Speaking at the Buy to Let Event, Richard Saunders, regional sales manager for Market Financial Solutions, said some of the amendments that have been proposed at the moment to the Renters’ Rights Bill include allowing term tenancies of up to 12 months, linking rent rises to inflation and allowing smaller landlords to continue to issue Section 21 notices going forwards.
“It’s unclear whether those amendments will stick or whether it will remain as is, but that’s being debated as we speak. Whatever the outcome of this, there’s going to be a big shake-up for how landlords need to run their portfolios, and what it’s going to mean for them on a yearly basis, at the very least, on how they need to manage that,” he said.
The Renters’ Rights Bill is currently at the committee stage in the House of Lords, with industry experts expecting it to become law by the summer.
Saunders noted that key areas of the bill as it stands include Awaab’s Law, re-letting legislation, rental increases and periodic tenancies.
Awaab’s Law, which is expected to come into force in October, requires landlords to address damp and mould that poses a significant risk to tenants within a fixed time frame.
Welcome to the future: how collaboration is driving the shift to digital home buying
Sponsored by Halifax Intermediaries
Saunders said it should be a “no-brainer”, but noted that the link to Energy Performance Certificates (EPCs) could put pressure on those with lower-rated properties to “up their game”.
Re-letting legislation one of the ‘prime changes’
Regarding re-letting legislation, Saunders said this was “one of the prime changes, which is going to dictate how landlords turn over their properties”.
The legislation means that if landlords evict tenants on the grounds that they want to sell the property, the landlord will be unable to let the property for 12 months from the original tenancy and unable to use the property for 12 months should they or a close family member wish to move in.
“It means that landlords, if they’re going to sell the property, they need to be certain about it. They can’t just do it and test the water and maybe then re-let it if they don’t sell it, they’ve got to be certain.
“They’ve got to plan further ahead, and they’ve probably got to be willing to accept negotiations on the price, because if they don’t get what they want, they then can’t re-let it, and they probably need to be able to be prepared to sell it whatever price they get for it,” he explained.
Rental increase and periodic tenancy changes mean landlords have to take a ‘longer-term view’
Rental increases are another area of change, as Section 13 notices will become the only way landlords can raise the rent.
Landlords will only be able to increase rents once per year, in line with the market rate, and bidding wars will also be prohibited, so landlords can’t accept offers above the listed rental price.
“What it means is that those landlords who have been sitting with good long-standing tenants, and they’re taking below market rent, are probably going to have to review those if they want to keep up with market rent, and if they want to up it, they can only do it once a year,” he noted.
Saunders said landlords will also have to take a “longer-term view” with periodic tenancies, as up to four changes of occupancy are possible in a single year.
Landlords will not be able to evict tenants in the first 12 months and the notice period will be four months. Tenants have a two-month notice period and can hand in their notice after one day of renting.
“The landlord is probably going to be more picky about who they put into their property. They want to be more certain about the long-term prospects of that tenant staying in the property,” he said.
Section 21 evictions and landlords selling on the rise ahead of Renters’ Rights Bill
Ahead of the Renters’ Rights Bill, Saunders said there had been a significant rise in Section 21 evictions, with 32,287 claims in 2024, which is a 7% increase on 2023.
He added that there has also been a spike in landlords putting their properties up for sale, with over 111,000 properties sold to owner-occupiers in 2024.
“It’s no coincidence that… has rocketed up. Landlords, I think, are taking the opportunity to move on tenants that are maybe paying below market rate, and they feel that they might have it be difficult to do so after the Renters’ Rights Bill has come in, and again, there’s a spike in landlords putting their properties up for sale.
“It all echoes that there are quite a few landlords shifting properties at the moment. I think it’s not all doom and gloom, because whilst the traditional buy-to-let stock is exiting the market, the balances for buy to let across the market are slowly creeping up.
“This suggests that there are fewer properties in the market, but the properties that are staying are being condensed into fewer landlords, into more professional hands, and probably larger properties in the shape of houses of multiple occupation (HMOs) [and] multi-unit blocks (MUBs) that house more people and are worth more in general,” he explained.
Brokers with portfolio landlord clients need to ‘form partnerships’
Saunders said brokers that look after portfolio landlords will need to “form partnerships with them rather than being a transactional-based broker and just dealing with the buy to lets as they arrive and waiting for them”.
“You’re going to want to be reviewing your clients’ portfolios once a year at least, to see: ‘Okay, are the rents on market rent? Are these properties still making a decent yield? Do you want to shift some around? Do you want to exit some of these properties from your portfolio and maybe replace it with something that’s higher yielding?’” he said.
Saunders said there was an uptick in landlords going into more professional territory, and while brokers did not have to be tax advisers, they should be aware of limited company structures.
“Having third-party relationships with solicitors, accountants, tax advisers is absolutely key. If you want to provide that holistic advice to your borrowers, and you want to be able to give them a full package of advice, having those people that you can rely on and you can refer to is absolutely key. Build those relationships with your trusted tax advisers, and you can refer both ways,” he said.
Saunders said an area of growth that the lender had seen are share purchase agreements, where a landlord buys the special purpose vehicle rather than a property that sits within it.
Another area of growth is letting properties to the local authority on a corporate let, and then the local authority would put tenants in there.
He said the tenants can be vulnerable, but yields can be “fantastic” and there are fewer lenders that operate in the space.
