The rental housing landscape in England & Wales is set for a major transformation following the first reading of the Renters’ Reform Bill before Parliament. A key pledge in the Government’s 2019 Manifesto, the bill was introduced with the goal of providing safer, fairer and higher-quality homes, and aims to strike a balance between protecting tenants and maintaining the rights of landlords.
- Abolition of Section 21 & Fixed Term Tenancies:
Quite possibly the most significant change introduced by the Bill is the long awaited abolition of “no fault evictions” under Section 21 of the Housing Act 1988. While this offers greater security to tenants, Landlord’s will find themselves having to navigate the more complicated Section 8 Grounds and ensure that at least one of the prescribed grounds contained at Schedule 2 of the Housing Act 1988 are met. This will undoubtedly mark the end of the accelerated possession procedure, which currently allow Landlord’s to obtain possession of a property without the need for a hearing, and at a lower cost.
There are currently 17 grounds for eviction under Section 8 contained at Schedule 2 of the Housing Act 1988. These grounds are largely used in circumstances where the tenant is in breach of the tenancy agreement, rental arrears or the landlord requires the property for various reasons. Many of these grounds are discretionary.
In addition to the ban on “no fault” evictions, the Bill will also bring about an end of fixed term tenancies so landlords will no longer be able to dictate a minimum term for the tenancy. All tenancies (including those already in existence) will automatically be converted to periodic tenancies i.e. a tenancy which runs by reference to when the rent is paid i.e. month to month, quarterly or annually rather than for a set period. Tenants will be able to give 2 months’ notice to terminate the tenancy at any time.
- Expansion of Section 8 Grounds:
In an attempt to balance out the abolition of “no fault” evictions, the Bill will seek to strengthen the already existing grounds under Section 8. Reformed possession grounds will allow landlords to recover their properties when necessary, such as then they intend to sell the property or if they wish for a close family member (or themselves) to move into the property.
Notice periods will also be reduced for tenants who breach tenancy agreements or cause property damage. Whilst these reforms intend to strike a balance between tenant security and ensuring landlords can effectively manage their properties, the Bill does not make changes to the court’s wide discretion to evict under Grounds 9 to 17 such as persistent rental arrears under two months’ or breaches of the tenancy agreement .
The Bill also promises a “reformed court process” alongside the reforms. Whilst details are scant as to what this will entail, it is understood that the intention will be to digitise much of the process which hopes to reduce delays.
- Changes to Rent Increases
Landlords will also face changes relating to when and how they can increase rent. The Bill will now permit Landlords to increase rents only once per year. Landlords will also now have to give two months’ notice (currently one month).
There will also be a new process for serving notice on tenants which largely replicates the current process under section 13 Housing Act 1988. A Landlord seeking to increase rent will now be required to fill out an online form and serve it on the tenant.
However, the tenant will be entitled to challenge it at any point prior to the starting date if they believe it to be above market rate. The aim of this being to effectively stop landlords “pricing out” tenants in lieu of being able to use the Section 21 procedure.
- Property Ombudsman & Property Portal:
The Bill also introduces a new Ombudsman scheme, which will be mandatory for all private landlords to join. The Ombudsman aims to provide fair and binding resolution to tenant complaints without the need for recourse to court.
The Ombudsman will have wide-reaching powers which will include the ability to offer compensation to tenants of up to £25,000 and compel a landlord to take remedial action. Landlords who fail to join the redress scheme may also face fines if a landlord fails to take part in the scheme.
There will also be a new online “Property Portal” which is to include a database of all residential landlords and privately rented properties in England. The intention is to provide more comprehensive information to both landlords and tenants as to their rights and obligations under a tenancy agreement. There will be a requirement for all properties to be registered on the database before they can be marketed for let, as well as financial penalties if a landlord fails to register a property.
- Decent Home Standard:
A “Decent Homes Standard” will apply to all private rented accommodation. This standard will aim to improve the quality of rental properties.
- Right to Pets & Abolition of Blanket Bans
A noteworthy provision of the Bill is the introduction of a new right for tenants to request permission to keep a pet in their rented accommodation. Landlords must consider these requests and cannot unreasonably refuse them. What is unreasonable will be determined on a case by case basis. A landlord may, perhaps, be able to refuse a pet in a House of Multiple Occupants on the basis of another tenants’ allergies. However, a landlord will find it more difficult to refuse a pet in a self-contained flat.
Landlords will also no longer be able to apply blanket bans on families with children or those in receipt of benefits.
The Renters’ Reform Bill marks the most significant changes to the rental housing sector since the Deregulation Act 2015. Whilst the Bill is only due for its second reading before Parliament, it is understood that the Government are keen to push the reforms through before the end of the current Parliament and landlords can likely expect to see this bill come into force prior to December 2024 when the current Parliamentary term is due to end.
The Reforms may mean that some landlords will be required to make significant changes to their rental property to comply with the Decent Homes Standard across England. In addition with landlords soon facing the more complicated and potentially problematic Section 8 eviction process we may see a flurry of Section 21 evictions prior to the implementation of the Bill.
You can read the full proposals on the Government website via the link below.
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