On 17th May, the Renters Reform Bill was introduced in Parliament. This was the ‘first reading’, which just outlined the key points of the Bill; MPs will actually consider and debate the contents in the ‘second reading’ stage, which hasn’t been given a date yet.
Of course, the proposals might change as the Bill makes its way through the Parliamentary process (see questions 16-18), but it’s well worth asking some key questions about what we know so far.
So, here are our top 20 questions and answers about the current proposals and how they’re likely to affect landlords and tenants:
1. What are the main changes being proposed in the Renters (Reform) Bill?
- Assured Shorthold Tenancies (ASTs) will be scrapped, so all tenancies will become periodic
- Section 21 ‘no-fault’ evictions will be abolished
- There will be a new Private Rented Sector Ombudsman scheme, which landlords will have to join
- A Privately Rented Property Portal will be created, with mandatory registration for landlords
- Landlords won’t be able to increase the rent more than once a year
- Tenants will have the right to request pets
2. What’s been left out of the Renters Reform Bill?
The Government’s White Paper, ‘A Fairer Private Rented Sector’, published last June, included three proposals that aren’t in this first draft of the Bill:
- Extending the Decent Homes Standard to the Private Rented Sector (PRS)
- Banning blanket refusals by landlords to accept tenants on housing support or Universal Credit
- Strengthening local council powers of enforcement
However, it’s likely these will be added as the Bill is debated, with the Government stating on its website: “We remain fully committed to implementing these reforms and will bring forward legislation at the earliest opportunity.”
3. What does scrapping Assured Shorthold Tenancies (ASTs) actually mean?
- There will no longer be any fixed terms, so all tenancies will be periodic and ‘roll’ from one rental period to the next.
- Rental periods will be restricted to either one month or 28 days (which won’t be a change for most landlords, who already charge rent on a monthly basis)
- Tenants will be able to give two months’ notice at any point.
Some landlords are understandably concerned about losing the security of tenants being ‘tied in’ for an initial period – usually 6 or 12 months – but the reality is that tenants don’t usually move unless there’s a good reason. So, as long as you’re providing a good home for them, it really shouldn’t make a huge difference.
4. Once section 21 is scrapped, how will I evict a tenant?
This change means you won’t be able to evict a tenant without a valid reason. But in reality, landlords don’t go around evicting tenants unless they do have a reason!
And there are a couple of bits of good news:
- Section 8 grounds for eviction are being strengthened to make sure you can get your property back when you need to, e.g. if the tenant is in rent arrears, you’re selling the property or you want to move into it yourself.
- If you’re evicting a tenant for anti-social behaviour, you should be able to do that more quickly than under the current rules.
5. If landlords are losing the accelerated possession order procedure along with S21, does that mean every possession claim will go to court?
The short answer is yes, and there are concerns that the already busy court system could be overwhelmed. Currently, around a third of all possession claims are made via the accelerated process, so potentially the courts could find themselves having to deal with 50% more cases.
The Government is planning to tackle this in two ways:
- Putting a greater focus on mediation for landlords and tenants, to help avoid evictions ending up in court in the first place
- Prioritising the most serious cases (e.g. evictions for anti-social behaviour)
6. What will happen to the rules around prescribed information?
At the moment, landlords have to provide the tenant with certain ‘prescribed information’ (such as deposit protection information, the EPC and the current Gas Safety certificate) in order to be able to serve a valid S21. The Government hasn’t so far given any details on what’s going to come into place in relation to prescribed information once S21 disappears – this is something we expect be clarified as the Bill is debated.
7. How much longer will I be able to still issue a S21?
The current laws will continue to apply until the Bill becomes an Act and that Act comes into force. Given the time it takes for a Bill to progress through Parliament (see questions 17 & 18), that’s likely to be at least another 12 months to two years for new tenancies and potentially two to three years for existing tenancies.
8. What information will be on the new Privately Rented Property Portal?
The portal will have two main uses:
- An information resource to help landlords understand and comply with their legal obligations. It will also be used by government to communicate legal changes.
- A landlord register. This will be a publicly accessible database of landlords and their properties, together with information on landlords who have received banning orders and details of related financial penalties or convictions.
It will be mandatory for landlords to register on the portal. If a property is advertised or let without being listed on the register, landlords could be fined £5,000 by the council. For persistent breaches or if a landlord provides fraudulent information, they could be fined up to £30,000 or face criminal prosecution and a Banning Order.
9. What will happen to the current Database of Rogue Landlords?
The new portal will replace the current Database of Rogue Landlords. The Government has said: “We are still determining the exact information which will be available to the public and this will be set out in regulations. We are planning for this to include information related to property standards.”
10. Will there be a registration fee for the portal?
Yes, landlords will be charged to register, although it hasn’t yet been decided what the fee will be. All the Government has said so far is that it will “work to ensure that the fee is proportionate and good value”.
11. Do I have to register and pay for the portal if my property is already licensed?
It’s not yet clear whether landlords who have already registered and paid for a licence – whether that’s a Houses in Multiple Occupation (HMO) licence or one under a selective licensing scheme - will have to register their details again and pay for their information to be listed on the portal.
The Government does plan to link the portal and the Ombudsman scheme so that landlords don’t have to duplicate their information, and it would make sense to take the same approach for landlords with licensed properties. This is something that should be clarified as the Bill is debated.
12. Will all landlords have to accept pets as part of the Renters Reform Bill?
If you have a valid objection – e.g. the property lease prohibits pets or the tenant wants to keep a large dog in a small flat – then you can refuse a tenant’s request. The main change here is that you can’t have a blanket ‘no pets’ policy and the tenant has the right to submit a written request to keep a pet.
