A couple of months ago, we wrote a blog called “Buy to Flex: The Solution to the Changing London Rental Landscape in 2023”. In the blog, we discussed the big changes coming in 2023 and how they’d drive the demand for a brand-new buy-to-flex model. With the Renters’ Reform Bill now in play, the changes have begun and the need for this model is clearer than ever.
Let’s explore what this new reform means for portfolio owners and why flexible models are going to be so important in 2023 and beyond.
What’s in the Renters’ Reform Bill?
Designed to give a “better deal to renters”, this bill was first proposed as part of the Conservative Manifesto ahead of the 2019 General Election. This far-reaching piece of legislation covered a plethora of challenges that both sides of renting faced, and was designed to redress the balance between the two.
Now, the bill is going through parliament, and its key highlights are detailed below:
Section 21 Evictions Abolished
Previously, landlords in England and Wales could carry out Section 21 evictions to regain possession of their property from assured shorthold tenants without stating a specific reason for the eviction.
Now, stricter rules are in place for tenant evictions. Landlords can only evict tenants under "reasonable circumstances," such as needing the property for personal use, accommodating a family member who has no alternative housing, or in cases of consistent non-payment of rent.
Enhanced Possession Grounds
This legislation also simplifies the process for landlords to reclaim their properties in instances of anti-social behaviour or repeated rent non-payment. Landlords can now regain possession more efficiently, avoiding prolonged legal proceedings.
Notice Period for Rent Increases Doubled
Presently, landlords must provide one month's notice for a rent increase. However, once this bill takes effect, the notice period will be extended to two months. Additionally, rent increases will only be permitted once a year, and the government intends to scrutinise "excessive increases" to offer further protection to renters in England and Wales.
Ban on Pet Restrictions
In addition to increased tenant rights, the Renters' Reform Bill prohibits landlords from unreasonably denying tenants the right to have pets in their homes. This is particularly advantageous for pet owners, as approximately one in ten London households owns a dog, as per PetMagnet.
The legislation also emphasises the importance of making decisions within a reasonable timeframe to prevent both parties from being stuck in limbo.
Other Reforms
Further changes introduced by this bill include standardising periodic tenancies, establishing a new ombudsman for landlords, and creating a dedicated property portal for tenants and landlords.
Under the Renters' Reform Bill, traditional assured shorthold tenancies (AST) with fixed six- or twelve-month terms will be replaced by rolling tenancies with no specific end date. This alteration will also affect the notice period required by tenants, extending it to two months. This change aims to "allow landlords to recover costs associated with finding a new tenant and minimise vacancy periods."
The new property ombudsman will possess authority to "rectify tenant grievances" and can compel landlords to issue apologies, provide information, take corrective actions, and offer compensation up to £25,000. Landlords will be obligated to join the ombudsman scheme, and renting out properties without membership will not be permitted.
Lastly, the bill introduces a digital property portal for landlords and tenants. This online platform will serve as a central hub to assist landlords in understanding and complying with their legal obligations. The exact nature of this portal is still under consideration, with the government exploring various options. The government aims to reduce the number of substandard rental properties by 50% by 2030 through the implementation of this portal.
What Does It Mean for Property Owners and Managers?
These changes are huge for portfolio owners, with the playing field considerably changed. The guests they’re likely to welcome, the length of stays available, and the tenancies offered will all be subject to change, leading to a tumultuous period. The new property portal and ombudsman also change how property owners are registered, and this is another challenge to face. Further changes in the future have also been mooted, including a white paper titled “A fairer private rented sector” that discusses bringing private standards in line with social housing.
The good news for portfolio owners is that Opago works proactively. Our suite of services means that despite changes in legislation and everything that comes with them, your portfolio can still be successful and profitable. We still firmly believe in the flexible model, and this approach is ideal as tenancies change to be rolling contracts.
To combat the idea of rolling contracts and it being harder to enact rent increases, Opago’s suggestion is to commit to flexibility. Our flexible letting model is designed to work for tenants and for landlords. Clients are identified, agreed with, and served by professional teams, and this means you can take a hands-off approach while your business scales and your yield increases.
With vast experience in the industry, cutting-edge technology, and a first-class workforce, Opago is perfectly positioned to provide property management solutions that allow companies to grow effectively. Our goal is to help you scale at twice the speed with half the risk - we take care of everything and allow you to focus on what matters most.
Opago’s industry-leading formula allows portfolios to be quickly transformed into flexi rentals. With typical returns increasing by between 30% and 40% when using this model, you can effectively double your yield with peace of mind.
So, What’s Next?
If you’re ready to learn more about flexible letting and everything that goes with it, get in touch with the Opago team. You can also view our Savings Calculator to get an idea on the numbers behind flexible living here.
This blog has been written as general guidance only, and is based on the assumption that all relevant laws, regulations, and planning conditions have been met.
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