A brief history
In April 2019, the government published the outcome of its consultation ‘Overcoming the barriers to longer tenancies in the private rented sector’. Following that, it committed to introduce a Renters Reform Bill that promised to abolish section 21 (‘no fault’) notices and phase out the Assured Shorthold Tenancy, the most common form of tenancy agreement in the Private Rented Sector. The white paper published in June 2022 provided further details of the proposals.
Campaigners on both sides have been vocal about this imminent reform; housing charity, shelter, dubbed the white paper a “gamechanger” for England’s 11 million private renters and the National Residential Landlords Association continues to seek to influence the government to ensure that the new Bill is “fair and workable for both landlords and tenants”.
What will the Bill aim to do?
The main aims of the Renters Reform Bill are to ensure that rented homes are of a decent condition and provide renters with the power to challenge poor practice and rent increases, ultimately ensuring that renters have a positive housing experience while progressing on the path to home ownership. In its white paper, the government set out its five ambitions for the Bill:
- All tenants should have access to a good quality, safe and secure home
- All tenants should be able to treat their house as their home and be empowered to challenge poor practice
- All landlords should have information on how to comply with their responsibilities and be able to repossess their properties when necessary
- Landlords and tenants should be supported by a system that enables effective resolution of issues
- Local councils should have strong and effective enforcement tools to crack down on poor practice
The Bill will affect most tenancies in the private rented sector in England (the exception being purpose-built student accommodation registered for one of the government-approved codes, which the government has said will be exempted).
The Decent Homes Standard
To progress the first ‘ambition’, the Bill is intending to place requirements on landlords to avoid health and safety hazards and disrepair, which will be enforced by local councils. The government ran a consultation on a decent homes standard, which closed on 14 October 2022 and sought views from the Private Rented Sector in England. The Bill will seek to implement the results of that consultation.
In 2018, the government introduced the Homes (Fitness for Human Habitation) Act 2018, which states that landlords must not let out homes with serious hazards that make the dwelling unsuitable for occupation. The Renters Reform Bill is intended to go beyond this, defining ‘decent’ as ‘free from the most serious health and safety hazards, such as fall risks, fire risks, or carbon monoxide poisoning’.
The Decent Homes Standard is already a regulatory standard in the social rented sector, and it is expected that the proposed standard in the private sector will mimic this. Under the proposed standard, a home is considered safe and decent if:
- It meets the current statutory minimum standard for housing
- It is in a reasonable state of repair
- It has reasonably modern facilities and services
- It provides a reasonable degree of thermal comfort
Section 21 notices
Under the current law, a landlord may serve a section 21 notice without the need for tenant default; they just need to show that the correct procedure has been followed. Generally speaking, this procedure requires 2 months’ notice to be given (provided that any fixed term has come to an end).
Under the proposals, the Bill will see periodic tenancies replace the common Assured Tenancy and Assured Shorthold Tenancy, removing the possibility of a landlord serving a section 21 notice on a tenant and providing more flexibility to renters by allowing them to end their tenancy on just 2 months’ notice.
The grounds for landlords to gain possession will also be reformed, so that landlords can only regain possession in reasonable circumstances, for example, in cases of repeated serious arrears or antisocial behaviour, or where landlords have a change of circumstance and they (or close family members) wish to move into the rental property. Renters will have the opportunity to address the arrears, as possession orders will only be granted if there have been at least two months' rent arrears on three occasions within a three-year period. Further, landlords will have to provide their tenants with twice as much notice for rent arrears evictions (four weeks as opposed to the current two weeks).
Under the proposals, the Bill will also limit rent increases to once per year, and landlords will have to provide tenants with 2 months’ notice to allow sufficient time to find replacement accommodation, if necessary. Rent review clauses will be prohibited, as well as “backdoor evictions”, whereby a landlord essentially evicts a tenant by virtue of an unreasonable rent increase. Tenants’ ability to challenge excessive rent increases through the First-tier Tribunal will also be improved.
There is an ongoing rent control debate, recently stimulated by the Scottish government introducing emergency legislation for rent controls on the Private Rented Sector which (from September 2022) set a cap on rent increases at 0% per annum, which has since increased to 3% per annum from 1 April 2023. However, the Bill is not expected to proceed down this route.
A ban on ‘No DSS’ practices
At the moment, landlords can refuse to rent to families with children and those in receipt of benefits, or require that tenants be ‘working professionals’. Under the Bill, blanket bans known as ‘No DSS’ will be unlawful. However, landlords will still be able to impose affordability criteria and select tenants based on the results of credit checks.
The proposals are to give tenants greater rights to request to have a pet in their property, which the landlord must consider and cannot unreasonably refuse.
A new ombudsman
Currently disputes relating to the Private Rented Sector are dealt with by the County Courts or First-tier Tribunal (Property Chamber). Under the proposals, tenants will have access to a quick, cheap and less adversarial means of redress via a new ombudsman.
A new digital property portal
All private landlords will have to register onto a new online portal to demonstrate their regulatory compliance. The portal will ensure that landlords understand their legal responsibilities and allow them to demonstrate this compliance, whilst also raising awareness among tenants. It's intended to act as a “trusted one-stop-shop” for guidance on renting in the Private Rented Sector.
The Property Portal is also seen as helping to increase local council’s ability to enforce against criminal landlords and boosting some of the functionality of the existing Database of Rogue Landlords and Property Agents (which was introduced in 2016 to keep track of “rogue” landlords and property agents).
The Renters Reform Bill is expected to be introduced into Parliament later this year. Once the Bill is enacted, the government has said that landlords will have 6 months’ notice of implementation, at which point all new tenancies will be periodic and be governed by the new rules. At least 12 months after the first implementation date (18 months after the Bill is enacted), all existing residential Assured and Assured Shorthold Tenancies will automatically transition to the new system.
The Bill, if and when enacted, will make major changes to the Private Rented Sector and landlords and tenants should pay close attention over the next few years as it is set to redefine their relationship.