The Renters' Rights Bill: The End of Fixed-Term Tenancies and Changes to Rent Increases
/The information in this article is based on the Renters' Rights Bill as currently proposed. While these measures are likely to come into effect, they are not yet law and are subject to change. The content provided is for informational purposes only and should not be considered as legal advice. Landlords are advised to regularly check for updates on the legislation and seek professional guidance to ensure compliance with any future legal requirements.
The Renters’ Rights Bill proposes significant changes to the private rented sector, including the abolition of fixed-term tenancies. This shift means tenants will have greater flexibility, but it also presents potential challenges for landlords. Additionally, changes to how rent increases are handled will impact both parties.
What Does the End of Fixed-Term Tenancies Mean?
Under the proposed changes, all tenancies will become open-ended, meaning tenants can leave at any time as long as they provide two months’ notice. This means that, in theory, a tenant could move in and immediately serve notice, leaving after two months.
When similar changes were introduced in Scotland in 2017, some tenants took advantage of this flexibility, but the practice diminished over time. However, landlords should be aware that this could initially lead to higher turnover and increased void periods.
How Will Rent Increases Work Under the New Rules?
Currently, landlords can include rent review clauses in tenancy agreements or serve a Section 13 notice to propose an increase. Under the new system, rent increases will only be allowed once per year and all increases must be processed via a Section 13 notice, giving at least two months’ notice to tenants (only one month is currently required).
If a tenant believes the proposed rent is above market value, they can challenge it at the First Tier Tribunal, which will determine the appropriate rent level. There are key changes to the Tribunal’s powers under the new system:
The Tribunal can no longer increase rent beyond what the landlord originally proposed. Currently, tenants are often hesitant to challenge increases due to the risk of the Tribunal setting an even higher rent based on market conditions. This change removes that risk.
If the Tribunal decides in favour of the tenant, the rent will be capped at the agreed level for 12 months.
Rent increases cannot be backdated. Any new rent amount will only apply from the date the Tribunal makes its decision.
In cases of financial hardship, the Tribunal will have the power to delay rent increases by up to two months.
Impact on Landlords
For landlords, these changes mean that:
They can only increase rent once per year and must follow the formal Section 13 process
Any disputes will be resolved by the Tribunal, with no risk of rent being raised above their proposed amount
Rental increases may be delayed if tenants appeal and Tribunal proceedings take several months to conclude
Market evidence will be crucial in justifying rent increases, as landlords will need to demonstrate that their proposed rent reflects current market conditions
Additionally, landlords will no longer be able to use rent review clauses in the tenancy agreement to impose increases outside the Section 13 framework. This ensures that all tenants have the right to challenge increases, reducing the potential for unfair rent hikes.
What Should Landlords Do?
With the removal of fixed-term tenancies and changes to rent increases, landlords should be prepared for greater tenant mobility and ensure their rental pricing remains competitive. It will be more important than ever to:
Have access to accurate and up-to-date market rent information to justify increases
Plan for potential delays in rental increases due to Tribunal proceedings
Consider how to incentivise long-term tenancies to minimise turnover
As the Renters’ Rights Bill progresses, landlords should stay informed about further updates and secondary legislation. If you need guidance on how these changes will affect your rental properties, book a call with us.