The Renters’ Reform Bill Explained

If you’re a landlord, then the Renters’ (Reform) Bill is guaranteed to be on your mind. It will introduce sweeping reforms to the private rental market and will likely have a massive impact on landlords and tenants alike.

In the year up to March, rental prices increased by up to 4.9% in London – reflecting the current pressures on the rental market. Equally, many landlords in areas like Tower Hamlets, Hackney and Croydon are dealing with an overcrowded market with many tenants competing for the same properties. The Renters’ (Reform) Bill aims to reduce these pressures and revive the rental market with new legislation. Ultimately, it puts into law many of the proposals suggested by the Fairer Private Rented Sector white paper published in June 2022.

Whether the Renters’ (Reform) Bill worries or excites you, you’ll need to understand it in detail. That’s because it’ll soon be a part of the law that your letting business must follow. This article summarises some of the most significant points made by the new bill – though there’s plenty more to explore if you have the time (see here).

When Will The Renters’ (Reform) Bill Become Law?

The renter’s reform bill has just been introduced to Parliament and has yet to be passed into law. This means that it has been formally published and presented to MPs. However, the bill must face debate in the House of Commons and House of Lords and then be reviewed and amended. Only when this has happened will the bill receive royal assent and become part of English law. Typically this takes about a year to happen.

It’s also important to note that many parts of the bill will be adjusted before it is finally passed into law.

Even when the new bill becomes law, it’ll take time to come into force. New tenancies will have six months to transition to the new system. After that point, all existing tenancies will have a further year to transition.

The Main Points Of The Renters’ (Reform) Bill

The Renters’ (Reform) Bill is an 89-page legal document with a lot of detail about the new rules. However, there are some key points which are particularly relevant for landlords:

• The end of Section 21 ‘no fault’ evictions
• Major changes to Section 8 evictions
• Periodic Tenancies to replace Assured Shorthold Tenancies (ASTs)
• The right to keep pets by default
• New rent increase restrictions
• Landlords must join a new property ombudsman
• Landlords must have a profile on a new letting database
• No more blanket bans for DSS tenants & families
• The Decent Homes Standard coming to the private rental sector

Let’s take a look at each of these points.

The End Of Section 21 ‘No Fault’ Evictions

Section 21 evictions will no longer be allowed under the renter’s reform bill. Section 21 was famous for allowing so-called ‘no fault’ evictions, where landlords could evict tenants without a specific reason with two months’ notice. Once the new bill becomes law, landlords can no longer evict tenants in this way. Instead, they’ll have to use particular grounds for eviction under Section 8.

Section 21 evictions are changing because they are causing significant anxiety for long-term renters. Once tenants moved to a rolling, Periodic Tenancy after their fixed-term tenancy agreement had ended, they could be given two months’ notice to leave the property by the landlord.

Major Changes To Section 8 Evictions

Section 8 evictions will fully replace Section 21 evictions. Under the new Section 8 rules, landlords will be able to evict tenants for various reasons, including personal reasons like selling the property. The idea is to protect tenants from unnecessary eviction while making it easier to evict bad tenants.

For example, evictions due to antisocial behaviour will have a shorter, 2-week notice period. Likewise, the new rules crack down on repeated significant arrears. Tenants found to be in 2 months’ arrears three times in 3 years can face eviction, even if they have settled their balance by the court hearing. Additionally, several grounds for Section 8 evictions are now mandatory, like the two above. In other words, if the judge rules in the landlord’s favour, then their eviction request will be granted with certainty.

Landlords will still be able to repossess the property for themselves or their family to live in or if they need to sell. The only restriction is that they can’t do this until the first six months of the tenancy have elapsed and after giving their tenants two months’ notice.

Periodic Tenancies To Replace ASTs

Under the Renters’ (Reform) Bill, all Assured Shorthold Tenancies (ASTs) will become Periodic Tenancies. Because of this, rules regarding rent increases will also change. Instead of rent increase clause in the tenancy agreement, landlords will be permitted to give a 2-month notice of a rent increase once per year, using a new form under Section 13. Any rent increases can be scrutinised, and if they exceed the ‘going market rate’, tenants can appeal to a first-tier tribunal to resolve the matter.

Periodic Tenancies Will Apply To Student Lets

Periodic Tenancies will also apply to student lets with private landlords. While the new Periodic Tenancy system won’t apply to official university accommodation, it will apply to thousands of private landlords who rent their properties to students.

Like the rest of the bill, the details of this arrangement are still being debated. It may cause significant disruption for landlords who rent to students. Without fixed-term contracts, students can choose to leave with two months’ notice at any point. Some students will likely opt to give notice so that their tenancy agreement ends soon after finishing their exams in June, meaning landlords could face a two-month void period before the term starts again in September. It may also be problematic for landlords to market properties to a new batch of students as, by April, many students will have already found a property for the new term.

The Right To Keep Pets By Default

The reform bill is welcome news for pet owners. Due to increasing pet ownership and its associated benefits, the new bill allows tenants to have a pet in their home – and their requests cannot be ‘unreasonably refused’ by landlords.

However, the exact grounds for a pet refusal are not clearly defined. The separate ‘Dogs and Domestic Animals (Accommodation and Protection) Bill’ does make some specific suggestions, though it is still being discussed and debated. For example, it suggests that landlords may deny pets on medical or religious grounds, or where the presence of pets affects the well-being of other tenants (e.g. in a HMO property).

The government intends to define the grounds for allowing pets in more detail.

Landlords will have 42 days to allow or refuse the request, which can be extended by a week if they require more information about the pet. If there is a conflict of interest, then the tenant can raise the issue with the new ombudsman scheme.

However, tenants must acquire pet insurance, or pay the landlord an equivalent amount to cover the cost of potential damages to the property. This amends the 2019 Tenant Fees Act to allow pet insurance as a ‘permitted payment’ that landlords can charge.

Landlords Must Join A New Property Ombudsman

The Landlord Ombudsman will mediate to resolve disputes between landlords and tenants on various issues. Landlords must be a part of it and pay a subscription fee to cover its running costs. It will be free for tenants, who can use the portal to file complaints about landlords and raise any issues.

There are several things the ombudsman can make landlords do:

• Take remedial action for repairs and maintenance
• Pay fines of up to £25,000
• Provide explanations or apologies
• Offer information
• Reimburse rent if this is necessary

Landlords Must Have A Profile On A New Letting Database

The proposed Lettings Database will contain essential information about all landlords renting properties in England and can be viewed by potential tenants and the local council. It will take the form of a searchable online property portal which contains lots of advice and information.

Landlords will have to be part of this database to let their properties. Also, they will have to keep the information about their letting history and properties up to date. If they fail to do this, they will be flagged as ‘inactive’ and unable to rent their properties until they have provided the necessary information. It’s important to note that any past misconduct regarding rental history will be displayed clearly on landlords’ profiles.

No More Blanket Bans For DSS Tenants & Families

Currently, landlords can advertise their properties to the exclusion of specific tenants. For example, they often blanket ban families or DSS tenants from applying to rent their properties. With the Renters (Reform) Bill, landlords won’t be able to do this and must consider all tenants equally.

The Decent Homes Standard Coming To The Private Rental Sector

The decent homes standard already applies to the social housing market, and now it’s coming to the private rental sector. This is part of the government’s aim to halve poor-quality housing by 2030, so landlords must ensure their homes meet this standard.

If you’re concerned about the new Renters’ (Reform) Bill, then help is at hand. You can talk to our lettings team for expert advice and guidance, so you can approach the new rules with confidence.