The Renters Reform Bill – What does this mean for Landlords?
As you will have heard on the news the Renters Reform Bill will mean big changes for the rental market. The Bill which will take some time to be fully implemented sets out to bring in a better deal for renters.
The Bill aims to improve the current rental system for the 11 million private renters and 2.3 million Landlords. The reforms will take some time to be implemented. It is proposed the implementation will come in two stages. The first stage will be for all new tenancies to become periodic and governed by the new rules, at least six months’ notice will be given of this date. It will depend on how long the legislation takes to pass through parliament and when the court system is ready to implement the changes. The second implementation date will be for all existing tenancies to be subject to the new rules. It is reported that it will be at least 12 months between the first and second date. Potentially the first date could be around October 2024.
The main points which the bill seeks to change are:
- Abolition of section 21 no fault evictions
- Introduction of new grounds for possession
- Introduction of a Private Rented Sector Ombudsmen
- Creation of the Privately Rented Property Portal
- Rights for Tenants to keep pets
- Decent Homes Standard
- Preventing Landlords from bans on renting to recipients of benefits
A number of the above points are addressed in more detail below
No Fault Evictions to be Abolished – New Grounds Created
Section 21 Notices will be abolished which means that landlords will no longer have the right to possession of their property outright. The Bill introduces and amends a number of the current existing grounds under section 8 of the Housing Act.
Landlords will be able to evict tenants to sell or move a family member into the property. These are mandatory grounds and will require 2 months’ notice.
The right to evict a tenant for rent arrears remains, where the tenant is in arrears of more than 2 months, 4 weeks’ notice will be required. This remains a mandatory ground. A new mandatory ground is proposed for tenants with three instances of being at least 2 months in arrears in a 3-year period. The Bill continues to propose other arrears related discretionary grounds for persistent late payment and any level of arrears.
Discretionary ground also continue to exist for breach of tenancy and deterioration of the property, these can be relied upon for issues such as a tenant refusing access or damage to the property.
This will remain service of notice, if the Tenant fails to vacate, court proceedings will need to be issued. It will be for the landlord to prove they are able to rely upon one of the section 8 grounds.
Landlord will be able to increase a Tenants’ rent, however a new system is being produced. It appears that it will be a case of Landlord serving the new form of notice, the tenant can either accept the new rent proposal or they can dispute the proposal. If disputed it will be referred to the First Tier Property Tribunal. Any rent increase will be limited to the current open market rent. The process has been put in place to prevent Landlords from increasing rents with a view to forcing tenants to leave.
Fixed term tenancies will be replaced with open-ended or rolling tenancies
Currently most Assured Shorthold Tenancies are for a period of 6 or 12 months. After this time has elapsed, a decision would be made to either renew the contract or if no new contract is issued the tenancy becomes periodic tenancy.
The new bill proposed that all rental properties will be under a periodic tenancy, rolling month by month. This would stop renters from being locked into tenancies if their home is unsuitable or their circumstances change.
The proposals include provision that tenants would need to provide two months’ notice to bring the tenancy to an end.
The Property Portal
The Bill will create a new database, all landlords will be legally required to register themselves and their property on the portal. If Landlords fail to register, they will be subject to penalties. The bill proposes that Landlords which failed to register with the portal could be fined up to £5000 by the Local Authority, and more for repeated failures.
Landlords will be required to pay to use the portal. The fee level has not been confirmed yet.
The portal is also to provide all relevant guidance to Landlords.
Currently the Landlord Licensing scheme will remain in place.
Until the Bill is enacted Landlords can continue to rely upon the existing section 21 and section 8 grounds to evict tenants from their properties. Once the timeline for implementation is formally announced we will know when Landlords will lose their section 21 rights [This is likely to be some time off at the moment, maybe around late 2024].
Landlords therefore need to start thinking about the long-term future of their rental properties, if they are considering leaving the market, careful consideration needs to be given to any new tenancy agreement which are being granted. If Landlords are considering coming out of the rental market, they may be better off allowing current tenancies to become periodic, so that they have the scope to rely upon section 21 if they plan to do so in the near future.
Landlord must ensure that they continue to strictly comply with the section 21 preconditions of service, as a failure to do so could prevent them from being able to evict tenants under section 21.
Holly Minney, Head of Dispute Resolution, said:
“The Bill will mean a lot of changes for Landlords and Tenants in the rental market, at the moment we have not been given much information on what changes are to be made to the court process. Currently the process even under section 21 is cumbersome and slow, so hopefully changes are made to make the eviction process speedier for Landlords.”