"These rules are designed to professionalise the sector and weed out 'bad' landlords, but for the majority of responsible investors, the long-term capital growth and steady rental yields still make BTL a smart move"
- Ryan Etchells - Together
For the approximately 11 million people in England who rent privately, and the landlords who house them, the Renters' Rights Act represents the most significant shift in the sector for a generation.
From 1 May, the traditional fixed-term tenancy is consigned to history as all contracts move to a single system of rolling periodic tenancies.
The Section 21 abolition and new restrictions on rent increases have left many property investors seeking clarity. Ryan Etchells, chief commercial officer at specialist lender Together, answers the key questions landlords are raising ahead of the deadline.
Does abolishing Section 21 mean you can no longer regain possession of your property?
While Section 21 is being phased out to give tenants greater security, the Renters' Rights Act also strengthens the grounds for possession under Section 8.
Landlords can still regain their property if they want to sell it, move back in themselves, or if a family member needs it as their primary residence. For these specific grounds, notice generally cannot be served within the first 12 months of a tenancy, and re-letting the property will not be possible for a year afterwards.
How often and by how much can you increase the rent?
The new legislation moves all tenants onto periodic tenancies, limiting rent increases to once per year. 'Rent review' clauses that allowed automatic price rises can no longer be included in contracts. Any increase must be made via a Section 13 notice, and the new rent must reflect the current market rate.
If a tenant believes the increase exceeds market value, they can challenge it through a tribunal.
What happens if a tenant falls into rent arrears?
The Act continues to protect landlords against non-payment. Where a tenant owes at least two months' rent, Section 8 can be used to begin eviction proceedings. Discretionary grounds are also available where there is a consistent history of late payments.
The government has maintained landlords' ability to act against tenants persistently in arrears or engaging in anti-social behaviour, though the default notice period for many grounds has increased to four months.
Is buy-to-let still a viable investment?
The shift to rolling tenancies and the Section 21 abolition represent a significant change, but demand for quality rental housing remains high. "While the shift to rolling tenancies and the end of Section 21 represent a significant change, the fundamental demand for quality rental housing remains incredibly high," said Etchells.
"These rules are designed to professionalise the sector and weed out 'bad' landlords, but for the majority of responsible investors, the long-term capital growth and steady rental yields still make BTL a smart move. The key is simply staying informed and ensuring your management processes are compliant with the new notice periods."
