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Renters (Reform) Bill

The Renters (Reform) Bill has now been formally presented to Parliament for review, promising to deliver a fairer lettings system for tenants and landlords in England. The government have described the Bill as a ‘once in a generation overhaul of housing laws’.

Here at Fishers, as a regulated agent, we always ensure that our landlords are fully compliant with the continuously changing legislation and always ensure that a tenant is safe and secure in their homes. We understand that landlords may be concerned by the headline changes that have been proposed in the Bill, currently the final details are to be confirmed and may not be debated for some time. Across the board, landlords are currently getting some of the highest rents and have a great choice of tenants and we have no reason to see the Bill impacting this.

What is the Renters (Reform) Bill?
The Bill aims to address what the government describes as an ‘imbalance’ between tenants and landlords. It also aims to providing more security for tenants and improve standards in the Private Rented Sector, while protecting over 2 million UK landlords.

When will it take effect?
It is not yet confirmed when the bill will make its way into law. The first reading in Parliament has taken place and they will have time to review before debating at a second reading. No dates for a second reading have been confirmed yet, although it is believed that the Bill will be awarded Royal Assent in Spring 2024.

It will be unlikely be in force by this time as it is expected a transition period will be needed for current tenancies. It is thought that there will be a lead time of 6 months for new tenancies and 1 year for existing tenancies.

How will the Bill affect landlords?
The Bill will affect landlords in a number of ways, such as;

  • Abolition of Section 21
  • Amendments to landlord grounds for possession
  • End of fixed term tenancies
  • Termination of blanket bans on tenant demographics and pets
  • Rent Review changes and increased notice periods
  • The Decent Homes Standard
  • Introduction of new Ombudsman scheme and landlord portal

Abolition of Section 21
Abolition of Section 21 or ‘No Fault Evictions’ is considered one of the most significant changes. All evictions will need to be based on an approved reason through notice under Section 8 of the Housing Act 1988. The strengthened Section 8 structure is similar, with various grounds in Schedule 2 being altered.

Why the change?
The government advises that the abolition has been designed to ‘empower renters to challenge poor landlords without fear of losing their home’. Essentially, it means tenancies will only end if the tenant decides to end the tenancy or if a landlord has grounds for possession under Section 8.

How does this affect landlords?
It shouldn’t have a large impact on landlords, as most landlords are well managed and regulated and have no cause to use a Section 21. The Bill looks to strengthen possession grounds and to improve the court process to enable landlords to quickly and effectively regain possession of their property when a tenant fails to meet their obligations.

Amendments to Landlord Grounds for Possession
The bill aims to strengthen Section 8 grounds for possession. This means a landlord would be able to;

  • Move into rental property
  • Sell rental property
  • Regain possession from tenant in arrears
  • Regain possession from anti-social tenants

Many grounds will become mandatory and there will be more certainty in court if the ground can be proven.

Move into Rental Property
A current Section 8 ground can be served if you want to move into own rental property to live in as own home. It doesn’t currently extend to other family members. The Bill introduces a new ground that allows you and close members of family to move in. This ground cannot be used in the first 6 months of the tenancy and the tenant would require 2 months’ notice.

Sell Rental Property
Landlords will be able to sell their property using Section 8 grounds, under the new legislation. The current mortgage repossession ground will remain, with new grounds created where a landlord wishes to sell. The ground cannot be used in the first 6 months of the tenancy and the tenant would require 2 months’ notice of intent to sell.

Regain Possession from Tenant in Arrears
 If tenant has been in two months of arrears on at least 3 occasions in the past 3 years, you will be able to use a new mandatory ground. This applies even in the instance where the tenant is not currently in two months arrears when it reaches court.

Regain Possession from Anti-Social Tenants
In cases of serious anti-social or criminal behaviour from a tenant the landlord can regain possession. Landlords will need to provide proof of the behaviour, which could hold up proceedings. Evictions that do go to court, it has been pledged by the government that this process will be digital, to reduce any delays.

The government say these reforms ‘will strengthen powers to evict anti-social tenants, broadening disruptive and harmful activities that can lead to eviction and making it quicker to evict a tenant acting anti-socially’.

