DATE ANNOUNCED FOR THE RENTERS REFORM BILL TO BE INTRODUCED
The government has confirmed to the NRLA that the long-awaited Renters' Reform Bill will be introduced to Parliament the week commencing 8 May 2023.
The National Residential Landlords Association has shared that the government is expected to release the full details of its Renters' Reform Bill on the week following the King's coronation. The Renters' Reform Bill proposals were outlined in its A Fairer Private Rented Sector white paper, released in June 2022. Here's an overview of what's expected to be introduced.
This guide to the Renters' Reform Bill covers:
- What's been proposed in the Renters' Reform Bill
- Why is the Renters' Reform Bill being introduced?
- When will the Renters' Reform Bill be introduced?
- The white paper: An overview
- Section 21 "no fault" evictions to be abolished
- Periodic tenancies to become standard
- Notice periods for rent increases to be doubled
- Minimum housing standards to be introduced
- Tenants given more rights to keep pets in properties
- Bans on renting to families with children or those on benefits to be outlawed
- A new ombudsman covering all private landlords
- A new property portal for private landlords and tenants
What is the Renters' Reform Bill?
The Renters' Reform Bill sets out the government's plans to fundamentally reform the private rented sector (PRS) and level up housing quality.
The proposed reforms for the PRS in England will be "the biggest shake-up of the private rented sector in 30 years”.
In June 2022, the government published a white paper, A Fairer Private Rented Sector, outlining the full extent of its plans.
What's been proposed in the A Fairer Private Rented Sector white paper?
As expected, the proposals include abolishing section 21, requiring private rented properties to meet the Decent Homes Standard and establishing a new ombudsman covering private landlords and a new property portal.
The government has also put forward several new proposals, including making all tenancies periodic; doubling the notice periods for rent reviews; making it illegal for landlords to have blanket bans on renting to families with children or those in receipt of benefits; and improving the rights of tenants to have pets in properties.
Sean Hooker, Head of Redress at the Property Redress Scheme, discusses these proposals in our webinar - watch it free on demand now.
Why is the Renters' Reform Bill being introduced?
The government says the A Fairer Private Rented Sector white paper "marks a generational shift that will redress the balance between landlords and 4.4 million private rented tenants.
It provides new support for cost of living pressures with protections for the most vulnerable, and new measures to tackle arbitrary and unfair rent increases."
At the same time, the proposals to introduce a Private Renters’ Ombudsman, improve grounds for possession under section 8, and introduce a new property portal will provide " the estimated 2.3 million private landlords with greater clarity and support".
When will the Renters' Reform Bill be introduced?
The government has now confirmed through the NRLA that the Renters' Reform Bill will be introduced to Parliament in the week following the King's coronation, commencing 8 May 2023.
Read on for more detail around the eight biggest changes expected to be outlined in the bill.
The white paper: An overview
1. Section 21 "no fault" evictions to be abolished
Section 21 will be abolished, so that landlords will only be able to evict a tenant in reasonable circumstances, which will be defined in law.
"Removing Section 21 will level the playing field between landlord and tenant, empowering tenants to challenge poor practice and unjustified rent increases, as well as incentivising landlords to engage and resolve issues," says the white paper.
Read more about how this expected change has already affected the lettings sector in our blog.
How will section 8 grounds change?
However, the government will also reform the grounds of possession under section 8 so that they are "comprehensive, fair, and efficient, striking a balance between protecting tenants’ security and landlords’ right to manage their property".
A new mandatory ground for repeated serious arrears, making eviction mandatory where a tenant has been in at least two months’ rent arrears three times within the previous three years, regardless of the arrears balance at hearing.
A new ground will be introduced for landlords who wish to sell their property and allow landlords and their family members to move into a rental property.
The notice period for the existing rent arrears eviction ground will be increased to four weeks while the mandatory threshold of at two months’ arrears at time of serving notice and hearing will remain.
In cases of criminal behaviour or serious antisocial behaviour, the notice period for the existing mandatory eviction ground will decrease.
How will court processes change?
Working in partnership with the Ministry of Justice (MOJ) and HM Courts and Tribunals Service (HMCTS), the government says it will also introduce a package of "wide-ranging court reforms that will target the areas that particularly frustrate and hold up possession proceedings".
This will include county court bailiff capacity, paper-based processes, a lack of adequate advice about court and tribunal processes, and a lack of prioritisation of cases.
The government also intends to "strengthen and embed mediation services for landlords and renters, preventing avoidable evictions".
Download a free guide to share with your landlords on the changes to sections 21 and 8.
2. Periodic tenancies to become standard
All tenants who would previously have had an Assured Tenancy or Assured Shorthold Tenancy will be moved onto a single system of periodic tenancies.
Tenants will need to provide two months’ notice when leaving a tenancy, to "ensure landlords can recoup the costs of finding a tenant and avoid lengthy void periods".
Landlords will only be able to evict a tenant in reasonable circumstances, which will be defined in law.
When will periodic tenancies become law in England?
The government says it will allow time for a "smooth transition to the new system, supporting tenants, landlords and agents to adjust, while making sure that tenants can benefit from the new system as soon as possible".
According to the Renters' Reform Bill timetable, the government will introduce the changes in two stages, providing at least six months’ notice of the first implementation date, "after which all new tenancies will be periodic and governed by the new rules".
To avoid a "two-tier rental sector", all existing tenancies will transition to the new system on a second implementation date.
Why are periodic tenancies being introduced?
The government hopes that a single tenancy system will mean "both parties will better understand their rights and responsibilities".
