What will the Renters Reform Bill change for property managers?
A new parliamentary session has now commenced, following The King's Speech to both Houses of Parliament on 7 November 2023. The Renters Reform Bill has carried over into the new parliamentary session. The Government has recommitted to its previously outlined measures.
What's included in the Renters Reform Bill?
The Renters Reform Bill lays out measures to protect the interests of both tenants and landlords in the private sector, including:
Restrictions on rent increases
Rent increases will now be limited to once per year, and landlords must provide a minimum of two months' notice before changing the rent. This is supposed to protect tenants from rent increases that do not reflect changes in the market or from attempts to evict via unfair rent increases, known as 'backdoor eviction'. Tenants will be able to appeal 'excessively above-market rents' more easily in an independent tribunal.
Introduce a new Private Rented Sector ombudsman
Landlords will be legally required to join a new, government-approved ombudsman to help solve disputes with tenants. The Government has stated that the ombudsman will 'provide fair, impartial, and binding resolution to many issues' and 'prove quicker, cheaper, and less adversarial than the court system'.
If fault is found, the ombudsman will have the power to make landlords issue apologies to tenants, provide necessary information, take appropriate remedial action, reimburse rent when standards are not met, or pay compensation of up to £25,000.
The ombudsman's decision will be taken as final, and failure to comply could result in a Banning Order being issued against repeat offenders.
Create a Privately Rented Property Portal
The Renters Reform Bill will see the creation of a new property portal for private landlords and tenants. This will act as a 'single front door' for landlords to better understand their legal obligations and demonstrate compliance. It will empower tenants to make more informed decisions when entering a tenancy agreement, by highlighting when landlords have not met compliance requirements in the past. This will assist compliant landlords with attracting new prospective tenants too. The portal will also help local councils target their enforcement activity where it is most needed.
Tenants given right to request to keep pets
If the Bill is passed, tenants will be able to request permission to keep pets in their rented property, and landlords will not be able to unreasonably withhold consent. Landlords will have 42 days within which to accept or deny the request to keep pets. However, landlords will be able to require tenants to provide written confirmation of pet insurance to cover the costs of potential damage to the property.
Abolish Section 21 'no-fault' evictions
We have already provided an overview of the abolishment of Section 21 evictions in our recent blog. For clarity, here are the key points:
Section 21 currently allows landlords to repossess their properties by evicting tenants without providing a reason. The Renters Reform Bill will abolish these 'no-fault' evictions by only allowing landlords to evict tenants under reasonable circumstances, such as anti-social behaviour. The abolition of Section 21 is intended to level the playing field between tenants and landlords and provide more housing security for private renters.
In place of Section 21, the Government intends to strengthen Section 8, which allows landlords to end a tenancy agreement if they have a legal reason to do so. For instance, landlords can apply Section 8 after a tenant has lived in their property for six months if they wish to sell the property or have family move in. There are also plans to add a new mandatory ground for repeated rent arrears. Eviction will become mandatory if a tenant has been in at least two months' rent arrears three times within the last three years. If a tenant breaches their tenancy agreement or damages the property, landlords will be able to evict them in as little as two weeks.
Single system of periodic tenancies
Under the Renters Reform Bill, the Government intends to simplify existing tenancy structures by moving all Assured Shorthold Tenancies onto a single system of periodic, or rolling, tenancies. Instead of having fixed six-, twelve-, eighteen-, or twenty-four-month contracts, tenancies will now have no specified end dates. Tenants will need to provide two month's notice when leaving a tenancy to allow landlords to find another appropriate tenant in time. Equally, landlords will not be able to evict without reasonable notice.
For more detail on the abolishment of Section 21, the introduction of periodic tenancies, and what this could mean for different kinds of property managers, see our recent blog on the relationship between the Renters Reform Bill and the student accommodation sector.
Future proposed reforms
In addition to the measures laid out in the Renters Reform Bill, the Government has committed to passing the following amendments at the earliest opportunity:
Making it illegal to have blanket bans on renting to tenants in receipt of benefits or with children
While landlords will retain the final say on who they rent to, the Government has reiterated their commitment to ensuring that tenants cannot be refused on the basis of having children or being in receipt of benefits. This helps to protect all families from discrimination.
Squeezing out criminal landlords
The Government has committed to making it easier for councils to target enforcement action against landlords who refuse to comply with legal measures, thus giving the majority of responsible landlords a bad name.
Protecting the student market
The Government has reiterated their intention to introduce new grounds for possession for student landlords to support the cyclical nature of the student housing market 'at the earliest opportunity'.