Key amendments to the Renters’ Rights Bill: what landlords in England need to know

The Renters' Rights Bill has had its first reading in the Upper House after the Commons incorporated several significant amendments aimed at protecting tenants. These amendments include limits on upfront rent payments, protections for bereaved guarantors and measures to discourage early student tenancy commitments.

It is expected that the bill will become law in summer or late autumn 2025, although there is speculation that it could receive royal assent sooner than this.

Concerns have been expressed that, despite its aims, the bill once passed may in practice cause landlords to sell, stymie investment and development, raise market rent and result in less, not more, rental accommodation. An earlier incarnation of the bill (Renters Reform) was introduced by the previous, Conservative government, but was not enacted not least because reforms and improvements to the court system were considered pivotal before implementation.

The government is proposing to introduce these reforms at the earliest opportunity, although has stated it is working closely with the Ministry of Justice and HM Courts and Tribunals Services to ensure the courts are prepared for the changes. What are the implications for landlords?

Limiting rent payments in advance

One of the most significant changes introduced by the Renters’ Rights Bill is the limitation on how much rent a landlord can request upfront.

A new clause restricts landlords to a maximum of one month’s rent in advance, in addition to a security deposit of five or six weeks' rent. Advance payments will constitute a breach of the Tenancy Fees Act 2019, although a holding deposit of up to one week's rent will not be prohibited. If landlords are unable to ask for the first month's rent in advance of signature of the tenancy agreement, this may complicate the onboarding process, particularly for larger landlords.

Prohibited payments will need to be repaid to the tenant and financial penalties for attempting to side step this rule of up to £5,000 may be imposed by local councils, although it remains to be seen how successful local authorities will be in policing or imposing such fines.

Nevertheless, this amendment may limit housing options for financially vulnerable individuals, such as those on fixed incomes, the self-employed and overseas students. These groups often rely on paying larger sums upfront to evidence their ability to pay their rent, perhaps where they would not meet landlord criteria or are unable to provide a guarantor.

Private rental sector database and ombudsman

The creation and operation of a mandatory private rented sector database and ombudsman is to be funded by registration fees payable by landlords. They will be liable for significant fines or criminal sanctions for multiple failures to comply.

The rationale is that the ombudsman will provide renters and landlords with access to an effective dispute resolution service, however there are concerns that these costs will add to overheads which will either affect profit margins or be offset by increases in market rent.

Eviction grounds for student tenancies

The bill introduces new rules to help stop the practice of requiring students to commit to student accommodation for the next year. Specifically, it prevents the use of eviction ground 4A to recover possession where students in houses of multiple occupation (HMOs) have agreed to a tenancy more than six months in advance of the date of occupation.

Landlords have expressed concerns that the measures may hamper recovering possession of their properties in time, ahead of the new academic year. While there may yet be further amendments to the bill, as it stands this ground of possession will not be available to landlords in respect of students living in non-HMO properties. This may deter landlords from renting to students generally.

Guarantors protected after tenant’s death

Except for some limited exceptions, such as when there is more than one tenant, guarantors will not be held liable for rent due under a tenancy following a tenant's death.

This will be another factor that landlords will have to take into account. They may have to take out insurance to protect themselves from such an eventuality, again potentially increasing rents or dissuading investment or rentals.

Osborne Clarke comment

Once enacted, this bill will significantly increase protections and rights for tenants and risks, liabilities and costs for landlords.

Despite considerable industry opposition, the government is proceeding with some of the more contentious points. However, there are industry concerns that the limitation on rent increases under periodic assured tenancies to once a year and at market rent could prompt disputes that could take months to determine and which could present another mechanism to prolong an eviction process.

When the section 21 process is abolished, it will mean that landlords must have a valid reason to remove tenants and, more than ever, their paperwork must be in order to increase their chances of success.

The proposals should be viewed in the context of the current state of the court system which is operating with a serious backlog. It can take many months to remove tenants who, for example, have not been paying full rent. The knock-on effect may be that fewer property owners will be willing to take the financial risks for diminishing returns of renting properties, which could push up market value as the supply of properties decreases, and affect investment into the residential sector.

Some landlords are serving section 21 "no-fault" eviction notices now, ahead of the bill coming into force, in light of the anticipated difficulties of regaining possession under the new regime (contrary to the bill's intention).

As always, the devil is in the detail. Time will tell whether the restrictions around advance rent payments hinder the market further or if alternative products emerge to help protect landlords from bad debts.