Renters Rights Bill Second Reading in The Lords – but how does it impact me?

The Renters Rights Bill had its Second Reading in the House of Lords this week, followed by several hours of what was described in parliamentary terms as ‘debate’ – but which really amounted to individual Lords, Ladies, Bishops, and Baronesses being able to stand up and have their say on the matter. And lots of them did (trust me, I sat through it, so you don’t have to…).

So, what does a ‘Second Reading’ mean, why does it matter, and what does it mean for the lettings market in South London?

Let’s take a deeper dive into these points, to explore what’s going on:

What does a ‘Second Reading’ mean?

The Second Reading is just that; the second time that a Bill (essentially a proposed law, or a ‘proposed Act of Parliament’) is read in ‘The House’ – in the case of this Renters Rights Bill, that House being The House of Lords, having been read twice already in The House of Commons. The Second Reading in the Commons was on October 9th, 2024, after which it was voted through by MPs, 424 in favour and 104 against.

In the Lords, a Bill is debated after its Second Reading (but not the first – and that is the same for The Commons), and is then normally passed without a formal vote, as was the case here. After passing this stage, it moves to a Committee Stage, where the Bill is scrutinised in detail by members of The House of Lords. The Committee Stage is different in The Lords compared to The Commons, as it is normally a ‘Committee of the Whole House’ – meaning that any member of The Lords can take part. It is at this stage that amendments can be proposed, debated, and voted upon.

Why does it matter?

We have written about the proposed changes put forward by this Bill previously, but some of the highlights include:

• Abolition of Section 21 ('No-Fault' Evictions): Landlords will no longer be able to evict tenants without providing a valid reason.
• Ending Fixed Term Tenancies: All tenancies will become what we currently call ‘periodic’ – meaning month by month and, in theory, indefinite. Tenants can end a tenancy by providing two months' notice, but landlords will need to provide specific grounds for possession.
• Expanded Grounds for Possession: Landlords can gain possession in certain circumstances, for example, in order to sell the property, occupy it as a home, or move in a family member. Landlords will be required to provide four months' notice, with restrictions on doing so within the first 12 months of a tenancy.
• Limiting Rent Increases: Rent increases will be limited to once per year, and tenants will be able to challenge increases by taking their case to a tribunal.
• Ban on Bidding Wars: Landlords and agents will be forbidden from accepting offers above an advertised rent price.
• No more ‘Rent in Advance’: Landlords and Agents will no longer be permitted to ask for any more than one month’s rent at a time.
• Right to Request Pets: Tenants will have the right to request permission to have pets, and landlords will not be able to unreasonably refuse. However, landlords may require pet insurance.
• New PRS Ombudsman: A new ombudsman will be created to handle disputes between landlords and tenants, avoiding the need for court proceedings.
• PRS Database: A database will be created to provide a register of landlords and agents, including their details, and any penalties, convictions, and offences. Local authorities and regulatory bodies will be able to access it. While the PRS Database will not be publicly available, some campaigners have pushed for more transparency. Whether this will change in future amendments remains to be seen.
• Decent Homes Standard: The Decent Homes Standard, previously applicable only to social housing, will now cover private rentals to ensure properties meet minimum standards.
• Implementation of Awaab’s Law: Landlords will be required to address and rectify serious health hazards, such as damp and mould, within a specified period or face penalties.
• Discriminatory Practices Forbidden: Landlords must not show bias or prejudice toward tenants, such as those with children or receiving benefits.

These proposals aim to enhance tenant security, ensure fair treatment, and improve rental property quality – and more on the full content of the bill can be found here. These are noble aims, but the question remains: is this Bill a sledgehammer to crack a nut, and will it create more problems than it solves?

 

The Lords' Debate and Key Concerns

Despite the overwhelming approval in the Commons, the Lords appear much more divided, and that will inevitably slow the progress of the Bill down to some extent. Few Peers fully support the Bill in its current shape, that much is clear. Most raised concerns, and many opposed it in principle; indeed, some in its entirety.

A disproportionate amount of the ‘debate’ centred on the student market—particularly the scrapping of fixed-term tenancies. This could lead to student tenants vacating in May or June with landlords unable to find new tenants before September or October, potentially driving student landlords out of the sector and reducing availability for students. Ministers have indicated that purpose-built student accommodation may be exempt, but many Peers noted that thousands of students rent standard private homes, meaning the issue remains unresolved.

Another issue for both students and international tenants is the removal of ‘rent in advance.’ With no ability to demonstrate regular income or UK credit history, rent in advance has been a useful solution—especially in cases where student loans or maintenance grants are paid in termly instalments. This issue will likely be scrutinised and addressed through amendments, but again it highlights the lack of foresight in drafting the Bill.

Many Lords expressed concerns about other aspects of the Bill, and it seems inevitable that amendments will be proposed at the forthcoming Committee Stage—amendments that will then be sent back to the Commons for further voting.

How does the Renters Rights Bill affect me in South London?

As a professional Lettings Agent in South London, we are closely watching this Bill because if (or more likely, when) it is passed, it will have an enormous impact—particularly given the high concentration of Buy-to-Let and HMO properties in this area.

According to ONS data, over 50% of properties in London are rented, and of those, around 60% are in the private rented sector. Any change in lettings legislation has an impact, and this Bill brings sweeping changes.

Nobody denies the need for addressing substandard homes, rogue landlords, and exploitative practices. However, two key questions arise:

1. Is this legislation overkill, and could these concerns not be addressed by enforcing existing legislation?
2. Could the effects on landlords be so severe that we see many leave the market?

Last year, a survey suggested that 30% or more landlords would sell up. Conversely however, according to projected data by Hamptons, around 3% were thought to have done so. That equates to roughly 150,000 buy-to-let properties sold, out of over 4.5 million. At the same time, 113,000 buy-to-let purchases were forecast to be made, leading to a net loss of 37,000 private sector properties. Whilst this is no doubt a concern in the midst of a housing crisis, it nevertheless represents less than 1% of the market. Troublesome, but not panic stations… not yet.

Final Thoughts

Our expectation is that a strongly voiced debate will be had at this next Committee Stage, largely reflecting industry concerns, even if not pandering to them. A number of amendments will be proposed – and some will be adopted. The Bill itself will likely become an Act of Parliament by summer.

A sledgehammer to crack a nut? More like a sledgehammer smashing a nut into several nuts – if you will forgive an analogy. Some problems will be solved, and for tenants, there will be a sense of greater fairness and better protections; on the other hand, new problems will be created, and in some cases old problems will be exacerbated.

Nevertheless, the market will prevail. If there is a market – any market – someone will service it; and in the case of UK housing, there is very much going to be a market to service.

Perhaps that will be a new breed of landlords. More likely, in our view, it will be a resilient majority of existing private landlords, letting agents, and property managers who will weather the storm, adapt, and move forward – as has been the case again and again in the past.

Because after all, in this country, what really is safer than bricks and mortar?