On 17 May 2023, the Renters (Reform) Bill was first introduced into Parliament. The Bill proposes several changes to the relationship between tenants and landlords, including:
- Abolishing Section 21 ‘no fault’ evictions;
- Altering the grounds on which possession can be sought;
- Ending fixed-term tenancies; and
- Restricting rent increases.
The aim of the Bill is to create a more equitable rental marketing by ensuring there is more of a balance between protecting the tenant’s rights and also providing stability for landlords.
Below, we have provided a general overview of the Bill and its potential implications.
What are the key provisions of the Renters Reform Bill?
Abolishing Section 21 ‘no fault’ evictions and stopping assured shorthold tenancies
Under the Bill, Section 21 notices are to be abolished. This means that all notices seeking possession will have to be ground-based notices under Section 8 of the Housing Act 1988. The end of the Housing Act would also mean concluding assured shorthold tenancies (subject to transitional provisions) therefore, all tenancies would be assured tenancies.
It’s important to note that tenancy deposit protection, which is an important feature of the current assured shorthold tenancies regime, will still continue to apply, meaning that a landlord failing to comply with the tenancy deposit rules will be unable to serve a valid Section 8 notice regarding almost all grounds.
Stopping fixed-term tenancies
Fixed-term tenancies will no longer be permitted, and all tenancies will change to be periodic. The period would have to be monthly or not longer than 28 days and tenants who want to end the tenancy will be able to do so by giving two months’ notice.
Amendments to possession grounds
The introduction of new grounds, means there are changes to the existing possession grounds. Key changes include the expansion of Ground 1, which permits a landlord to provide two months’ notice if they or their partner/relative want to move into the property. There will also be an additional new Ground 1A for landlords who plan to sell the property.
It’s important to note that both grounds are only to be used after six months and where a tenant leaves following the service of notice if a partner/relative does not occupy the property, the landlord is unable to let or market the property for three months. For further details on the changes to Section 8 Ground, see our previous blog here.
Limiting rent increases
Landlords will only be able to increase the rent once a year using the statutory notice procedure set out in the Housing Act 1988 Section 13 and the notice period in which the landlord must inform the tenants will be increased from one to two months.
If tenants are not happy with the rent increase, they can challenge it in the First Tier Tribunal (Property Chamber). Landlords are not now able to rely on contractual rent review clauses within the tenancy agreements.
Mandatory private rented property database
Under the Bill, all landlords will be forced to join a redress scheme, despite whether or not they choose an agent to let the property. Landlords who fail to comply can be fined. The Bill will also introduce a Private Rented Section Database. Membership will be compulsory as it will provide information for the Government’s future Private Rented Sector Property Portal.
The right to request a pet
In tenancy agreements/contracts there will be a new term added into assured tenancies that a tenant could potentially be allowed to keep a pet with the landlord’s consent unless the landlord’s refusal is reasonable. However, for tenants to have pets, a landlord may require the tenant to have pet insurance to cover any damage. The Tenant Fees Act 2019 will be adjusted accordingly.
Terms and documents to be issued
Prior to the tenant moving in or on the first day of the tenancy, the Bill ensures a new duty on landlords to give tenants a written statement of terms and information.
Financial penalties
If a landlord breaches any of the new duties under the Renters (Reform) Bill then this could result in financial penalties and or constitute an offence. In addition to the above changes, the Bill will amend the Protection from Eviction Act 1977 in order for local authorities to impose financial penalties.
What effect will the Renters Reform Bill have on landlords and tenants?
The changes could/are likely to evolve as the Bill moves through Parliament, however, there is no doubt that it will bring huge changes for the private rented sector.
Fixed-term tenancies will be something of the past and landlords will need to adjust to all their tenancies and be prepared that a tenant will be able to give two months’ notice at any time. This has raised concerns in terms of students as landlords have said they have a fixed term yearly contract so it coincides with the academic year. It is likely the Government will have something inserted in the Bill for students so that it will coincide with the academic year.
Even though Section 21 will be abolished it does not mean there will be no form of ‘no fault’ eviction. For example, there will still be grounds for possession that would not involve any fault from the tenant, such as possession required for occupation by the landlord’s relative and or spouse, or if the landlord is to sell the property.
Apart from tenancy deposit requirements, the current Bill does not invalidate a Section 8 if landlords have not supplied the tenant with an Energy Performance Certificate or Gas Safety Certificate. Although the Bill remains silent at present it is highly likely that these requirements will form part of the database or will be a requirement to enable a valid Section 8 to be served.
However, it’s important for both landlords and tenants to be aware that even after the final Bill receives Royal Assent, the actual changes will not be implemented imminently. The Government will implement the new system in two stages to allow landlords time to consider the reforms.
Is the Renters Reform Bill likely to achieve its aims?
The objective of the Bill is:
“To ensure private renters have access to secure and decent homes that landlords retain the confidence to repossess their properties where they have good reason to.”
Although the Bill includes a variety of financial penalties towards landlords if they do not follow the new requirements, for these to actually be enforced local authorities need to be made aware of the breaches. It is also thought that many landlords will try to use ‘loopholes’ before the Bill is finalised so that grounds for possession are not open to abuse.
How can we help?
Paula Haverkamp is a Senior Associate and Litigation Executive in our Dispute Resolution team, specialising in landlord and tenant matters and property disputes.
For further information in relation to the subjects discussed in this article, please contact Paula or another member of our team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online form.
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