Landlords are set to be banned from evicting renters without a reason as part of a package of measures to make the private rental sector fairer.

The Renters Reform Bill, which was included in the Queen’s Speech, will abolish so-called ‘no fault’ section 21 evictions in England, under which landlords can force renters to leave their properties even if they have done nothing wrong.

Local councils are also set to be given more effective tools to enable them to crack down on rogue landlords, as part of a campaign to halve the number of non-decent rental homes by 2030.

In addition, a new property portal will be introduced to give renters performance information on their landlord to help hold landlords to account.

The government is also pressing ahead with moves to improve living conditions for people who live in social housing.

The Social Housing Regeneration Bill will introduce new Tenant Satisfaction Measures to help people see how their landlord is performing.

It will also ensure the Regulator of Social Housing is able to inspect properties and act as a watchdog on standards.

Why is this happening?

The government made a manifesto commitment to abolish no fault evictions.

It is now acting on this pledge by including the Renters Reform Bill in the Queen’s Speech, which means it will be part of the government’s legislative programme for the new session of Parliament.

Alongside greater protection for renters, the bill also introduces a stronger legal framework for landlords to help them regain their properties if renters are repeatedly in rent arrears, while notice periods will also be reduced for cases of anti-social behaviour.

Who will it affect?

The bill is good news for the 4.4 million households in England who currently rent their home in the private sector.

Not only will renters have greater security once no fault evictions are banned, but the bill will also empower them to challenge unfair rent increases and other poor practices by landlords without the fear of being kicked out of their home in retaliation.

Research in 2019/20 found that 22% of renters had not ended their last tenancy by choice, forcing them to spend an average of £1,400 in moving costs.

Meanwhile, applying the legally binding ‘Decent Homes Standard’ to the private rented sector for the first time will ensure renters have access to safer, better quality homes, as one in five private rented homes currently falls short of this standard.

Measures to provide a more effective legal framework and stable market for landlords should also benefit renters, as it should encourage existing landlords to remain in the sector and new ones to enter it.

As a result, the supply of private rental homes should increase, offering more choice to renters and helping to relieve some of the upward pressure on rents.

The introduction of a new Ombudsman for private landlords will also enable disputes to be resolved without having to go to court, which is both expensive and slow.

Residents to be more involved in local developments

A third bill included in the Queen’s Speech that will impact the housing market is the Levelling Up and Regeneration Bill, which includes measures to reform the planning system to give residents more involvement in local development.

The bill aims to simplify and standardise the planning process, so that local plans can be produced more quickly and will be easier for communities to influence.

The move is expected to help ensure new developments are attractive and environmentally friendly, as well as including affordable housing.

It will also see the introduction of a new levy on developments, which will be set locally and used to pay for the infrastructure that communities need, such as housing, schools, GPs and new roads.

The Bank of England has increased interest rates for the fourth consecutive time in a bid to tackle soaring inflation.

Its Monetary Policy Committee has raised the official cost of borrowing – known as the Bank Rate – from 0.75% to 1%.

The move will lead to around two million homeowners with variable rate mortgages facing higher monthly repayments, adding around £26 a month for someone with a £200,000 mortgage.

But there is some good news for homeowners looking to remortgage.

The rate rise had been widely anticipated and much of the increase has already been priced into new fixed rate deals by lenders.

At the same time, intense competition in the mortgage market has prevented the full increase to the Bank Rate since December from being passed on to new borrowers.

Why is this happening?

Inflation, which measures increases to the cost of living, is continuing to rise as the conflict in Ukraine puts further pressure on prices.

Consumer Prices Inflation – the key measure used by the Bank of England – has soared to 7% during the past year.

This is well above the 2% target at which the Monetary Policy Committee is expected to keep inflation and even higher than its own predictions for inflation.

The Monetary Policy Committee also expects the situation to get worse, with inflation expected to hit 10% by the end of the year, due in a large part to further increases in energy costs anticipated in October.

The Monetary Policy Committee uses changes to interest rates as a way of controlling inflation.

