The Renters Reform Bill
RENTERS (REFORM) BILL: YOUR COMPLETE GUIDE
The Renters (Reform) Bill went through a second reading on Monday 23rd of October. It will now move onto the committee stage where it will be closely examined in detail and where often amendments are made. The main point which came out of the second reading is that section 21 will be delayed in its implementation and until court procedures have been improved. They are also going to introduce a new ground for possession for student landlords.
Although most parliamentary bills generally receives a second reading "no sooner than two weekends after first reading", there has been a five month gap between the Renters (Reform) Bill first and second reading.
The government introduced the Renters’ (Reform) Bill to parliament on 17 May 2023. The Bill must now go through a lengthy parliamentary process before it becomes law.
What is the Renters (Reform) Bill?
The Renters (Reform) Bill sets out the government's plans to fundamentally reform the private rented sector (PRS) and level up housing quality. The proposed reforms commit to "bring in a better deal for renters" and marks "the biggest shake-up of the private rented sector in 30 years”.
The government first published the full extent of its plans in a white paper - A Fairer Private Rented Sector in June 2022. Most of the measures proposed in the white paper were included in the bill, published 2023, with a few exceptions that will be considered as "further improvements."
The bill, introduced to parliament on 17 May 2023, will need to pass through parliament before becoming law. Housing Secretary Michael Gove he hoped to see the bill in place "as quickly as possible."
What's included in the Renters (Reform) Bill?
1. Section 21 "no fault" evictions to be abolished
The bill confirms plans to abolish Section 21 - a process that enables private landlords to repossess their properties. Instead, landlords will only be able to evict a tenant under reasonable circumstances. In place of section 21, the bill outlines proposals to strengthen section 8. This allows a landlord to end a tenancy agreement early if they have a legal reason to do so.
This includes the introduction of a new mandatory ground for repeated rent arrears. This makes eviction mandatory where a tenant has been in at least two months’ rent arrears three times within the previous three years, regardless of the arrears balance at hearing.
There is also a new ground that means landlords can apply section 8 to a tenancy if they wish to sell a property, or if they wish to allow their family members to move into a rental property. This can apply after a tenant has been in a property for at least six months.
2. A single system of periodic tenancies
The bill confirms the government's ambition to simplify existing tenancy structures, by moving all Assured Shorthold Tenancies onto a single system of periodic tenancies.
Assured Shorthold Tenancies are currently the most standard type of rental agreement in the private rented sector. It is a common process for tenants to enter into a contract of six or 12 months. After this time has elapsed, a decision would be made to either renew the contract or switch to a periodic (e.g. month by month) payment.
Instead, the Renters (Reform) Bill proposes that all rental properties will be under a periodic tenancy - rolling by every month without having a specified end date.
The proposals outline that tenants would then need to provide two months’ notice when leaving a tenancy, to "ensure landlords can recoup the costs of finding a tenant and avoid lengthy void periods".
3. Notice periods for rent increases to be doubled
Rent increases will be limited to once per year and the minimum notice landlords must provide of any change in rent will be increased to two months. The Renters’ (Reform) Bill white paper outlines plans to end the use of rent review clauses, "preventing tenants being locked into automatic rent increases that are vague or may not reflect changes in the market price" and says that "any attempts to evict tenants through unjustifiable rent increases are unacceptable".
4. Tenants given more rights to keep pets in properties
The Renters (Reform) Bill outlines that tenants can request permission to pet in their home and that landlords cannot unreasonably withhold consent. A landlord must accept or refuse consent by the 42nd day after the date of the request. This can be extended by a week if a landlord asks for further information.
5. A new ombudsman covering all private landlords
Landlords "may" be required to join a government-approved ombudsman covering all private landlords who rent out property in England - regardless of whether they use a letting agent.
A landlord redress scheme would enable a former or current tenant to be able to make a complaint against a landlord, which would then be independently investigated. The bill outlines its conditions for what the redress scheme should include, but more details are needed on when the scheme would be set up.
WILL JOINING THE OMBUDSMAN BE MANDATORY FOR LANDLORDS?
In all cases, it seems that membership will be mandatory. The white paper says that "making membership of an ombudsman scheme mandatory for landlords who use managing agents will mitigate the situation where a good agent is trying to remedy a complaint but is reliant on a landlord who is refusing to engage".
It will also ensure that tenants have access to redress services in "any given situation, and that landlords remain accountable for their own conduct and legal responsibilities".
6. New Property Portal for private landlords and tenants
A new digital property portal will be introduced to "provide a single ‘front door’ to help landlords understand, and demonstrate compliance with their legal requirements."
The government says that "too often tenants find out too late that they are renting a substandard property from landlords who wilfully fail to comply, and councils don’t know who to track down when serious issues arise."
It notes that the portal will also "support good landlords to demonstrate regulatory compliance and to attract prospective tenants."
WILL IT BE MANDATORY TO REGISTER PROPERTIES ON THE PORTAL?
The portal aims to provide a solution to these issues, with landlords legally required to register their property on the portal and local councils empowered to take enforcement action against private landlords that fail to join the portal.
The portal will "dramatically increase local councils’ ability to enforce against criminal landlords". The government plans to incorporate some of the functionality of the existing Database of Rogue Landlords and Property Agents.
Future proposed changes for the private rented sector:
1. Applying the Decent Home Standard to the private rented sector
2. Bans on renting to families with children or those on benefits to be outlawed
There will be amendments along the way before the Renters (Reform) Bill becomes law so keep following our blogs to find out more on what is perceived to be a major shake up of the private rented sector.
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