The Renters’ (Reform) bill 2023: What should you know?
19th May 2023 posted in Property News
The Renters’ (Reform) Bill has been announced to Parliament, promising to deliver a fairer lettings system for tenants and landlords in England.
According to the government, the Bill is a “once-in-a-generation overhaul of housing laws”. Landlords have been keeping a close eye on the contents of the bill, which will make it:
- More difficult to evict tenants.
- Easier for tenants to have pets.
- Illegal for landlords to issue blanket bans on letting to those on benefits.
- Mandatory for landlords to join an Ombudsman scheme.
The Bill also pledges to introduce a Decent Homes Standard, which all landlords need to abide by.
But what does this mean for landlords? “It’s important to understand there’s no need to panic,” advises Hunters’ Lettings Director, Carrie Alliston.
“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.”
This guide will explain what the Renters’ (Reform) Bill is and assess the impact the legislation could have on UK landlords.
If you’re worried 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 idea of a Renters’ (Reform) Bill was first introduced in 2019 by then Prime Minister Theresa May but has faced a number of delays, mainly 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?
We don’t know when this Bill will make its way into law, however it’s believed that the Bill will be awarded Royal Assent in spring 2024.
However, it’s unlikely it’ll be in force by then as a transitory period for existing tenancies is needed. It’s believed there would be a lead in time of 6 months for new tenancies and a further year for existing tenancies.
How will the Renters’ (Reform) Bill affect landlords?
The Renters’ (Reform) Bill will affect landlords in a variety of ways, including:
- The end 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.
Section 21 is no more
The most significant change 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.
Why was this change made? According to the government, the abolition of section 21 was designed to “empower renters to challenge poor landlords without fear of losing their home.”
This means tenancies will only end if the tenant decides to or if a landlord has grounds for possession under section 8.
What does this mean for landlords? According to Carrie Alliston, very little. “Since only around 6% of tenants are evicted this way, this shouldn’t have too much of an impact on landlords.” In fact, the Bill promises to strengthen grounds for possession and improve court processes, so landlords can quickly and effectively regain access to their properties when a tenant fails to meet their obligations.
An end of fixed term tenancies
All fixed term tenancies will be abolished by the Bill. Instead, agreements will be periodic from day one. Tenants will need to give landlords a notice period of two months to exit their tenancy under the new rules and notice periods of longer than two months will be made illegal.
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? Landlords will be able to give tenants two months’ notice if they wish to sell or move into their 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, they can be penalised by the local authority.
But should landlords be concerned? Carrie Alliston doesn’t think so. “When this was introduced in Scotland, it had very little effect on landlords as it’s not cheap to move. Tenants will need to find another deposit and set up all of their utilities again.”
Some landlords rent their properties as short term or holiday lets over the summer months, and then rent on an assured shorthold tenancy (AST) over the winter.
Under the new Bill, a landlord will have no grounds to obtain possession nor certainty that the property will be available for the holiday season.
Landlord grounds for possession
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.
As part of the Renters’ (Reform) Bill, many grounds will become mandatory. This means 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.
Under the 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
If your tenant has been in at least two months of arrears on at least three occasions in the past three years, you’ll be able to use a new mandatory ground.
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
Landlords looking to sell their rental property will be able to do so using a section 8 ground under the new legislation.
Under the Bill, the current mortgage repossession ground will remain, with new grounds created for other circumstances where you wish to sell.
However, for the first six months of a tenancy, these grounds can’t be used. Tenants will also require two months’ notice of your intent to sell.
Anti-social behaviour ground amendments
Notice periods will be reduced to two weeks, in the case of serious anti-social or criminal behaviour from a tenant. However, landlords will still need to provide proof of this behaviour which may hold up proceedings. For evictions that end up in the courts, the government has pledged to digitize the process, with the aim of reducing delays.
According to the government, 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.”
Renting to tenants with pets
Perhaps the most headline-catching item is that all tenants will be allowed to keep a pet if the landlord consents. In addition to this, consent cannot be unreasonably refused or withheld. Refusal or consent must be given within 42 days of permission being sought.
Why was this change made? The Renters’ (Reform) Bill pledges to ensure landlords do not unreasonably withhold consent when a tenant requests to keep a pet. Tenants will also be able to challenge refusals, giving them more power over their let.
What does this mean for landlords? Landlords can now insist that the tenant obtains pet insurance. This is good news for landlords as it means that they’re not automatically compelled to allow a pet.
However, more detail on this element of the Bill is needed, especially when it comes to properties where pets are banned in the headlease, or Houses in Multiple Occupation (HMOs) where the needs of other tenants will need to be considered.
The Decent Homes Standard
According to the original white paper for this Bill, it's estimated around 12% of rental properties in the UK “pose an imminent risk to the health and safety of tenants”. To combat this, the Decent Homes Standard would be applied to the Private Rented Sector for the first time.
Why was this change made? The government maintains that “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? 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.
However, under the new Bill, local council departments will now have greater powers to enforce the Decent Homes Standard and deal with landlords who don’t comply.
Landlord portal and ombudsman
The Bill proposes a new Private Renters’ Ombudsman, designed to help landlords and tenant disputes, taking the pressure off the court system. A new property portal would also be introduced, with landlords required to register their properties.
Why was this change made? The aim of the portal is to give tenants more transparent information on the standard of the property they wish to rent and local councils more details if or when problems arise at a property. The portal will list landlords’ obligations and help tenants make better decisions when signing a new tenancy agreement.
What does this mean for landlords? Landlords must all join the ombudsman. However, landlords using a letting agent to manage their properties already benefit from those agents being part of mandatory redress schemes.
Rent reviews and increase notice periods
Rent increases would be limited to once per year under the Renters’ (Reform) Bill, with the notice period required to inform tenants of a rise in rent increased to two months.
Why was this change made? In order to give more power to tenants, changes have been made to prevent landlords from making sudden and considerable increases to rent.
Tenants will now be able to challenge a rent increase that they feel is unfair. Furthermore, rent review clauses that lock tenants into rises, will be banned from tenancy agreements.
What does this mean for landlords? Landlords will no longer be able to include rent increase clauses in the tenancy agreement. They will only be able to increase rents using the section 13 notice procedure, which can then be challenged by tenants.
Other changes included in the Renters’ (Reform) Bill
No more blanket bans
It will now become illegal for landlords and letting agents to apply blanket bans on renting to tenants with children or those on benefits.
Although no exact detail has been given in the Renters’ (Reform) Bill, tenants would be permitted to ‘modify’ rental properties as long as the properties are returned to their original condition at the end of a tenancy.
Although the plan for lifetime deposits was a focal point of the Renters’ (Reform) Bill’s early news coverage, it’s now being played down.
Tenants would have had a deposit that travelled with them between rental properties under the original proposals.
How can Hunters help?
If you’ve any questions, our team is on hand. Get in touch today to find out how we can help you.