The long awaited “once-in-a-generation” overhaul of housing law
The much anticipated Renters (Reform) Bill was introduced to Parliament on Wednesday 17 May 2023 by Michael Gove, Minister for the Department for Levelling Up, Housing and Communities. The Bill introduces huge changes to the law for landlords and tenants, with the aim of giving some 11 million tenants greater security in their tenancies and improving the standards of accommodation and providing landlords with a route to recover possession of their home when they have good reason to do so.
However, the proposed changes face a mixed reception from both landlord groups and tenant groups. Landlords argue that it will make renting properties out harder and will result in them pulling out of the rental market, meaning reduced housing stock and therefore increased difficulty for renters. Tenant groups would like to see further improvements to the legislation including longer notice periods when landlords seek possession to enable more time for tenants to find alternative accommodation, a longer protected period at the start of a tenancy before landlords can serve notice (currently six months) and tight control of the new provisions enabling landlords to recover possession.
Here we look at the main provisions in the current version of the Bill, which has just begun its long journey through Parliament. Whilst there are over 80 pages of proposals to digest, we will be producing more detailed updates on the key points in due course. Although the Bill is likely to undergo amendments during the Parliamentary process, the main provisions are expected to take effect in one form or another and in particular, the much anticipated abolition of Section 21 “no fault” evictions which was a Conservative party manifesto pledge.
The changes have been introduced to oversee a “once-in-a generation” overhaul of the current housing law to try and ensure “safer, fairer and higher quality homes” for all those that need them.
Introducing the Bill to Parliament, Michael Gove stated:
“Too many renters are living in damp, unsafe, cold homes, powerless to put things right, and with the threat of sudden eviction hanging over them”.
The reforms are intended to try and improve this situation for renters. So what are the key changes which the government is proposing?
The main proposed changes to the legislation
1. Abolition of fixed term and assured shorthold tenancies
All tenancies which would be assured tenancies or assured shorthold tenancies will become periodic tenancies, with a rent period not exceeding one month. Landlords will no longer be able to offer a fixed term tenancy.
2. Abolition of the section 21 (s21) “no fault” eviction procedure
At present, in certain circumstances, landlords are able to serve a s21 notice giving a tenant two months’ notice to vacate the property and no fault by the tenant needs to be proven. The Bill abolishes this procedure so that any landlord wishing to evict a tenant must prove one of the grounds under Schedule 2 of the Housing Act 1988 instead. Tenants however, will be able to move out upon giving 2 months’ notice to the landlord.
3. Grounds for a landlord to recover a property to be expanded
New grounds are going to be introduced such as when a landlord wants to sell the property or have close family members move in. There will also be a ground for persistent rent arrears to stop tenants paying off the arrears just before the possession hearing, together with provisions to make it easier to evict anti-social tenants.
4. Rent increases
Landlords will no longer be able to use rent review provisions under the tenancy agreement but will have to follow the s13 statutory procedure allowing rent increases only once a year to market prices, with an increased 2 month notice period. Tenants will have the ability to challenge the rent through the First Tier Property Tribunal if they believe it to be excessive.
Every tenant now has the right to request to keep a pet, which the landlord must consider and cannot unreasonably refuse. Landlords will be allowed to require pet insurance to cover any damage to the property.
6. New Ombudsman
The government plans to introduce a new Private Rented Sector Ombudsman which landlords ‘may’ have to join. The Ombudsman should provide a fair and binding resolution to many landlord and tenant issues in a way that is less costly, quicker and less adversarial than the current court system.
7. New Portal
The intention is to create a new Privately Rented Property Portal to help landlords understand their legal obligations and demonstrate compliance and for tenants to better understand the law and their rights. All landlords would be required to register so that tenants will have information about a landlord before agreeing to enter into a new tenancy.
8. Landlords must provide a written statement of terms
Written statement setting out basic information about the tenancy and the parties’ responsibilities, while maintaining the ability to adapt and agree these terms with the new tenant.
Further changes to the Bill are expected, to include provisions banning landlords who refuse to rent to individuals because they receive benefits or have children, and the application of the Decent Homes Standard to the private rented sector.
Landlords reaction to the proposed changes
While many groups have welcomed the proposed changes, some have expressed concern that with evictions being made harder, landlords are likely to become more selective about who they offer their properties to and charge higher rents to cover potentially higher legal costs for defaulting tenants. The result could affect the ability of those in disadvantaged communities trying to rent.
In addition, there are concerns that landlords are pulling out of the market due to tax changes, higher interest rates and now further regulation, leading to a reduction in housing stock for renters.
Tenants reaction to the proposed changes
Concern has also been expressed by tenant groups that the measures do not go far enough, and have suggested that further improvements to the legislation are needed. These include longer notice periods when landlords seek possession to enable more time for tenants to find alternative accommodation, longer protected period at the start of tenancies before notice can be served and tight control of the new provisions enabling landlords to recover possession.
No doubt both sides of the debate will be lobbying hard to have their respective views heard as the Bill passes through Parliament.
The final version of the new legislation is still open for discussion, however the proposed changes are set to shake up the rental market in a way which has not been seen for years, causing celebration and concern alike amongst landlord and tenant groups.
We will be watching the Bill’s passage through Parliament with a keen interest and keeping you updated on the developments. For further information or advice on this issue please contact us on 01733 882800 or email us [email protected]. Follow us on LinkedIn for further detail of the proposed changes which will be published in the weeks to come.
Rebecca Beynon-Phillips LLB, Senior Associate
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