According to the Government, the new Renters’ Rights Bill aims to transform the rental market by banning Section 21 evictions, limiting rent increases, and improving living standards for tenants. With other various proposed measures for landlords and the introduction of various tenant-friendly policies, this bill will reshape the landscape for both renters and landlords alike. Here’s what you need to know in a medium sized nutshell…
Much of the content of this blog is from the government website; gov.uk
Government Statement
The Renters’ Rights Bill delivers our manifesto commitment to transform the experience of private renting, including by ending Section 21 ‘no fault’ evictions. The bill will improve the current system for both the 11 million private renters and 2.3 million landlords in England. It will give 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.
Reform of the sector is long overdue, and we will act where previous governments have failed. While the majority of landlords provide a good service, the private rented sector currently provides the least affordable, poorest quality and most insecure housing of all tenures.
Millions of people in England live day in, day out with the knowledge that they and their families could be uprooted from their home with little notice and minimal justification, and a significant minority of them are forced to live in substandard properties for fear that a complaint would lead to an instant retaliatory eviction.
A functioning private rented sector can provide a secure stepping stone for aspiring homeowners and flexibility for those who want it. But the insecurity embedded in the current tenancy system fails both those tenants looking for a stable home for their families and those landlords who are undercut by the rogues and chancers. It is a drain on aspiration and reform is central to our opportunity mission so all have the chance to achieve their potential.
Overview of Bill Measures
In this blog I have paraphrased the content of the original text to limit the size of this blog, however, the essential points are detailed.
The Renters’ Rights Bill is designed to:
- Abolish section 21 evictions and move to a simpler tenancy structure where all assured tenancies are periodic. This will be implemented implement in one stage following the bill becoming law.
- Ensure possession grounds are fair to both parties, giving tenants more security, while ensuring landlords can recover their property when reasonable. The bill introduces new safeguards for tenants, giving them more time to find a home if landlords evict to move in or sell, and ensuring unscrupulous landlords cannot misuse grounds.
- Provide stronger protections against backdoor eviction by ensuring tenants are able to appeal excessive above-market rents which are purely designed to force them out. As now, landlords will still be able to increase rents to market price for their properties and an independent tribunal will make a judgement on this, if needed.
- Introduce a new Private Rented Sector Landlord Ombudsman that will provide quick, fair, impartial and binding resolution for tenants’ complaints about their landlord. This will bring tenant-landlord complaint resolution on par with established redress practices for tenants in social housing and consumers of property agent services
- Create a Private Rented Sector Database to help landlords understand their legal obligations and demonstrate compliance (giving good landlords confidence in their position), alongside providing better information to tenants to make informed decisions when entering into a tenancy agreement. It will also support local councils – helping them target enforcement activity where it is needed most. Landlords will need to be registered on the database in order to use certain possession grounds.
- Give tenants strengthened rights to request a pet in the property, which the landlord must consider and cannot unreasonably refuse. To support this, landlords will be able to require pet insurance to cover any damage to their property
- Apply the Decent Homes Standard to the private rented sector to give renters safer, better value homes and remove the blight of poor-quality homes in local communities.
- Apply ‘Awaab’s Law’ to the sector, setting clear legal expectations about the timeframes within which landlords in the private rented sector must take action to make homes safe where they contain serious hazards.
- Make it illegal for landlords and agents to discriminate against prospective tenants in receipt of benefits or with children – helping to ensure everyone is treated fairly when looking for a place to live.
- End the practice of rental bidding by prohibiting landlords and agents from asking for or accepting offers above the advertised rent. Landlords and agents will be required to publish an asking rent for their property and it will be illegal to accept offers made above this rate.
- Strengthen local authority enforcement by expanding civil penalties, introducing a package of investigatory powers and bringing in a new requirement for local authorities to report on enforcement activity.
- Strengthen rent repayment orders by extending them to superior landlords, doubling the maximum penalty and ensuring repeat offenders have to repay the maximum amount.
Tenancy reform
The Renters’ Rights Bill will introduce a transformative new tenancy system, ending ‘no explanation’ section 21 evictions. The new tenancy system will provide tenants will empower them to challenge bad practice without fear of retaliatory eviction. Landlords will also benefit, with more straightforward regulation, and clearer and expanded possession grounds.
Periodic tenancies
The Renters’ Rights Bill will remove fixed-term assured tenancies.
