The Renters Reform Bill has been long-anticipated, promising far-reaching reforms of housing law in England. Currently in the early stages of the Parliamentary process (and therefore still subject to change), what key issues should Boards of registered providers be considering in relation to the Bill?
- Abolition of fixed term tenancies – a number of providers implemented fixed term tenancies following the implementation of the Localism Act 2011, albeit that many have now reverted to offering periodic lifetime tenancies in general needs housing. The provisions of the Bill remove the ability to grant fixed term tenancies at all and will apply to registered providers and the private rented sector alike. This shift will require changes to allocations and lettings policies and procedures and means the loss of starter tenancies.
- Eviction procedures – the ban on section 21 “no fault” evictions will also equally apply to registered providers and the private rented sector. However, it is proposed that new eviction grounds will be introduced, including in relation to selling a property, repeated rent arrears and a specific ground in respect of supported housing. The court system is due to have an injection of cash which should make the court process quicker but the reality of this is uncertain which could mean that the need to use grounds for possession will inevitably lead to longer court proceedings. This change will also require enforcement procedures and policies to be amended, and Boards will need to consider the impact on their business plans in an increasingly difficult operating environment. Added to this is that RPs will no longer be able to terminate shared ownership leases by notice of seeking possession and will have to rely on forfeiture proceedings which is another shift change for the sector.
- Potential impact on valuations – our early conversations with valuers in the sector indicate there could be an impact on valuations, especially in relation to properties valued at MV-STT (market value subject to tenancy), from the wider effects on the market, as comparisons are taken against the investor market which may experience some exits.
- Implications for subsidiaries – those providers with unregistered subsidiaries delivering market rent activities will fall within the remit of the proposals under the Bill for private landlords, including the ban on s21 no-fault evictions, the new private rented sector redress scheme and the replacement of assured shorthold tenancies with assured periodic tenancies. This could have significant implications for the operating models for these subsidiaries, and potentially on lease and/or funding models underpinning these business arrangements.
- Potential opportunities – increased regulation (and associated costs) for private landlords, coupled with increasing difficulties for them to regain possession or properties, may see opportunities arise for registered providers to acquire properties, either to be utilised for social housing and/or market rent. However, this will depend on the quality of the properties becoming available and the extent to which providers’ already stretched business plans may allow them to capitalise on such opportunities.
Join us for a thought provoking webinar at 11am-12pm on 13 July 2023 where we will discuss the things that Executives and Boards need to consider with the impending implementation of the Renters Reform Bill – register now.