Renters Reform Bill – what changes can landlords expect?
The Renters Reform Bill is currently making its way through parliament and had its first reading in May 2023. A date has yet to be fixed for its second reading in the Commons, but it may take place in November 2023. The Bill sets out reforms to the Private Rented Sector. This follows publication of the government’s White Paper ‘A Fairer Private Rented Sector’ in 2022, which set out ambitious reforms to improve the quality of rental properties and provide more security for tenants in England.
We summarise below the key reforms that are currently detailed in the Renters Reform Bill.
- Fixed term tenancies will be abolished. Fixed term tenancies, including assured and assured shorthold tenancies, will be abolished and replaced by periodic tenancies with a monthly rental period. These changes will be implemented in two stages:
- All new tenancies will be periodic with effect from the Commencement Date specified in the Bill. That date has yet to be fixed, but the government has confirmed that it will be at least six months after the Bill receives Royal Assent.
- All existing tenancies will be converted to periodic tenancies from the ‘Extended Application Date’ specified in the Bill, which will be at least 12 months after the Commencement Date.
- Section 21 ‘No-fault’ evictions will be abolished. This fulfils the government’s pledge to end no-fault evictions to stop landlords evicting tenants who complain about rent increases or disrepair. In practice, landlords will still be able to serve and rely on Section 21 Notices to bring existing tenancies (ie, tenancies that pre-date the Commencement Date) to an end before the Extended Application Date.
- The grounds for obtaining possession will be revised. New grounds for possession have been introduced and existing grounds strengthened to compensate landlords for the abolition of no-fault evictions:
- New mandatory grounds permit landlords to take possession if: (a) they want to sell the property (after the first six months of the tenancy); or (b) the tenant is in repeated serious rent arrears (where the tenant has been in two months’ arrears at least three times in the previous three years);
- The current ground for landlords or their spouse / civil partner to take possession to re-occupy the property has been expanded to include ‘close family members’ which includes parents, grandparents, siblings, children and grandchildren; and
- Landlords will be able to seek possession of the property on grounds of criminal or serious anti-social behaviour immediately after giving notice, although the court will not make a possession order until 14 days after service of the notice.
- Conversely, the notice period for all rent arrears grounds will be increased from two to three weeks, to provide additional protection to tenants. The Bill also extends the requirements for landlords to hold rent deposits in a protected scheme and to supply prescribed information to tenants regarding the scheme before they can obtain a court order for possession. Presently these conditions only apply to no-fault evictions, but they will apply to possession orders sought on all grounds (except for criminal or anti-social behaviour) once the Bill comes into effect.
- Tenants will be required to give two months’ written notice to quit. Tenants can give notice at any time during the tenancy, so long as the notice aligns with the end of the rent period. This gives tenants security of tenure and flexibility, but landlords face the risk that tenancies could be significantly shorter once the standard six month fixed term is abolished. Given the associated costs of reletting the property and the lack of income between tenancies (particularly for buy-to-let landlords), this might lead some landlords to exit the market.
- Rent review clauses will be prohibited and rent increases will be restricted to once per year. Landlords must serve two months’ written notice to increase the rent. The rent can only be increased once every 12 months. Tenants can apply to the First Tier Tribunal to challenge any proposed increase in rent and the Tribunal will fix the rent to reflect the open market rent. Rent review clauses in tenancy agreements will no longer be effective.
- All private landlords must sign up to a new mandatory Ombudsman service and must pay a fee to join. This will provide a ‘no-cost’ alternative to court for tenants to resolve disputes concerning property standards and disrepair. The Ombudsman will have power to compel landlords to apologise, provide information, take remedial action or pay compensation to tenants of up to £25,000. If the tenant accepts the Ombudsman’s decision, it will be binding on the landlord and can be made enforceable as it were a court order.
- A new property database will be introduced. Landlords will be required to register and pay a fee to be included on the database and must provide information about themselves and their rental properties, so that tenants can identify who is responsible for the property. If landlords fail to register, they may be fined up to £5,000.
- Tenants will have the right to request that a pet can live with them in the property – landlords must not unreasonably withhold consent to such a request. Landlords can reasonably require tenants to obtain or pay for insurance for pet damage to the property as a condition of such consent.
- Landlords must produce written tenancy agreements. If they fail to do so, they face a fine of up to £5,000. However, the government has yet to provide details of what information must be included within the agreement.
As things stand, the Renters Reform Bill does not include the proposals in the White Paper: (a) making landlords subject to a statutory duty to comply with the Decent Homes Standard; or (b) prohibiting blanket bans on renting to tenants with children or on benefits. This is somewhat surprising given the government’s commitment to improving the quality of housing standards. However, the guidance published alongside the Bill suggests that the government shall bring forward separate legislation to implement these reforms, but no information on timing has been given.
In terms of timing for implementation of the Renters Reform Bill, it is unlikely that the Bill will come into force until the first half of 2024 at the earliest. Based on the government’s current timeline, the changes to new tenancies may come into force between autumn 2024-early 2025 and the changes to existing tenancies 12 months later (autumn 2025-early 2026).
This article was published on 26 September 2023.