Where are we now?
Let’s take you back to 2019 when, as part of its manifesto, the Conservative government pledged to reform the private rented sector. The government proposed the Renters Reform Bill with a number of changes to shake up the sector. The bill received its first reading in May 2023. 5 months later, the second reading debate took place, with the committee stage being recently completed at the end of 2023. The next stage is the report stage and third Reading, which was expected to take place in February or March 2024. It is then expected to go to the House of Lords to agree the final version and then onward to receive royal assent.
At the time of writing, there has been no update on when the third reading is likely to take place, and it appears there is rebellion in the government on parts of the bill, leading to speculation that it may never pass.
Section 21 Notices
One of the key commitments of the bill is to abolish section 21 ‘no fault’ evictions to provide tenants with more security, and to transition all tenancies to periodic contracts. This was met with a lot of resistance from landlords. The government then announced that they would pause the process to work closely with the Ministry of Justice and HM Courts and Tribunal Service to “drive forward improvements to the court possession process so that users have a modern, digital service that will align with the reforms to tenancy law”.
In October 2023, the government made a surprise announcement that the abolition of section 21 would only occur when “sufficient progress has been made to improve the courts”. This would include the digitising of the courts process, improving bailiff recruitment, and providing more advice to landlords and tenants. However, in February 2024, Michael Gove, Secretary of State for Levelling Up, Housing and Communities, reconfirmed the position that section 21 notices would be abolished before the general election but did not shed any light on how this would be implemented.
What Happens if Section 21 Notices are Abolished?
The bill proposes to “strengthen” the section 8 process and add new mandatory grounds for possession where:
- a landlord wishes to sell the property
- a landlord intends to move a family member into the property
- a tenant has been in at least two months’ arrears, at least three times, in the last three years
- a landlord has been served with an enforcement notice by the local authority and needs possession to comply with the notice
The bill also proposes to amend the discretionary grounds relating to anti-social behaviour to reduce the evidence level required for possession.
Implementation
With respect to implementation, the government proposed to provide at least 6 months’ notice of the first implementation date, after which all new tenancies will be periodic and governed by the new rules. Specific timing will depend on when royal assent is secured. All existing tenancies will transition to the new system on a second implementation date. After this point, all tenants will be protected from section 21 eviction. The government proposes to allow at least 12 months between the first and second dates.
What About my AST?
The bill intends to simplify the tenancy structure and to have a single system of period, or ‘rolling’ tenancies.
What does this mean for landlords and tenants? No fixed end date with tenancies rolling each month.
Tenants would need to provide two months’ notice to leave the tenancy, and the landlord giving two months’ notice, or by using the more stringent section 8 grounds. Landlords have raised concerns about breaching their mortgage conditions, which often require a minimum 6-month term for tenancies.
The Property Portal
The bill proposes a new database of Landlords and their properties for transparency purposes, also aiming to eliminate ‘rogue’ landlords. The database would include information about existing and prospective landlords as well as information about any banning orders, fines, breaches etc. Landlords will be obliged to register with the database and to pay a fee. Details of the fee are awaited, but will be required to be “fair and proportional”.
The Private Sector Property Ombudsman
The bill proposes to introduce a new government approved ombudsman. The scheme would then be a one-stop shop for any disputes between a landlord and tenant. The ombudsman will have powers to compel landlords to issue an apology, provide information, take remedial action, and/or pay compensation of up to £25,000.
All landlords would be obliged to join the scheme, irrespective of whether they use an agent. Again, there will be a fee connected to the membership, details of which are awaited.
What About Student Tenancies?
Purpose built student accommodation will be exempt as long as the provider is registered for government-approved codes. However, students in multiple occupation will need to move to periodic tenancies.
Rent Increases
Landlords will be able to increase rents once per year, similar to the current section 13 rules, and in line with market rates. Landlords will be obliged to give tenants two months’ notice for any proposed increase using the correct notice.
Tenants can challenge an “above market rent increase” at First-tier Tribunal before the date of the proposed rent increase date.
Changes to Rent Repayment Orders
Currently, a tenant or local authority can go to a tribunal if a landlord commits at least seven offences, including using violence to enter a property and failing to comply with improvement notices. The landlord will need to repay the rent to a tenant if the tenant wins the case. The bill proposes to add more offences for landlords, including landlord breaches of ombudsman rules, or if a landlord deliberately provides false or misleading information onto the property portal. The maximum rent repayment order will also be increased so a landlord may be liable to repay 24 months’ rent rather than 12.
What About Guarantors and their Obligations?
There is an area of uncertainty concerning guarantors’ obligations and how they are to be bound as currently this is under a fixed term. Further clarification is awaited on this topic.
What About Tenants on Benefits and those with Children?
The bill proposes blanket bans relating to tenants on benefits or those with children. Landlords and agencies will be banned from discriminating against these groups.
Do I have to let my Tenant Keep a Pet?
Landlords can no longer have a blanket ban on the keeping of pets. Landlords would be required to respond to any pet request within 42 days unless they have requested additional information or agreed a later date with the tenant.
The bill is proposing for tenants to acquire insurance for their pets to protect the landlord in the event of any damage. In the meantime, however, landlords can seek to recover costs for any damage, provided there is provision in the tenancy agreement.
The government has not yet provided any specific guidance on situations in which landlords can refuse a request for pets.
There remains considerable uncertainty around the bill, especially with an upcoming general election. Will the government keep its promise, or has time run out? We will keep you posted on any further updates.