The Renters’ Rights Bill, poised to reshape the UK’s private rental sector, introduces a significant shift in the rights and obligations of both landlords and tenants.

Designed to enhance security for tenants while pushing for greater accountability among landlords, the Bill addresses a range of issues, from “no-fault” Section 21 eviction abolition, to extending Awaab’s Law into the private rented sector, allowing tenants to challenge hazardous living conditions.  

These sweeping reforms mean landlords will face an increasingly complex regulatory landscape, with a need to adapt to stricter legal requirements while also finding new ways to maintain positive tenant relationships.

What the no-fault evictions ban will mean for landlords

The Renters’ Rights Bill will end so-called no-fault evictions.

Currently, Under Section 21 of the Housing Act 1988, landlords are allowed to evict tenants without them being at fault. The landlord doesn’t need to give a reason for the notice, such as wanting to move back in, or wishing to sell the property. 

However, with Section 21 eviction abolition, landlords will instead need to rely on Section 8. This requires specific grounds for eviction, such as rent arrears or anti-social behaviour.

This Section 8 eviction process is notoriously more time-consuming and complex from a legal point of view, pushing landlords to gather substantial evidence and potentially engage in lengthy legal battles to evict problematic tenants, increasing their administrative burden and driving up legal costs.

Whilst the Renters’ Rights Bill will introduce a new ground for landlords wishing to sell up to take possession, and will amend the existing ground for landlords looking to move themselves or their families into the property, it won’t be possible to enforce these grounds until after the first 12 months of the tenancy.

Landlords will also have to provide tenants four months’ notice, and won’t be allowed to market the property for 12 months after the expiry of the notice, or after the date any court claim is filed.

The bill will also amend the obligatory rent arrears ground (Ground 8), upping the required arrears from two to three months.

Why landlords are moving towards rent guarantee insurance

Section 21 eviction abolition will see landlords are facing new challenges when it comes to managing tenant relationships and ensuring a stable rental income. The increased rigidity of having to rely on Section 8 leaves landlords with a smaller safety net, especially in situations where tenants might default on rent, or breach their tenancy agreement.

Adding to this, longer court delays and limited bailiff availability could leave landlords waiting months to reclaim possession, potentially losing rental income in the process.

As a result says Landlord Action’s Paul Shamplina, rent guarantee insurance is likely to emerge as an attractive option, ensuring landlords can receive a steady income regardless of tenant payment issues. This insurance acts as a financial buffer, helping landlords to mitigate risks in a post-Section 21 landscape where eviction is no longer a straightforward process.

The need for stricter tenant referencing

The new landlord possession grounds will naturally prompt landlords to prioritise tenant stability from the outset, with a heightened focus on factors like income consistency, employment status, and rental history as indicators of a tenant’s likelihood to meet ongoing rental obligations.

Alongside rent guarantee insurance, therefore, Paul Shamplina says that landlords will also start reconsidering how they screen tenants, placing a stronger emphasis on tenant stability and reliability in order to protect themselves against the fallout of the eviction reforms.

The expanded Grounds for Possession under Section 8 will require landlords to present evidence of substantial issues, making it more challenging to remove problematic tenants.

In light of this, referencing will likely play a more prominent role, with landlords scrutinising tenant income stability, employment status, and rental history to reduce potential risks.

Many landlords are starting to turn to professional tenant referencing services or background checks for the first time, seeking greater reassurance in tenant reliability. This new approach means that prospective tenants may experience more rigorous assessments, as landlords aim to minimise the chances of costly, prolonged disputes that could threaten their income and stability.

Previous rental history will also become a valuable metric for assessing prospective tenants. A positive rental history, with timely payments, property care, and clear communication, offers insight into a tenant’s approach to their rental responsibilities.

As a result, many landlords will now contact a tenant’s former landlords for a more comprehensive reference, helping to mitigate potential risks associated with a tenant’s rental behaviour.

The history of Section 21 and why landlords are reeling at its abolition

Section 21, commonly known as the “no-fault” eviction clause, was introduced in 1988 as part of the Housing Act. It was designed to simplify eviction processes for landlords, allowing them to regain possession of their property without providing a reason, after giving tenants two months’ notice. Initially, the goal was to encourage more people to invest in buy-to-let properties, making renting a flexible option for both landlords and tenants.

With the assurance of Section 21, landlords were generally confident they could regain their property if needed, which supported a straightforward rental system.

Many landlords felt this option balanced the risk of renting by providing them with an “exit route” if issues arose, or if they simply wanted to sell the property. However, critics argued that it created an inherent insecurity for tenants, who could be asked to leave without specific grounds. Tenants, therefore, faced potential instability, often feeling their tenure could end abruptly.

