Social Housing Speed Read: The Renters (Reform) Bill takes its first legislative steps
13th June, 2023
A year ago one of our speed read articles summarised proposed housing reform legislation, one of which was the Renters (Reform) Bill.
Now, five years after first being mooted, this long-awaited Bill has taken its first steps in the legislative process.
What is the Renters (Reform) Bill?
This Bill is one of the biggest shake-ups to the English rental market in recent years, being described by government as a “once-in-a-generation overhaul of housing laws.” It aims to ensure the market is “fairer and more effective”, with Michael Gove stating it will “ensure that everyone can live somewhere which is decent, safe and secure.”
The Bill will not apply retrospectively and is split into two distinct parts. One being reforms to assured tenancies, the second being a system for accountability, in order to regulate the sector and protect tenants from inadequate landlords.
Abolishment of assured shorthold tenancies and s21 evictions
Currently, under the Housing Act 1988, dwellings can be let on either a fixed term or periodic assured shorthold tenancy. For periodic tenancies, a s21 notice can be served by a landlord, requiring the tenant to return possession of the property at the expiry of the notice, after two months. This process is often used, with the charity Shelter reporting that nearly 230,000 private renters have been served with a no-fault eviction notice since April 2019.
The headline provision of the Renters (Reform) Bill is to make all future tenancies periodic, and abolish s21 “no fault” evictions. “No-fault” evictions make it challenging for tenants to put down roots, which in turn reduces investment into local areas – and crucially has a high impact on homeless figures. This provision of the Bill aims to mitigate against this and provide security to tenants, and at the same time, strengthen their ability to speak out against their landlords, without fear of eviction.
Strengthening of grounds for possession
Understandably, landlords might be concerned that the abolishment of s21 evictions could lead to difficulty in regaining possession of their properties. To address this concern, the government says “responsible” landlords will still be able to recover their properties where tenants are at fault, through the Bill’s strengthened eviction powers and possession grounds.
New, or amended, possession grounds include:
- If the tenant is repeatedly late in paying rent;
- If the landlord wishes to sell the property;
- If tenants do not have a right to rent;
- Breach of tenancy; and
- Deterioration of the property.
Note that many of the possession grounds are discretionary, or tied to specific conditions that must be satisfied before they can be relied upon by landlords.
The government has stated they do not support the introduction of rent controls, as this could discourage investment into the sector, leading to declining property standards.
So instead, the Bill introduces a statutory regime of rent review, meaning a landlord may propose a new rent not more than once a year (and on 2 months’ notice). This prevents landlords including rent review clauses in tenancy agreements.
As currently, tenants will be able to challenge rent reviews to the First Tier Tribunal (Property Chamber). As currently, the FTT will determine the open market rent of the property and apply that, whether higher or lower than the proposed rent.
The intention here is to prevent above-market rent increases forcing tenants out of their homes and to ensure when adjustments to rent do need to be made that changes are predictable and tenants have sufficient time to consider their options.
The Bill provides for the creation of a landlord redress system, a new Ombudsman and a landlord database. This is in a bid to hold landlords to account, increase transparency and ensure complaints are taken seriously and resolved efficiently. How this will work in practice is unknown as much of the detail on these provisions is still awaited.
In terms of enforcement, the Bill outlines a two-tier system of fines and criminal offences for breaches of landlord compliance. For example, there will be financial penalties for landlords who breach the rules on types of tenancy, as well as breaches of database requirements. Additionally, the Bill introduces penalties for landlords not registering or joining a redress scheme.
Fines are on two scales: up to £5,000, or up to £30,000 for more serious or repeat offences.
Local Council’s will find their enforcement powers strengthened, but also will be required to report on their enforcement activity to a “lead enforcement authority”, in the hope of targeting criminal landlords. There is no precise list of who these authorities will be, but they will be awarded this status by the Secretary of State. Their function is to ensure the provisions of the Bill are enforced consistently.
Also, where tenants have been “irresponsible”, notice periods will be reduced. For example, if they have breached their tenancy agreement or caused damage to the property.
One, perhaps more unusual, provision is the new “right to request to keep a pet”, removing a landlord’s ability to have a blanket ban on pets. Whilst this might seem a minor amendment in comparison to those discussed above, the rationale behind this is to make it easier for those with pets to find homes, and bring the private sector in line with social housing. Further, the Bill will amend the Tenant Fees Act 2019 so landlords can require pet insurance to cover any damage to their property caused by pets.
What happens next?
The Bill still has many more legislative hurdles to jump through, with the next stage not taking place until July. For now we must wait and see how the Bill progresses and await further details on provisions and an appropriate transition period. Should this be enacted it will certainly be one of the biggest reforms to the rental market we have seen in recent years.
If you have any questions on the above and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray, or a member of our expert Social Housing Team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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