Buy-to-let reforms: what they mean for landlords

Even if you haven’t been following the haphazard progress of the Renters Reform Bill through parliament and it’s eventual failure to make the statute books owing to the snap election announcement, you will probably still have read about the government’s buy-to-let reforms.

As is so often the case, the proposed buy-to-let reforms are positive or negative depending on the point of view you take. Certainly, the changes are likely to be more welcome to renters than they are to landlords. However, to help you make your own decision, we have outlined the key changes in this article.

White paper

The government’s proposed buy-to-let reforms are published in a white paper called A fairer private rented sector. This sets out a 12-point plan of action to drive improvements in the private rented sector. We’ve summarised this below:

1. Halving the number of non-decent rented homes by 2030 and requiring private rented homes to meet the Decent Homes Standard. We have blogged about this in more detail here.
2. Speeding up improvements in housing quality in the areas that most need them. This will involve working with councils to enforce standards and working with landlords to help them adopt the Decent Homes Standard faster.
3. Abolishing Section 21 ‘no fault’ evictions. Landlords will only be able to end a tenancy if they have valid grounds for possession.
4. Reforming grounds for possession. It will be simpler to evict people for antisocial behaviour. Persistent arrears and the sale of a property will become grounds for possession.
5. Allowing rental increases only once each year. Rent review clauses will also be abolished and tenants will be better able to challenge excessive rent increases via the First Tier Tribunal.
6. Landlords will have to join a new, single Ombudsman scheme. This should resolve disputes quicker and more cheaply than the court system. Changes may also be made to rent repayment orders, enabling tenants to reclaim rent for non-decent homes.
7. Targeting areas where there are unacceptable delays in court proceedings.
8. Introducing a new property portal. This will provide landlords and tenants with information about responsibilities, compliance and other matters. It may also contain information about offences currently kept on the Database of Rogue Landlords.
9. Giving councils more powers to crack down on criminal landlords.
10. Making it illegal to have blanket bans on renting to families with children or people on benefits. Other groups, such as prison leavers, may also be covered.
11. Allowing tenants to keep pets and ensuring that landlords cannot unreasonably refuse such requests. Landlords will be able to request that tenants have pet insurance.
12. Finding market-led solutions to passport deposits. This will make it easier to transfer an existing deposit to a new landlord or agent, helping people who would struggle to raise a second deposit when moving.

What do the buy-to-let reforms mean for you?

If you are a landlord, the buy-to-let reforms are likely to have a big impact. It will be expensive for many to bring their properties up to the Decent Homes Standard. Worryingly, it will become more difficult to end tenancies. While it will be possible to end a tenancy for antisocial behaviour, landlords will need to prove wrongdoing.

That said, it’s hard to see some of the changes having much impact. For example, while it will no longer be possible to refuse letting a property to people on benefits, it’s likely that many of them wouldn’t pass necessary credit checks.

In short, the buy-to-let reforms are going to result in higher costs and more red tape for landlords. At a time of rising interest rates, many are going to be looking for ways to improve their margins. If you are in this position, why not get in touch with THP – the accountants for landlords?