Landlords in England should understand how the proposed private rented sector changes within the Renters (Reform) Bill will affect them.
Updated in February 2024, this guide will explain what the Renters (Reform) Bill is and assess the impact it could have on landlords in England.
If you’re worried about how this change in legislation will affect your property, get in touch today to find out how we can help you.
What is the Renters (Reform) Bill?
The Renters (Reform) Bill first came into the public domain in 2019 and aims to provide more security for tenants and improve standards in the Private Rented Sector (PRS), while also ensuring landlords retain certain rights to possession of their properties.
The Covid-19 pandemic, however, delayed the Bill’s passage through parliament until June 2022 when its white paper was published, outlining all the proposed changes the Bill could make. In May 2023, the Bill was, at last, announced to Parliament.
When will the Renters (Reform) Bill take effect?
We don’t yet know when this Bill will make its way into law. However, it’s likely there will be a transitory period for existing tenancies. It’s believed there would be a lead in time of 6 months for new tenancies and a further year for existing tenancies.
Timeline for the Renters (Reform) Bill
The bill is currently going through the House of Commons, following the process:
- First reading: May 2023.
- Second reading: October 2023.
- Committee stage: November 2023.
- Report stage: Current stage
- Third reading: TBC
How the Renters (Reform) Bill will impact landlords
The key elements of the Renters (Reform) Bill landlords should be aware of include:
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The abolition of section 21
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The end of fixed term tenancies
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Changes to landlord grounds for possession
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Renting to tenants with pets
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A landlord portal and a requirement to join a new ombudsman scheme
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Changes to how rents are reviewed and increased notice periods
When will the Renters (Reform) Bill take effect?
In May 2023, the Bill was announced to Parliament and over the next year or so, it’ll be making its way into law in England, prompting some landlords to worry about the terms for their future let.
“No landlord needs to sell their property” advises Toby Phillips. “The Bill will allow landlords to seek possession on that ground. They will also have strengthened grounds for rent arrears and anti-social behaviour.
“Put simply, landlords are currently getting the highest rent ever and have the best choice of tenants and this shouldn’t change anything.”
The abolition of section 21
One of the most publicised elements of the Renters (Reform) Bill has been the abolition of section 21 evictions.
Why was this change made? Also known as ‘no fault’ evictions, abolishing section 21 will mean only tenants can end agreements with no reason by giving two months’ notice to their landlord. This is designed to empower renters to challenge poor landlords without fear of losing their home.
This means tenancies will only end if the tenant decides to or if a landlord has grounds for possession under section 8.
What does this mean for landlords? According to Toby Phillips, it won’t have too much of an impact. “Since only around 6% of tenants are evicted this way, this shouldn’t have too much of an effect on landlords.”
“In fact, the Bill proposes to add additional grounds for possession to section 8, while also strengthening existing grounds and improving the court process – making it easier for landlords to regain possession under certain circumstances.”
The end of fixed term tenancies
The abolition of fixed term tenancy agreements would mean that all tenancies would instead be periodic from day one. Any attempt by landlords to create a fixed term tenancy or serve a notice to quit, can result in a fine from the local authority.
Why was this change made? The end of fixed term tenancies would give tenants more flexibility than they currently have, since they would be able to leave at any stage of their tenancy by giving two months’ notice to their landlord.
What does this mean for landlords? Will this prompt tenants to leave their rental properties early? Toby Phillips doesn’t think so.
“When this was introduced in Scotland, it had very little effect on landlords as it’s not cheap to move. Tenants will need to find another deposit and set up all of their utilities again.”
“In fact, as part of a revised section 8, landlords would be able to give a tenant two months’ notice should they wish to sell or move into their rental property, while notice periods for other grounds (anti-social behaviour, rent arrears, etc) will continue to vary.”
Holiday lets
Many landlords rent their properties on assured shorthold tenancies (ASTs) during winter, before using their properties as short term holiday lets during summer.
With no section 21, those landlords would have no certainty of vacant possession ahead of the summer holiday let season.
