What Is The Renters Reform Bill

What is the renters reform bill? 

The renters reform bill is a piece of legislation that outlines the governments plans to fundamentally reform the private rented sector and, level up housing quality. The bill includes numerous reforms including banning of no fault evictions section 21, changing legislation for pets in Properties, introducing a property portal and an ombudsman for Landlords. 

 

The reform commits to bring a better deal for renters and marks the biggest shake up of the private rented sector in 30 years! 

 

The government first published the full extent of its plans in a white paper - A Fairer Private Rented Sector in June 2022. Most of the measures proposed in the white paper were included in the bill, which was first published in May 2023. However, further changes were made in the bills second reading in October 2023, and during the committee phase November to December 2023. The bill is currently awaiting is third reading in the House of Commons before it moved to the House of Lords.

 

Why is the rental reform bill being introduced? 

 

The private rented sector is a virtual part of the UK housing market. More than 4 million properties are privately rented with the number of renters having doubled since 2004! 

 

The government says that under current legislation, some renters face “a precarious lack of security” - especially in terms of section 21 “no-fault” evictions. Meanwhile, responsible landlords are facing issues by being undercut by a minority of criminal landlords. The Renters Reform Bill continues to divide opinion, according to research conducted by Goodlord landlords are overall feeling pessimistic about the introduction of new rules with 25% of those surved feeling very pessimistic and 29% feeling somewhat pessimistic, only 14% feeling optimistic. On the other hand, 29% of letting agents feel optimistic about the change

 

What stage is the renters reform bill at currently? 

The bill is currently going through the house of commons following the process : 

 

·      First reading: The renters reform bill was announced to Parliament in May 2023

·      Second reading: This occurred in October 2023. This gave MPs of all parties the opportunity to debate Bill in Parliament. One of the biggest changes at this stage was the announcement that the courts would need to be reformed before section 21 could be a abolished

·      Committee stage: A line by line examination of the bill, which occurred at the end of 2023. The biggest outcomes of this stage were that the decent Holmes standard would be applied to the sector for the first time, further support to protect The cyclical nature of student tenancies, a ban on landlords and agents from discriminating against tenants on benefits, and an overhaul of Rent Repayment Orders 

·      Report stage: This allows MPs to debate the bill again for further amendments - We are currently at this stage

·      Third reading: This is the opportunity for final debate on the bill and will then go to the House of Lords.

 

When will the rinses reform bill become law?

 

The bill must pass through the House of Commons and the House of Lords before achieving royal ascent. The conservative party has committed to passing the renters reform bill into law before the date of the next general election, which we expect to take place in the autumn of 2024

 

However, if and when the rent is reform bill does become law this year, this does not mean that all policies will come into effect on day one. In some cases, this will become law in stages.

 

For example, the transition to periodic tenancies will be applied for all new tenancies in stage one and all existing tenancies will transition on a set date as part of stage two. However, timings are yet to be confirmed.

 

In addition, section 21 will not be abolished until the courts have been reformed, which leaves timelines more unclear

 

What is included in the renters reform film?

 

1 - Section 21, no evictions to be abolished - 

The bill confirms plans to abolish section 21, a process that enables private landlords to repossess their properties by evicting a tenant. The landlord does not need to give a reason to give notice, hence the term “no fault” eviction. Instead, Landlord will only be able to evict a tenant in reasonable circumstances. 

 

The 2022 government white paper states that “Removing section 21 level the Playing field between landlord and tenant empowering tenants to challenge, poor practice and unjustified rent increases, as well as incentivising Landlord to engage and resolve issues.” Michael Grove further reiterated the governments view that no fault eviction can be “cruel and heartless.”

 

Is section one still being abolished?

In October 2023, the government announced the abolition of section 21, would only occur when "significant progress has been made to improve the courts" this was an unexpected announcement that may cause delays.

