After what feels like countless delays, we finally have our hands on the Renters Reform Bill. Introduced to Parliament, on 17th May 2023, the bill sets out the government’s plans to reform the private rented sector (PRS), after concerns that under the current legislation some tenants aren’t being protected properly. The bill aims to standardise rental conditions, and to ensure that all PRS tenants have safe, fit-for-purpose homes, to live in.
The government first published its plans in a white paper back in June 2022 (you can read our blog post on that here), and the majority of their original proposed measures are included in the new bill. However, there are a few exceptions that they now consider as ‘further improvements’ to be implemented later down the line. The publication of the bill takes the measures one step closer to being passed into law, in what’s being deemed as the most significant legal change in the lettings industry this generation has seen.
Key points of the Bill
Abolish Section 21 Evictions
Currently a landlord can evict a tenant with 2 months’ notice, using a section 21, commonly referred to as a ‘no fault eviction’. These evictions have been seen as problematic by tenants, who feel they are unable to safely report any problems they are having in fear of being served a notice they are unable to challenge. Under the reforms, section 21’s will be eliminated, meaning a tenancy can only end if a tenant gives notice, or a landlord uses one of the valid section 8 grounds – more on these later.
Single System of Periodic Tenancies
Under the bill there will be a single system of monthly periodic tenancies, meaning no more ASTs, or fixed term rental periods. The new measures will mean tenancies will be indefinite until either the tenant gives notice, or the landlord uses one of the reasonable grounds for eviction under section 8 rules. Written tenancy agreements will also now be mandatory, outlining the basic information and responsibilities for all parties involved.
The exceptions to periodic tenancies include:
- Purpose built student accommodation (note this does not include private student accommodation).
- Temporary accommodation.
- Supported housing.
Rent increases
Landlords will only be able to increase rents once per year and must now provide a 2-month notice. Tenants can challenge any rent increases through the first-tier tribunal, to avoid the rent being raised astronomically in a bid to force tenants out of a property. A Section 13 notice will now have to be used and rent review clauses will be banned from tenancy agreements.
Grounds for Eviction under Section 8
The government plans to strengthen the grounds for eviction under Section 8 of the Housing Act 1988. Unlike a section 21 notice, a section 8 notice can only be used if the tenant is in breach of certain criteria. The new system will introduce new grounds, make many of the existing grounds mandatory, and change several of the notice periods, to make it easier for landlords to regain possession of their property.
New & Amended Ground Highlights:
- Ground 1: Moving in – A mandatory ground which can be used when landlords want to move into the property. It has been expanded to include landlords’ close family members, and the landlord will no longer have to have previously lived in the property. It cannot be used within the first 6 months of a tenancy, and 2 months’ notice will need to be given.
- Ground 1A & B: Selling the Property (New)– This mandatory ground is being introduced for landlords who wish to sell their property. It cannot be used within the first 6 months of a tenancy, and 2 months’ notice will need to be given.
- Grounds 2ZA and 2ZB: Superior lease/landlord (New) – Applies when a superior landlord ends a lease under a superior tenancy or seeks possession when they become the landlord.
- Ground 6A: Enforcement action (New) – If a landlord has an enforcement action placed upon them and is no longer allowed to rent the property, 2 months’ notice can be given.
- Ground 7: Death of the tenant – The time to start the process has been extended to 24 months to allow more time for any succession proceedings.
- Ground 7A: Anti-Social behaviour – If a tenant has been convicted of a serious offence, then the notice period for this ground has been lowered to 2 weeks, and the landlord is able to start court proceedings immediately upon giving the notice.
- Ground 8: Rent arrears – Landlords will no longer use this mandatory ground if the rent arrears have been caused by a delay in receiving Universal Credit payments. The notice period has been increased from 2 weeks to 4 weeks.
- Ground 8A: For repeated rent arrears (New) – This ground can be enacted if a tenant doesn’t pay at least 2 months’ rent, on 3 separate occasions. This stops the current loophole of the tenants paying a nominal amount to keep it under the threshold.
- Ground 14: Anti-Social behaviour - Wording changed from ‘likely to cause nuisance and annoyance’ to ‘capable of causing nuisance and annoyance’, giving a wider range of behaviours to be considered. This discretionary ground’s notice period is to 2 weeks, and the landlord can start court proceedings immediately upon giving the notice.
New specialist grounds for the agricultural sector, those who provide supported, or employment related accommodation, and tenancies granted for homelessness duty are also being introduced. Additionally ground 3, allowing for mandatory repossession for certain holiday lets is being repealed, and current grounds 2, 4, 5, will no longer need prior warning that this ground could be enacted to be successfully used.
