The government has published its Renters (Reform) Bill which promises to deliver a fairer lettings system for tenants and landlords in England.
Dubbed by the government as a “once-in-a-generation overhaul of housing laws”, landlords have been keeping a close eye on the contents of the bill, which promises to:
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Make it harder to evict tenants.
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Make it easier for renters to have pets.
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Make landlords join a mandatory Ombudsman scheme.
Updated in February 2024, in this guide we’ll explain what the Renters (Reform) Bill is and examine the impact the legislation could have on landlords and tenants in England.
If you’re concerned about how this change in legislation will affect your property, get in touch with our team today to find out how we can help you.
What is the Renters (Reform) Bill?
The Renters (Reform) Bill was first mooted in 2019 by then Prime Minister Theresa May but has faced a number of delays due to the Covid-19 pandemic.
The Bill’s aim is to address what the government described as an ‘imbalance’ between tenants and landlords, providing more security for tenants and improving standards in the Private Rented Sector.
When will the Renters (Reform) Bill take effect?
Although we don’t know when this Bill will make its way into law, it’s likely there will be a transitory period for existing tenancies. It’s believed there would be a lead in time of 6 months for new tenancies and a further year for existing tenancies.
Timeline for the Renters (Reform) Bill
The bill is currently going through the House of Commons, following the process:
- First reading: May 2023.
- Second reading: October 2023.
- Committee stage: November 2023.
- Report stage: Current stage
- Third reading: TBC
What impact will the Renters (Reform) Bill have?
“It’s important to understand there’s no need to panic,” advises Martin & Co Managing Director Eric Walker.
“No landlord needs to sell their property as the Bill will allow them to seek possession on that ground. They will also have strengthened grounds for rent arrears and anti-social behaviour.
Put simply, landlords are currently getting the highest rent ever and have the best choice of tenants.”
The Renters (Reform) Bill contains several important elements that will affect landlords:
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The abolition of section 21.
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The end of fixed term tenancies.
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Changes to landlord grounds for possession.
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Renting to tenants with pets.
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A landlord portal and a requirement to join a new ombudsman scheme.
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Changes to how rents are reviewed and increased notice periods.
The abolition of section 21
The biggest single change in the Renters (Reform) Bill is the abolition of section 21 – or ‘no fault’ evictions.
In future, all evictions will need to be based on an approved reason provided by the landlord through a notice under section 8 of the Housing Act 1988.
The section 8 structure is pretty similar, although the various grounds for possession in Schedule 2 of the 1988 Act have been extensively re-worked and this will require detailed cross referencing.
Why was this change made?
The abolition of section 21 is, in the government’s words, designed to “empower renters to challenge poor landlords without fear of losing their home.”
This means tenancies will only end if the tenant decides to, or if you have grounds for possession under section 8.
What does this mean for landlords?
According to Eric Walker, very little. “Since only around 6% of tenants are evicted this way, this shouldn’t have too much of an impact on landlords.” In fact, the Bill promises to strengthen grounds for possession and improve court processes, so landlords can quickly and effectively regain access to their properties when a tenant fails to meet their obligations.
The end of fixed term tenancies
The Renters (Reform) Bill will abolish all fixed term tenancies, with agreements instead being periodic from day one. Tenants will need to give you a notice period of two months to exit their tenancy under the new periodic tenancy rules and notice periods of longer than two months will be banned.
Why was this change made?
The abolition of fixed term tenancies will leave tenants free to give notice at any stage during their tenancy, awarding them far more freedom than they currently have.
What does this mean for landlords?
For landlords, you’ll be able to give your tenants two months’ notice if you wish to sell or move into your rental property, with notice periods for other grounds (such as anti-social behaviour or rent arrears) varying. If a landlord attempts to create a fixed term tenancy or seeks to serve a notice to quit, then they can be penalised by the local authority.
But should landlords be concerned? Eric Walker doesn’t think so. “When this was introduced in Scotland, it had very little effect on landlords as it’s not cheap to move. Tenants will need to find another deposit and set up all of their utilities again.”
Holiday lets
Some landlords rent their properties as short term or holiday lets over the summer months, and then rent on an assured shorthold tenancy (AST) over the winter.
Under the new Bill, a landlord will have no grounds to obtain possession nor certainty that the property will be available for the holiday season.
