Carter Jonas: Rural landlords urged to act as sweeping rental reforms become law

Carter Jonas is urging rural landlords to review rented property on their farms and estates in light of the Renters' Rights Act, which became law on Monday.

The legislation delivers the most significant overhaul of the private rented sector in England in decades and brings major implications for rural property-holders.

Landlords of cottages, farmhouses and other estate lets need to understand their obligations under the new framework or potentially face fines or rent repayment orders.

While the full suite of changes will roll out over time, it will ultimately deliver stronger tenant protections, heightened compliance obligations and a need for more professional property management.

Under the new law all assured shorthold tenancies and fixed-term assured tenancies will convert to open-ended, periodic tenancies.

Section 21 evictions, which are known as 'no-fault' evictions, have been abolished and landlords will require valid grounds for any possession claim, such as sale or personal use. Notice periods will be extended and the margin for informal, ad-hoc tenancy arrangements greatly reduced.

From a rural and estate point of view the consequences are profound. Owners who previously relied on long-standing informal tenancy terms will now face ­lifetime tenant occupancy unless the landlord meets a prescribed ground to regain possession.

The introduction of a public database of landlords and advertised rents means transparency and market discipline will be imposed. Landlords will be unable to accept above-advertised rents or bid competition from tenants.

Rural homes that do not meet the incoming Decent Homes Standard or fail to comply with the extended application of Awaab's Law (covering damp, mould, hazard elimination and minimum safety) will face increased risk, both reputational and financial.

Carter Jonas Partner Chris Turner said: "For rural landlords the game has changed. From now on every tenancy must be treated as a long-term investment under a new legal framework. Unless you are confident in compliance, enforcement, documentation and asset management you risk being caught out."

Mr Turner said that many landlords are already reviewing their portfolios with a five-to-ten-year outlook. Rising rural rents help absorb some of the compliance cost pressures. For example, small cottages which let for under £1,000/month five years ago are now achieving £1,500/month, but the scale of the upgrade burden is substantial.

"We are talking about costs of £30,000 or more on older rural lets to meet proposed insulation, energy performance and safety standards over the next decade," he said. "The new law doesn't just raise the bar for new tenancies, it means existing lets must be analysed now."

Carter Jonas recommends that landlords understand the implications of the new law, and review their responsibilities before the new standards are applied.

This may include an audit of their properties, check that their houses will be compliant, ensure their documentation is robust, review exit and possession strategies, and engage property-management expertise that can navigate rural-specific issues such as worker-housing exemptions, heritage building limitations and estate-let markets.

Comment from Strutt & Parker on the implications of the Renters' Rights Act for farm and estate businesses with let property

The Renters' Rights Bill has received Royal Assent, marking the most significant overhaul of the private rented sector in decades.

It is a pivotal moment, bringing substantial changes for landlords across three key areas: rent review procedures, length of occupation and administrative requirements.

Jess Mountain, a member of Strutt & Parker's Private Client team, says: "At this stage there still is no information on when different elements of the Act will come into force, so we await further details with interest. But given the scale of the changes, a phased introduction of the reforms will be welcome.

"This is a major piece of legislation, introducing a wide range of new rights and responsibilities for both landlords and tenants. Many farms and estate businesses will be affected. While the Act doesn't apply to residential property let under an FBT or AHA tenancy, it will cover any residential property on a holding that's sublet under an AST or Assured Tenancy. 

"There will be cost implications for landlords, including new administrative requirements such as registering and paying fees for a tenant redress scheme and landlord database, as well as increased maintenance obligations. 

"Keeping detailed records and also carrying out thorough tenant checks will be more important than ever.

"However, after years in the making, it's positive to finally have clarity on how the Private Rented Sector will operate. We hope this Act will draw a line in the sand on tenancy reforms and provide greater stability for the future."

For landlords, the key reforms are as follows:

•                              All Assured Shorthold Tenancies (ASTs) will convert to periodic agreements with no fixed end date.

•                              Tenants will be able to serve a notice to quit from day one of a tenancy with two months' notice.

•                              Section 21 'no fault' evictions abolished - landlords will need specific legal grounds for regaining possession.

•                              The threshold for eviction under Section 8 will rise from two to three months' rent arrears.

•                              Rent rises will be limited to once per year, capped at market levels and only one month's rent in advance will be allowed.

•                              Tenants will be empowered to challenge unreasonable rent increases.

•                              A new ombudsman, tenant redress scheme and landlord database will be introduced.

•                              Maintenance and repair obligations will increase to comply with Decent Homes Standard and Awaab's Law (latter to increase focus on hazards such as damp and mould).

•                              Tougher penalties for non-compliance and greater enforcement.

Jess Mountain adds: "Landlords are entering a more complex and demanding era, but our team can help them to successfully navigate what these changes mean for their rural business. These changes will make it more important than ever to stay on top of your legal responsibilities and day-to-day obligations. Expert guidance and support can make a big difference."