Committee Stage Renters Rights

Renters' Rights Bill Enters Committee Stage

The Renters' Rights Bill enters the committee stage in the House of Lords from the 22nd of April before further scrutiny once all the agreed amendments are made.

Amendments tabled for discussion

It is expected that there will be over 200 amendments tabled for discussion. However, very few will be accepted and the core policies of the bill like fixed term tenancies and section 21 will be abolished when the Bill becomes law. 

Amendments likely to pass

The Government’s amendment clarifies that, where a landlord has served a valid Section 8 or Section 21 notice before the Bill comes into force, they will have three months from commencement to claim for possession. Without this change, landlords would need the court to issue the possession claim within three months to be certain they could gain possession. Given current court delays, this could have invalidated the claims of landlords – including those who acted promptly to regain possession.

The Bill also raises the arrears threshold from two months to three months under ground 8 notice a longer period for a landlord to wait before starting proceedings to gain possession.

Not only does this increase potential risks for landlords, who face a minimum of four months unpaid rent before they can apply for a possession claim, but tenants will be allowed to slip further into debt. The amendment to retain the two-month threshold, may pass as any tenants who are also receiving Universal Credit (UC) would invalidate a section 8 notice arrears threshold, if there are any delays in tenants receiving this support. A private landlord has no way of verifying whether a tenant is receiving UC, let alone whether payment has been delayed.

This risks a landlord making what they believe to be a valid claim for possession, only to find that all or part of the arrears are due to a delayed Universal Credit (UC) payment.  

Student Market 

Landlords renting out their properties to students are likely to make fundamental changes to their businesses. The student cycle will always operate in line with the academic year and an amendment is proposed to ensure all student properties – not just larger Houses in Multiple Occupation (HMOs) – benefit from the certainty provided by the student ground for possession (ground 4A). The exclusion of one and two-bedroom student properties from ground 4A risks up to one-third of private rented student accommodation leaving the student market, which will limit options and restrict access to higher education.  

Certainty of tenure

The Bill will remove fixed terms and make all assured tenancies open-ended. It will also enable a tenant to serve two months’ notice at any time, which will create uncertainty for landlords. The amendment to introduce a four-month notice restriction at the start of a tenancy, effectively creating a minimum six-month tenancy. This would provide some stability for both landlord and tenants.

Rent Appeals to be streamlined

The Bill aims to make it easier for tenants to challenge above-market rent increases; however, the only way a tenant will know whether a proposed increase is above market rent is to challenge it at the First-tier Tribunal. There are a couple of amendments on the table one is for tenants to check with the Valuation Office Agency (VOA) whether rent increases are in line with market rates or not, this will filter out any challenges that the tenant would make. The other amendment is to question further whether the tribunal service is adequately resourced to cater for challenges should they be needed. 

Having stated the above two amendments it's not likely that rent controls will pass into the final Bill as it's not current government policy to control rents.

Impact of the Bill

Landlord confidence is at an all-time low so understanding the ramifications of the bill and making it fairer and workable is what counts to sustain the private rental market from being hit with more landlords wanting to sell, which negatively impacts housing within the sector.

The other main factor behind the Renters' Rights Bill is the critical need for court reform to ensure the shift to a purely grounds-based possession procedure does not overwhelm the system and worsen possession timeliness. There are amendments to review the Bill’s impact on the sector, including the supply of rented homes and the regulatory and financial burden on landlords and the judicial system. These amendments are essential given the limited analysis provided by the Bill’s impact assessment and lack of clarity on court reform.

While there are no guarantees that these changes will be accepted, the committee stage in the House of Lords does offer the opportunity to debate the issues and test the Government’s thinking. Committee stage will conclude in early May stay tuned to keep you updated on key developments.