The Renters (Reform) Bill is a legislative proposal that outlines the government’s intentions to extensively reshape the private rented sector (PRS) and enhance the quality of housing.
The suggested reforms aim to establish improved rights and conditions for renters, representing the most significant overhaul of the private rented sector in three decades.
Presented to parliament on 17th May 2023, the Bill must undergo parliamentary scrutiny and approval before it can be enacted into law. Housing Secretary Michael Gove expressed his desire to expedite the implementation of the Bill during an interview with BBC Newsbeat.
Why is the Renters (Reform) Bill being introduced?
The private rental sector plays a crucial role in the housing market of the United Kingdom. The number of privately rented properties has surpassed four million, doubling since 2004.
According to the government, current legislation exposes some renters to an uncertain lack of stability, particularly concerning Section 21 “no fault” evictions. Additionally, responsible landlords face challenges posed by a small fraction of unscrupulous landlords who undercut their efforts.
While the government has outlined its intentions in the Renters (Reform) Bill, it also has broader aspirations for the sector. It emphasises that nearly a quarter of privately rented homes fail to meet basic standards of decency. Therefore, the government aims to eventually apply a Decent Homes Standard to the private rented sector.
What’s included in the Renters (Reform) Bill?
1. Section 21 “no fault” evictions to be abolished
The Renters (Reform) Bill solidifies the government’s intentions to eliminate Section 21, which currently allows private landlords to regain possession of their properties without specific reasons. Instead, landlords will only be able to evict tenants under reasonable circumstances.
According to the government’s 2022 white paper, the removal of Section 21 aims to create a fairer balance between landlords and tenants. It will empower tenants to challenge unfavourable practices and unjustified rent hikes, while also encouraging landlords to proactively address and resolve issues.
Housing Secretary Michael Gove reiterated the government’s stance that “no fault” evictions can be harsh and lacking compassion.
How will Section 8 Grounds change?
Instead of Section 21, the Renters (Reform) Bill presents proposals to enhance Section 8, which allows landlords to terminate a tenancy agreement prematurely if they have a legitimate legal reason to do so.
One significant aspect of the proposed changes is the introduction of a new mandatory ground for cases of repeated serious rent arrears. This means that eviction becomes obligatory if a tenant has been in arrears of at least two months’ rent on three separate occasions within the previous three years, irrespective of the outstanding arrears balance at the time of the hearing.
Additionally, there is a new ground that enables landlords to utilise Section 8 in situations where they intend to sell a property or permit their family members to occupy a rental property. This provision can be invoked after a tenant has resided in the property for a minimum of six months.
How will the court process change?
The government has made a pledge to collaborate with the Ministry of Justice (MOJ) and HM Courts and Tribunals Service (HMCTS) to achieve their objectives.
In the government’s white paper titled “A fairer rental sector,” they expressed their intention to implement a comprehensive set of court reforms that specifically address the issues that cause delays and obstacles in possession proceedings. These reforms aim to streamline the process and make it more efficient.
2. A single system of periodic tenancies
The Renters (Reform) Bill confirms the government’s objective to simplify the existing tenancy structures by transitioning all Assured Shorthold Tenancies (ASTs) to a unified system of periodic tenancies.
Currently, Assured Shorthold Tenancies are the most commonly used rental agreements in the private rented sector. Typically, tenants enter into a fixed-term contract for six or twelve months. At the end of the term, a decision is made to either renew the contract or switch to a periodic payment arrangement (e.g., month by month).
Under the proposed Renters (Reform) Bill, all rental properties would operate under a periodic tenancy framework, with no specified end date, rolling over monthly.
The proposals outline that tenants would be required to provide a two-month notice period when vacating a tenancy. This provision aims to ensure that landlords can recover the costs associated with finding new tenants and avoid prolonged periods of vacancy.
3. Notice periods for rent increases to be doubled
As part of efforts to address the cost of living crisis, the government aims to implement measures that restrict rent increases to once per year. Additionally, landlords will be required to provide a minimum notice period of two months for any changes in rent, as outlined in the previous year’s white paper. These initiatives are intended to provide tenants with greater stability and predictability regarding rental costs, offering them more time to prepare for potential changes in their housing expenses.
Will landlords be able to review rents?
According to the Renters’ (Reform) Bill white paper, one of the proposed measures is the elimination of rent review clauses. The aim is to prevent tenants from being bound by automatic rent increases that are ambiguous or do not accurately reflect changes in market prices. The government strongly opposes any attempts to evict tenants through unwarranted rent hikes, considering them unacceptable.
In cases where rent increases are deemed disproportionate, the government intends to ensure that tenants feel confident in challenging unjustified raises by providing recourse through the First-tier Tribunal. Additionally, the government will implement measures to prevent the Tribunal from approving rent amounts higher than what landlords initially proposed when seeking a rent increase. These provisions aim to safeguard tenants from unfair and excessive rent adjustments.
4. Tenants given more rights to keep pets in properties
Tenants have the right to request permission to keep a pet in their rental home, and landlords are prohibited from unreasonably withholding consent.
When a tenant makes a request, the landlord is obligated to respond and provide their decision within 42 days from the date of the request. However, if the landlord requires additional information, they may request an extension of up to one week to consider the request further. This provision ensures that landlords cannot unduly delay their response to the tenant’s pet request.
How will landlords be protected if they accept a tenant with pets?
The Renters (Reform) Bill introduces slightly stricter requirements compared to the white paper. It specifies that when a tenant requests permission to have a pet, they must provide written confirmation that they have obtained pet insurance. Alternatively, they can state their willingness to cover the landlord’s reasonable costs for insurance to account for potential pet-related damages.
These additional provisions aim to address concerns about potential damage caused by pets and ensure that appropriate measures, such as insurance coverage, are in place to mitigate any associated risks.
5. A new ombudsman covering all private landlords
Under the Renters (Reform) Bill, there is a possibility that landlords may be obligated to join a government-approved ombudsman scheme that encompasses all private landlords renting out properties in England, regardless of whether they use a letting agent.
The establishment of a landlord redress scheme would provide an avenue for former or current tenants to lodge complaints against landlords, which would be independently investigated. The bill outlines the conditions and requirements for the redress scheme, ensuring its effectiveness and fairness. However, further details regarding the timeline for setting up the scheme are yet to be provided.
The implementation of a landlord redress scheme aims to enhance tenant protection, provide a mechanism for resolving disputes, and hold landlords accountable for any misconduct or wrongdoing.
6. New Property Portal for private landlords and tenants
As part of the Renters (Reform) Bill, a new digital property portal will be introduced to serve as a centralised platform, acting as a single “front door” to assist landlords in understanding and demonstrating compliance with their legal obligations.
The government recognises that tenants frequently discover too late that they are renting substandard properties from landlords who intentionally neglect their responsibilities. Additionally, local councils often face challenges in identifying and locating landlords when significant issues arise.
The portal aims to address these concerns by providing a comprehensive resource for landlords to ensure regulatory compliance and enable them to showcase their adherence to legal requirements. Moreover, the portal will help attract prospective tenants by promoting transparency and trust in the rental market.