Instead, all tenancies will be periodic, with tenants able to stay in their home until they decide to end the tenancy by giving 2 months’ notice. The objective is to offer more flexibility to both parties to respond to changing circumstances.
Grounds for possession – using Section 8
Landlords must, as in the current system, go to court if a tenant does not leave. They will need to provide evidence that the ground is met. For mandatory grounds, the court must award possession if the ground is proven. For discretionary grounds, the court can consider if eviction is reasonable, even when the ground is met.
Where a tenant is at fault, landlords can give notice using the relevant grounds at any point in the tenancy. This includes where a tenant commits antisocial behaviour, is damaging the property, or falls into significant arrears.
The Bill will increase the mandatory threshold for eviction from 2 to 3 months’ arrears and increase the notice period from 2 weeks to 4. This will allow tenants more time to repay arrears and remain in their homes, while ensuring landlords do not face unsustainable costs. Landlords can also continue to use the discretionary rent arrears grounds, for example if rent is repeatedly late.
Tenants will benefit from a 12-month protected period at the beginning of a tenancy, during which landlords cannot evict them to move in (themselves or family member) or sell the property. Landlords will need to provide 4 months’ notice when using these grounds.
The Bill will prevent landlords gaining possession if they have not properly protected a tenant’s deposit or registered their property on the private rented sector database. It will ensure landlords are always able to rectify non-compliance, so they are not prevented from regaining possession indefinitely. These restrictions will not apply to antisocial behaviour grounds.
Rent increases
Tenants will be able to challenge what they consider to be unreasonable rent increases. The aim here is to prevent landlords using rent increases as a backdoor means of eviction, while ensuring rents can be increased to reflect market rates. This is actually nothing new and the First Tier Tribunal system has been in place for years.
In future, all rent increases in the private rented sector will be made using the same process. Landlords will be able to increase rents once per year to the market rate – the price that would be achieved if the property was newly advertised to let. To do this, they will need to serve a simple ‘section 13’ notice, setting out the new rent and giving at least 2 months’ notice of it taking effect. We will simply adjust the time frame currently used to discuss increases with landlord and tenants.
If a tenant believes the proposed rent increase exceeds market rate, they can then challenge this at the First-tier Tribunal, who will determine what the market rent should be. As previosuly mentioned this is not a new service and has been available to tenants for a number of years.
In cases of ‘undue hardship’, the Tribunal will have the power to defer rent increases by up to a further 2 months.
To ensure tenants always have a right of appeal, rent increases by any other means – such as rent review clauses – will not be permitted. This will also ensure all parties are clearer on their rights and responsibilities. This is not a change to the ‘best practice’ undertaken by the majority of landlords and agents.
Implementation
To end section 21 evictions as quickly as possible, the government will introduce the new tenancy reform for the private rented sector system in one stage. On this date the new tenancy system will apply to all private tenancies – existing tenancies will convert to the new system, and any new tenancies signed on or after this date will also be governed by the new rules.
Existing fixed terms will be converted to periodic tenancies, and landlords will no longer be able to serve new section 21 or old-style section 8 notices to evict their tenants.
Private Rented Sector Landlord Ombudsman
The government will introduce a new Private Rented Sector Landlord Ombudsman Service, which all private landlords in England with assured or regulated tenancies will be required by law to join, including those who use a managing agent.
Tenants will be able to use the service for free to complain about a landlords’ actions or behaviours. The service is designed to offer fair, impartial and binding resolution for tenants, and will have powers to compel landlords to issue an apology, provide information, take remedial action, and/or pay compensation. All agents are currently required to be a member of an Ombudsman scheme so tenants are already able to make complaints.
The Bill states that the service is also designed to benefit landlords by resolving tenant-initiated complaints in the quickest and most cost-effective way possible. Landlords will also have access to guidance and support from the ombudsman service to help them improve their complaint handling practices.
The bill includes robust enforcement measures for the ombudsman service. Local councils will be able to take action against landlords who fail to join, or against anyone who markets a PRS property where the landlord is not registered. This will include civil penalties of up to £7,000 for initial breaches and up to £40,000 or criminal prosecution for continuing or repeated breaches.
Tenants will be able to seek rent repayment orders against their landlord if the landlord commits an offence by persistently failing to join the ombudsman service.
Landlords will be required to comply with ombudsman decisions. Failure to comply may result in a landlord being expelled from the scheme and subsequent local council enforcement action, as outlined above. There will be a route for landlords to rejoin the ombudsman service if they take the necessary steps to become compliant.
