landlords have been scared stiff ever since labor were elected because a labor government usually means harsher conditions for investors but now the guessing game is over because Labour just released their big plans for the property market and they announced some huge changes that could be the final straw for some landlords I was invited on to National radio to talk about this because I've literally written the book about being a landlord yet I also choose to rent so I have an unusual perspective on this which I'll share with you as we go through and for me
there are five key changes so I'll explain what each of them is and what it'll likely mean for landlords and tenants alike but before we can do that we need to understand how on Earth we ended up here so reform of the rental sector has been on the cards since 2019 when it was a Manifesto commitment for the conservative government at the time took a while but the conservatives eventually brought forward a bill that promised widespread changes to the rental market but there was so much Furious arguing about it that in the end they ran
out of time before the general election and the bill failed now labor is in power they've come back with their own version which you'd expect to be more landlord unfriendly but is it the first big change of course is to no fault evictions this is the big headline Grabber from now on there is no such thing as a no fault eviction there's also no such thing as a fixed term tency from the time this comes into effect all tenancies will run on indefinitely and can only be ended with a valid reason so from a landlord
point of view this raises two big questions the first is can I still get my property back back to move into or to sell and the answer to that is yes but you can't do that within the first year of ATT tenancy ATT tendency must have been running for at least a year before you can ask for the property back in order to sell or move in and at the point that you do do that you need to give four months notice which is up from two at the moment the second big question of course
is well what have I've got a tenant who's not paying their rent well once there's no no fault option you're going to have to go to court and prove that they haven't paid their rent and the only way to be sure that the judge will tell the tenant they have to leave is if they are in what's called serious rent arear the definition for serious is going to be 3 months of AAR up from what's currently two and once they have those three months of AAR you need to give them four weeks notice to leave
up from what's previously been two now I'm going to be extremely unpopular with landlords for saying this but I don't think it's unreasonable that you're not going to be able to give notice because you want to sell the property within the first year and I don't think it's unreasonable to give 4 months notice I know this potentially hits accidental landlords harder but when choose to invest in property which is someone's home rather than investing in something else I think it's fair enough that there are some kind of restrictions to balance the fact that yes it's
your property against the disruption of someone having to leave when it's not their fault what about if you've got a tenant who isn't paying well this one I think would be reasonable if and this is a giant if the courts actually worked properly if it was a simple matter of showing that the tenant hadn't paid their rent and then straight away they're told to leave and that's the end of it no problem you don't really need the whole no fault thing the problem is if you've got a tenant who isn't paying you now need to
wait longer before you can start the process and then the process itself could go on forever especially cuz the courts are going to be so much busier in the future I have more to say about that later on but we've got a lot more to get through before we move on to our second big change though this is not law yet lots could change as it gets through the process so sign up to our free Weekly Newsletter property pulse to be updated on everything as it happens a link to that is in the description below
the second big change is around rent increases under these plans you won't be able to write rent increases into the contract at the start instead a maximum of once a year you can tell the tenant that you plan on increasing the rent and you can only increase it up to whatever the market rent is at the time if the tenant disagrees with this and they think you're increasing it to above the market rate they can refer it to a tribunal who will then be able to look at it and either approve your rent increase or
say no actually you can only increase it by this much now importantly this is not the same as rent controls not at all they're not setting a maximum that rents can go up by they just want to make sure that you're not trying to put through a crazy increase as a way of forcing someone out I don't think this is the biggest deal because in reality no one increases the rent more than once a year anyway and nobody really tries to charge more than the market rent the only potential issue is that tenants can effectively
delay the impact of a rent increase by referring it to the tribunal even if they agree with it because the rent increase only becomes binding once the tribunal has made their decision now that should happen relatively quickly but how are they going to be resourced to deal with this when everyone starts doing it all at the same time I don't know we're going to have to see the next big change is bidding wars this is a really interesting one so the change is that landlords and agents will have to publish a asking rent for the
property and they then won't be able to accept any bids above that asking rent now in my experience even in a hot Market you don't tend to get that many situations where people keep bidding the rent up and up and up I'm sure it does happen but it's not normal so I don't think C is going to make that much of a difference in really hot markets I suppose what will happen is that the asking rent will suddenly adjust upwards and then what you've effectively got is an offers up to system next up is another
change that's grabbed a lot of headlines which is about discrimination landlords won't be able to discriminate against people on benefits or who have children now some landlords have got mortgages or Insurance in place that says they can't rent to people on benefits for example but those terms in mortgage and insurance contracts will be made unenforceable by the same law some landlords have taken this is but it's my property you can't tell me I can't choose I should be able to decide who I rent to but that's not really what it is in reality you can
still accept any offer you want you can decide that the offer from one applicant is more attractive than another what you can't do is say in your marketing no children or no benefits and then in the letting process you can't prevent anyone from viewing the property or making an offer on it if they want to then the final change before we get onto the all important business of when this happens and what it will all mean is the new landlord database a new database is going to be created with a listing for all landlords and
