UK Property Just Changed FOREVER

Summary

The 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

00:00

🏠 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.

05:01

📈 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.

10:02

📅 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.

Keywords

💡No fault evictions

No fault evictions refer to a landlord's ability to end a tenancy without needing to prove any wrongdoing by the tenant. In the context of the video, it is highlighted as a significant change where such evictions will no longer exist, and all tenancies will run indefinitely unless ended with a valid reason, impacting landlords' flexibility.

💡Fixed term tenancy

A fixed term tenancy is an agreement for a set period, after which it can be renewed or ended. The script mentions the end of fixed term tenancies, meaning all tenancies will be indefinite, which can affect both landlords' and tenants' expectations and planning.

💡Serious rent arrears

This term refers to a significant amount of unpaid rent, which is used as a criterion for eviction. The video explains that the definition is changing to require three months of unpaid rent, up from two, to qualify as 'serious', affecting the eviction process.

💡Rent increases

The video discusses proposed changes to how rent increases are handled. Landlords will need to justify rent hikes based on market rates, and tenants can challenge these through a tribunal, which could delay the implementation of rent increases.

💡Market rent

Market rent is the current average rent for similar properties in the same area. The script explains that landlords can only increase rent to what the market rent is at the time, ensuring that rent hikes are reasonable and not exploitative.

💡Bidding wars

Bidding wars occur when multiple tenants compete to offer the highest rent. The video suggests that landlords will no longer be able to accept bids above the asking rent, potentially limiting rent increases and making the rental process more transparent.

💡Discrimination

The video addresses the issue of landlords discriminating against potential tenants based on factors like receiving benefits or having children. New rules will make such discrimination illegal, promoting fairness in the rental market.

💡Accidental landlords

Accidental landlords are individuals who unexpectedly find themselves owning rental properties, often due to life circumstances. The video suggests that new regulations may disproportionately affect this group, as they may have less flexibility and more difficulty adapting to changes in the rental landscape.

💡Landlord database

A new requirement for landlords to register in a database is discussed. This database will list all landlords and properties, adding a layer of regulation and potentially increasing transparency for tenants and authorities.

💡Ombudsman

Although not explicitly mentioned in the script, the mention of red tape suggests an increased role for third-party dispute resolution services like ombudsmen, who can help resolve disputes between landlords and tenants.

💡Rental reforms

Rental reforms refer to the changes being proposed to the rental sector. The video provides an overview of these reforms, emphasizing their potential impact on both landlords and tenants, and how they aim to balance security and flexibility in the rental market.

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