Pets in Lets
This bill will legislate that consent is not unreasonably withheld when tenants request to have a pet in their home and gives the tenant a right to challenge a decision if consent is withheld. To aid landlords with this, the Tenant Fees Act 2019 will be amended so that pet damage insurance becomes a permitted payment. This means landlords can require a tenant to take out pet insurance or can take out pet insurance and ask the tenants to reimburse them for any costs or excess payments.
Property Ombudsman
Since 2014 it has been a legal requirement for all letting agents and property managers to be part of a government approved redress scheme, otherwise known as a property Ombudsman. The point of an Ombudsman is to protect consumer rights by providing fair, impartial, and binding resolutions without needing to go to court. This results in decisions being made more quickly, cheaply and without the adversarial nature of the courts system.
However, the Renters Reform bill will require all private landlords to be part of the one chosen government approved property ombudsman, regardless of whether they use an agent or not. This will mean all tenants will have access to the Ombudsman services, allowing them to pursue redress for free, which will hopefully encourage tenants to feel more confident in making complaints where necessary. The Ombudsman will have powers to enforce landlords to take remedial actions, issue apologies, provide information and pay compensations, ensuring landlords become more accountable for their conduct and responsibilities. Failure to comply with the redress schemes binding decision for serial or serious offenders could result in a Banning Order. The cost of joining the Ombudsman has yet to be revealed.
Property Portal & Enforcement
A new digital property portal will be created in England, initially used as a register of landlords and their private rented properties. Joining the database will be a legal requirement, and a landlord can be fined if they advertise a property not on the register or provide fraudulent information. The information a landlord will need to provide includes the their name, details on property ownership and management, information relating to the property’s standard, and entries on Banning Orders, convictions for serious offences, and other breaches. The cost of registering on the property portal hasn’t yet been announced. Once this is in place the government hopes that the property portal will be the foundation of a future PRS service, providing an information hub for tenants, landlords, and local councils.
They are hoping the Property Portal will play a key role in helping the government enforce the new rules under the Renters Reform Bill, and they will be asking the Local authorities to help them with this. The government will introduce a "lead enforcement authority" to help share relevant information with the councils to help make sure that they're consistent in how the new regulations are enforced and they will be increasing the local authorities’ ability to administer actions against criminal landlords. The bill proposes that all councils will need to enter any eligible landlord offences to the property portal, and will be able to fine landlords, and hand-out banning orders if they break certain terms of the bill.
Further Improvements
Many of the aspects of the white paper that have not been included specifically in the bill, have been listed as ‘further improvements’, that the government has committed to delivering in future.
The Decent Homes Standard
The Decent Homes Standard (DHS) is currently the metric used to assess the quality of homes in the social rented sector, and the white paper set out the governments intentions to also apply this to the PRS, to ensure everyone had the right for a safe and decent home to live in. However due to the inclusion needed from the social housing and energy efficiency sectors, it has been more complex to implement, and therefore not included. The government did undertake a consultation into the DHS in 2022 but the results are yet to be announced. It is likely that the new property portal will be key into implementing and monitoring the DHS whenever it comes into play.
Tenants Right’s – Benefits & Children
The idea is to make it illegal for landlords or agents to place blanket bans on renting to those in receipt of benefits, or families with children, to destroy the barriers in place that leave certain tenants with limited options. The government have said this is still a priority for them, and policy making is ongoing behind the scenes. The white paper also suggested that other vulnerable groups such as those who have been incarcerated, could potentially be included in this blanket ban reform.
Court Reform
Sadly, there has been no specific plan to overhaul the court process to deal with the likely increased number of cases that need to be seen, once section 8 notices will be the only form of eviction, however the government has said they plan on working with the Ministry of Justice and HM Courts and tribunals Service to create a ‘modern, digital service’.
More Powers to Local Authorities
The bill emphasizes that it will give councils more "investigative powers” and will explore how to allow councils to report on enforcement activity, particularly to help reduce the number of criminal landlords, however no more details on how they are going to do this have been given.
What happens next?
The question now is, "when is this likely to take effect?" Any bill the government want to make law usually takes between 9 – 12 months to pass through the houses and finally reach royal assent. However, Michael Gove has made it clear that he wants to get the bill through by next year. Currently the bill has had its first reading, which gave MPs the chance to debate the bill, but there are many steps between that and the final stage of royal assent.
The government have said they plan to bring the reforms in, in 2 stages. The first implementation date will see the reforms be applied to all new tenancies, and then all existing tenancies will transition to the changes on the second implementation date. Other reforms outlined in the bill such as the new property Ombudsman, won’t be introduced on the day the bill becomes law, but will be actioned as soon as possible after royal assent. How long ‘as soon as possible’ means, we don’t yet know.
Realistically, we think we’re looking at October 2024 for the bill to become law, however this is just an estimation, and we will keep you updated as and when we learn more.
You can follow the bills passage to becoming law here
