The Renters Reform Bill, presented to parliament by the Government on 17 May 2023, signifies a significant milestone in rental regulations that will have implications for landlords and tenants across England.
Initially proposed in 2019 and further developed in the 2022 fairer private rented sector white paper, the Renters Reform Bill encompasses comprehensive reforms aimed at enhancing the rental system for the 11 million private renters and 2.3 million landlords in England.
Reasons for the Introduction of the Renters Reform Bill
The introduction of the Renters Reform Bill aims to bring about improvements in the rental sector and provide a fairer deal for tenants. The key objectives of the bill include abolishing Section 21 ‘no fault’ evictions, which will restrict landlords to evicting tenants only on fault-based grounds and reasonable circumstances. Additionally, fixed-term tenancies will come to an end.
Under the bill, tenants will have the right to request keeping pets, and landlords cannot unreasonably refuse this request, although they can require tenants to have pet insurance.
The bill also recognizes the challenges faced by responsible landlords and seeks to highlight the majority of landlords who perform their duties well. It intends to support these landlords by introducing more comprehensive possession grounds, giving them reassurance that they can regain possession of their property in cases of tenant misconduct or changing circumstances.
The Housing Secretary, Michael Gove, has emphasized that the new laws will promote the provision of quality homes by responsible landlords while fulfilling the government’s commitment to abolish Section 21 evictions. The aim is to ensure that everyone has access to a decent, safe, and secure home that they can be genuinely proud of.
Overview of Proposed Changes in the Renters Reform Bill
The Renters Reform Bill incorporates the majority of the recommended reforms outlined in the Government’s initial white paper. While some changes may be implemented at a later stage, it is advised to review the Bill in detail for a comprehensive understanding of the proposed amendments.
Key Information for Landlords and Tenants:
Renters Reform Bill – Changes to Section 21 Evictions
The Renters Reform Bill aims to eliminate ‘no fault’ Section 21 evictions and introduce a more streamlined and secure tenancy structure. The goal is to provide tenants with greater stability, allowing them to establish roots in their communities, while ensuring landlords have confidence in regaining possession of their property when necessary.
Under the new system, fixed-term tenancies will be replaced by periodic tenancies, which do not have a specified end date. Once the Bill is implemented, all new tenancies (previously categorized as Assured Tenancies or Assured Shorthold Tenancies) will operate under the revised framework. Existing tenancies will transition to the new system after a second implementation date, which will occur at least 12 months later.
To maintain fairness, tenants will be required to provide two months’ notice when vacating a property. This ensures that landlords can recover the costs associated with finding a new tenant and avoid lengthy periods of vacancy. Landlords will only be able to evict tenants in reasonable circumstances, as defined by the law, to prevent unwarranted displacements.
Instead of Section 21, the Bill proposes strengthening Section 8, which allows landlords to terminate a tenancy agreement prematurely if they have legal grounds to do so. The process for ending a tenancy using Section 8 grounds will be similar to the current Section 21 process. Landlords will need to serve tenants with a prescribed notice form and adhere to the required notice period. If a tenant fails to vacate the property, landlords will need to present evidence in court demonstrating that the grounds for eviction apply.
Renters Reform Bill – Grounds for Gaining Possession
The Renters Reform Bill aims to establish comprehensive, fair, and efficient grounds for gaining possession, covering various circumstances in which landlords may reasonably seek possession. These grounds can be categorized as either mandatory or discretionary. Mandatory grounds require judges to grant possession when landlords can provide evidence that the ground is met. Discretionary grounds allow judges to assess whether it is reasonable to award possession, even if the ground is satisfied.
Recognizing that landlords’ circumstances can change, the Government is introducing new mandatory grounds for eviction when landlords intend to sell their property or move themselves or their family into the rental property. During the first six months of the tenancy, landlords will not be able to rely on these grounds, ensuring that responsible tenants enjoy enhanced security and peace of mind after moving in.
Additionally, new mandatory grounds for repeated serious rent arrears will be introduced. This will assist landlords dealing with tenants who consistently pay off small amounts of arrears, staying below the two-month threshold for mandatory repossession.
Under the new rules, eviction will be mandatory if a tenant has accumulated at least two months’ rent arrears on three separate occasions within the previous three years, regardless of the arrears balance at the time of the hearing. This provides support to landlords facing undue burdens, while ensuring that tenants with long-standing tenancies are not evicted due to isolated financial difficulties occurring years apart.
Furthermore, the notice period for existing eviction grounds related to rent arrears will be extended to four weeks, while still maintaining the mandatory threshold of two months’ arrears at the time of serving notice and the hearing. This allows tenants a reasonable opportunity to settle their arrears without risking the loss of their home.
A New Mandatory Ombudsman for Landlords and Renters
The Renters Reform Bill will introduce a government-approved Private Rented Sector Ombudsman, who will serve as a mandatory authority for landlords and renters. The aim is to provide a fair, impartial, and binding resolution to various issues, offering a quicker, more cost-effective, and less adversarial alternative to the court system. This ombudsman will cover all private landlords renting out properties in England, regardless of whether they utilize an agent.
Under the proposed landlord redress scheme, former or current tenants will have the opportunity to lodge complaints against landlords, which will then be independently investigated. This will enable private renters and landlords to resolve disputes efficiently without resorting to court proceedings. Not only will this method be more affordable than going to court, but it will also provide both landlords and tenants with a fair, impartial, and binding resolution to many issues.
The Ombudsman will possess the authority to rectify matters for tenants by compelling landlords to issue apologies, provide necessary information, undertake remedial actions, and potentially pay compensation of up to £25,000.
The Bill outlines the necessary conditions for the redress scheme and suggests that landlord membership with the Ombudsman will become mandatory. However, additional details are still required regarding the establishment and implementation of the scheme.
