What is the new Renters’ (Reform) Bill?
The Renters’ (Reform) Bill is a critical piece of new legislation, set to reshape the private rental market for the foreseeable future.
The 89-page document aims to “bring in a better deal for renters” by changing the way tenancies and evictions work on a fundamental level. These changes will affect landlords across the board, so it’s vital to understand the changes which will soon come into force.
When will the Renters’ (Reform) Bill become law?
Potentially late 2024, but this is an estimate. It’s likely to take much longer to establish everything the bill suggests in practice (for example, court reforms and appointing the new ombudsman).
Before it can become law, the bill must be debated in Parliament, with amendments discussed and agreed.
After that, the bill will be put into effect in two stages.
- Stage 1 – Landlords will be given a 6-month warning before the first implementation date. After those 6 months have elapsed, any new tenancies will be created under the new legislation.
- Stage 2 – 12 months after the first implementation date, all existing tenancies will also transition to the new system. At this point, landlords will be able to evict using the new Section 8 grounds, and no longer be able to use Section 21.
Key features of the Renters’ (Reform) Bill explained
Section 21 evictions will end
Abolishing Section 21 is a key feature of the bill. The reason for this change is because Section 21 allowed landlords to evict tenants without a specific reason.
That is all set to change.
Landlords must now state a specific reason for eviction under the (reformed) Section 8 notice. This applies whatever the circumstances – whether they want to repossess the home to live in it themselves, or evict tenants for anti-social behaviour.
New grounds for eviction under Section 8
Section 8 evictions will be expanded to cover a range of new circumstances, providing clear guidelines for eviction in place of Section 21.
For example, here are two significant changes made to Section 8 eviction law:
- Repeated arrears – if the tenant has been in 2 months arrears 3 times in the last 3 years, then the landlord can evict them under new Section 8 rules. This applies even if the tenant has paid the rent by the time of the court hearing.
- Anti-social behaviour – the bill also targets tenants who commit anti-social behaviour, and allows landlords to serve tenants a shorter 2-week notice in this instance.
Significantly, if the landlord can prove repeated arrears or anti-social behaviour, the judge will be obliged to grant a repossession order in their favour.
Based on personal circumstances, landlords can evict if:
- They or their family members want to live in the property.
- They want to sell the property.
When can landlords evict due to personal circumstances?
These provisions cover the territory traditionally held by Section 21. However, guidance for the new bill also states that “landlords won’t be able to use grounds for moving in, selling or redevelopment for the first six months of the tenancy.” And if they do want to reclaim the property, they also must give tenants 2 months’ notice.
If landlords repossess the property to sell it, they won’t be able to put the property back on the market to rent for 3 months. This is meant to deter landlords from abusing the system.
Periodic Tenancies will replace ASTs
Under the new bill, all Assured Shorthold Tenancies (ASTs) will become Periodic Tenancies. This is part of the government’s plan to make the system simpler. Tenancies will roll on from month to month without any specified end date.
To end the Periodic Tenancy, the landlord or tenant must give notice. The tenant would need to give two months’ notice to leave the property, while the landlord would have to use Section 8 rules to evict them for a reasonable cause with appropriate notice (e.g. repeated rent arrears, landlord wanting to live in the property).
However, there are two key areas of concern:
- Tenants can give notice immediately
Tenants can give a 2-month notice to leave the property at any point. This means they could use Periodic Tenancies as short-term accommodation by giving notice as soon as they move in.
- Periodic tenancies will apply to student lets
Currently, this transition to Periodic Tenancies will include properties let to students – though it does not apply to official university accommodation.
Rent increases are restricted to once per year
Under the new rules, landlords can only increase rent once a year and after giving tenants 2 months’ notice. This doubles the old rent increase notice period, which was only a month.
To do so, they must use the Section 13 process and fill out a new form (which has yet to be created). This marks a move away from rent increases laid out in the tenancy contract.
The right to keep pets
The reform bill is welcome news for pet owners. Due to increasing pet ownership and its associated benefits, the new bill allows tenants to request having a pet in their home.
