UK Property Just Changed FOREVER
Summary
TLDRThe Labour government's proposed changes to the UK rental market include the abolition of no-fault evictions, making all tenancies indefinite with valid reasons required to end them. Landlords face a minimum one-year tenancy before reclaiming property and must provide four months' notice for rent arrears cases now requiring three months for eviction. Rent increases are to be capped at market rates, with tribunals resolving disputes. Landlords will also be prohibited from discriminating against tenants on benefits or with children. A new landlord database will be established, with fees and public access details pending. These reforms aim to balance tenant security with landlord rights but may initially increase rental difficulties and costs.
Takeaways
- 🏠 The Labour government's new property market plans aim to create more stability for tenants but may increase challenges for landlords.
- 🚫 The concept of 'no fault' evictions will be eliminated, meaning all tenancies will be indefinite and can only be ended with a valid reason.
- 🕒 Landlords will have to wait at least a year from the start of a tenancy to reclaim their property for personal use or sale, with a four-month notice period required.
- 💰 If tenants are not paying rent, landlords will need to go to court to prove non-payment, with 'serious rent arrears' now defined as three months instead of two.
- 📈 Rent increases will be regulated, with landlords required to justify any increase to a tribunal, aiming to prevent excessive rent hikes.
- 🚫 Bidding wars on rent prices will be prohibited, landlords must advertise an asking rent and cannot accept bids higher than this.
- 👨👩👧👦 Landlords will no longer be allowed to discriminate against tenants based on benefits or having children, with such clauses in mortgage and insurance contracts becoming unenforceable.
- 📊 A new landlord database will be created, requiring all landlords and properties to be listed, with fees associated and potential public access to some information.
- 📆 The proposed changes are expected to be implemented by summer 2025, with existing tenancies converting to the new system simultaneously.
- 📉 While the reforms aim to reduce the need for court involvement in tenancy disputes, concerns remain about the current court system's capacity to handle the increased workload.
Q & A
What is the first major change announced by the Labour government regarding property market?
-The first major change is the elimination of no-fault evictions. From now on, all tenancies will run indefinitely and can only be ended with a valid reason.
How long must a tenancy be running before a landlord can ask for the property back to sell or move in?
-A tenancy must have been running for at least a year before a landlord can ask for the property back to sell or move in.
What is the new notice period required for a landlord to ask a tenant to leave after the first year of tenancy?
-The new notice period is four months, up from the previous two months.
How does the new policy define 'serious rent arrears'?
-The new policy defines 'serious rent arrears' as three months of unpaid rent, up from the previous definition of two months.
What is the second major change proposed by the Labour government in relation to the property market?
-The second major change is regarding rent increases. Landlords will not be able to write rent increases into the contract at the start and can only increase it up to the market rent at the time.
What is the new rule for landlords and agents regarding asking rent for a property?
-Landlords and agents will have to publish an asking rent for the property and will not be able to accept any bids above that asking rent.
What is the new policy regarding discrimination against people on benefits or who have children?
-The new policy states that landlords will not be able to discriminate against people on benefits or who have children. Terms in mortgage and insurance contracts that restrict this will be made unenforceable.
What is the purpose of the new landlord database proposed by the Labour government?
-The new landlord database will list all landlords and properties, and it will be required to have an entry in the database before a property can be marketed.
What is the estimated timeline for these changes to be implemented?
-The process is expected to be completed by summer 2025, but some parts like the landlord database may take longer to set up.
How will the new policy affect accidental landlords who own only one property?
-Accidental landlords may find it more difficult due to the requirement to give four months' notice to move back in or sell, and not being able to do so within the first year of a tenancy.
What does the speaker believe is the biggest issue with the new policy changes?
-The speaker believes the biggest issue is the courts' ability to handle the increased workload, as the current system is already overwhelmed.
Outlines
🏠 Landlord Reactions to Labour's Property Market Plans
This paragraph discusses the apprehension among landlords following the Labour party's election, as they anticipate stricter regulations. The speaker, an experienced landlord and author, was invited to a national radio show to discuss Labour's significant property market reforms. The paragraph outlines five major changes, starting with the abolition of 'no fault' evictions and the shift to indefinite tenancies, which can only be ended with a valid reason. Landlords now face questions about property recovery for personal use or sale, requiring a minimum one-year tenancy before action can be taken, with a four-month notice period. Additionally, non-payment of rent now necessitates court intervention, with 'serious rent arrears' defined as three months, up from two, before eviction proceedings can begin. The speaker suggests that these measures are reasonable, considering the disruption caused to tenants.
