The Renters’ Rights Bill is likely to come into effect between Oct 2025 and Jan 2026. At that time, all ASTs (Assured Shorthold Tenancies) will become periodic ie they will not be for fixed terms and will  roll over month by month. Of course, ASTs already automatically become periodic at the end of the initial period assuming landlord and tenant agree to continue but, once the new law is in force, existing ASTs will immediately become periodic (rolling) tenancies.

The headline change in the new law will be prevention of most no-fault “Section 21” evictions, and the stated intention is to give renters more security. Exceptions to this are where the owners or their family wish to move in themselves or to sell the property, although tenants will benefit from a 12-month protected period at the beginning of a tenancy.

How does this affect flat management companies?

Buildings insurance policies for leasehold blocks typically require that any sublet flats that are rented on ASTs. Sometimes the lease imposes the same requirements, especially where there is a desire to avoid AirBnB and ‘party weekenders’, as such very short lets can make it almost impossible to know who is accessing the building. If the lease doesn’t cover this, then management companies can make reasonable regulations (providing that the lease allows) which could include restricting sub-letting to tenancies that meet insurer requirements.

A key thing to remember is that your insurers should already be aware of how many flats are sub-let and that full disclosure is your responsibility.  If in doubt about anything, do contact your insurer. Here at Gallagher, our leasehold flats specialists are always ready to answer customer queries,

While it is likely that insurers will contact you to clarify any substantive changes to their requirements after the Renters’ Act is in force, you might want to make extra sure you are fully covered by reminding them if you have sublet flats in the building that are now automatically becoming periodic tenancies.

While you would expect leaseholders who are sub-letting to know about the imminent new law, you may also want to remind them of both the current insurer requirements and keep them in the loop if you are advised of any changes.

It is likely that some of the insurance cover for owner occupiers will not extend to sub tenants. For instance, the provision of alternative accommodation can be restricted to owner occupiers. This means that anyone subletting their flat could find themselves losing tenants and facing expensive void periods or having to fund alternative accommodation for their tenants if the building becomes uninhabitable for any reason. These are risks they can insure themselves against, so do but remind them to check the block buildings insurance policy.

What is The Renters’ Rights Act?

Rental reform has been a long time coming, and this new law has its roots in the last government. It has now finished the lengthy, but reassuringly thorough, parliamentary process of turning a Bill to a Law. This involved readings, committees, and amendments in the Commons before the Bill went to the House of Lords where the process of close examination was repeated, with fine tuning which should ensure the new law is actually workable.

The Bill had its third and final reading in the House of Lords on 21 July, passing in just 20 minutes,  and now awaits Royal Assent. After that, the government will publish the regulations on how to implement the new law.

Here is a quick look at how an idea or manifesto promise, having first become Bill, becomes the law of the land.

The key provisions of the new Renters’ Rights Act will be:

    • Abolishing Section 21 “no-fault” evictions.
    • Creating a simpler, single system of periodic tenancies.
    • Strengthening tenant rights and protections against unfair evictions.
    • Introducing a Private Rented Sector Landlord Ombudsman.
    • Establishing a Private Rented Sector Database.

In practice the Renters’ Rights Act should make little difference to managers of blocks of flats. It is the relationship between the subletting leaseholder and their tenant that is changing. Leaseholders who sublet are still ultimately responsible for ensuring that lease conditions are met, and perhaps the introduction of the new law is a timely opportunity for management companies and agents to remind them of clauses such as quiet times, not hanging laundry on balconies and use of common areas and gardens and to ask them to ensure their tenants are aware of them?

But first, do check that you have already told your insurers about any sublet flats.

Disclaimer:

The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.

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