The landlord cannot deny this request without good cause. However, they may be able to deny it on medical or religious grounds, or where the presence of pets affects the well-being of other tenants (e.g. in a HMO property). The government intends to define the grounds for disallowing pets in more detail.
Landlords will have 42 days to allow or refuse the request, which can be extended by a week if they require more information about the pet. If there is a conflict of interest, then the tenant can raise the issue with the new ombudsman scheme.
However, tenants must acquire pet insurance, or pay the landlord an equivalent amount to cover the cost of potential damages to the property. This amends the 2019 Tenant Fees Act to allow pet insurance as a ‘permitted payment’ that landlords can charge.
A new ombudsman (redress scheme) covering all private landlords
Landlords must join a compulsory ombudsman authority (also known as a redress scheme). The ombudsman aims to address and resolve issues between landlords and tenants impartially, and enforce specific actions when required.
The bill gives the ombudsman significant powers. If landlords do not comply, they will be liable to court action or a Banning Order.
The ombudsman can order landlords to:
- Take remedial action on a property
- Pay a compensatory fine of up to £25,000
- Offer information
- Provide explanations or apologies for actions they’ve taken
- Reimburse rent if the property does not meet the right standard
There are two other significant features to consider:
- Tenants can complain, landlords can’t – The ombudsman is set up for tenants, meaning they have free access to its services and can file complaints – but landlords don’t.
- Landlords must pay to be members of the ombudsman – While the service is free for tenants, landlords will be charged ongoing fees to be a part of it.
This scheme should help landlords and tenants avoid taking issues to court.
A new landlord database
The bill provides for a new ‘Privately Rented Property Portal’ for landlords and tenants.
The aim is to create an online hub where tenants and local authorities can access critical information about landlords and rental properties.
There are four key points to remember:
- It’s compulsory for landlords – Landlords must be on this database to let their properties at all.
- It will display landlords’ letting history – Tenants and the local authorities can view essential information about landlords and their letting history, including any past misconduct.
- Landlord profiles must be kept up to date – Landlords will have one of two statuses on the site: active or inactive. Active landlords can freely rent their properties, but inactive landlords can’t let or market their properties until their status has been updated.
- It’s also built for local councils – they will be able to monitor landlord profiles, raise any issues and use it to help them administer enforcement action.
The end of blanket bans for certain tenants
Currently, landlords can specify what kind of tenants they want to house. This often leads to families or tenants on benefits being excluded from the private rental market.
Landlords will not be allowed to discriminate against tenants with blanket bans which exclude them from consideration.
The Decent Homes Standard to be applied to the private rental sector
The Decent Homes Standard already applies to the social housing sector, and the new bill will apply this to the private market.
What do some of the leading estate and letting agents think about the new Renters’ (Reform) Bill
Maurice Shasha – Plaza Estates
“I think this will just cause more Landlords to exit the market and cause even more of a shortage of stock than the unprecedented low we are currently seeing, which will push up rents past the record levels they are currently at. This, added to the other hair-brained new Government regulations i.e with regards EPC’s, HMO’s & Tax, to name a few, is actually causing skyrocketing rents which are surely not in tenants’ interest. Increased Interest rates are also causing rents to go up, together with inflation pushing up block service charges.”
Lee Whitelock – Garrett Whitelock
“We have looked closely into the proposed changes and we strongly believe there’s no need to panic! Landlords will still be able to seek possession on valid grounds and will have enhanced grounds for dealing with rent arrears and anti-social behaviour, and most importantly, will be able to seek possession if they wish to sell the property. In fact, under the proposed changes, Landlords will have much greater flexibility when it comes to selling, as part of the proposed changes is to abolish fixed term tenancies.”
Ultimately, there is still a long way to go before the Renters’ (Reform) Bill becomes law, and we can expect to see heated debate and several amendments soon.
It remains to be seen how much landlords will lose or gain under the legislation, and whether certain proposals will be watered down by the time the bill is finally passed. Either way, the Renters’ (Reform) Bill marks a radical set of changes for the private rental sector.