Private Rented Sector Database
The Renters’ Rights Bill will introduce a new Private Rented Sector Database. All landlords of assured and regulated tenancies will be legally required to register themselves and their properties on the database and could be subject to penalties if they market or let out a property without registering it and providing the required information.
The database will provide a ‘one stop shop’ for landlords allowing them to access relevant guidance.
For tenants, the database will be able to view the information available before they decide to rent a property.
The database will provide local councils with more data about private rented sector properties.
We are waiting further detail on this as this is new.
Rental bidding
The Renters’ Rights Bill will, according to the Government, end the unfair practice of pitting renters against each other in bidding wars.
The Bill will require landlords and letting agents to publish an asking rent for their property. It will also prohibit them from asking for, encouraging, or accepting any bids above this price.
We really didn’t think this was a thing!
Renting with pets
The Government state that they are committed to supporting responsible pet ownership in the private rented sector. The Renters’ Rights Bill will ensure landlords cannot unreasonably withhold consent when a tenant requests to have a pet in their home, with the tenant able to challenge unfair decisions.
The Bill will allow landlords to require insurance covering pet damage. This will provide landlords with reassurance that any damage caused by a pet can be taken care of, and that the responsibility for preventing and resolving damage caused by a pet will fall to the tenant.
Guidance will be published for landlords and tenants before the new rules come into effect.
Decent Homes Standard
A Decent Homes Standard (DHS) in the private rented sector is being introduced.
The Renters’ Rights Bill will allow regulations to be made setting out DHS requirements for private rented sector homes and will provide local councils with effective and proportionate enforcement powers.
For landlords using our managed service, we are already advising of standards required in the Fit for Human Habitation (FFHH) and Housing, Health & Safefty Rating System (HHSRS) legislations.
We await to see the detail.
Awaab’s Law
Following the tragic death of 2-year old Awaab Ishak due to prolonged exposure to mould in his social rented home, the Manchester Evening News, Shelter and the Ishak family led a campaign for ‘Awaab’s Law’. This was introduced for social housing through the Social Housing (Regulation) Act 2023.
The Renters’ Rights Bill will extend Awaab’s Law to privately rented homes. This will ensure that all renters in England are empowered to challenge dangerous conditions and that all landlords must take swift action to make sure homes are safe.
The measures in the bill will allow new requirements to be set requiring private rented sector landlords to address hazards, such as damp and mould, within a specified time period. If landlords do not comply, tenants will be able to bring enforcement action against them through the courts.
As a managed landlord, having regular inspections, this legislation is covered under current legislation providsed in FFHH & HHSRS.
That’s it!
The Renters Rights Bill in a medium sized nutshell. There are bound to be questions from both Landlords and Tenants and our team at Cope & Co. will ensure that every question is answered over the coming months.
Opinion
I personally feel that the majority of the headlines will not have a massive effect on the vast numbers of compliant, conscientious landlords. There may be a few more hoops to jump through from an administation point of view but I think these are manageble.
However, there are two headlines that stand out for me which will affect all landlords.
Firstly, the grounds for repossession when a landlord wishes to move in, move a family member in or sell the property. In my agency, around 90% of the section 21’s we served in the last 12 months were for these reasons. No decent landlord will ever evict a decent tenant for no reason – it defies logic. A 12 month protected tenant window and a 4 month notice period to allow a landlord to sell or move in is totally unfair. I feel that this will be one of the hotly contested points as the Bill makes is progress through to becoming law.
Secondly, the abolishment of fixed term tenancies in favour of periodic tenancies may have a financial implication on landlords under the standard fee structure that the majority of agents use. A landlord would ordinarily pay a maximum of two ‘setup’ fees in a year (2 x 6 months tenancies). However, the number of new tenancies in a year can obviously increase under a periodic tenancy system with no fixed term agreements in place.
I am currently working on some changes to our LetSimple™ management service which will help eliminate the potential increase in the number of setup fees. Watch this space!
To cover yourself against additional costs of serving a section 8 and the possibility of higher arrears, there is our excellent, affordable Rent Guarantee policy, which covers legal expenses up to £100,000 and rent up to £50,000.
Once again, apologies for the length of this blog but all essential information had to be included.
Look out for ongoing updates, podcasts and detailed blogs over the next few months.