End of Fixed Term Tenancies
All fixed term tenancies will be abolished by the Bill; agreements will be periodic from the start. Under the new rules tenants will need to give the landlords two months’ notice to exit the tenancy. Notice periods of longer than two months will be made illegal.

Why the change?
It gives tenants more freedom to give notice at any stage.

How does this affect landlords?
Landlords will be able to give two months’ notice if they wish to sell or move into their rental property. Other notice grounds vary. If a landlord attempts to create a fixed term tenancy or tries to serve a notice to quit, they will be penalised by the local authority.

Termination of Blanket Bans on Tenant Demographic and Pets
Blanket bans on tenants could be removed as part of the Renters (Reform) Bill. The idea is this will reduce discrimination across the rental sector. Landlords will not be able to unreasonably refuse tenants with pets or blanket ban children, or tenants that claim benefits. Refusal or consent must be given within 42 days of permission being sought.

Why the change?
Aims to ensure landlords do not unreasonably withhold consent. Tenants will also be able to challenge when they have requests denied.

How does this affect landlords?
Landlords are encouraged to look at tenants’ credentials before making any decision. Where a tenant has a pet, the landlord can now insist the tenant obtains pet insurance. More details will be needed on this element, especially clarification where pets are banned in head leases or Houses of Multiple Occupation (HMO).

Rent Review Changes and Increased Notice Periods
Under the Bill rent increases would be limited to once per year and the notice period required to inform tenants increased to two months.

Why the change?
Prevents landlords from making sudden and considerable increases to rent. Tenants will be able to challenge increases where the see as unfair. Rent review clauses that lock tenants into rises will be banned.

How does this affect landlords?
Landlords will no longer be able to include rent increase clauses. Landlords will only be able to increase rents using Section 13 notices, which can be challenged by tenants.

Decent Homes Standard
Currently standard is only applicable to social housing. It looks set to become standard across the private rental sector. Decent Homes Standard states that properties must be free of any hazards, include useable facilities and be appropriately clean. The government aims to halve the number of non-compliant rental homes across the country by 2030. Vast majority of landlords provide safe and warm accommodation, Decent Homes Standard seeks to root out rogue landlords.

Why the change?
The government maintains the stance that ‘too many renters are living in damp, unsafe, cold homes, powerless to put things right and with the threat of sudden eviction hanging over them.

How does this affect landlords?
Several steps have already been put in place to raise property standards, such as legislation on smoke alarms, carbon monoxide alarms and the implementation of Homes (Fitness for Human Habitation) Act 2018 and Minimum Energy Efficiency Standards (MEES) in private rented homes.

The new Bill, will allow local council departments to have greater powers to enforce the Decent Homes Standard and deal with landlords that do not comply.

Introduction of new Ombudsman Scheme and Landlord Portal
A new Private Renters Ombudsman Scheme has been proposed under the new Bill. Designed to help landlords with tenant disputes and alleviate the pressure on the court system.  Membership would be obligatory to all landlords regardless of if they use an agent. A new property portal will also be introduced where landlords will be required to register their properties and will become a central hub for compliance. The goal is the portal will increase transparency for landlords and make it easier to adhere to the Decent Homes Standard.

Why the change?
It will give the tenant clearer information on the standard of the property they are interested in. The portal will list landlords’ obligations and allow the tenant to make more informed decisions when signing a new agreement.

How does this affect landlords?
All landlords will need to join the ombudsman. All landlords using an agent to manage properties already benefit from their agents being part of a mandatory redress scheme.

Other Proposed Changes in the Bill

Lifetime Deposits
Originally it was thought the tenant could have a deposit that moved with them around rental properties. Lifetime deposits were a focal point in early headlines however this has been toned down.

Tenant Modifications
No exact details have been given but tenants could be permitted to ‘modify’ properties, as long as they are returned to their original condition at the end of the tenancy.

Rent Repayment Orders
Government would like to further the Rent Repayment Orders, to reimburse any tenants for rent payments made while they have been living in a property that falls below the Decent Homes Standard.