Student lets
Student rentals usually run from September to June each year in a repeating cycle.
Concerns arose among student landlords and agents about potential problems if student tenancies were switched to ongoing leases. In response, the government enhanced a provision during the committee phase, allowing landlords to reclaim their property more easily at the end of the academic year.
Landlord grounds for possession
With section 21 abolished, the Renters (Reform) Bill would expand grounds for possession under section 8, as well as pledging to improve the court process for landlords.
A revised and expanded section 8 will give landlords the power to:
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Move either themselves or close family into a rental property.
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Sell a rental property.
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Regain possession from tenants in rent arrears.
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Regain possession from anti-social tenants.
Most section 8 grounds would become mandatory as part of the Bill, meaning judges would have to rule in favour of landlords who are able to prove grounds for possession have been met.
Moving family into a rental property
Although landlords can use section 8 grounds for possession if they wish to move into their rental property, the rules can’t be used to move children or other family members in.
The Renters (Reform) Bill would allow this, however, with revised grounds for possession.
However, a landlord would not be able to use this ground until six months of a tenancy had expired, and they would need to give a tenant two months’ notice of their intention.
Selling a rental property
Landlords who wish to sell their rental property and don’t wish to do so with tenants in situ will be able to use a section 8 ground for possession under the Renters (Reform) Bill.
Tenants will need to be given two months’ notice of the intent to sell, and this ground can only be used once a tenancy agreement has run for at least six months.
The current mortgage repossession ground will remain in place.
Rental arrears ground amendments
Even if a tenant isn’t in rental arrears at the time, landlords will be able to issue a section 8 notice if they have previously been in two or more months of arrears on three or more occasions over three years.
If this mandatory ground is proven, landlords will only need to give the tenant four weeks’ notice to leave the property.
Anti-social behaviour ground amendments
In the case of serious anti-social or criminal behaviour from a tenant, notice periods will be reduced to two weeks.
No more blanket bans
Currently, landlords can enforce blanket bans on tenants with children or those on benefits, but this will end if the Renters’ (Reform) Bill becomes law.
Renting to tenants with pets
Under the new Bill, tenants would be allowed to keep a pet, as long as the landlord consents within 42 days of the request being made.
Why was this change made? Making consent for pets a default position is the government’s first step towards more pet-friendly rental properties. Now consent cannot be unreasonably refused or withheld by landlords and tenants will also be able to challenge refusals, giving them more power over their let.
What does this mean for landlords? Although the Bill pledges to ensure landlords can’t unreasonably withhold consent when a tenant requests to keep a pet, landlords can insist their tenants take out pet insurance. The Tenant Fees Act would be amended to allow pet insurance as a chargeable fee.
As for how this will work in the future, it is evident that more detail is needed. For instance, it’s unclear how the law would work for properties such as flats where pets are banned in the lease, or for Houses in Multiple Occupation (HMOs) where other tenants’ needs would have to be considered.
Landlord portal and ombudsman
Landlords would be required to sign up to a mandatory private renters’ ombudsman under the Renters’ (Reform) Bill.
A new property portal would also be introduced under the Bill, with landlords required to register their properties.
Why was this change made? The portal would be in place to give tenants more information on the standard of the property they wish to rent and local councils more details should any dispute or problems arise.
What does this mean for landlords? Landlords whose properties are managed by a letting agent already benefit from mandatory redress, but the ombudsman would also be in place to help settle disputes with tenants away from court hearings.
Rent reviews and increase notice periods
Landlords would be restricted to one rent review per year under the Renters (Reform) Bill, with notice periods for a rent rise increased to two months.
Why was this change made? This change is designed to stop landlords from making sudden, considerable and frequent increases to rent. Furthermore, tenants will also be able to challenge a rent increase if they deem it to be unfair.
What does this mean for landlords? Landlords will only be able to increase rents using the section 13 notice procedure, which can then be challenged by tenants. As well as this, rent increase clauses in the tenancy agreement will be banned.
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