Introduction
On 17 May 2023, the Government introduced the long-awaited Renters (Reform) Bill to the Commons to "bring in a better deal for renters" in the Private Rented Sector (PRS) and make significant changes to the Housing Act 1988 (HA1988).
It's important to stress that this is just a draft Bill. The one thing we know is that it won't pass into the statute book without amendment.
Abolition of Section 21
The Bill proposes abolishing Section 21. The abolition of Section 21 is the change most welcomed by renters, and is a proposal most disliked by landlords.
Once the abolition comes into force, landlords will only be able to terminate a tenancy using the new Section 8. Tenants will be able to terminate their tenancy by giving two months' notice.
Abolition of Fixed Term Tenancies
The Bill abolishes fixed term tenancies for all private residential tenancies. All tenancies will be periodic with both tenants and landlords being required to give two months notice.
There's no exception at present in the draft to exclude student tenancies. This ignores the recommendation of the Levelling Up Select Committee from February 2023 to retain fixed-term contracts in the student private rented sector. A potential impact is for student landlords to leave the market or to switch to working professionals, who aren't tied to the academic year. Alternatively, landlords may put increase rents to reflect the fact that most students only want a property from September to May, rather than the current July to June.
New Section 8 Grounds For Possession
- Revised Mandatory Ground 1: Occupation as principal home for landlord or family
- New Mandatory Ground 1A: Sale of property
- New Mandatory Ground 5: For occupation as supported accommodation
- New Mandatory Ground 8A: Repeated Rent Arrears
- At least 2 months' rent was unpaid for at least a day on 3 or more separate occasions within a three-year period.
- If the rent isn't by calendar month, at least 8 weeks' rent needs to be unpaid
- The calculation of rent arrears should exclude any sums due to delays from the payment of Universal Credit
- Revised Discretionary Ground 14: Anti-social Behaviour
- The wording will replace a reference to guilty of "behaviour causing or likely to cause nuisance or annoyance" with "capable of causing "
New Procedure To Increase Rent
The Renters Reform Bill proposes introducing a single way of increasing rent with the following new procedure:
- To increase the rent, a landlord will need to complete a form, which will be on GOV.UK, and serve it on the tenant with 2 months' notice.
- If the tenant accepts the proposed rent increase, the rent will change on the rent day after expiry of the notice.
- If the tenant doesn't agree with the increase and think it's above the market rate, they can dispute the increase through referring a case to the First-tier Tribunal. The tenant will need to do this before the new rent is due and let their landlord know.
Landlords can only increase rents up to market rent once a year.
New Rights For Tenants To Request Consent For A Pet
Tenants will have the legal right to request a pet in their home. The landlord must consider the request and can't unreasonably refuse to give consent.
- The request must be in writing and include a description of the pet. The landlord can ask for more information, and there are time limits for a decision.
- The time limit for a decision by the landlord is 42 days. If the landlord requests more information, they have an extra 7 days from receiving it.
What's reasonable is an objective test and can't just be considered from the landlord or tenant's point of view. For example, it's probably reasonable to refuse a pet in an HMO or if a request would breach the terms of a superior lease.
New Property Ombudsman
The Bill will make it compulsory for all private landlords in England to join a government-approved redress scheme. Membership will apply for all private landlords, regardless of whether they use a letting agent. Landlords will have to abide by the decision of the Ombudsman.
Landlords will pay for the costs of the Ombudsman. It will be free for tenants to use if their landlord hasn't dealt with a legitimate complaint. Landlords won't be able to use the Ombudsman if they have a legitimate complaint about their tenants.
New Private Rented Sector Database
The Bill proposes a new digital database where each landlord and each property will have unique identifiers. It will be compulsory to have active entries for both the landlord and the property before marketing a property for letting. Landlords will pay for the running of the database.
Several new offences will be introduced relating to the database, including knowingly or recklessly providing materially false or misleading information. A tenant can obtain a rent repayment order under Section 40 Housing and Planning Act 2016. It will therefore be vital that landlords and letting agents keep accurate records and documentation for the database.
Decent Homes Standard
The Bill will ensure the Decent Homes Standard applies to the PRS for the first time.
Ban on Families Or Tenants On Benefits
The Bill will make it illegal for landlords and agents to have blanket bans against tenants with children or those receiving benefits.