Understanding the Renters (Reform) Bill is key to weighing up the impact it could have on you as a landlord.
There’s no doubt the Bill will have a big effect on the private rented sector in England when it becomes law, promising to deliver a fairer lettings system for tenants and landlords.
The Bill - dubbed a “once-in-a-generation overhaul of housing laws” - has pledged to make it:
More difficult to evict tenants.
Easier for tenants to have pets.
Mandatory for landlords to abide by a Decent Homes Standard.
Illegal for landlords to issue blanket bans on letting to those on benefits.
Compulsory for landlords to join an Ombudsman scheme.
But what does this mean for landlords in England? “It’s important to understand there’s no need to panic,” advises Parker's Managing Director, Rob Smith.
“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.”
Updated in May 2023, this guide will explain what the Renters (Reform) Bill is and assess the impact it could have on UK landlords.
If you’re worried about how this change in legislation will affect your property, get in touch 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 yet know when this Bill will make its way into law, since there will probably be a period of negotiation beforehand. However, it’s believed that the Bill will be awarded Royal Assent in spring 2024.
This does not mean it’ll be in force by then, since a transitory period for existing tenancies is needed. It’s currently 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?
Landlords have been keeping a close eye on the contents of the bill, which will affect them in a range of different ways, including:
The end of section 21.
The end of fixed term tenancies.
Changes to landlord grounds for possession.
Renting to tenants with pets.
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
Perhaps the most significant change is the abolition of section 21 - otherwise known as ‘no fault’ evictions.
Once the Bill is passed into law, all evictions will 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? 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 Rob Smith, 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 to 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 end of fixed term tenancies will leave tenants free to give notice at any stage during their tenancy, giving them far more freedom than they currently have.
Under the new guidelines, landlords will be permitted 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.
What does this mean for landlords? 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? Rob Smith 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.”
Currently, 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 landlords will be able to:
Sell their rental property when you need to.
Move into their rental property.
Regain possession from anti-social tenants or tenants in rent arrears.
Many grounds will become mandatory. This means landlords will have more certainty in court if they can prove the ground has been met.
Moving into a rental property
Under existing rules, a section 8 notice can be served if a landlord wants to move into their rental property and live in it as their main home. However, this doesn’t extend to children or other family members.
A new section 8 ground will be introduced that allows landlords and close members of their family to move in. However, this ground can’t be used in the first six months of the tenancy and tenants would need two months’ notice.
Rental arrears ground amendments
If a tenant has been in at least two months of arrears on at least three occasions in the past three years, landlords will 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, landlords will only need to give tenants four weeks’ notice to leave the property.
Selling a property
Landlords looking to sell their rental property will be able to do so using a section 8 ground under the new legislation. The current mortgage repossession ground will remain, with new grounds created for other circumstances where they 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 an intent to sell.
In the case of serious anti-social or criminal behaviour from a tenant, notice periods will be reduced to two weeks. That said, 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.
The government believes 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
Tenants will now be allowed to keep a pet, as long as the landlord consents within 42 days of the request being made. Consent cannot be unreasonably refused or withheld by landlords and tenants will also be able to challenge refusals, giving them more power over their let.
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.
What does this mean for landlords? In spite of these changes, landlords can now also 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.
More details on this element of the Bill are required, 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.
Landlord portal and ombudsman
Designed to help with landlord and tenant disputes, a new private renters’ ombudsman will be introduced. As well as this, a new property portal will be launched, which will require landlords 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? It will be compulsory for all landlords to join the ombudsman. It should be noted that landlords using a letting agent to manage their properties already benefit from those agents being part of mandatory redress schemes.
Rent reviews and notice periods
In order to give more power to tenants, rent increases would be limited to once per year under the Renters (Reform) Bill. The notice period required to inform tenants of a rise in rent will be increased to two months.
Why was this change made? 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.
How can Parkers help?
If you’ve any questions, our team is on hand. Get in touch today to find out how we can help you.