As the Renters’ Rights Bill (‘the Bill’) makes its way through Parliament, it has been met with mixed opinions from MPs and the rental industry. The Bill aims to rebalance the relationship between tenants and landlords.
Lauded as creating a ‘simpler system’ by increasing tenants’ security in occupation, the Bill is equally criticised as ‘counter-productive’, with suggestions that the stringent regulations will push landlords away from the rental market, reducing property availability and consequently increasing competition and rental prices. The National Residential Landlords Association has also expressed concerns that without a proper plan to improve enforcement against criminal and improperly acting landlords, the Bill will fail on implementation.
Other criticisms for rushing the bill through “without any care for the repercussions” include the potential repercussions on an already strained court system.
This is the first article in a series which will explore the Renters’ Rights Bill and the key changes it will bring about for tenants and landlords.
Abolition of Section 21
Perhaps the most significant change the Bill hopes to bring is an end the Section 21 ‘no fault’ eviction process..
Section 21 is a provision which enables landlords to recover possession of a property from the tenants at the end of a fixed term and irrespective of whether or not the tenant has breached their tenancy agreement. Similar to the Renters (Reform) Bill, this will be accomplished by bringing the regime of assured shorthold tenancies (ASTs) to an end, in favour of assured periodic tenancies, which all existing ASTs will become.
The move to end section 21 notices is aimed at improving security of tenure for renters by better protecting their ability to remain in a property. Whilst this brings about momentous advantages for tenants, it will have a substantial knock-on effect on the court system. The accelerated section 21 process for recovering possession of a property was intended to be quicker, cheaper and more efficient than other routes of recovering possession. Without an alternative process this will likely lead to greater delays, costs and saturation of the court’s availability.
Data released by the Ministry of Justice regarding the mortgage and landlord possession statistics shows that claims, orders for possession, and repossessions have increased by around 9-16% since last year, although this may be a consequence not only of anticipation and the Bill coming into force, but also of pressure on occupiers to maintain payments generally.
Notably, the average time from claim to repossession has increased from 22.1 last year to 25.4 weeks for the same period in 2024. This means in addition to the periods of previous arrears arising before landlords can commence proceedings, it also takes longer to recover possession, leading to greater delays – an issue that the section 21 process sought to remedy.
As the Bill continues through Parliament, it will be interesting to see whether these concerns are addressed by the government or whether the court system will require anticipatory reform.
An end to rental bidding
Demand in certain areas well exceeds supply. Under the Bill, landlords and agents are banned from not only instigating bidding wars, by prohibiting letting at more than advertised. A bidding war is where prospective tenants compete for a tenancy by increasing their offers, with the highest offer typically awarded the tenancy agreement.
Whilst this may appear a sensible idea, practically there is the risk that landlords will advertise at much higher rents than they would normally expect to receive, inciting offers below the asking rent, and consequently having a choice of the best rent offered to them once again – leading to the legislation not having any teeth.
Ban on rent increases
Landlords will have only a limited ability to increase the rent. The only permitted way to increase the rent will be under Section 13 of the Housing Act 1988, creating a “soft” rent control.
The Section 13 process allows a landlord to serve a notice on the tenant in a prescribed form proposing a new rent which will take effect at the beginning of a new period of the tenancy specified in the notice. Landlords can only serve the Notice once a year and increases must align with market rates.
Tenants can dispute rent increases through the First-Tier Tribunal. The Bill will also extend the previous one month’s notice of an increase in rent to two months.
This may be particularly damning for landlords given the current volatility of interest rates. If mortgage rates increase, it poses the question of how landlords will meet these costs if their rental income is limited.
Right to request a pet
Under the Bill, landlords must not unreasonably refuse to allow tenants to keep a pet at the property. However, unlike the Renters’ (Reform) Bill for those tenants wishing to have a pet there will be an implied term in their tenancy agreement that they must have pet insurance. Failure to do so will result in a breach of tenancy.
Before accepting a pet, landlords with leasehold properties will be wise to consider the terms of their own lease to assure they do not place themselves in breach.
To conclude
As with all bills, further changes and tweaks are expected, however, this proposed legislation stands to bring about the biggest changes to the English housing market since 1988 and these changes are inevitably going to cause a lot of uncertainty.
Whilst this may seem like a re-balancing of power, it does invite the questions of whether this is over-regulation, and whether it will deter landlords from wanting to remain landlords, thereby in fact reducing the availability of properties in the private rental sector.
The next article in this series will explore further the rules and consequences for landlords under the Bill including the increasing of Rent Repayment Orders (RROs), the enforcement options for local authorities, and more.
The information above may be subject to change.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.
