The Renters (Reform) Bill 2025: what HMO landlords need to know

For HMO landlords who directly let rooms to individual tenants under Assured Shorthold Tenancies (ASTs), the Renters (Reform) Bill will bring about notable changes:

• Abolition of Section 21: The removal of ‘no-fault’ evictions means that landlords will no longer be able to regain possession of their property at the end of a fixed-term tenancy without a specific, legally valid reason under the reformed Section 8. This necessitates a thorough understanding of the revised and expanded grounds for possession, which may include rent arrears, tenant breaches of contract, or the landlord’s genuine intention to sell or move back into the property.
• Reform of Section 8 Grounds: Landlords will need to rely more heavily on the reformed Section 8 for possession. It’s crucial to maintain meticulous records of any tenant breaches and to follow the correct legal procedures when serving notice. The Bill aims to make the grounds for possession clearer and potentially more accessible for legitimate reasons.
• Application of the Decent Homes Standard: The Bill extends the Decent Homes Standard to the private rented sector, meaning HMO properties will need to meet minimum standards of safety, warmth, and repair. Landlords will need to ensure their properties comply with these standards and address any issues promptly.
• Private Rented Sector Ombudsman: The introduction of a private rented sector ombudsman will provide tenants with a formal avenue to resolve disputes outside of the court system. HMO landlords need to be prepared to engage with the ombudsman if complaints are raised and ensure their practices are fair and compliant with the ombudsman’s rulings.
• End to Fixed-Term Tenancies (Potentially): The Bill may move towards a system of periodic tenancies as the default, removing the concept of fixed-term ASTs. This would give tenants greater flexibility to leave with appropriate notice. 
• Restrictions on Rent Increases: The Bill aims to limit rent increases to once per year and tie them to market rates, preventing landlords from using excessive rent hikes as a means of ‘backdoor eviction’.

For landlords who lease their entire HMO property to a corporate entity like DawnVale Estates under a commercial lease agreement, the direct impact of the Renters (Reform) Bill is likely to be different:

• Commercial Lease Agreements: The contractual relationship between a landlord and a corporate tenant like DawnVale Estates is governed by a commercial lease agreement, which operates under different legal principles than Assured Shorthold Tenancies with individual tenants. These agreements typically outline the responsibilities of both parties regarding property management, maintenance, and termination clauses.
• DawnVale’s Responsibilities: DawnVale Estates, as the tenant under the commercial lease, assumes the responsibility for managing the property, including tenant sourcing, maintenance, and compliance with regulations related to the individual occupants. Therefore, the direct obligations imposed by the Renters (Reform) Bill concerning tenant rights, eviction processes, and the Decent Homes Standard will largely fall under DawnVale’s purview as the direct landlord to the occupants.
• Indirect Effects: While the Bill may not directly impact the lease agreement between the landlord and DawnVale, there could be indirect effects. For example, if the Bill leads to increased regulatory burdens or costs associated with managing HMOs to the required standards, this could potentially influence DawnVale’s operational costs and, consequently, the terms of future lease agreements. However, the immediate and direct responsibilities outlined in the Renters (Reform) Bill for individual tenancies will primarily be managed by DawnVale.
• Peace of Mind for Landlords: As DawnVale Estates guarantees rent and provides comprehensive management, landlords effectively outsource the direct responsibilities and potential complexities arising from the Renters (Reform) Bill. DawnVale takes on the task of ensuring compliance with new regulations and managing tenant relationships according to the new legal framework.