It also hopes to provide "greater security for tenants, while retaining the important flexibility that privately rented accommodation offers," says the white paper.
"This will enable tenants to leave poor quality properties without remaining liable for the rent or to move more easily when their circumstances change, for example to take up a new job opportunity."
3. Notice periods for rent increases to be doubled
In a move to combat the cost of living crisis, rent increases will be limited to once per year and the minimum notice landlords must provide of any change in rent will be increased to two months.
Will landlords be able to review rents?
The Renters' Reform Bill white paper outlines plans to end the use of rent review clauses, "preventing tenants being locked into automatic rent increases that are vague or may not reflect changes in the market price" and says that "any attempts to evict tenants through unjustifiable rent increases are unacceptable".
In cases where increases are disproportionate, the government will "make sure that tenants have the confidence to challenge unjustified rent increases through the First-tier Tribunal" and it will "prevent the Tribunal increasing rent beyond the amount landlords initially asked for when they proposed a rent increase".
4. Minimum housing standards to be introduced
Minimum housing standards for the private rented sector (PRS) will be introduced by widening the application of the Decent Homes Standard, which currently only applies to the social housing sector.
What's included in the Decent Homes Standard?
Under the Decent Homes Standard, homes must be free from serious health and safety hazards and landlords must keep homes in a good state of repair so renters have clean, appropriate and useable facilities.
The government will also expand Rent Repayment Orders to cover repayment for non-decent homes.
Periodic tenancies will also enable tenants to end a tenancy without remaining liable for the rent in unsuitable and unsafe accommodation.
What do the new standards hope to achieve?
The white paper says that "putting a legislative duty on private landlords to meet the Decent Homes Standard will raise standards and make sure that all landlords manage their properties effectively, rather than waiting for a renter to complain or a local council to take enforcement action."
It will give local councils the tools to enforce the Decent Homes Standard in the PRS "so that they can crack down on non-compliant landlords while protecting the reputation of responsible ones".
The white paper also reaffirmed the government's intention to upgrade "as many homes as possible" in the private rented sector to EPC Band C by 2030.
5. Tenants given more rights to keep pets in properties
The government will legislate to ensure landlords do not unreasonably withhold consent when a tenant requests to have a pet in their home, with the tenant able to challenge a decision.
How will landlords be protected if they accept a tenant with pets?
At the same time, the government will amend the Tenant Fees Act 2019 to include pet insurance as a permitted payment. This means landlords will be able to require pet insurance, so that any damage to their property is covered.
The government also encourages landlords "to allow reasonable requests by tenants to redecorate, hang pictures or change appliances - provided they return the property to its original state when they leave".
6. Bans on renting to families with children or those on benefits to be outlawed
It will become illegal for landlords or letting agents to have blanket bans on renting to families with children or those in receipt of benefits ("No DSS").
Why are these rules being introduced?
The white paper says that, "while most landlords provide a professional service to their tenants, there is evidence that some landlords and agents are actively discouraging, or even preventing people in receipt of benefits or with children from renting their properties".
The government will also explore whether action is needed to support other vulnerable groups that may struggle to access PRS accommodation, such as prison leavers.
7. A new ombudsman covering all private landlords
A single government-approved ombudsman covering all private landlords who rent out property in England - regardless of whether they use a letting agent - will be introduced and membership will be mandatory.
What powers will the ombudsman have?
The ombudsman will have powers to "put things right for tenants", including compelling landlords to issue an apology, provide information, take remedial action, and/or pay compensation of up to £25,000.
The government also intends for the ombudsman to be able to require landlords to reimburse rent to tenants where the "service or standard of property they provide falls short of the mark".
The ombudsman’s decision will be binding on landlords, should the complainant accept the final determination and failure to comply with a decision may result in repeat or serious offenders being liable for a Banning Order.
Will joining the ombudsman be mandatory for landlords?
The white paper says that "making membership of an ombudsman scheme mandatory for landlords who use managing agents will mitigate the situation where a good agent is trying to remedy a complaint but is reliant on a landlord who is refusing to engage".
It will also ensure that tenants have access to redress services in "any given situation, and that landlords remain accountable for their own conduct and legal responsibilities".
8. New Property Portal for private landlords and tenants
A new digital Property Portal will be introduced to "provide a single ‘front door’ to help landlords understand, and demonstrate compliance with their legal requirements".
The government says that "too often tenants find out too late that they are renting a substandard property from landlords who wilfully fail to comply, and councils don’t know who to track down when serious issues arise". It notes that the portal will also "support good landlords to demonstrate regulatory compliance and to attract prospective tenants".
How will the new property portal for landlords work?
The nature of the portal is yet to be determined, with the government to "conduct extensive testing of potential solutions for the portal, underpinned by user research and engagement with representative groups, to make sure the system works for tenants, landlords and local councils".
The portal should be flexible enough to support future policy developments, "supporting efforts to raise standards in the sector and reduce the number of non-decent rented homes by 50% by 2030". This could include a system where landlords and agents must meet minimum standards before properties can be let.
Will it be mandatory to register properties on the portal?
The Property Portal aims to provide a solution to these issues, with landlords legally required to register their property on the portal and local councils empowered to take enforcement action against private landlords that fail to join the portal.
The Property Portal will "dramatically increase local councils’ ability to enforce against criminal landlords". The government plans to incorporate some of the functionality of the existing Database of Rogue Landlords and Property Agents.
You can download a full overview in our e-book, Renters' Reform Bill: Your guide to the "A Fairer Private Rented Sector" white paper. This article is intended as a guide only and does not constitute legal advice. Visit gov.uk for more information.
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