In 2023, two bills were introduced that impact landlords: the Renters Reform Bill and the Leasehold and Freehold Reform Bill. For the most successful property investment, landlords looking to enter the market and existing landlords should both be aware of how these different bills may impact them in the upcoming year. Although no official date has been set for either bill to pass, it is assumed both will pass in 2024.
Renters Reform Bill
The second reading of the Renters Reform Bill took place on October 23rd 2023, it sets out to improve the private renting system for both renters and landlords. It is estimated that this bill will pass in 2024. With the bill, the government sets out to simplify existing tenancy structures to a single structure where all Assured Shorthold Tenancies will become periodic.
The bill’s feature to abolish Section 21 evictions, which gives landlords the right to enact ‘no fault’ evictions was met with a response from the National Residential Landlords Association (NRLA) that suggested the grounds for possession by landlords in this instance would be incredibly timely. As a result, the government has confirmed that the abolition will not occur until reforms to the justice system are enacted.
Strengthening the grounds on which landlords can look to repossess properties is another aspect of this bill. Therefore, landlords should more easily be able to repossess their property if tenants continually accumulate rent arrears or exhibit anti-social behaviour.
The Renters Reform Bill also allows tenants to request to keep a pet, which the landlord couldn’t refuse unreasonably. Landlords would then be able to obtain pet insurance to cover any damage to the property.
Leasehold and Freehold Reform Bill
The Leasehold and Freehold Reform Bill was introduced on November 27th 2023 and the earliest it will be passed as law is summer 2024. It looks to improve homeownership for leaseholders by empowering their rights.
Leasehold properties allow buyers to own the property itself but not the land it’s on, meaning leaseholders are required to pay ground rent for their properties. This reform bill looks to abolish the sale of new leasehold properties so that all newly bought houses in England and Wales become freehold from purchase.
Another measure of the bill sets out to increase the standard lease extension term to 990 years from the current 50 years it is for houses and 90 years it is for flats. Ground rent will also be reduced to zero after a premium is paid.
The bill will allow leaseholders to more quickly benefit from freehold ownership or the 990-year lease extension by removing the condition that a leaseholder should have owned their property for 2 years before these changes benefit them.
Both reform bills are indicative of the effort being put into improving the private rental sector and homeownership in the UK. Alongside the improved sentiment that is present around the UK property market, this is a positive sign for the upcoming year for property investors. If you are looking to invest in UK property, GetGround can help you find, finance, manage, and sell your property investments, all in one place. Book in a call with our team to learn more or get started.
