Described as ‘the biggest shake-up of the private rented sector in 30 years’, the Renters Reform Bill certainly generated its fair share of headlines when its white paper was published.
Some of those media headlines were intentional hyperbole and many of them were, frankly, inaccurate.
“It’s not over the top to say that the Renters Reform Bill is going to impact landlords,” says Platinum’s lettings expert Rachel Lewis.
“But there was nothing in the white paper that came as a surprise and there’s a long way to go until any of what you’re about to read actually becomes law.
“We expect further consultations and a multitude of debate, scrutiny, and amendments to come over the next 12-to-18 months before the Bill goes through the Commons and the Lords.
“So, while we’ll be educating our franchise partners to understand the proposals and signpost a clear plan for them right away, there’s no need for landlords to panic.”
What is the Renters Reform Bill?
The Renters Reform Bill was tabled intended to redress the balance between landlords and tenants and provide the latter with greater security, better property standards and more protection.
First brought to the public’s attention in 2019 by then Prime Minister Theresa May, the Bill was delayed due to Covid-19 and is only now gathering pace towards becoming law potentially in late 2023 or early 2024.
What does the Renters Reform Bill propose?
The Renters Reform Bill proposes to:
1. Abolish section 21 evictions
Commonly referred to as ‘Non-fault possessions’, under current rules, landlords can serve a section 21 notice, giving the tenant two calendar months’ notice, to start the process of regaining possession of a rental property, without providing a reason.
There are limitations in place, however: The tenancy must have been set up correctly, including service of relevant Prescribed Information and notice can’t be served prior to the first day of the fifth month of the fixed term.
The Renters Reform Bill, though, proposes to scrap section 21 – meaning only tenants will be able to end a tenancy unless the Landlord can prove a reason defined in law.
Landlords, instead, will have to issue a section 8 notice to regain possession of a property, providing a reason, or ‘ground’, for doing so.
That ‘ground’ would then need to be proven in court.
Court processes for section 8 are historically expensive and notoriously slow, so the Bill also proposes to improve this, while enhancing the grounds for possession landlords can use.
When will section 21 be abolished?
Once the Renters Reform Bill becomes law, section 21 will be banned for use with new tenancies first – known as a ‘first date of implementation’.
There will then be a second date implementation, which will ban the use of section 21 for all tenancies, including those that were already in progress before the first date of implementation.
It’s likely that the gap between the two dates of implementation will be at least 12 months.
2. All tenancies will be periodic from day one
The Renters Reform Bill proposes to end fixed term tenancies – meaning tenancies will automatically be periodic from day one.
Under a fixed term tenancy agreement currently, tenants can’t give notice to leave until the end of that term (for example, six months or 12 months) unless a term in the tenancy is included for early termination.
But when the Renters Reform Bill becomes law, a tenant will be able to give two months’ notice at any stage, to bring the contract to an end.
3. Changes to section 8 grounds for possession
With section 21 no more under the Renters Reform Bill, using a section 8 ground for possession will be only process for landlords to regain possession of their properties.
So, the Renters Reform Bill aims to make using section 8 quicker and easier, with the promise of a reformed court process and more ‘fit for purpose’ grounds for possession.
Many of the revised grounds for possession will be mandatory, too, which means a judge will have no choice but to find in favour of the landlord if they can prove the ground has been met.
The Bill proposes to:
- Widen the ground for possession when a landlord wants to move into their rental property, so this includes circumstances where close members wish to move in
- Introduce a ground for possession that allows a landlord to sell a rental property without tenants in situ
- Widen grounds for possession when a tenant has previously been in rent arrears, even if they’re not currently in arrears
- Reduce notice periods for tenant anti-social behaviour to two weeks
4. Blanket bans on tenants
The Renters Reform Bill aims to tackle discrimination in the private rented sector and, as such, landlords will no longer be able to blanket ban tenants with children or those who are receiving benefits.
5. Pets and the Renters Reform Bill
If you read the Daily Mail, you’ll have seen that landlords will be forced to accept tenants with pets once the Renters Reform Bill is made law.
This is one of those hyperbolic headlines we referred to right at the top of this piece – and it’s not true.
The Renters Reform Bill certainly aims to make it easier for tenants with pets to find somewhere to live, but landlords still have a say.
The Bill states that landlords ‘will not unreasonably be able to withhold consent’ when a tenant asks if they can keep a pet.
Tenants will also be able to challenge refusals if they wish.
There's also a reference to requiring pet insurance to be mandatory when renting with a pet, something which may be incorporated into the Tenant Fees Act as a permitted payment.
But exactly how all of this will work in practice is something of an unknown.
When it comes to Houses in Multiple Occupation (HMOs), our bread and butter, there are all sorts of complexities when it comes to tenants with pets, including if the property’s other housemates, for example, have allergies.
How will this work in practice with the potential for six dogs to be left at home while tenants are at work?
More detail is definitely needed on this one…
6. The Decent Homes Standard
We’re massive champions for high quality rental properties – no tenant should ever have to live in sub-standard accommodation in 2022.
So, we were delighted to see the Decent Homes Standard will be applied to privately rented properties for the first time – it’s about time.
Amazingly, 12% of privately rented homes in the UK “pose imminent risks to the health and safety of tenants”.
This simply cannot be allowed to happen any longer and the application of the Decent Homes Standard will give councils more power to deal with non-compliant landlords and poor-quality homes.
7. Lifetime deposits
Lifetime deposits formed a major part of the press coverage surrounding the Renters Reform Bill – but don’t expect to see these any time soon.
The concept would see a tenant’s deposit follow them when they move property and, in principle, it’s a great idea.
After all, one of the biggest issues tenants face is having to save for a new deposit before receiving an existing one back when they move.
But lifetime deposits are off the table for now, and it’s no surprise given nobody appears to have a plan for exactly how they’d work!
With alternative deposit schemes already available, it appears the industry has already provided a suitable option for tenants.
8. Landlord portal and ombudsman
The Renters Reform Bill would see an independent private renters’ ombudsman created to encourage landlords and tenants to settle disputes outside of the courtroom.
Given the pressure on courts and current delays, this surely is a positive, and the Bill would make it mandatory for all landlords to join the scheme. Letting agents are already required to register with a scheme.
Alongside the ombudsman, a property portal would be created and again landlords would have to register all their rental properties, so tenants can search for and access information on the property particulars, including relevant certificates, before they commit to rent.
9. Rent review limits
Rent reviews would be limited to one increase every 12 months under the Renters Reform Bill, with the notice period a landlord is required to give a tenant to increase the rent being increased to two months
Tenants will also be able to challenge what they perceive to be unjustified rent rises, with rent review clauses locking tenants into rent increase being banned.
When will the Renters Reform Bill become law?
It’s important to stress that the Renters Reform Bill white paper simply outlines everything the Bill proposes.
It’s not law and it’s not likely to be for at least 18 months, so we all have plenty of time to prepare for what’s coming.
Over the coming months, draft legislation will be completed, and the government will be consulted and lobbied over the plans.
Even when the Bill is debated in the House of Commons, expect to see a raft of amendments – and that’s before it even reaches the House of Lords.
Once everything is set in stone, the first implementation date for the new legislation is likely to be early 2024, with all existing tenancies signed before that date having to comply 12 months later.
Now is the time to have your say, periodic tenancies and pets in properties may not be the desired solution for all tenancies, especially student lets and there has been no reference to HMOS in the White Paper, which satisfy a huge housing need in the sector.