📈 Rent Increase Regulations and Discrimination Ban
The second paragraph focuses on restrictions on rent increases, where landlords can only propose an increase once a year and must align with market rates. Tenants can challenge excessive increases through a tribunal. The paragraph also addresses the new rules against discrimination based on benefits or having children, making it illegal for landlords to refuse tenants on these grounds. Despite some landlords' objections, the law aims to ensure fair housing opportunities. The paragraph concludes with the introduction of a new landlord database, requiring all landlords and properties to be registered, with fees and public access to information yet to be determined.
📅 Implementation and Impact of Rental Reforms
The final paragraph speculates on the timeline and implications of the proposed reforms. The process is expected to be completed by summer 2025, with some elements like the landlord database taking longer. The speaker anticipates an initial increase in rents due to the elimination of bidding wars and discusses the varying impacts on different stakeholders. Landlords will need to be more cautious and strategic in tenant selection, while tenants may find more security but face ongoing challenges in finding rentals. The speaker concludes that while the reforms are significant, they do not signal the end of property investing, but rather a need for greater diligence and compliance.
Mindmap
Keywords
💡No fault evictions
💡Fixed term tenancy
💡Serious rent arrears
💡Rent increases
💡Market rent
💡Bidding wars
💡Discrimination
💡Accidental landlords
💡Landlord database
💡Ombudsman
💡Rental reforms
Highlights
Labour government's property market plans announced, causing concern for landlords.
End of no-fault evictions and fixed-term tenancies, leading to indefinite tenancy agreements.
Landlords can reclaim property after one year, with a four-month notice period.
Eviction for non-payment of rent requires proof in court and a three-month arrears threshold.
The author suggests the new eviction process is reasonable but depends on court efficiency.
Rent increases will be capped at market rates, with disputes resolved by tribunals.
Bidding wars on rent are to be eliminated, with landlords required to stick to asking rent.
Landlords will no longer be able to discriminate against tenants on benefits or with children.
A new landlord database will be created, with listings for all landlords and properties.
The proposed changes are not expected to be a major overhaul but will introduce more red tape.
The timeline for these changes is summer 2025, but some aspects like the database will take longer.
Existing tenancies will convert to the new system simultaneously with new ones.
Landlords will need to be more selective with tenants due to longer eviction processes.
Tenants may find more security under the new system, but finding a rental could still be difficult.
The author does not believe rents will increase significantly due to the reforms.
Accidental landlords may be most affected, with less flexibility and more challenges.
The courts' efficiency is a critical issue that needs to be addressed for the reforms to work.
The author concludes that property investing is not dead, but caution and careful tenant selection are essential.
Transcripts
landlords have been scared stiff ever
since labor were elected because a labor
government usually means harsher
conditions for investors but now the
guessing game is over because Labour
just released their big plans for the
property market and they announced some
huge changes that could be the final
straw for some landlords I was invited
on to National radio to talk about this
because I've literally written the book
about being a landlord yet I also choose
to rent so I have an unusual perspective
on this which I'll share with you as we
go through and for me there are five key
changes so I'll explain what each of
them is and what it'll likely mean for
landlords and tenants alike but before
we can do that we need to understand how
on Earth we ended up here so reform of
the rental sector has been on the cards
since 2019 when it was a Manifesto
commitment for the conservative
government at the time took a while but
the conservatives eventually brought
forward a bill that promised widespread
changes to the rental market but there
was so much Furious arguing about it
that in the end they ran out of time
before the general election and the bill
failed now labor is in power they've
come back with their own version which
you'd expect to be more landlord
unfriendly but is it the first big
change of course is to no fault
evictions this is the big headline
Grabber from now on there is no such
thing as a no fault eviction there's
also no such thing as a fixed term tency
from the time this comes into effect all
tenancies will run on indefinitely and
can only be ended with a valid reason so
from a landlord point of view this
raises two big questions the first is
can I still get my property back back to
move into or to sell and the answer to
that is yes but you can't do that within
the first year of ATT tenancy ATT
tendency must have been running for at
least a year before you can ask for the
property back in order to sell or move
in and at the point that you do do that
you need to give four months notice
which is up from two at the moment the
second big question of course is well
what have I've got a tenant who's not
paying their rent well once there's no
no fault option you're going to have to
go to court and prove that they haven't
paid their rent and the only way to be
sure that the judge will tell the tenant
they have to leave is if they are in
what's called serious rent arear the
definition for serious is going to be 3
months of AAR up from what's currently
two and once they have those three
