The Renters (Reform) Bill Explained
If you are a Landlord, the Renters (Reform) Bill has no doubt been on your mind. It plans to introduce sweeping reforms into the private rental sector and will have an impact on Landlords and Tenants alike.
The Bill aims to reduce the pressures on the rental market and revive it with new legislation; ultimately, it is putting into law many of the proposals suggested by the Fairer Private Rented Sector white paper, which was published in June 2022.
As a Landlord you will need to ensure you understand it in detail or employ an agent who does as it will become part of the law that all landlords and agents must adhere to.
This blog summarises some of the most significant points made by the new Bill – although there is much more to digest within it.
When will the Renters (Reform) Bill become law?
This Bill has been introduced to parliament but has yet been passed into law – it has been formally published and presented to the MP’s and is being debated in the House of Commons and the House of Lords. After this, it may be amended and reviewed before receiving Royal Assent and becoming part of English law, this typically takes around a year.
Many parts of the Bill may well be adjusted before it is finally passed into law and when it does, it will take time to come into force. New tenancies will have 6 months to transition to the new system, after that point, all existing tenancies will have a further 12 months to transition.
The main points of the Renters (Reform) Bill
The Bill is an 89-page document with a lot of detail about the new proposed rules. However, there are some key points, which are particularly relevant for Landlords and we will look these in more detail below:
- The end of Section 21 ‘no fault’ evictions
- Major changes to Section 8 evictions
- Periodic tenancies to replace Assured Shorthold Tenancies (AST’s)
- The right to keep pets by default
- New rent increase restrictions
- Landlords must join a new Property Ombudsman
- Landlords must have a profile on a new lettings database
- No more blanket bans for DSS tenants or families
- The Decent Homes Standard coming to the Private Rental sector
The End of Section 21 ‘No Fault’ Evictions
These will no longer be permitted under this Bill. Section 21 allowed Landlords to evict tenants without a specific reason with 2 months’ notice. Once this new Bill becomes law, Landlords can no longer evict tenants this way. Instead, they will have to use particular grounds for eviction under section 8.
Section 21 evictions are changing because they cause significant anxiety for long-term renters. Once a tenant has moved onto a rolling periodic agreement at the end of their fixed term, they can be given 2 months’ notice to leave a property.
Major changes to Section 8 Evictions
Section 8 Evictions will fully replace Section 21 evictions under this new Bill. Under the new rules, Landlords will be able to evict tenants for various reasons, including personal reasons like selling the property. The idea behind this is to protect tenants from unnecessary eviction whilst making it easier to evict bad tenants.
For example, evictions due to antisocial behaviour will have a shorter 2-week notice period. Likewise, the new rules crack down on repeated significant arrears, tenants found to be in 2 months arrears, 3 times in 3 years can face eviction even if the balance is settled by a court hearing. Landlords will still be able to repossess the property for themselves or their family to live in or if they need to sell. The only restriction is that they cannot do this until the first 6 months of the tenancy have lapsed and after giving their tenants two months’ notice.
Periodic Tenancies to replace AST’s
Under the Renters (Reform) Bill, all Assured Shorthold Tenancies will become periodic. Because of this, the rules regarding rent increases will also change.
Instead of a rent clause in the tenancy agreement, Landlords will be permitted to give 2 months’ notice of a rent increase once per year using a new form under Section 13.
Any rent increases can be scrutinised and if they exceed the ‘market rate’ tenants can appeal to a first tier tribunal to resolve the matter.
Periodic tenancies will apply to Student Lets
Periodic tenancies will also apply to Student Lets with private Landlords. While the new periodic tenancy system will not apply to official university accommodation, it will apply to the thousands of private Landlords who rent properties to students.
Like the rest of the Bill – this is still being debated, if bought in; it may cause significant disruption to Landlords who rent to students. Without fixed term contracts, students can choose to leave with 2 months’ notice at any point. Some students will likely opt to give notice so that their tenancy agreement ends soon after finishing their exams in June, meaning Landlords could face a 2-month void period before the terms starts again in September. It may also be problematic for Landlords to market properties to a new batch of students, as, by April, many students will have already found a property for the new term.
The right to keep pets by default
The Reform Bill is welcome news to pet owners. Due to increasing pet ownership and its associated benefits, the new Bill allows tenants to have a pet in their home – and the requests cannot be ‘unreasonably refused’ by Landlords.
However, the exact grounds for pet refusal are not yet clearly defined. The separate Dogs and Domestic Animals (Accommodation and Protection) Bill does make some specific suggestions though it is still being debated. For example, it suggests Landlords may deny pets on medical or religious grounds, or where the presence of pets may affect the wellbeing of other tenants (e.g. A HMO Property)
The government intends to define the grounds for allowing pets in more detail.
As part of the Bill, Landlords will have 42 days to allow or refuse the request, which can be extended by a week if they require more information regarding the pet. If there is a conflict of interest, the tenant can raise the issue with the new Ombudsman scheme.
Tenants will be required to have pet insurance or pay the Landlord an equal amount to cover the cost of potential damages to the property. This will amend the 2019 Tenant Fees Act to allow pet insurance as a ‘permitted payment’ that Landlords can charge.
Landlords must join a new Property Ombudsman
The Landlord Ombudsman will mediate to resolve disputes between Landlords and Tenants on various issues. Landlords must be a part of it and pay a subscription fee to cover its running costs. It will be free for tenants, who can use a portal to file complaints about Landlords and raise any issues.
There are several things that the Ombudsman can make Landlords do:
- Take remedial action for repairs and maintenance
- Pay fines of up to £25,000
- Provide explanations or apologies
- Reimburse rent if this is necessary
- Offer information
Landlords must have a profile on a new Letting Database
The proposed Lettings Database will contain essential information about all Landlords renting properties in England and can be viewed by potential tenants and the local council. It will take the form of a searchable online property portal, which contains advice and information.
Landlords will have to be a part of this database to let their properties. In addition, they will have to keep the information about their letting history and properties up to date. If they fail to do this, they will be flagged as ‘inactive’ and unable to rent their properties until they have provided the necessary information. It is important to note that any past misconduct regrading rental history will be displayed clearly on Landlords profiles.
No blanket ban for DSS tenants and families
Currently Landlords can advertise their properties to the exclusion of specific tenants. With the Renters (Reform) Bill, Landlords will not be able to do this and all tenants must be considered equally.
The Decent Homes Standard coming to the Private Rental Sector
The Decent Homes Standard already applies to the social housing market and now it is being bought to the Private Rental Sector. This is part of the government’s aim to halve poor quality housing by 2023, so Landlords must ensure their homes meet this standard.
Please Note: The Renters (Reform) Bill is still being debated by MP’s and the information contained in this post could be subject to significant changes before becoming Law.
If you are concerned about the new Renters (Reform) Bill, help is at hand. Why not talk to our Lettings team for expert advice and guidance.