The Renters (Reform) Bill has, at last, been announced to Parliament. It has certainly generated lots of headlines as “the biggest rental sector shake-up in 30 years”.
There’s no doubt the proposals in the Bill will have a big impact on landlords in England if and when they become law.
“But it’s important not to panic,” stresses Managing Director Toby Phillips.
“We don’t expect the Bill to become law before 2024, so there is plenty of time for landlords to understand and weigh up the impact it will have on them.”
“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 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 Renters (Reform) Bill aims to provide more security for tenants and improve standards in the Private Rented Sector (PRS) in England. It also aims to protect certain rights for landlords, particularly with regard to the possession of their properties.
The Bill first came to the public’s attention in 2019 when it was mooted by then Prime Minister Theresa May.
The Covid-19 pandemic, however, delayed the Bill’s passage through parliament until June 2022 when its long-awaited white paper was published.
How will the Renters (Reform) Bill impact landlords in England?
The Renters (Reform) Bill contains a number of proposals that have raised some eyebrows. These include:
The abolition 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
The abolition of section 21
Arguably the biggest change proposed in the Bill, the abolition of section 21, will have a major impact on landlords in England.
Removing section 21, or ‘no fault’ evictions, means landlords will have to use grounds for possession under section 8 if they wish to get their properties back. 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.
The Bill proposes to add additional grounds for possession to section 8, while also strengthening existing grounds and improving the court process – making it easier for landlords to regain possession under certain circumstances.
What does this mean for landlords? According to Toby Phillips, the change won’t effect landlords too much. “Only around 6% of tenants are evicted this way, so this shouldn’t have too much of an impact on landlords.”
In fact, the Bill promises to strengthen grounds for possession and improve court proceedings, so landlords can quickly and effectively regain access to their properties when a tenant fails to meet their obligations.
Fixed term tenancies are no more
Another huge change proposed in the Renters (Reform) Bill is the abolition of fixed term tenancy agreements. Should the Bill become law, all tenancies would instead be periodic from day one.
Why was this change made? The end of fixed term tenancies means tenants would be free to leave at any stage of their tenancy by giving two months’ notice to their landlord, awarding them far more freedom than they currently have.
What does this mean for landlords? Any attempt by landlords to create a fixed term tenancy or serve a notice to quit, can result in a fine from the local authority. However should landlords be concerned? Toby Phillips 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.”
In fact, as part of a revised section 8, landlords would be able to give a tenant two months’ notice should they wish to sell or move into their rental property, while notice periods for other grounds (anti-social behaviour, rent arrears, etc) will continue to vary.
Landlords who rent their properties as short term holiday lets during the summer and on assured shorthold tenancies (ASTs) during the winter will also be affected by the Renters (Reform) Bill.
Landlord grounds for possession
With no section 21 for landlords to use, the Renters (Reform) Bill pledges to overhaul section 8 grounds for possession, to make it easier for landlords to regain possession of their properties through the courts.
The Bill says this will give landlords the power to:
Regain possession from anti-social tenants.
Regain possession from tenants in rent arrears.
Sell a rental property when they need to.
Move themselves or close family into a rental property..
Anti-social behaviour ground amendments
In the case of serious anti-social or criminal behaviour from a tenant, notice periods will be reduced to two weeks. Landlords will 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.
Regain possession from tenants in rent arrears
Under the Renters (Reform) Bill, landlords will be able to issue a section 8 notice to tenants who have been in at least two months of rent arrears on at least three occasions in three years – regardless of whether they’re in arrears when the hearing reaches court.
If this mandatory ground is proven, landlords will only need to give a tenant four weeks’ notice to leave the property.
Sell a rental property
A new section 8 ground will be created for landlords who want to sell a rental property without tenants in situ, while the current mortgage repossession ground will remain in place.
Tenants will need to be given two months’ notice of a landlord’s intent to sell, while this ground cannot be used when a tenant has been renting the property for less than six months.
Moving family into a rental property
Under current section 8 rules, landlords can give tenants notice if they wish to move into their rental property themselves.
However, there’s no ground that states a landlord’s close family or children can move in, but this looks set to change under the Renters (Reform) Bill.
A revised section 8 ground is proposed which would allow a landlord to give notice if they wish to move close family members into their property.
This ground, however, can only be used once a tenant has lived in the property for at least six months and two months’ notice would need to be given to the tenant.
No more blanket bans
Blanket bans on letting a property to tenants with children or those on benefits will be made illegal under the Renters' (Reform) Bill.
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? Amending their model tenancy agreement to make consent for pets a default position was the government’s first step towards more pet-friendly rental properties.
The Renters (Reform) Bill aims to take that another step further, but more detail is needed on exactly how this will work. For instance, it’s unclear how the law would work for properties such as flats where pets are banned in the lease, or for Houses in Multiple Occupation (HMOs) where other tenants’ needs would have to be considered.
What does this mean for landlords? Although the Bill pledges to ensure landlords can’t unreasonably withhold consent when a tenant requests to keep a pet, landlords can insist their tenants take out pet insurance. The Tenant Fees Act would be amended to allow pet insurance as a chargeable fee.
Landlord portal and ombudsman
A new mandatory private renters’ ombudsman would be created under the Renters (Reform) Bill, which all landlords in England will be required to join. The ombudsman would be in place to help landlords and tenants find dispute resolutions without the need to attend court.
A new property portal would also be introduced under the Bill, with landlords required to register their properties.
Why was this change made? The portal would be in place to give tenants more information on the standard of the property they wish to rent and local councils more details should any dispute or problems arise.
What does this mean for landlords? It should be noted that landlords who use a letting agent to manage their properties already benefit from their agent being part of a mandatory redress scheme. However, once this Bill takes effect, it will be compulsory for all landlords to join the ombudsman and online portal.
Rent reviews and increase notice periods
The Renters (Reform) Bill proposes that landlords are restricted to one rent review per year alongside an increased notice period of two months for any rise in rent.
Why was this change made? Changes have been made to prevent landlords from making sudden and considerable increases to rent. Tenants will also be able to challenge a rent increase if they deem it to be unfair.
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 Whitegates help?
If you’ve any questions, our team is on hand. Get in touch today to find out how we can help you.