What is the Renters Reform Bill: Empowering Tenants and Improving Rental Sector Conditions

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:

• Make it harder to evict tenants.
• Make it easier for renters to have pets.
• Introduce a Decent Homes Standard.
• Make landlords join a mandatory Ombudsman scheme.

But what does this mean for landlords? “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.”

Updated in May 2023, in this guide we’ll explain what the Renters’ (Reform) Bill is and examine the impact the legislation could have on landlords 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 timings for when this Bill will make its way into law are as yet unclear, it’s understood that the Bill will be carried over to the King’s speech with the aim of it getting Royal Assent in spring 2024. However, it’s unlikely it’ll be in force by then as there will need to be a transitory period for existing tenancies. It is understood that once Royal Assent is received, there would be a lead in time of 6 months for new tenancies and a further year for existing tenancies.

How the Renters’ (Reform) Bill will impact landlords

The Renters’ (Reform) Bill contains several important elements that will affect landlords:

• The abolition of section 21.
• The end of fixed term tenancies.
• Changes to landlord grounds for possession.
• The end of blanket bans on tenant demographics.
• Renting to tenants with pets.
• The Decent Homes Standard.
• A landlord portal and a requirement to join a new ombudsman scheme.
• Changes to how rents are reviewed and increased notice periods.

How can the Renters’ Reform Bill benefit tenants?

First and foremost, it addresses the issue of Section 21 evictions, which often force tenants to find new homes on short notice, resulting in substantial moving costs and unnecessary disruptions. Furthermore, the bill enforces the Decent Homes Standard within the private rental market, ensuring that rental properties adhere to specified health and safety criteria while maintaining adequate facilities. Moreover, the bill aims to empower tenants by facilitating challenges against unjustified rent increases and enabling them to seek compensation for subpar living conditions. These reforms intend to alleviate the financial burdens faced by families and enhance the overall conditions within the rental sector. It is crucial to recognize that the majority of landlords act responsibly and provide secure accommodations for their tenants. However, for those who do not meet their obligations, the bill imposes increased penalties and grants local councils greater authority to address non-compliant landlords. Additionally, the bill includes provisions to safeguard landlords, simplifying the process of reclaiming properties under specific circumstances such as when tenants engage in antisocial behavior.

HOW WILL THE NEW PROPERTY PORTAL FOR LANDLORDS WORK?

The nature of the portal is yet to be determined, with the government to “conduct extensive testing of potential solutions for the portal, underpinned by user research and engagement with representative groups, to make sure the system works for tenants, landlords and local councils.”

WILL IT BE MANDATORY TO REGISTER PROPERTIES ON THE PORTAL?

The portal aims to provide a solution to these issues, with landlords legally required to register their property on the portal and local councils empowered to take enforcement action against private landlords that fail to join the portal. The portal will “dramatically increase local councils’ ability to enforce against criminal landlords”. The government plans to incorporate some of the functionality of the existing Database of Rogue Landlords and Property Agents.

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.

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.

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:

• Move into your rental property if you wish.
• Regain possession from tenants in rent arrears.
• Sell your rental property when you need to.
• 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 behavior 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.”

The Decent Homes Standard

It’s estimated around 12% of rental properties in the UK “pose an imminent risk to the health and safety of tenants” according to the original white paper for this Bill. Under any new legislation, the Decent Homes Standard would be applied to the Private Rented Sector for the first time.

Why was this change made?

According to Housing Secretary Michael Gove, “Too many renters are living in damp, unsafe, cold homes, powerless to put things right, and with the threat of sudden eviction hanging over them.” “This government is determined to tackle these injustices by offering a New Deal to those living in the Private Rented Sector; one with quality, affordability, and fairness at its heart.”

What does this mean for landlords?

Local council departments will be given greater powers to enforce the Decent Homes Standard and deal with landlords who don’t comply. However, ahead of this bill, several steps to raise property standards have already been taken, including the requirement for smoke and CO2 detectors and the implementation of the Homes (Fitness for Human Habitation) Act 2018 and Minimum Energy Efficiency Standards (MEES) in private rented homes.

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.

What is Private Rented Sector?

The private rented sector (PRS) refers to housing that is privately owned and rented out to tenants. This can include apartments, houses, and other types of residential property. The PRS is an important part of the housing market, providing flexible rental options for people who are unable or unwilling to purchase their own homes. However, the sector has been subject to criticism over issues such as rising rents, insecure tenancies, and poor quality housing. Governments and policymakers around the world are looking at ways to regulate the PRS in order to improve standards and ensure that tenants are protected.

Understanding the Role of Private Landlords

Private landlords are individuals or companies who own and rent out one or more residential properties in the private rented sector (PRS). They may be small-scale landlords who rent out a single property, or larger-scale investors who hold a portfolio of properties. Private landlords play an important role in the PRS, providing accommodation to millions of tenants worldwide. While there are many responsible and professional private landlords, the sector can also attract unscrupulous landlords who fail to maintain their properties or treat their tenants fairly. Tenants are advised to research potential landlords and properties carefully before signing a tenancy agreement, and to know their rights and responsibilities as renters.

The National Residential Landlords Association: Empowering and Supporting UK Landlords

The National Residential Landlords Association (NRLA) is a prominent organization in the United Kingdom dedicated to representing and supporting landlords across the country. As a leading voice in the rental sector, the NRLA plays a vital role in promoting best practices, advocating for landlord rights, and providing resources and guidance to its members.

The Landlord Redress Scheme: Ensuring Fairness and Resolution in the Rental Sector

The Landlord Redress Scheme is an essential mechanism designed to promote fairness and provide a means of resolution for both landlords and tenants in the United Kingdom. As part of the government’s efforts to improve the rental sector, the scheme aims to address disputes, grievances, and issues that may arise during a tenancy. Recognizing the importance of a balanced landlord-tenant relationship, the Landlord Redress Scheme offers a platform for tenants to seek redress when they believe their rights have been infringed upon or when disputes arise with their landlord. Similarly, it provides landlords with a channel to address any concerns they may have regarding tenant behavior or breaches of the tenancy agreement. Terminating a Tenancy Agreement Early:

Conclusion

In conclusion, the Renters’ Reform Bill represents a significant step towards bolstering tenant rights. By addressing issues such as Section 21 evictions, rental property standards, and unfair rent increases, the bill aims to enhance the living conditions of tenants, alleviate financial pressures, and promote responsible practices within the rental sector.

You can find more information on our website, Weatherill Property Group