Section 21 eviction abolition is a key aspect of the Labour Party’s Renters’ Rights Bill, aimed at increasing tenant security. However, this shift introduces a new risk for landlords, as they now must meet specific grounds for eviction, such as rent arrears or anti-social behaviour, which can be complex to prove and more costly in both time and resources.

This perceived shift in control means landlords are more exposed to potential legal hurdles, heightening their need for protections like rent guarantee insurance. With Section 21 gone, landlords feel a need to safeguard their income in case of protracted legal processes to remove tenants who may be in arrears, and rent guarantee insurance offers a practical solution.

Compounding risk: no-fault evictions ban combines with court delays, bailiff shortages and increasing tenant arrears, pushing landlords to take evasive action, or secure their investments with guaranteed rent.

With Section 21 eliminated, landlords will have to rely on “Section 8” for evictions, which is a more complex process requiring specific grounds, such as arrears or tenant misconduct.

However, this process relies heavily on the court system, which has been plagued by delays. These delays are often due to a backlog of cases, limited court resources, and a shortage of bailiffs to enforce eviction orders.

For landlords, this means that regaining possession of their property, even when grounds are valid, can take months, posing serious financial strain if tenants stop paying rent during this period.

These issues are further compounded by the current economic environment, which has made it difficult for many tenants to keep up with rent, leading to a rise in arrears.

As costs of living increase, more tenants may find it challenging to meet monthly rental obligations, pushing some landlords to the edge financially. Without the ability to remove tenants quickly via Section 21, landlords are left vulnerable to potentially lengthy periods without rental income.

In addition to tenant arrears, landlords themselves are facing rising costs, whether through maintenance, regulatory compliance, or mortgage interest rate increases. As costs rise, many landlords have increased rents to offset their expenses, yet this can place even greater financial pressure on tenants, potentially increasing the risk of arrears.

Each of these factors – longer eviction processes, rising arrears, higher costs, and delayed court proceedings – creates a compounding effect, leaving landlords with fewer viable options for mitigating risks and protecting their livelihoods.

Given these cumulative pressures, the use of professional tenant screening and thorough referencing is likely to become more common as landlords attempt to select tenants with a strong financial profile from the start, aiming to avoid situations where evictions or arrears become an issue.

Of course, all of this will attract more costs and will without doubt add to a landlord’s already pressured role. This is why landlords are increasingly looking to consolidate their costs and secure their rental income with a guaranteed rent agreement.

A rent guarantee agreement offers an alternative safeguard, providing a buffer against income loss, and sometimes covering the legal expenses associated with disputes. It offers a way to protect their rental income and provide a degree of financial stability during these times.

How do rent guarantee schemes work?

A rent guarantee scheme involves landlords letting their property to a specialist rent guarantee letting agent. They effectively become the tenant, guaranteeing the landlord’s rent for an agreed period, usually 3-7 years.

Rent is paid monthly by standing order for the duration of the agreement, even if the property is empty.

The agent then lets the landlord’s property, usually through its partnered local authorities and housing associations. They take charge of sourcing and referencing tenants, so that whole – now even more crucial – process is taken care of.

Specifically at City Borough Housing, for the whole duration of the guaranteed rent agreement, we take care of every aspect of the tenancy, including handling tenant queries, organising maintenance and repairs, carrying out quarterly property inspections and paying the rent every month.

When the agreement comes to an end, the property is returned in the same condition it was when we took it on, allowing for fair wear and tear.

Guaranteed rent schemes allow landlords to take a hands-off role with their buy-to-let investments, as well as providing reassurance in the increasingly fragile landscape of the private rented sector.

With City Borough Housing managing the property, for at least three years, there won’t be any need to source, reference or deal with tenants, to handle or pay for everyday maintenance and repairs, or to chase rental payments.

Ready to protect your rental property against the mounting pressures of the current economic and social climate? Talk to City Borough Housing.

The steadiness, risk relief and all-encompassing property management services offered by guaranteed rent schemes make them an appealing option for landlords, especially as the private rented sector faces potentially its biggest shift in decades.

Before signing into a contract, however, you should take time to check the terms and conditions of the rent guarantee scheme, taking into consideration factors such as fees, maintenance limits and the reputation and experience of the provider and doing your due diligence to ensure you a trustworthy partner.

City Borough Housing offers a professional, fast and friendly service with no hidden fees. We operate throughout London, as well as parts of Kent and Surrey. And it doesn’t take long to get started.

From inspecting your property to ensure everything is in order safety and compliance-wise, to agreeing terms and signing the rent guarantee agreement, can take as little as 48 hours.

To find out more, and to request your free property valuation, please get in touch.