Running a buy to let business these days can be a challenge. Any landlord determined to negotiate the shifting sands of the private rental market will also need to keep a close eye on legislative reforms that are afoot.
With that in mind, let’s cast an eye across the horizon of some of the changes landlords can expect in the year ahead.
Renters Reform Bill: will the reforms become clear?
The single biggest development to shape the private rental market for many years to come is the much-vaunted and long-awaited Renters Reform Bill.
The reforms are aimed at making the private rented sector “fairer” for both landlords and tenants. As the Law Society has noted the basic thrust of the reforms was first aired by the government in April 2019. Eventually, a White Paper on the subject – entitled A Fairer Private Rented Sector – was published on the 16th of June 2022.
2023 may yet be the year when some or all of the proposed reforms are finally enacted.
Included in the raft of sweeping changes are the following highly significant moves:
- repeal of Section 21 of the Housing Act 1988 and its so-called “no-fault” evictions – which will, of course, make it more difficult for many landlords to gain repossession of their let property;
- removal of landlords’ ability to grant Assured Shorthold Tenancies (ASTs) – by far the most common type of tenancy – and replace them with Periodic Tenancies that grant tenants the right to abandon any tenancy (without paying further rent) after just giving just two months’ notice; and
- landlords will be restricted to just two rent increases each year – and tenants will be able to appeal against the increases and any other issues with an independent private rented sector ombudsman.
The housing charity Shelter – which broadly supports the reforms – adds that it will also become illegal to reject applications for tenancies from those on welfare benefits, a formal register of landlords will be created, and local authorities will be given greater powers to enforce the rights of tenants.
Clearly, enactment of the current Renters Reform Bill would alter the entire landscape for landlords throughout the UK.
Focus on energy efficiency for commercial properties
Building management specialists the BGES Group on the 22nd of November 2022 reminded landlords that important energy efficiency measures will be extended to commercial properties during the course of 2023.
The current Minimum Energy Efficiency Standards (MEES) that apply to non-residential buildings mean that landlords cannot grant new leases to commercial tenants if the Energy Proficiency Certificate (EPC) is rated less than E – that is, if it is F or G.
With effect from the 1 of April this year, those standards will apply to every tenancy agreement and lease – including existing ones. Not only that but even more stringent standards are expected to be introduced by 2027 when the minimum rating will become C, and again by 2030 when all leased commercial buildings must achieve at least a B rating.
Scotland: New rules for landlords in 2023
Thanks to its independence across many aspects of government, legislation affecting landlords in Scotland differs from the rules binding those in the rest of the UK. As far as Scotland is concerned, therefore, there are two key dates of which landlords must be aware:
Rent freeze and ban on evictions
- in response to rocketing inflation, on the 28th of October 2022, the Cost of Living (Tenant Protection) (Scotland) Bill 2022 came into effect;
- this introduced a ban on tenants’ evictions and a freeze on rents until at least the 31st of March this year;
- the termination date is subject to review every three months – so the provisions may yet be extended (by up to two further intervals of six months each) until 2024;
Licensing of all short-term lets
- in October of 2022, the Scottish government introduced legislation requiring all new “hosts” or landlords of short-term lets to apply for a licence allowing them to accept paying guests or tenants;
- with effect from the 1st of April this year, those rules will now apply to all hosts or landlords – including existing ones;
- once an existing landlord has applied for the relevant licence, they can continue to let the accommodation while the application remains under consideration – but new hosts or landlords must wait until their licence is in place before they can legally let the accommodation.
Summary
Wherever in the UK you are a landlord with a buy to let business, therefore, there are significant changes on the horizon, and you will do well to prepare for the impact and implications of these well in advance.
Disclaimer: Please note that this information is based on our current understanding of planned legislation. Until legislation is actually passed, further changes can be made. We recommend you always seek professional advice if you have any queries relating to your obligations as a landlord as well as legislation.
