The Government has released full details of the Renter’s Rights Bill, based on a commitment made in their general election manifesto. It comes after the previous Government’s Renters Reform Bill failed to become law. Its provisions include the following:
- Section 21 ‘no fault’ evictions will be abolished. Currently, landlords can gain possession without giving reason on fixed term tenancies that have come to an end, or for periodic tenancies (including tenancies that are rolling over), and this option will cease to exist. Instead, Landlords will have to rely on a Section 8 notice, where they will have to evidence the grounds on which the terms of the tenancy have been broken and go to court for possession if the tenant fails to leave. The impact of the current backlog of cases in the court system could mean long delays for gaining possession (the average last year was reported to be over 50 weeks) and, whereas the previous Government planned to abolish Section 21 notices once the courts had been reformed, the Labour Government plan to implement this measure, as soon as next summer, without court reform.
- Tenancy structures – fixed term tenancies will be removed and replaced with periodic tenancies, whereby tenants may end the tenancy by giving 2 months’ notice. The proposal is that, when the new system comes into force for new tenancies (on a date yet to be confirmed), all existing tenancies will convert to the new type of tenancy, to avoid a two-tier system emerging. It means that when this change comes into force, either the landlord or the tenant will have to actively end the agreement. Landlords seeking possession will have to use Section 8 notices, as referred to above, and go through the courts to get an eviction. It is understood the notice period for Section 8 notices will be 4 months, whereas it is currently two months for Section 21 notices. The change in the tenancy structures would have created problems for the student market, where demand for housing is based around the academic year. However, the Bill introduces a new mandatory ground which will allow landlords renting HMOs to full-time students to seek possession ahead of each new academic year (between June to September) as long as notice is served before the tenancy is entered into.
- Grounds for possession - the Bill clarifies and expands grounds for possession for landlords but also ensures tenants are protected from arbitrary eviction. Grounds for possession may include antisocial behaviour, causing damage to the property, or significant rent arrears. Having served notice for possession, a landlord must go to court if a tenant does not leave and will need to provide evidence that the ground for possession is met. For mandatory grounds, the court must award possession if the ground is proven, but for discretionary grounds e.g., the rent is repeatedly late, the court can consider if eviction is reasonable. With the current delays in the court system, as mentioned above, landlords potentially face long wait times, and the additional costs of going to court for possession.
- Landlords’ rights to reclaim property - the bill includes strengthened rights for landlords to reclaim properties, when necessary, for example to sell a property or move into it. However, tenants will benefit from a 12-month protected period at the beginning of a tenancy and landlords will also need to provide 4 months’ notice.
- Rent increases - all rent increases in the private rented sector will be made using the same process, whereby landlords will be able to increase rents once per year to the market rate. If a tenant believes the proposed rent increase exceeds the market rate, they can challenge this via the First-tier Tribunal, who will determine what the market rent should be. It follows that rent review clauses will not be permitted. With this measure, the Government aims to address what they see as excessive within-tenancy rent increases and it should not have a significant adverse impact, unless the Government goes further and brings in rent controls or empowers local areas to do so, a move which would likely drive more landlords out of the market, should that occur.
- Rent arrears - the mandatory threshold for eviction will increase from 2 to 3 months’ arrears and increase the notice period from 2 weeks to 4 weeks. The purpose is to allow tenants more time to repay arrears and remain in their homes.
- Rental bidding - landlords and agents will be required to publish an asking rent for their property and it will be illegal to accept offers made above this rate. In areas of high demand, landlords may raise the asking rents to compensate for this.
- Private Rented Sector Landlord Ombudsman Scheme – the purpose is to resolve disputes between landlords and tenants, without involving the courts, and provide fair resolutions, which will be binding on the parties. It will be mandatory for private landlords to join the scheme and there will be a fee for membership. Further detail is awaited.
- Private Rented Sector Database - landlords will need to be registered on the database to use certain possession grounds.
- Decent Homes Standard – this already applies to the social housing sector and the Government plans to extend it to the private sector, to ensure homes are safe, and hazard free. Good landlords will already abide by the decent homes standard but will not have been used to time frames for dealing with problems, unless set by the councils. The legislation (‘Awaab’s Law’) will introduce time limits within which landlords must take action to deal with serious hazards, such as damp and mould (which we understand will be 14 days for investigation, and 7 days for fixing the problem), and face heavy fines (or a banning order for repeat offences) for not abiding by them.
A second reading of the Bill was held in Parliament on 9 October. The Conservative party filed a motion to dismiss the bill on the basis it would not provide security and affordability for tenants, it did not respect landlords’ property rights and, may reduce the supply of rented housing. However, the motion was defeated, and the Bill will now be subject to further scrutiny.
We will continue to monitor developments on the Renters’ Rights Bill and will provide further updates, as and when appropriate.
