The long-awaited Renters (Reform) Bill has been announced to Parliament.
Heralded as the “biggest private rented sector shake-up in 30 years”, there’s no doubt the Bill will have an impact on landlords in England.
The Renters (Reform) bill has pledged to make it:
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More difficult to evict tenants.
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Easier for tenants to have pets.
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Mandatory for landlords to abide by a Decent Homes Standard.
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Illegal for landlords to issue blanket bans on letting to those on benefits.
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Compulsory for landlords to join an ombudsman scheme.
But what does this mean for landlords? “It’s important to understand there’s no need to panic,” advises Managing Director, Toby Phillips.
“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 February 2024, this guide will explain what the Renters (Reform) Bill is and assess the effect it could have on landlords in England.
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 exactly is the Renters (Reform) Bill?
Former Prime Minister Theresa May first announced the Bill in 2019, but its reading was delayed due to the Covid -19 pandemic.
The Bill aims to provide more security for tenants and improve standards in the Private Rented Sector (PRS), while also ensuring landlords retain certain rights to possession of their properties.
When will the Renters (Reform) Bill take effect?
We don’t yet know when this Bill will make its way into law. However, it’s likely there will be a transitory period for existing tenancies. It’s believed there would be a lead in time of 6 months for new tenancies and a further year for existing tenancies.
Timeline for the Renters (Reform) Bill
The Bill is currently going through the House of Commons, following the process:
- First reading: May 2023.
- Second reading: October 2023.
- Committee stage: November 2023.
- Report stage: Current stage
- Third reading: TBC
How will the Renters (Reform) Bill affect landlords?
The Bill contains several important elements landlords need to understand:
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The end of section 21.
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The end of fixed term tenancies.
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Changes to landlord grounds for possession.
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Renting to tenants with pets.
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A landlord portal and a requirement to join a new ombudsman scheme.
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Changes to how rents are reviewed and increased notice periods.
The abolition of section 21
Under the Renters (Reform) Bill, section 21 ‘no fault’ evictions would be abolished.
This move would mean landlords will have to use section 8 processes to regain possession of a property, with only the tenant being able to end the tenancy without a reason.
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.
This means tenancies will only end if the tenant decides to or if a landlord has grounds for possession under section 8.
What does this mean for landlords?
According to Toby Phillips, the change won’t have too much of an impact. “Only around 6% of tenants are evicted this way, 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.
An end of fixed term tenancies
As part of the removal of section 21, fixed term tenancies would also be abolished, with agreements becoming periodic from the first day.
Tenancy agreement notice periods of more than two months would be banned.
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.
Under revised section 8 grounds, 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 vary.
What does this mean for landlords?
If a landlord attempts to create a fixed term tenancy or seeks to serve a notice to quit, they can be penalised by the local authority.
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.”
Holiday lets
The Bill will also affect landlords who rent their properties as short-term, or ‘holiday’ lets, while renting on standard assured shorthold tenancies (ASTs) during the winter.
These landlords will have no grounds for possession or certainty that the property will become available for the summer at the end of each AST.
Student lets
Student lets are usually cyclical in nature, running from September until June. There had been the worry that moving student tenancies over to periodic tenancies would cause issues.
However, the government has now added a strengthened ground that will allow a landlord to take a property at the end of the year.
Landlord grounds for possession
Section 8 grounds for possession will be overhauled as part of the Renters Reform Bill, giving landlords the power to:
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Move into their rental property.
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Sell your rental property
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Regain possession from anti-social tenants or tenants in rent arrears.
Most importantly, many section 8 grounds will become mandatory, meaning judges would be forced to grant possession if the landlord can prove the ground.
Moving into your rental property
While current section 8 rules state a landlord can issue tenants with notice if they wish to move into their rental property, this isn’t the case for children or family members.
Under the Renters (Reform Bill), section 8 will be revised allowing a landlord to give notice if their close family members wish to move into the property.
However, this ground can’t be used in the first six months of the tenancy and your tenants would need two months’ notice.
Selling your property
New section 8 grounds will be created under the Bill for landlords who wish to sell their rental property.
The current mortgage repossession ground will also remain in place.
For the first six months of a tenancy, however, these grounds can’t be used, while tenants will also require two months’ notice of any intent to sell.
Anti-social behaviour
Notice periods for serious anti-social or illegal behaviour will be reduced to two weeks, although 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.
Rental arrears ground amendments
A new mandatory ground will be created under section 8 allowing landlords to issue notice to tenants who have been in at least two months of arrears on at least three occasions in three years.
This ground may be used even if the tenant is not in arrears at the time of the court hearing.
If this ground is proven, landlords will only need to give the tenant four weeks’ notice to leave the property.
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?
The Renters (Reform) Bill pledges to ensure landlords do not unreasonably withhold consent when a tenant requests to keep a pet.
What does this mean for landlords?
Tenants must have pet insurance, which is good news for landlords as it means that they’re not automatically compelled to allow a pet.
However, it’s unclear how the law would work for properties where pets are banned in the headlease, or for Houses in Multiple Occupation (HMOs) where other tenants’ needs would have to be considered.
Landlord portal and ombudsman
The Bill proposes a new private renters’ ombudsman to help with landlord and tenant disputes. As well as this, a new property portal will be launched, which will require landlords to register their properties.
Why was this change made?
Designed to give tenants more information on the standard of the property they wish to rent, the portal will also list landlords’ obligations. Furthermore, it will offer local councils help if problems arise at a property.
What does this mean for landlords?
It will be compulsory for all landlords to join the ombudsman. It should be noted that landlords using a letting agent to manage their properties already benefit from those agents being part of mandatory redress schemes.
Rent reviews and increase notice periods
Landlords would be restricted to one rent review or increase per year under the Renters (Reform) Bill, while notice periods to inform tenants of a rent increase would be increased to two months.
Why was this change made?
Changes have been made to prevent landlords from making sudden and considerable increases to rent.
The Bill also allows tenants to challenge a rent increase if they believe it to be unfair and rent review clauses in tenancy agreements would be banned.
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 Ellis & Co help?
If you’ve any questions, our team is on hand. Get in touch today to find out how we can help you.
