ESTAS Insights Newsletter Edition 15


In this edition PayProp MD Neil Cobbold explains why Private Rental Sector changes in 2023 provide big opportunities for letting agents.

PRS changes in 2023 provide big opportunities for letting agents

The private rented sector (PRS) across the UK is set for some big changes in 2023.

Letting agents in England will finally see the reforms outlined in the government's “A fairer private rented sector” white paper feature in upcoming legislation. In Wales, the PRS will be getting to grips with The Renting Homes (Wales) Act 2016 which took effect on 1 December 2022. Scottish agents continue to deal with the fallout from temporary legislation that prevents landlords from raising rent and restricts the grounds for eviction, while the PRS underwent substantial changes in Northern Ireland with the introduction of the Private Tenancies Act (Northern Ireland) 2022. Letting agents will need to be aware of these changes, but the best will be able to leverage them to show their market knowledge and professionalism to attract new landlords to their fully-managed service.

Arguably, the biggest changes to the UK’s PRS will be seen in England with the planned introduction of the Renters Reform Bill later this year. The government's “A fairer private rented sector” white paper will inform PRS legislation in 2023 and bring several key changes to the industry.

One of the key proposals in the white paper plans to improve the quality of rental properties by introducing a new "minimum standard" for rental properties. This will include basic requirements such as a working heating system and a functional toilet, as well as more general requirements such as adequate lighting and space. This is intended to ensure that renters are not living in substandard accommodation, and will put pressure on landlords to improve the condition of their properties. However, it will also mean that agents will need to be more diligent in ensuring that properties meet the new minimum standard and that landlords are aware of their obligations under the new system.

Another key area is the removal of Section 21 which enables so-called ‘no fault’ evictions. If this legislation passes, landlords will need to use specific grounds for eviction and go before the courts to justify it. This burden of proof means landlords and letting agents will need to be diligent in recording instances where the tenant breaches their tenancy agreement. For small-scale landlords, this could present a problem, one which a professional letting agency can solve using technology to accurately record, for example, a history of rent arrears that would provide grounds for eviction.

In addition, tenants will be able to challenge any unfair rent increases in court. While the government is yet to spell out what counts as a fair rent increase, this change will make it more important for landlords to lean on the advice of letting agents who know the market to ensure rent increases are appropriate.

In Scotland, tenants, landlords and agents will continue to see the impact of temporary legislation set in 2022 that restricts evictions and limits rent increases. The latest from the Scottish government is that these restrictions will be in place until at least September 2023.

However, from April landlords will be able to increase rents by 3%, and can also apply to Rent Service Scotland to increase rent by up to 6%to partially cover increased costs like mortgage interest or service charges. While these figures are still well below the rate of inflation, it is more than the current 0% increase allowed.

Agents in Wales will be busy adapting to the new regulations introduced in The Renting Homes (Wales) Act 2016, which took effect on 1 December 2022. One of the biggest changes is to the ‘no fault’ notice period, which has increased from two to six months. Landlords that need to evict a tenant sooner will now need to demonstrate grounds for eviction. New home standards have been introduced meaning landlords need to ensure the properties they rent out are fit for habitation, while new rules governing the passing on of a rental home in the event of the tenant dying have been implemented. Finally, all current tenancy and licence arrangements have been replaced. The vast majority of all PRS tenants will need to be issued with a new standard occupation contract, and landlords and agents must provide current tenants with a written statement within six months from 1 December 2022 outlining the new contract.

While agents in Northern Ireland have already had a few months to implement the Private Tenancies Act (Northern Ireland) 2022, the impact will still be felt in 2023. The biggest change is the amount of notice a landlord must give a tenant when they want them to leave a property. While the minimum is four weeks’ notice, some landlords could have to wait up to 12 weeks depending on the length of the tenancy. Getting the notice period right will be key for landlords and agents in 2023. However, more extensive reform of the PRS in Northern Ireland could be coming. A report commissioned by the government outlines further steps that could be taken to reform the industry, including rent controls, increasing housing supply and welfare support.

While all of these changes across the UK will mean agents need to adapt, it also presents a tremendous opportunity for professional letting agents to demonstrate their knowledge and experience to attract new landlords. Landlords will need guidance adapting to these new, more complex regulations and, according to the English Housing Survey, only 18% use an agent for management services. The proposed changes in England, coupled with the new rules across the rest of the UK, present an ideal opportunity to reach out to the other 82%, demonstrate their knowledge of the market and help them ensure their properties comply with the latest legislation. Agents using PropTech to scale their lettings businesses can take on this new business efficiently without increasing headcount to cope with the additional work. As a result, those early tech adopters are poised to make a success of 2023.

ESTAS Key date update for 2023

28th February – Deadline for reviews for 2023 awards
Midnight on 28th Feb is when the ‘Review Season‘ closes for the 2023 awards. As long as you have a minimum of 15 reviews from sellers & buyers or 15 from landlords or tenants (if you are entering one of the letting categories) your branch will be eligible for the ESTAS Shortlist for 2023. For all the minimum review requirements please click here

May 2023 - ESTAS Shortlists announced
After our awards audit in March & April comes the second biggest date in the ESTAS calendar. We’ll be hosting our virtual shortlist events every Friday afternoon throughout May announcing all the shortlisted firms around the UK.

20th October 2023 - The ESTAS Awards
The biggest day in the UK residential property industry! Once again we’ll be bringing together the cream of estate agency, property lawyers and mortgage brokers to see who has won the most coveted awards in property in 2023.

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