Renters Reform Bill – Tenants’ Right to Keep Pets
The Renters Reform Bill will introduce measures to facilitate tenants’ ability to have pets in their rented homes. All tenants will have the right to request permission to keep a pet, and landlords must consider these requests in a reasonable manner and not unreasonably refuse them.
The Government acknowledges that certain situations will always warrant a landlord’s reasonable refusal, such as cases where the superior landlord explicitly prohibits pets. In the event of a denied request, tenants have the option to challenge the decision. Disputes can be escalated to the Private Rented Sector Ombudsman (as mentioned below) or brought before a court, with a final decision based on the evidence presented by both parties.
To support this change, landlords will have the authority to require tenants to obtain pet insurance. This provision will provide landlords with peace of mind, knowing that any potential damage caused by a pet to the property will be covered. Moreover, the responsibility for preventing and resolving pet-related damage will rest with the tenant.
The Tenant Fees Act 2019 will be amended to include pet insurance as a permitted payment. In cases of damage, the tenancy deposit can be utilized, although landlords should refrain from attempting to recover costs twice for the same damage. In rare instances where the insurance and deposit fall short of covering the damage costs, landlords retain the right to pursue additional expenses through legal means, taking the matter to court to seek compensation.
Renters Reform Bill – Rent Increases and Rent in Advance
The Renters Reform Bill aims to address concerns regarding rent increases and rent paid in advance. Under the new legislation, the use of rent review clauses will be prohibited, and rent can only be increased once per year. This will streamline the process, replacing the current section 13 procedure outlined in the Act. Landlords will be required to provide a 2-month notice period for any rent adjustments.
The Government intends for these changes to prevent tenants from being subjected to automatic rent increases that lack clarity or fail to reflect market price changes.
Renters Reform Bill – Enhanced Property Portal for Landlords and Tenants
As part of the Renters Reform Bill, the government plans to introduce an improved digital Property Portal. This platform aims to assist landlords in comprehending their legal obligations and demonstrating their compliance. Simultaneously, it will offer tenants access to valuable information, empowering them to make well-informed decisions before entering into a tenancy agreement.
The Property Portal will serve as a central hub where landlords can easily access comprehensive details about their responsibilities. Likewise, tenants will have the ability to obtain information regarding their landlord’s compliance. This enhanced transparency will enable both parties to navigate the rental process more effectively.
Furthermore, local councils will benefit from better data accessibility, equipping them to take action against unscrupulous landlords. The proposed portal will incorporate certain features of the existing Database of Rogue Landlords, ensuring that all eligible landlord offences are recorded and publicly visible, thus promoting accountability and deterring misconduct.
Additional Proposed Reforms for the Private Rented Sector
In line with the private rented sector white paper, the government has pledged to introduce further reforms aimed at providing support to both landlords and tenants. These reforms include the establishment of a new Decent Homes Standard and the prohibition of blanket bans on families with children or those receiving benefits. The government is fully dedicated to implementing these reforms and intends to introduce the necessary legislation at the earliest opportunity.
Introducing the Decent Homes Standard for the Private Rented Sector
The Renters Reform Bill proposes extending the regulatory Decent Homes Standard, originally applicable to the Social Rented Sector, to private rented homes. This initiative aligns with the government’s Levelling Up mission, which aims to reduce the number of non-decent homes by 50% by 2030. While the government expresses its commitment to this plan, further consultation is necessary before implementation.
Once in effect, private rental properties must meet the following criteria:
- Free from significant health and safety risks, including hazards related to falls, fires, or carbon monoxide.
- Adequate kitchen and bathroom facilities.
- Effective noise insulation.
- Clean, suitable, and functional amenities.
- Sufficient heating, ensuring warmth and dryness.
The Department of Levelling Up, Housing and Local Communities expects the Decent Homes Standard to enhance overall standards in the private rented sector, encouraging proactive management by landlords rather than relying solely on tenant complaints or enforcement actions by local councils.
Renters Reform Bill – Ending Blanket Bans on Benefits
The Renters Reform Bill aims to make it illegal for landlords and letting agents to have ‘blanket bans’ that discriminate against families with children or individuals receiving benefits. The court has already ruled that such policies, like ‘No DSS’ or ‘No benefits,’ are unlawful and discriminatory under the Equality Act. These bans disproportionately affect women, disabled individuals, and vulnerable populations, making it harder for them to find rental accommodations.
The Bill goes further by recommending the enforcement of this court ruling through the following measures:
- Encouraging landlords to make decisions based on individual circumstances rather than implementing blanket bans.
- Collaborating with the insurance industry to dispel misconceptions and facilitate insurance coverage for properties where tenants receive benefits.
- Enhancing welfare support information for both tenants and landlords, ensuring those who struggle with rent payments can arrange direct payments of housing costs to their landlords through Universal Credit (Managed Payments).
- Raising awareness about the range of local services available to assist individuals on low wages or receiving benefits.
These proposed reforms aim to create fairer and more inclusive rental practices, providing equal opportunities for families with children and individuals receiving benefits to secure suitable housing.
Renters Reform Bill – Implementation Timeline
The Renters Reform Bill will undergo further readings in parliament and ultimately receive Royal Assent before its implementation. The Government intends to implement the Bill in two stages, providing ample notice to all parties involved for the necessary adjustments.
At least 6 months’ notice will be given for the first implementation date. From this date onwards, all new tenancies will follow the new rules, including the provisions regarding renting with pets, and will be of a periodic nature. The specific date will depend on when the Bill receives Royal Assent.
To ensure a smooth transition and avoid a divided rental sector, existing tenancies will move to the new system on the second implementation date. There will be a minimum of 12 months between the first and second implementation dates to provide landlords and tenants with clarity regarding their rights and obligations.