 

The government has outlined that these improvements should include

 

·      Digitising the court process

·      Exploring how courts can prioritise disputes when antisocial behaviour is involved

·      Improving bailiff recruitment

·      Providing more advice and counsel to landlords and tenants

 

In February 2024, Michael Grove confirmed that section 21 will be outlawed before the general election. However, Angela Rayner deputy leader of the labour party, strongly refuted Grove’s claims, stating "these are yet more weasel words from Michael Grove, after years of broken promises"

 

There were further announcements in February February 2024, that the proposal would be watered down by conservative MPs who wish to increase rights for Landlords.

 

Why do court processes need to change for section 21 to take effect?

 

Although the government previously committed to working in partnership with the Ministry of Justice and the HM Courts and Tribunal Service, the commitment to prioritise the courts process over section 21, came slightly unexpectedly

 

This concession is likely due to discontent among Landlord MPs regarding section 21, a reform that is generally viewed negatively by landlords. By agreeing to focus On reforming the courts first, the government has offered a significant concession to win MP support. 

 

How will section 8 grounds change? 

In place of section 21, the The bill outlines proposals to strengthen section 8. This will allow landlords to end the tenancy agreement if they have a legal reason to do so.

 

The government plans to add new mandatory ground for repeated rent arrears. This makes eviction mandatory where a tenant has been in at least two months rent arrears three times within the previous three years, regardless of the arrears balance at the hearing.

 

There is also a new ground that means landlords can apply section 8 to a tenancy if they wish to sell a property or if they wish to allow their family members to move into a rented property. This can apply after a tenant has been in a property for at least six months.

 

2 - A single system, periodic tenancies

 

The bill confirms the governments ambition to simplify existing tenancy structures. All Assured Shorthold Tenancies, e.g. 6, 12 or 24 month contracts, will move onto a single system of periodic rolling tenancies. All tenancies will roll by every month with no specified end date.

 

Assured Shorthand Tenancies are currently the most standard type of rental agreement in the private rented sector. 

 

The proposal outlines that tenants would then need to provide two months notice when leaving a tenancy to ensure the Landlord can recoup the cost of finding a new tenant and avoid lengthy void periods

 

In addition, Landlords would only be able to evict Tennant under "reasonable" circumstances.

 

Its important to note that following the report stage of the Bill, new proposals from the amendment paper suggest that tenants won't be able to give notice to leave a property agreement until they have lived in the property for at least four months. This will prevent tenants who aren't in long-term agreements from treating a property as a short term let. 

 

What about student tenancies? 

Student lets are cyclical in nature, often following the same pattern every year from September until June. There had been widespread worry from student Landlords and letting agents that moving student tenancies over to periodic tenancies would cause issues. During the committee phase, the government added a strengthened ground that will allow a landlord to take a property at the end of the year. 

 

Student housing will be protected further in the amendment paper from January 2024, by extending grounds of possession to all properties occupied by one or more students. Previously homes with only one or two students would be classed as an HMO, but the latest amendment would ensure student occupied housing would be available to re let the next year

 

3 - Notice periods for rent increases to be doubled 

 

Rent increases will be limited to once per year, and the minimum notice landlords must provide of any change in rent will be increased to 2 months.

 

Will Landlord be able to review rents?

The Renters Reform Bill white paper outlines plans to end the use of rent review clauses. Preventing tenants being locked into automatic rent increases that are vague or may not reflect changes in the market price and says that any attempts to evict tenants through unjustifiable rent increases are unacceptable.

 

However, landlords and agents will be able to raise rents once a year in line with the market rates. Similar to the current section 13 rules with two months notice of any increase shared with tenants.

 

The government will publish a new form that would need to be served to tenants to let them know that you plan to increase their rent. If the tenant agrees, they simply pay the increased rent. 

 

If the tenant feels that the increase is disproportionate, the government will make sure that tenants have the confidence to challenge unjustified rent increases through the first tier tribunal. 

 

4 - Tenants given more rights to keep pets in properties 

The Renters Reform Bill outlines that tenants can request permission to have a pet in their home, and that Landlord cannot unreasonably withhold consent

 

A landlord must accept or refuse consent by the 42nd day After the date of the request. This can be extended by a week if Landlord asks for further information.