Some landlords already allow pets, but if you currently don’t and you’re concerned about your property being damaged, the good news is that pet insurance will become a ‘permitted payment’ under the Tenant Fees Act. That means you’ll be able to require your tenant to take out insurance, which should protect both of you financially if anything goes wrong.
13. What will be the new process for rent rises and will tenants be able to challenge them?
Under the proposals:
- Landlords will have to give tenants two months’ notice of a rent increase
- The notice must be given formally via a section 13
- Landlords will no longer be able to write ‘rolling’ rent rises into the tenancy agreement.
If tenants feel any proposed increase is unreasonable and the landlord refuses to adjust it, they can take the matter to the First-Tier Tribunal. However, this is currently so time-consuming that very few tenants actually use it. The Government is proposing to make it easier for tenants to fight unfair rent rises by digitising the process, which is good news for tenants, but could lead to more landlords finding their annual rent increases challenged in the future.
14. What extra powers are proposed for councils?
The Government wants to make sure that local councils have ‘strong and effective enforcement tools to crack down on poor practice’, so is pledging to increase their investigative powers and strengthen fine regimes for serious offences. They’re also proposing to:
- Run pilot schemes with selected local councils to explore different ways of enforcing standards and working with landlords to aid the adoption of the Decent Homes Standard
- Require local councils to report their housing enforcement activity to the Department for Levelling Up, Housing and Communities (DLUHC)
While these proposals were outlined in last June’s White Paper, they haven’t actually been included in the first draft of the Bill, although we expect them to be added as it progresses through Parliament.
15. Will councils be given more money to enforce?
Nothing has been mentioned yet about additional funding for local councils, but it’s something the Government will have to address because many councils are already seriously struggling to afford the resources necessary to carry out even the most basic enforcement action.
If the new proposals enable councils to collect more in fines, they will be able to self-fund extra enforcement efforts in the future. However, they’re going to need some money upfront from the Government to pay for the initial increase in activity required to identify more criminal landlords.
16. Are there any specific proposals that are expected to change as the Bill is debated?
Bills often have things clarified, added and changed as they progress through Parliament, and there are already certain things that we need more detail on, such as:
- What will happen with prescribed information
- What the requirement will be for registering properties on the portal that are already licensed
- The cost to landlords of the portal and Ombudsman
But one thing that hasn’t been given enough consideration is the impact that scrapping Assured Shorthold Tenancies (AST) is likely to have on student landlords.
Most landlords of student properties issue rental agreements for a fixed 12-month term, so tenants can’t leave at the end of the academic year. Removing fixed terms would allow students to end their tenancy before the summer holidays – or even sooner - potentially leaving landlords with no rental income for three or four months, as it’s incredibly hard to find replacement tenants for student properties in the middle of the year.
There’s already concerns that unless this specific issue is addressed by the Government, many student landlords might exit the market. And with a serious shortage of suitable private rental accommodation in most towns and cities across England already, this needs to be adressed sooner than later.
17. What are the next steps for the Renters Reform Bill?
Following the first reading in the House of Commons, the Bill will go through 10 more stages before it becomes an Act:
- ‘Second reading’, where MPs will debate the key points
- ‘Committee’ - a more in-depth analysis and debate of all the clauses and proposals for change, carried out by a specially selected committee of MPs, who can take evidence from experts and relevant groups from outside Parliament
- ‘Report’, where any proposed amendments can be further debated by all MPs – this is the last stage at which changes can be made in the House of Commons
- ‘Third reading’ – this is where the final draft of the Bill is approved (or not)
- The five stages above are repeated in the House of Lords
- ‘Royal Assent’ - once the Bill has been approved at the third reading in the Lords, it will go to the King for Royal Assent, which is when it legally becomes and Act.
You can see full details about each stage on the UK Parliament site.
18. When will the Renters Reform Bill to be passed and when will the changes start impacting landlords?
Bills generally take around a year to progress through Parliament, then the Act comes into force around 6 months later, usually in April or October.
Because a date hasn’t yet been set for the ‘second reading’ stage, this might not happen until the Autumn. That means the Bill probably wouldn’t be passed until Autumn 2024 at the earliest, coming into force in April 2025 for new tenancies. Lettings laws are usually applied to new tenancies first and then existing tenancies around a year later.
19. Once the Bill is passed, what will I need to do differently as a landlord?
- Register yourself and your properties on the Privately Rented Property Portal
- Sign up to the Ombudsman scheme
- Adapt current tenancy agreements so that they comply with the new rules regarding periodic tenancies and issue new paperwork for new tenancies (as required)
- Understand changes to prescribed information (yet to be clarified)
- Serve a section 13 notice for rent increases, giving your tenant at least two months’ notice (use Form 4 on the government website)
- Understand the revised section 8 grounds for possession
20. Who benefits more from the changes – tenants or landlords?
For most landlords, who already let in a professional manner, the passing of this Bill shouldn’t make a huge difference to the way they operate. The two most significant benefits for landlords are:
- Strengthened grounds for possession under section 8
- Being able to evict anti-social tenants more quickly
However, for landlords to really benefit, the current problems with the courts must be resolved, chiefly the length of time it takes for cases to be heard.
Undoubtedly, it’s tenants who will benefit more:
- The portal will enable them to make checks on their landlord
- With fixed terms disappearing, they won’t be tied into paying rent on a property that turns out to be unsuitable
- Responsible pet owners should have a wider choice of rental accommodation
- It will be easier to formally challenge unfair rent rises
- The Ombudsman will give them a route to redress if they have complaints about their landlord
If you’d like to discuss anything we’ve covered here, or you’ve got any other questions, just get in touch with your local Your Move branch and speak to one of the lettings team.
The Your Move Content Marketing Team