all properties and you won't be able to Market a property before it has an entry in that database will you have to pay to be on that database of course you will how much of that information will be public that still hasn't been decided it's not as scary as it sounds because for the most part it sounds like it's only going to be made available to local authorities for enforcement purposes but some information may be made available publicly for potential tenants to see so we're just going to have to wait and see so those are
just the five things that caught my attention there's loads more in there it's a really big document we'll link to it below if you want to check it out in full but we'd be here all day if we went through the whole thing what you really want to know is when's this going to happen and what does it mean as for when like I said this is just the start it still needs to go through the House of Commons and the House of Lords and as it does it can be amended so we probably will
see some changes with what's finally published but I don't think it's going to be major because this is Labor's Bill and they have a massive majority a date that's being kicked around for completing that process is summer 2025 but there are some parts of this like the landlord database that are going to take longer to set up so what I suspect will happen is that the big changes to section 21 and tendencies will come in first maybe in the middle of 2025 with everything else to follow later what they have said is that existing Tendencies
will convert at the same time as new ones so there's not going to be any staging of this all Tendencies where you've already got one or whether you create one in the future they all be operating under this system from the same day whenever it comes into effect so what ultimately will all this mean from a landlord perspective it means that choosing the right tenant was already important it's going to become Ultra important but if you've got someone who's causing trouble or not paying it's going to take a lot longer to get them out especially
at first while all this is being set up from a tenant perspective it means that while you've got more security once you're in finding somewhere to rent it's still likely to be really hard none of this creates any more housing and the landlords of the properties that do exist are going to be very very cautious now whenever there's any kind of change to renting at all landlords always go oh it just means rents will go up normally I don't buy that I think on this occasion we probably will see a one-off upward adjustment in rents
because of the whole fact that you can't have bidding wars anymore because it means that if you're very confident that you're going to have loads of interest you might as well go high with what you're asking for and then invite offers below it so who are the overall winners and losers here well of course tenants are winners pressure groups aren't going to be happy with everything but it's hard to say that this isn't better for tenants than it was before that was kind of the whole point for somewhat serious landlords who have a few properties
they're in good areas they can be picky about who they take on I think it's pretty neutral there will be more red tape to contend with with the database and the Ombudsman which is something else that's in there but I think they should probably be relieved because it could have been so much worse there is nothing in there about rent controls and there's no kind of hardship test around evictions which is also something that was rumored in advance the big losers I think are accidental landlords people who only got one property and it's probably not
one that they intended to rent out in the first place maybe they used to live there then they had to move and they couldn't sell it they'll complain about having to give 4 months notice to move back in or to sell which will limit their flexibility and to not be able to do that within the first year of ATT tenancy it is going to make things a lot harder for them but like I said earlier I do get it you do have to balance that against the fact that it's someone's home and if you sit
back and forget everything that's gone before forget the system that we've had up until now and create this system from scratch with a court system that works properly it wouldn't seem that crazy but for me the courts are the real issue here if you had a legal route that was reliable that worked properly and work quickly you wouldn't need no fault eviction but the quick and easy no fault evictions that landlords are supposedly using on a whim to kick people out and doing away with that was the whole reason for all this in the first
place even that process can take N9 months or more at the moment because the courts in the bayt system is so overwhelmed and once all this kicks in all at the same time surely their workload is going to spike dramatically this is such a clear problem that when the conservative version of this was going through a cross Party Committee looked into this and told the government that they should really sort the courts out first before pushing ahead with any of this but they ignored it and ultimately the labor version is now ignoring it too they
say in their briefing notes that ultimately we expect our rental reforms to reduce Demand on the courts which there really are no words for and they talk about working towards all manner of improvements but who knows how long that's all going to take if it happens at all overall though is this the apocalypse I really don't think so I've been in the market for a long time and over the last decade in particular we've seen lots and lots of changes to the rental sector which people have got very worked up about at the time but
once it's bedded in it just becomes normal and life goes on for me personally there's nothing in there that makes me want to sell any of my properties because I haven't used an eviction of any type for years I've got good properties and good areas I've chosen my tenants well and been lucky I'm sure as well and the tenancy has always just naturally ended on its own but there will be some landlords I'm sure including accidental landlords and including people who've been in it for a long time and are a bit sick of the whole
thing anyway and see getting more difficult for whom this is the final straw so no matter how dramatic the headlines you see or the odd stories you hear this reform doesn't mean that property investing is dead but it does mean you need to be careful because if you get the wrong tenant or make a mistake with legal documents the consequences are going to be more severe than before so to keep yourself safe and keep your Investments profitable check out this video next where I run you through the things that you must know before renting a
property in 2024