months of AAR you need to give them four
weeks notice to leave up from what's
previously been two now I'm going to be
extremely unpopular with landlords for
saying this but I don't think it's
unreasonable that you're not going to be
able to give notice because you want to
sell the property within the first year
and I don't think it's unreasonable to
give 4 months notice I know this
potentially hits accidental landlords
harder but when choose to invest in
property which is someone's home rather
than investing in something else I think
it's fair enough that there are some
kind of restrictions to balance the fact
that yes it's your property against the
disruption of someone having to leave
when it's not their fault what about if
you've got a tenant who isn't paying
well this one I think would be
reasonable if and this is a giant if the
courts actually worked properly if it
was a simple matter of showing that the
tenant hadn't paid their rent and then
straight away they're told to leave and
that's the end of it no problem you
don't really need the whole no fault
thing the problem is if you've got a
tenant who isn't paying you now need to
wait longer before you can start the
process and then the process itself
could go on forever especially cuz the
courts are going to be so much busier in
the future I have more to say about that
later on but we've got a lot more to get
through before we move on to our second
big change though this is not law yet
lots could change as it gets through the
process so sign up to our free Weekly
Newsletter property pulse to be updated
on everything as it happens a link to
that is in the description below the
second big change is around rent
increases under these plans you won't be
able to write rent increases into the
contract at the start instead a maximum
of once a year you can tell the tenant
that you plan on increasing the rent and
you can only increase it up to whatever
the market rent is at the time if the
tenant disagrees with this and they
think you're increasing it to above the
market rate they can refer it to a
tribunal who will then be able to look
at it and either approve your rent
increase or say no actually you can only
increase it by this much now importantly
this is not the same as rent controls
not at all they're not setting a maximum
that rents can go up by they just want
to make sure that you're not trying to
put through a crazy increase as a way of
forcing someone out I don't think this
is the biggest deal because in reality
no one increases the rent more than once
a year anyway and nobody really tries to
charge more than the market rent the
only potential issue is that tenants can
effectively delay the impact of a rent
increase by referring it to the tribunal
even if they agree with it because the
rent increase only becomes binding once
the tribunal has made their decision now
that should happen relatively quickly
but how are they going to be resourced
to deal with this when everyone starts
doing it all at the same time I don't
know we're going to have to see the next
big change is bidding wars this is a
really interesting one so the change is
that landlords and agents will have to
publish a asking rent for the property
and they then won't be able to accept
any bids above that asking rent now in
my experience even in a hot Market you
don't tend to get that many situations
where people keep bidding the rent up
and up and up I'm sure it does happen
but it's not normal so I don't think C
is going to make that much of a
difference in really hot markets I
suppose what will happen is that the
asking rent will suddenly adjust upwards
and then what you've effectively got is
an offers up to system next up is
another change that's grabbed a lot of
headlines which is about discrimination
landlords won't be able to discriminate
against people on benefits or who have
children now some landlords have got
mortgages or Insurance in place that
says they can't rent to people on
benefits for example but those terms in
mortgage and insurance contracts will be
made unenforceable by the same law some
landlords have taken this is but it's my
property you can't tell me I can't
choose I should be able to decide who I
rent to but that's not really what it is
in reality you can still accept any
offer you want you can decide that the
offer from one applicant is more
attractive than another what you can't
do is say in your marketing no children
or no benefits and then in the letting
process you can't prevent anyone from
viewing the property or making an offer
on it if they want to then the final
change before we get onto the all
important business of when this happens
and what it will all mean is the new
landlord database a new database is
going to be created with a listing for
all landlords and all properties and you
won't be able to Market a property
before it has an entry in that database
will you have to pay to be on that
database of course you will how much of
that information will be public that
still hasn't been decided it's not as
scary as it sounds because for the most
part it sounds like it's only going to
be made available to local authorities
for enforcement purposes but some
information may be made available
publicly for potential tenants to see so
we're just going to have to wait and see
so those are just the five things that
caught my attention there's loads more
in there it's a really big document
we'll link to it below if you want to
check it out in full but we'd be here
all day if we went through the whole
thing what you really want to know is
when's this going to happen and what
does it mean as for when like I said
this is just the start it still needs to
go through the House of Commons and the
House of Lords and as it does it can be
amended so we probably will see some
changes with what's finally published
but I don't think it's going to be major
