The Renters Rights’ Bill is currently making its way through Parliament and when it becomes law later this year it will change the rental landscape in England in a very significant way, ushering in a new era of security for those who rent their home.
Originally introduced by the previous government as The Renters (Reform) Bill in May 2023, the legislation was reintroduced, with some additions, by the new Labour Government when it took office.
As the biggest change to private tenancies in over 30 years, the reforms will affect both landlords and tenants. The aim is to fully rebalance the relationship of landlord and tenant in the Lettings market, by ending the Section 21 ‘no fault’ right to end a tenancy.
Currently, a landlord may serve two months’ notice to end the tenancy either at the end of the contractual term, or once the agreement has become periodic (i.e. rolled over into a month to month arrangement). This is subject to a minimum term of 6 months on the basis that even if the agreement provides for a shorter term a court cannot order possession until at least 6 months have elapsed.
Once the Act comes into force this right will be completely removed and all tenancies will become periodic (including existing tenancies). Possession will only be possible where there are breaches of the agreement or significant rent arrears. Other grounds for possession will be that the owner wants to use the property themselves (or for a close family member) or that they wish to sell. At least a year of the tenancy will have to have gone by before these grounds can be used and there will be restrictions on these such that once possession has been obtained on these grounds that the property cannot be let out again for a period of a year.
Both Labour and the Conservatives promised to end ‘Section 21’ – although, the Conservative administration indicated a willingness to wait until the court service had been streamlined before bringing in these changes. The new government has had no such qualms.
For a landlord seeking to increase the rent, in cases where the tenant does not agree the increase, a procedure will have to be gone through under ‘Section 13’ where an application to the tribunal will need to be made. It is not difficult to see that these provisions will slow down the pace of rent increases and mean that landlords will have to accept that frequent rent changes are not likely to be possible. For those familiar with the ‘assured tenancy’ regime, the procedure and grounds for possession will seem very familiar.
This coupled with the likely delays in the Court Service and the time that it will take to bring matters to trial, will make the recovery of possession much harder. Even where there is tenant default, some of the ‘traditional’ grounds will be amended. For instance, Section 8 (where there must be two months’ arrears at the date of the Section 8 Notice and at the date of the hearing) will be expanded to three months arrears at both points before possession will be mandated.
Whilst this is not quite a return to the Rent Act 1977 and the protected tenancies that arose under that legislation, this new Act will make very significant changes, giving tenants much greater security.
In its announcements around the Bill the Labour party has promised that the Bill will improve the current system, giving renters “much greater security and stability so they can stay in their homes for longer, build lives in their communities, and avoid the risk of homelessness.
The changes have been much trailed in the press, but one thing that needs to be considered is the likely timing for these changes. The Bill has had its second reading, current thinking is that its provisions could become law as soon as the Autumn of this year. This really will be a game changer for the residential lettings market.
A summary of the key changes appears below
The Renters Rights Bill proposes to:
- Introduce Tenancy reform by removing fixed-term assured tenancies, enabling tenants to stay in their home until they decide to end the tenancy by giving two months’ notice. The Government says this will “end the injustice of tenants being trapped paying rent for substandard properties and offer more flexibility to both parties to respond to changing circumstances.”
- Restrict the amount of rent that can be taken in advance by amending The Tenant Fees Act to prohibit advance payments of over one month’s rent.
- Abolish Section 21 no fault evictions “to protect renters from a key driver of homelessness and empower them to speak up against discriminatory treatment.” This was one of the most contentious measures contained within the original Bill, and the Renters’ Rights Bill goes further in abolishing Section 21 evictions for both existing and new tenancies at the same time.
- Restrict rent increases to once a year and enable tenants to challenge them to “prevent unscrupulous landlords using rent increases as a backdoor means of eviction”
- Stop agents and landlords from instigating rental bidding wars
- Give tenants the right to request a pet
- Apply a ‘decent homes standard’ to the private rented sector to make sure homes are safe ‘tackling the blight of poor-quality homes’ and apply ‘Awaab’s Law’ to the sector
- Create a national digital private rented sector database of landlords and their properties
- Set up a new Private Rented Sector Landlord Ombudsman service
- Make it illegal for landlords to discriminate against tenants in receipt of benefits or those with children
- Strengthen the enforcement powers of local councils to identify and fine unscrupulous landlords
It is important to note that although the Bill has been reintroduced to Parliament, it is still not currently law.
The Renters’ Rights Bill received its second reading in the House of Lords on 4 February and will next move to Committee stage, a date for which is still to be announced, although little opposition is anticipated as much of the Bill has been presented before. Once this is done the Bill will move to a report stage and then a third reading in the Lords before moving to the Royal Assent and becoming law.
Whether implementation will be phased remains to be seen but it is quite possible that several of the key provisions, including removing Section 21, could be law by the mid to late summer or the autumn of this year.
The Renters’ Rights Act, whilst not law yet, will be a game changer. And whether you are a landlord, or a tenant now is the time to prepare for what this will mean.
We will continue to provide updates on the progress of the Bill and as ever, watch this space.
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.