 

How will landlords be protected if they accept a Tennant with pets?

 

It indicates that a tenant must provide in writing confirmation that they have insurance for their pet, or that they are willing to pay the landlord reasonable costs to cover the landlords insurance incase of any pet damage. 

 

5 - A new ombudsman covering all private landlords

 

Landlords will be required to join a government approved Ombudsman, regardless of whether they are using a letting agent. A landlord redress Street scheme would enable a former or current tenant to be able to make a complaint against a landlord, which would then be independently investigated. 

 

Before the Bill’s second reading in October 2023, the government suggested that it is still looking at different options around how the ombudsman service will be delivered. 

 

What powers would the Ombudsman have? 

The ombudsman would have powers to put things right for tenants, including compelling landlords to issue an apology, provide information, take remedial action and or pay compensation of up to £25,000 

 

The government also intends for the ombudsman to be able to require landlords to reimburse tenants where the service or standard of the property they provide falls short of the mark. 

 

Will joining the ombudsman be mandatory for Landlords?

In all cases, it seems that Membership will be mandatory. The white paper says that making membership of an ombudsman scheme mandatory for landlords who use managing agents will mitigate the situation where a good agent is trying to remedy a complaint, but is reliant on a landlord who is refusing to engage.

 

It will also ensure that tenants have access to redress services in any given situation and that the landlord remains accountable for their own conduct and legal responsibilities. 

 

6 - New property portal for private landlords and tenants 

 

A new digital property portal will be introduced to provide a single front door to help landlords understand and demonstrate compliance with their legal requirements. 

 

The government says that too often tenants find out too late that they are renting a substandard property from landlords who willingly failed to comply, and councils don't know who to track down when serious issues arise. It notes that the portal will also support good landlords to demonstrate regulatory compliance and to attract prospective tenants.

 

7 - Applying the decent home standard to the private rented sector

 

The white paper - a fairer private rented sector - published in 2022, suggested that there would be the introduction of minimum housing standard requirements that would likely require privately rented homes to meet the Decent Homes Standard for the first time.

 

This was further built upon during the committee stage, with confirmation that a Decent Homes Standard. The government announced that local authorities would be given more powers to enforce landlords to make properties decent. This includes fines of up to £30,000 , banning orders or the ability for tenants to claim up to 24 months worth of rent back.

 

8 - Bans on renting to families with children, or those on benefits to be outlawed

 

The government has long called for legislation to protect discrimination for people with children and those on benefits . in the committee stage the government re-introduced this into the Bill

 

Landlords and agents will be banned from discriminating against these groups and will not be able to specify  "NO DSS" in adverts or prevent people from viewing a property

 

The BBC has reported that the Scottish and UK government are planning to work together to implement the law on this topic to make sure that Landlord can't exclude the tenants with children or on benefits from renting homes 

 

However, I spokesperson for the Scottish government has said that talks must include a close examination of the UK government decision to freeze local housing allowance rates at 2020 levels for the third year running, as affordability is the far more significant barrier to access in a privately rented home.

 

9 - An overhaul of rent repayment orders  (RRO)

 

A Rent Repayment Order (RRO) means that a tenant or local authority can go to a tribunal if a landlord commits at least seven offences, including using violence to enter a property and failing to comply with improvement notices. The landlord will need to repay the rent to a tenant if the tenant wins the case

 

The Bill proposes, adding three more offences for Landlords, including;

 

·      If a Landlord breaches the ombudsman rules

·      If a landlord deliberately provides false or misleading information onto the property portal

 

The maximum rent repayment order will also be increased, so a Landlord may be liable to pay 24 months rent, rather than 12.

 

In addition, the committee stage also revealed plans to overturn a case called Rakusen v. Jensen. In march 2023, the Supreme Court had ruled that a rent repayment order cannot be made against a superior landlord, i.e. the landlord that owns the property in a rent to rent agreement.