The Renters’ (Reform) Bill – landmark changes to the private rental sector for landlords and tenants

The Government has introduced the Renters’ (Reform) Bill (the “Bill”) into Parliament today. It states  that this will protect around 11,000,000 tenants across England. They also state that the Bill will additionally benefit over 2,000,000 landlords by making it easier for them to recover possession of their properties on certain grounds.

The Government’s stated objective is to move things towards creating a fairer rental sector and improving living conditions for tenants by introducing a “once-in-a-generation overhaul”.

The Bill’s changes include:

1. abolishing ‘no fault evictions’;
2. restrictions on landlord’s refusing tenants’ request for pets on the premises;
3. restrictions on landlord’s blanket ban on certain types of tenants; and
4. strengthening of landlord’s eviction powers on certain grounds.

In relation to each item:

No-fault evictions and other changes to benefit/protect tenants

Section 21 of the Housing Act 1988 currently permits private landlords to repossess properties from tenants renting under an assured shorthold tenancy without having to establish fault on the tenant’s part. Research by the housing charity Shelter stated that nearly 230,000 private renters had been served with a section 21 no-fault eviction notice since April 2019.

The key element of the Bill is the ban on no-fault evictions, essentially preventing landlords from evicting tenants without reason as that can cause a power imbalance between a landlord and tenant.

Additionally, landlord’s will not be able to unreasonably refuse a tenant’s request for a pet in their home.

The Bill will also make it illegal for landlord’s and their agents to have blanket bans on renting to tenants who are in receipt of benefits, or those with children providing fairer treatment on families seeking housing.

Reforms for landlords

The Bill is intended to assist landlords by making it easier for landlords to repossess properties from anti-social tenants and those who miss rental payments. The relevant notice periods will be reduced where tenants have been irresponsible, for example by damaging the property they occupy.

The Bill will expand on the disruptive and harmful activities that can lead to eviction, with a view to making it quicker to evict a tenant who is acting anti-socially.

New grounds for possession will also be created to allow landlords to repossess properties to sell or move their close family members into the property.

The introduction of a new Ombudsman will facilitate the enforcement of the policy changes and try to resolve low-level disputes between landlords and tenants, without the need to go to court.

A new digital Property Portal will also be created to enable landlords to understand their obligations, and to allow tenants to better understand their obligations when making decisions regarding new tenancy agreements.

Moving forward

The Bill will first have to pass through Parliament and the reforms will likely not be implemented until 2024.

We expect further legislation to be added to the Bill including:

1. requiring privately rented homes abide by the Decent Homes Standard, which stipulates that properties must be free from serious health and safety hazards (currently only applies to the social housing sector); and
2. Councils will be given strengthened enforcement powers to help target criminal landlords.

It remains to be seen what will happen with the passage of the Bill through Parliament but the changes will only be likely to create more issues for landlords particularly in limiting or at least delaying or making it more expensive to obtain possession against tenants at the end of tenancies.  On the back of heightened regulation affecting landlords and rented properties plus the increased tax burden placed on landlords none of this is likely to stop what appears to be the wide spread departure of many landlords from the market and leading to less rental properties and consequently higher rents being paid.

At least there have been no restrictions introduced on rent yet as has happened in Scotland although many landlords will, we think, feel very nervous with more controls or limitations on the way.

If you have any issues or questions regarding the Bill or its implications please do contact either Stephen Brower or any member of the Property team to discuss further.

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