Commercial Director - Property
Much has been written about the Renters’ Rights Act over the past few months, with the abolition of Section 21 ‘no fault’ evictions understandably attracting most of the headlines. But while this is undoubtedly one of the most significant changes, it isn’t the only reform that will influence how landlords manage their portfolios.
The removal of Assured Shorthold Tenancies (ASTs) in favour of periodic tenancies could prove just as important, fundamentally changing how landlords approach tenant relationships, portfolio planning and future investment decisions.
For brokers, it’s important to understand how these reforms work together to ensure you’re in the strongest possible position to advise your property investor clients.
Section 21 has long provided landlords with a straightforward route to regain possession of their property at the end of a tenancy. Under the new legislation, landlords will instead need to rely on strengthened Section 8 grounds, using legitimate reasons such as selling the property, moving into it themselves, or dealing with serious rent arrears or anti-social behaviour.
At the same time, landlords can no longer rely on the certainty of fixed-term tenancies. Instead, tenancies will become periodic, with tenants remaining in the property until they choose to leave or the landlord successfully regains possession using one of the statutory grounds.
Taken together, these reforms place far greater emphasis on keeping good tenants rather than regularly replacing them, and that’s not necessarily a bad thing.
Long-term tenants can provide more stable rental income, reduce void periods and minimise the costs associated with reletting a property. But it does mean landlords need to think differently about how they manage their investments.
Tenant referencing, for example, becomes even more important. Choosing reliable tenants who pay their rent on time and look after the property has always been good practice, but under the new framework the consequences of getting that decision wrong become much greater.
Equally, landlords will need to place greater emphasis on maintaining properties that tenants genuinely want to stay in.
This aligns with the wider direction of travel within the private rented sector. Alongside tenancy reform, the government intends to introduce the Decent Homes Standard and Awaab’s Law into the private rented sector, reinforcing expectations around property condition and maintenance.
As regulation evolves, investing in the quality of a rental property is likely to become an increasingly important consideration, with higher minimum standards driving up tenant expectations across the board.
Modern kitchens and bathrooms, improved energy efficiency, better insulation and proactive maintenance can all help landlords attract and retain good tenants while supporting rental values over the longer term. And many of these improvements can be achieved through light refurbishment projects without requiring major structural work.
This is where light refurbishment finance can add real value. As landlords place greater emphasis on improving the quality of their rental properties, short-term finance can provide the flexibility to complete non-structural upgrades, such as new kitchens, bathrooms and energy efficiency improvements, before refinancing onto a longer-term Buy to Let mortgage. For investors, it can be an effective way of future-proofing assets while spreading the cost of improvements over the life of the project.
For brokers, these conversations present an opportunity to add value beyond sourcing finance alone as many clients will be looking for guidance on how changing legislation could affect their investment strategy, and how funding can support those plans.
The Renters’ Rights Act undoubtedly represents one of the biggest changes to the private rented sector for decades. While some landlords may see additional regulation, others will recognise an opportunity to build more resilient portfolios centred around high-quality properties and longer-term tenant relationships.
Anna Lewis, Commercial Director at Castle Trust Bank
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