It has been over five years since the previous government announced that it will put an end to ‘no fault’ evictions and seek to redress the balance between landlords and tenants in the private rented sector in England. Following a consultation in 2019, the Renters (Reform) Bill was conceived, but despite passing its third reading in the Commons, it was canned ahead of the general election in July.
In their manifesto, Labour pledged to see through a more robust version of these wholesale reforms and a new bill, the Renters’ Rights Bill, was introduced in Parliament on 11 September 2024. The bill will now progress through the House of Commons and House of Lords (which could result in changes) and whilst there is no definitive date for the bill to become law, the current expectation is that it will be sometime in summer 2025. Here are ten key facts you need to know about the proposed legislation.
The standard six or 12 month fixed-term assured tenancy that private renters usually commit to at the outset will no longer be an option. Instead, all tenancies will be periodic giving tenants the ability to end their tenancy on two months’ notice at any time during the course of their agreement.
On the date of implementation, any existing fixed-term tenancies will convert to periodic tenancy agreements and from that date all new tenancies signed on or after this date will be governed by the new rules.
The current law allows landlords to evict their tenants for no reason via the existing s.21 route.
The proposed legislation protects landlords who need to evict tenants who are ‘at fault’ by retaining and expanding on the existing s.8 statutory grounds.
Courts must make a possession order if a landlord can provide the necessary evidence to prove fault-based mandatory grounds such as significant non-payment of rent, serious damage or anti-social behaviour. The mandatory threshold for eviction via the rent arrears ground will increase from two months to three months’ arrears and the notice period from two to four weeks.
Mandatory orders will also be available if a landlord can make out one of the two new ‘landlord circumstance’ grounds which are that they either need to sell the property or they and/their family need to move into it. A landlord seeking to rely on either of these grounds needs to give four months’ notice to their tenant and cannot rely on either ground in the first 12 months of the tenancy
The practical upshot of the abolition of s.21 is that any application for possession will need a court hearing rather than potentially being ‘fast-tracked’ on paper. There are concerns that this will further overwhelm the court system, which is currently taking an average of 24 weeks to process applications, and make the eviction process even more protracted and expensive for landlords. They have not repeated the previous government’s pledge to reform the court system prior to introducing such a ban.
Under the current regime, the landlord can increase the rent either with the agreement of the tenant, or by triggering a rent review clause in the tenancy agreement. In default of agreement or in the absence of a rent review clause, a landlord can serve a statutory notice of increase on the tenant. This can only be done once every 52 weeks and any tenant who disputes the proposed increase can refer the notice to the First-tier Tribunal.
The Renters Rights’ Bill will regulate rent increases by prohibiting rent review clauses and only permitting rent increases to market rate by statutory notice and no more than once a year. Tenants will still be able to refer the notice to the Tribunal, but further reforms will bring an end to backdated rent increases following determination and the risk of the Tribunal increasing rent beyond the initial proposed rent.
Currently, tenants cannot give notice to terminate a fixed-term tenancy agreement, and if they stay on after that fixed-term has expired then they need to give one month’s notice.
With the abolition of fixed-term tenancies, the new legislation proposes to increase the notice period to two months and tenants will be able to give notice from day one of their tenancy agreement.
Currently landlords can market their properties as ‘no pets allowed’ or refuse existing tenants the right to have a pet. Going forward under the new regime, tenants will have the right to request a pet, a request that landlords cannot unreasonably refuse but can however require insurance covering pet damage.
Landlords will no longer be able to impose a blanket ban on letting properties to tenants with children and/or on benefits. All applicants need to be considered on their individual circumstances and affordability and cannot be declined on account of having children and/or being in receipt of benefits.
Awaab’s Law is newly-introduced legislation requiring social landlords to investigate and repair any hazards such as mould or damp within certain time limits to bring social housing up to a decent standard of condition.
The Renters’ Rights Bill will introduce Awaab’s Law to the private rental sector.
The Decent Homes Standard has set mandatory minimum quality standards to social housing for over 20 years. This will be updated and extended to apply to the private rental sector for the first time and landlords who fail to address serious hazards could be fined up to £7,000 by local councils and could also face prosecution for non-compliance.
A new private rented sector database will be created to help landlords understand their obligations and demonstrate compliance, as well as providing tenants with information about a property they wish to rent alongside transparency throughout their rental period. The database will also provide local councils with more data about private sector properties which it can use to identify non-compliant landlords.
All landlords of assured tenancies will be required to register themselves and their properties on the database and failure to do so could lead to enforcement action by the local council and potentially bar them from getting a possession order.
Bidding wars between potential tenants will be outlawed with a new legal requirement for landlords and letting agents to publish the required rent for a property.
Landlords and agents will be prohibited from “asking for, encouraging, or accepting any bids” above the publicly stated price. Local councils will be given powers to impose civil penalties on landlords, and anyone acting on their behalf, of up to £7,000 for breaches. This will be per breach so landlords and agents could receive multiple civil penalties.
Landlords will be legally required by law to join this service which will offer impartial and binding complaint resolution for tenants. The service will be free and it is expected that landlords will be required to pay a small annual fee per property for membership. The Renters’ Rights’ Bill includes enforcement measures for landlords who fail to join the service or subsequently fail to comply with decisions.
Although the Renters’ Rights Bill has only just had its first reading, the Housing Minister expects the new tenancy system to be in place by next summer which does not give the private rented sector much time to prepare for change. We will be scrutinising the legislation in more detail over the coming weeks so please watch this space for further guidance and top tips.
For more information on the Renters’ Rights Bill and how this may impact your properties or tenancy agreements, please contact Amelia Pine or Victoria Bonnet.