Student lets
Student tenancies, which typically run from September to June each year, have worried landlords and agents about transitioning to periodic leases.
To address concerns, the government added a provision which should make it easier for landlords to reclaim their properties annually.
Landlord grounds for possession
To protect responsible landlords, the Renters (Reform) Bill will overhaul the section 8 grounds for possession.
This means you’ll be able to:
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Move into your rental property if you wish.
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Regain possession from tenants in rent arrears.
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Sell your rental property when you need to.
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Regain possession from anti-social tenants.
Many grounds will become mandatory, meaning you’ll have more certainty in court if you can prove the ground has been met.
Moving into your rental property
Current rules state that a section 8 notice can be served if you wish to move into your rental property and live in it as your main home. However, this doesn’t extend to your children or other family members.
As part of the Renters (Reform) Bill, a new section 8 ground will be introduced that allows you and close members of your family to move in. However, this ground can’t be used in the first six months of the tenancy and your tenants would need two months’ notice.
Rental arrears ground amendments
Under new section 8 rules regarding rental arrears, you’ll be able to use a new mandatory ground if your tenant has been in at least two months of arrears on at least three occasions in the past three years.
This will apply even if the tenant is not currently in two months of arrears when the hearing reaches court.
If this ground is proven, you’ll only need to give your tenant four weeks’ notice to leave the property.
Selling your property
If you wish to sell your rental property, you’ll be able to do so using a section 8 ground under the new legislation.
The current mortgage repossession ground will remain, with new grounds created for other circumstances where you wish to sell.
For the first six months of a tenancy, however, these grounds can’t be used, while tenants will also require two months’ notice of your intent to sell.
Anti-social behaviour ground amendments
In the case of serious anti-social or criminal behaviour from a tenant, notice periods will be reduced to two weeks. Landlords will still need to provide proof of this behaviour which may hold up proceedings. However, for evictions that end up in the courts, the government has pledged to digitize the process, with the aim of reducing delays.
The government maintains that these reforms “will strengthen powers to evict anti-social tenants, broadening the disruptive and harmful activities that can lead to eviction and making it quicker to evict a tenant acting anti-socially.”
Renting to tenants with pets
All tenants will be allowed to keep a pet if the landlord consents. Furthermore, this consent cannot be unreasonably refused or withheld. Refusal or consent must be given within 42 days of permission being sought.
Why was this change made?
In a bid to empower tenants, the Renters (Reform) Bill pledges to ensure landlords do not unreasonably withhold consent when a tenant requests to keep a pet. Tenants will also be able to challenge refusals.
What does this mean for landlords?
In a change to the Tenant Fees Act 2019, landlords can insist that the tenant obtains pet insurance. This is good news for landlords as it means that they’re not automatically compelled to allow a pet.
In reality, more detail on this element of the Bill is needed, especially when it comes to properties where pets are banned in the headlease, or Houses in Multiple Occupation (HMOs) where the needs of other tenants will need to be considered.
Landlord portal and Ombudsman
To help ease pressure on the court system with no section 21, the Bill proposes a new Private Renters’ Ombudsman is created to help landlords and tenant disputes outside of the courtroom. A new property portal would also be introduced under the Bill, with landlords required to register their properties.
Why was this change made?
The aim of the portal is to give tenants more transparent information on the standard of the property they wish to rent and local councils more details if or when problems arise at a property. The portal will list landlords’ obligations and help tenants make better decisions when signing a new tenancy agreement.
What does this mean for landlords?
Although it would be mandatory for all landlords to join the Ombudsman, landlords using a letting agent to manage their properties already benefit from those agents being part of mandatory redress schemes.
Rent reviews and increase notice periods
Rent increases would be limited to once per year under the Renters (Reform) Bill, with the notice period required to inform tenants of a rise in rent increased to two months.
Why was this change made?
In order to give more power to tenants, changes have been made to prevent landlords from making sudden and considerable increases to rent.
Tenants will now be able to challenge a rent increase that they feel is unfair. Furthermore, rent review clauses that lock tenants into rises, will be banned from tenancy agreements.
What does this mean for landlords?
Landlords will no longer be able to include rent increase clauses in the tenancy agreement. They will only be able to increase rents using the section 13 notice procedure, which can then be challenged by tenants.
How can Martin & Co help?
If you’ve any questions, our team is on hand. Get in touch today to find out how we can help you.