because this is Labor's Bill and they
have a massive majority a date that's
being kicked around for completing that
process is summer 2025 but there are
some parts of this like the landlord
database that are going to take longer
to set up so what I suspect will happen
is that the big changes to section 21
and tendencies will come in first maybe
in the middle of 2025 with everything
else to follow later what they have said
is that existing Tendencies will convert
at the same time as new ones so there's
not going to be any staging of this all
Tendencies where you've already got one
or whether you create one in the future
they all be operating under this system
from the same day whenever it comes into
effect so what ultimately will all this
mean from a landlord perspective it
means that choosing the right tenant was
already important it's going to become
Ultra important but if you've got
someone who's causing trouble or not
paying it's going to take a lot longer
to get them out especially at first
while all this is being set up from a
tenant perspective it means that while
you've got more security once you're in
finding somewhere to rent it's still
likely to be really hard none of this
creates any more housing and the
landlords of the properties that do
exist are going to be very very cautious
now whenever there's any kind of change
to renting at all landlords always go oh
it just means rents will go up normally
I don't buy that I think on this
occasion we probably will see a one-off
upward adjustment in rents because of
the whole fact that you can't have
bidding wars anymore because it means
that if you're very confident that
you're going to have loads of interest
you might as well go high with what
you're asking for and then invite offers
below it so who are the overall winners
and losers here well of course tenants
are winners pressure groups aren't going
to be happy with everything but it's
hard to say that this isn't better for
tenants than it was before that was kind
of the whole point for somewhat serious
landlords who have a few properties
they're in good areas they can be picky
about who they take on I think it's
pretty neutral there will be more red
tape to contend with with the database
and the Ombudsman which is something
else that's in there but I think they
should probably be relieved because it
could have been so much worse there is
nothing in there about rent controls and
there's no kind of hardship test around
evictions which is also something that
was rumored in advance the big losers I
think are accidental landlords people
who only got one property and it's
probably not one that they intended to
rent out in the first place maybe they
used to live there then they had to move
and they couldn't sell it they'll
complain about having to give 4 months
notice to move back in or to sell which
will limit their flexibility and to not
be able to do that within the first year
of ATT tenancy it is going to make
things a lot harder for them but like I
said earlier I do get it you do have to
balance that against the fact that it's
someone's home and if you sit back and
forget everything that's gone before
forget the system that we've had up
until now and create this system from
scratch with a court system that works
properly it wouldn't seem that crazy but
for me the courts are the real issue
here if you had a legal route that was
reliable that worked properly and work
quickly you wouldn't need no fault
eviction but the quick and easy no fault
evictions that landlords are supposedly
using on a whim to kick people out and
doing away with that was the whole
reason for all this in the first place
even that process can take N9 months or
more at the moment because the courts in
the bayt system is so overwhelmed and
once all this kicks in all at the same
time surely their workload is going to
spike dramatically this is such a clear
problem that when the conservative
version of this was going through a
cross Party Committee looked into this
and told the government that they should
really sort the courts out first before
pushing ahead with any of this but they
ignored it and ultimately the labor
version is now ignoring it too they say
in their briefing notes that ultimately
we expect our rental reforms to reduce
Demand on the courts which there really
are no words for and they talk about
working towards all manner of
improvements but who knows how long
that's all going to take if it happens
at all overall though is this the
apocalypse I really don't think so I've
been in the market for a long time and
over the last decade in particular we've
seen lots and lots of changes to the
rental sector which people have got very
worked up about at the time but once
it's bedded in it just becomes normal
and life goes on for me personally
there's nothing in there that makes me
want to sell any of my properties
because I haven't used an eviction of
any type for years I've got good
properties and good areas I've chosen my
tenants well and been lucky I'm sure as
well and the tenancy has always just
naturally ended on its own but there
will be some landlords I'm sure
including accidental landlords and
including people who've been in it for a
long time and are a bit sick of the
whole thing anyway and see getting more
difficult for whom this is the final
straw so no matter how dramatic the
headlines you see or the odd stories you
hear this reform doesn't mean that
property investing is dead but it does
mean you need to be careful because if
you get the wrong tenant or make a
mistake with legal documents the
consequences are going to be more severe
than before so to keep yourself safe and
keep your Investments profitable check
out this video next where I run you
through the things that you must know
before renting a property in 2024
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