, so better oversight and regulation may increase an understanding of the reality of being a landlord, especially the better ones. Equally poor tenants need to be recognised as the real issue; they are in much the same way we are aware of poor landlords.” Another said, “I believe the Bill is generally designed to target ‘bad’ landlords, and therefore, I do not believe it will have a great impact on myself.” Another, “I think that it encourages tenants and landlords to be responsible, and it is a good thing.”

 
 

Alison Thompson, National Lettings Managing Director at LRG, reflects on the collective feedback: “The journey of the Renters (Reform) Bill is a critical moment for the UK’s property sector. With 70% of landlords calling for tenant arrears to impact credit ratings and 61% pushing for streamlined legal proceedings, there’s a clear mandate for reform that addresses landlords’ concerns while fostering a fair housing market. As discussions around the Renters (Reform) Bill continue, LRG remains steadfast in its commitment to championing legislative changes that recognise the challenges landlords face, advocating for a rental market that is equitable, sustainable, and responsive to the needs of all stakeholders involved.”

Surveyed on their understanding of the Bill, 46% of tenant surveyed had never even heard of the Bill, with 36% saying they knew a little about it and only 4% saying they knew a lot about it. 

The Renters (Reform) Bill is approaching its Third Reading in the House of Commons and will then move to the House of Lords. LRG will continue to use landlord and tenant insight to influence the emerging legislation.

 

Anyone wishing to read the full report of landlord and tenant sentiment can download it here.

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