The Renters (Reform) Bill promises to deliver a fairer lettings system for tenants and landlords in England.
According to the government, the Bill is a “once-in-a-generation overhaul of housing laws”. Landlords have been keeping a close eye on the contents of the bill, which will make it:
- More difficult to evict tenants.
- Easier for tenants to have pets.
- Illegal for landlords to issue blanket bans on letting to those on benefits.
- Mandatory for landlords to join an Ombudsman scheme.
What is the Renters (Reform) Bill?
The idea of a Renters (Reform) Bill was first introduced in 2019 by then Prime Minister Theresa May but has faced a number of delays, mainly due to the Covid-19 pandemic.
The Bill’s aim is to address what the government described as an ‘imbalance’ between tenants and landlords, providing more security for tenants and improving standards in the Private Rented Sector.
When will the Renters (Reform) Bill take effect?
We don’t yet know when this Bill will make its way into law. However, it’s likely there will be a transitory period for existing tenancies. It’s believed there would be a lead in time of 6 months for new tenancies and a further year for existing tenancies.
How will the Renters (Reform) Bill affect landlords?
The Renters (Reform) Bill will affect landlords in a variety of ways, including:
- The end of section 21.
- The end of fixed term tenancies.
- Changes to landlord grounds for possession.
- The end of blanket bans on tenant demographics.
- Renting to tenants with pets.
- A landlord portal and a requirement to join a new ombudsman scheme.
- Changes to how rents are reviewed and increased notice periods.
End of Section 21
The most significant change is the abolition of section 21 – or ‘no fault’ evictions.
In future, all evictions will need to be based on an approved reason provided by the landlord through a notice under section 8 of the Housing Act 1988.
The section 8 structure is pretty similar, although the various grounds for possession in Schedule 2 of the 1988 Act have been extensively re-worked and this will require detailed cross referencing.
Why was this change made? According to the government, the abolition of section 21 was designed to “empower renters to challenge poor landlords without fear of losing their home.”
This means tenancies will only end if the tenant decides to or if a landlord has grounds for possession under section 8.
An end of fixed term tenancies
All fixed term tenancies will be abolished by the Bill. Instead, agreements will be periodic from day one. Tenants will need to give landlords a notice period of two months to exit their tenancy under the new rules and notice periods of longer than two months will be made illegal.
Why was this change made? The abolition of fixed term tenancies will leave tenants free to give notice at any stage during their tenancy, awarding them far more freedom than they currently have.
What does this mean for landlords? Landlords will be able to give tenants two months’ notice if they wish to sell or move into their rental property, with notice periods for other grounds (such as anti-social behaviour or rent arrears) varying. If a landlord attempts to create a fixed term tenancy or seeks to serve a notice to quit, they can be penalised by the local authority.
Landlord grounds for possession
The Renters (Reform) Bill will overhaul the section 8 grounds for possession.
This means you’ll be able to:
- Move into your rental property if you wish.
- Regain possession from tenants in rent arrears.
- Sell your rental property when you need to.
- Regain possession from anti-social tenants.
As part of the Renters (Reform) Bill, many grounds will become mandatory. This means you’ll have more certainty in court if you can prove the ground has been met.
Moving into your rental property
Current rules state that a section 8 notice can be served if you wish to move into your rental property and live in it as your main home. However, this doesn’t extend to your children or other family members.
Under the Bill, a new section 8 ground will be introduced that allows you and close members of your family to move in. However, this ground can’t be used in the first six months of the tenancy and your tenants would need two months’ notice.
Rental arrears ground amendments
If your tenant has been in at least two months of arrears on at least three occasions in the past three years, you’ll be able to use a new mandatory ground.
This will apply even if the tenant is not currently in two months of arrears when the hearing reaches court.
If this ground is proven, you’ll only need to give your tenant four weeks’ notice to leave the property.
Selling your property
Landlords looking to sell their rental property will be able to do so using a section 8 ground under the new legislation.
Under the Bill, the current mortgage repossession ground will remain, with new grounds created for other circumstances where you wish to sell.
However, for the first six months of a tenancy, these grounds can’t be used. Tenants will also require two months’ notice of your intent to sell.
Anti-social behaviour ground amendments
Notice periods will be reduced to two weeks, in the case of serious anti-social or criminal behaviour from a tenant. However, landlords will still need to provide proof of this behaviour which may hold up proceedings. For evictions that end up in the courts, the government has pledged to digitize the process, with the aim of reducing delays.
According to the government, these reforms “will strengthen powers to evict anti-social tenants, broadening the disruptive and harmful activities that can lead to eviction and making it quicker to evict a tenant acting anti-socially.”
Renting to tenants with pets
Perhaps the most headline-catching item is that all tenants will be allowed to keep a pet if the landlord consents. In addition to this, consent cannot be unreasonably refused or withheld. Refusal or consent must be given within 42 days of permission being sought.
Why was this change made? The Renters (Reform) Bill pledges to ensure landlords do not unreasonably withhold consent when a tenant requests to keep a pet. Tenants will also be able to challenge refusals, giving them more power over their let.
What does this mean for landlords? Landlords can now insist that the tenant obtains pet insurance. This is good news for landlords as it means that they’re not automatically compelled to allow a pet.
However, more detail on this element of the Bill is needed, especially when it comes to properties where pets are banned in the headlease, or Houses in Multiple Occupation (HMOs) where the needs of other tenants will need to be considered.
Landlord portal and ombudsman
The Bill proposes a new Private Renters Ombudsman, designed to help landlords and tenant disputes, taking the pressure off the court system. A new property portal would also be introduced, with landlords required to register their properties.
The aim of the portal is to give tenants more transparent information on the standard of the property they wish to rent and local councils more details if or when problems arise at a property. The portal will list landlords’ obligations and help tenants make better decisions when signing a new tenancy agreement.
Landlords must all join the ombudsman. However, landlords using a letting agent to manage their properties already benefit from those agents being part of mandatory redress schemes.
Rent reviews and increase notice periods
Rent increases would be limited to once per year under the Renters (Reform) Bill, with the notice period required to inform tenants of a rise in rent increased to two months.
Why was this change made? In order to give more power to tenants, changes have been made to prevent landlords from making sudden and considerable increases to rent.
Tenants will now be able to challenge a rent increase that they feel is unfair. Furthermore, rent review clauses that lock tenants into rises, will be banned from tenancy agreements.
What does this mean for landlords? Landlords will no longer be able to include rent increase clauses in the tenancy agreement. They will only be able to increase rents using the section 13 notice procedure, which can then be challenged by tenants.
Other changes included in the Renters (Reform) Bill
No more blanket bans
It will now become illegal for landlords and letting agents to apply blanket bans on renting to tenants with children or those on benefits.
Tenant modifications
Although no exact detail has been given in the Renters (Reform) Bill, tenants would be permitted to ‘modify’ rental properties as long as the properties are returned to their original condition at the end of a tenancy.
Lifetime deposits
Although the plan for lifetime deposits was a focal point of the Renters (Reform) Bill’s early news coverage, it’s now being played down.
Tenants would have had a deposit that travelled with them between rental properties under the original proposals