The theory is that by making it more expensive to borrow money, people and companies will spend less, which will help to reduce pressure on prices.

With inflation expected to continue to increase, there are likely to be further increases to the Bank Rate in the months ahead, with economists predicting they could rise to 1.5% or even higher.

What does it mean for me?

The vast majority of homeowners, around three-quarters, will not be impacted by the change as they are on fixed rate mortgages.

The increase to the Bank Rate will only affect you if you have a variable rate mortgage, such as a tracker deal, or if you are on your lender’s standard variable rate.

Only around 850,000 homeowners currently have a tracker mortgage, while a further 1.1 million are on a standard variable rate one.

With a fixed rate mortgage, monthly payments stay the same for the length of the deal, which is usually two or five years.

For homeowners on a variable rate deal, their repayments will increase by around £26 a month if they have a £200,000 mortgage.

As a result, repayments will have risen by a total of £92 per month since interest rates first started to rise in December.

But it is worth remembering that people on standard variable rates typically have much lower outstanding mortgages than average.

If they only owe £50,000 through their mortgage, their monthly repayments will have risen by just £23 a month since December.

What’s happening in the mortgage market?

It is still too early to say how much of the latest increase will be passed on to borrowers by lenders.

But the previous increases have not been passed on in full due to intense competition in the mortgage market.

For example, although the Bank Rate increased by 0.65% between December and March, standard variable rate mortgages rose by only 0.37% on average during the same period.

The increase in interest rates has also been widely anticipated, so much of the rise has already been priced into fixed rate deals.

As a result, rates on these products are not expected to rise significantly following the latest change to the Bank Rate.

The average two-year fixed rate mortgage currently stands at 3.03%, up from 2.29% in November last year before rates started to rise.

What should I do now?

If you have a fixed rate mortgage, you do not need to take any action, as you will not be impacted by the change.

If you are on your lender’s standard variable rate, you should think about remortgaging to a more competitive deal.

The difference between the average interest rate charged on an SVR and the typical one for a fixed rate mortgage is currently 1.75%.

As a result, someone with a £200,000 mortgage being repaid over 25 years could save £192 a month, or a massive £4,611 over two years by switching.

Their savings would increase by a further £695 over two years if standard variable rates rise by a further 0.25%.

Meanwhile, an estimated 1.5 million homeowners will come to the end of fixed rate mortgage deals this year.

Unfortunately, if you are coming off a two-year fixed rate mortgage, you are likely to find that rates for new deals are higher than when you last remortgaged.

The average cost of a two-year fixed rate mortgage was 2.09% in May 2020, nearly 1% less than the 3.03% it stands at today.

As a result, if you have a £200,000 mortgage you could see your repayments rise by £98 a month.

But remember, this calculation is based on average rates and there are better deals available, with best buy rates starting at around 2.3%.

Your home is also likely to have increased in value since you last remortgaged, while you will have repaid some of your loan. As a result, you are also likely to qualify for a competitive mortgage rate.

If you are worried about higher repayments when you remortgage, you could consider increasing your mortgage term.

Extending your mortgage term from 20 years to 30 years would reduce your monthly payments from £1,120 to £850, based on a £200,000 mortgage and an interest rate of 3%.

But remember, if you do this, you will end up paying more interest over the life of your mortgage.

The news is better if you are coming to the end of a five-year fixed rate mortgage, as average rates on these are only 0.28% higher than five years ago, a difference of £28 a month for someone with a £200,000 mortgage.

If you are looking to take out a new fixed rate mortgage, you will need to decide whether you want to remortgage on to a two-year or a five-year deal.

The difference between these two rates has continued to narrow, with the average premium for fixing for five years, rather than two years, now just 0.14%.

If you think you may struggle to keep up with your mortgage repayments following the run of interest rate rises, it is important to contact your lender as soon as possible.

There are a number of steps lenders can take to help you, including granting you a temporary payment holiday or putting you on to an interest-only mortgage for a short time.