The big “bad” Renters Reform Bill, how scared should landlords be?

The Renters Reform Bill has been looming over landlords since Theresa May’s government first announced the Bill in April 2019. In our last blog we discussed the impact that the Renters Reform Bill is likely to have on student housing and the abolition of “no fault evictions.” If, as discussed, the Bill ensures that all tenancies are periodic and section 21 notices are forbidden, how can a landlord legitimately regain possession of residential property?

As it inches ever closer to becoming law in England and Wales, what else is lurking in the Bill?

New grounds for possession

The Bill proposes a number of new grounds for possession under section 8 that can be used by a landlord to evict a tenant. Commentors believe that the new ground 1B, where landlords seek to gain possession of their properties with the “intention” to sell, will be a common replacement for section 21 notices. Other new grounds can be used in circumstances where the landlord lets to an employee who has ceased to work for the landlord, if a superior lease ends, if the landlord needs to house agricultural workers or if the tenant is in repeated rent arrears over a period.

Amended grounds for possession

Grounds for possession that currently exist have been amended with many of these changes granting greater flexibility to landlords. For example, the Bill expands the class of relations of the landlord that count as family members for the purpose of ground 1, to not only include the spouse of the landlord but their parents, grandparents, nieces and nephews or children of these relations. Another landlord-philic amendment is a change to ground 14 which allows a landlord to evict a tenant engaging in anti-social behaviour. Whereas the current threshold to be met requires the tenant to be “likely” to cause trouble, this has been somewhat lowered with the tenant only needing to be “capable” of causing problems for the landlord to step in.

The Private Rented Sector Database

The Bill places a duty on the Secretary of State to put in place a database operator to establish and run a database which contains entries of existing residential landlords, prospective residential landlords and dwellings which are, or intend to be let.

This will allow tenants to be able to access information and assess the rental market. Although an administrative exercise for Landlords the increased transparency will allow them to assess the market and perhaps inform rent pricing. In its White Paper the government promised that the addition of the database will provide “a single ‘front door’ for landlords to understand their responsibilities”.

Pets

Pet owning tenants will be pleased to hear that if the Bill makes it to statute there will be an implied term into every tenancy agreement that a tenant may keep a pet unless the landlord “reasonably” refuses. The explanatory notes that accompany the Bill provide an example of what would be reasonable refusal, this includes the situation where accepting a pet would breach an agreement with a superior landlord. The Court will be able to order specific performance of the obligation not to unreasonably refuse a pet if the landlord breaches the implied term.

A treat for landlords is that they can require a tenant to have pet insurance in place or they can recoup the reasonable costs of maintaining pet insurance.

Rent increases

The Bill will limit the number of times that a landlord will be able to increase rent to once a year. The only way that this can be done is by issuing a section 13 notice and the rent can only be increased to “open market rates.” The aim is to prevent landlords adopting a strategy of increasing the rent as a method to gain possession when section 21 notices have been abolished.

Penalties

Non-compliance with some parts of the Bill will incur heavy penalties such as a fine of up to £30,000 and in some instances a summary criminal conviction which would be a very serious matter indeed for any landlord.

Although it may appear to be out with “no fault evictions”, the new grounds brought in by the Bill may potentially more than compensate. The Bill is not yet in force having only just received a second reading in the House of Commons. The current strategy is that the Bill will be implemented in two stages applying to new tenancies entered into after the Bill has been implemented and then to all tenancies on a date to be decided.

It was thought that the Bill might be so extreme so as to unnerve residential landlords who may take the opportunity to sell their properties especially in the face of increased mortgage interest rates. Needless-to-say it seems that the Bill is going to make it on to the statute book and it is essential landlords obtain timely expert advice to protect their valuable property assets.

For further specific advice please contact partner Shams Rahman or any member of the Property and Trusts Litigation team.

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