Since the Rental Reform Bill was first announced five years ago, there have been a significant amount of changes made to it and here we explain some of the main points of the passed bill and what they mean for you as a tenant and a landlord
The Renters Reform Bill has been passed in Parliament – but what does it now offer for renters and landlords?
After five years since promising huge change, the Tories took their Renters Reform Bill to the Commons this week where MPs considered the new amendments before making their final vote. The bill was passed yesterday, and it is now making its way to the House of Lords. However, since it was first announced, there have been a significant amount of changes.
One of the major amendments was that promised manifesto ban on Section 21 notices – known as a “no fault eviction” notice – would only pass once a probe into the courts had been held. But, this clause offered no timeline meaning there is no clear date for when it could potentially introduced. Lots of criticisms have been made about the bill with the main one accusing MPs of “watering” it down to offer landlords more support and tenants less.
Once in the House of Lords, the Bill will go through the same stages as in the Commons. This includes an initial first and second reading, then a more detailed committee stage, before returning to the full Lords chamber for a third reading. If accepted, it will then go on to receive Royal Assent which will officially make it law. However, the implementation date is uncertain according to the Tenancy Deposit Scheme (TDS) service. This is due to the upcoming General Election, as once one is called, it could potentially push back the Bill. This means there is no certainty that it will be delivered this year.
Here we explain some of the main points of the Government’s Rental Reform Bill and what they mean for you as a tenant or landlord.
End to fix term tenancies
The Renters Reform Bill will abolish fixed-term tenancies for renters. This means you will no longer be able to sign contracts which have a concrete timeline for the tenancy – such a one-year fixed tenancy, or two-year tenancy. Instead, all tenancies offered will be moved onto a single system of monthly “rolling” tenancies. These are tenancies which once signed simply are ongoing each month and have no set end date. According to the bill, all tenants who would previously have had an assured tenancy or assured shorthold tenancy will move onto rolling tenancies.
Ban on Section 21 notices and eviction notices
As mentioned before, Section 21 notices are the controversial legal power that allows landlords to evict tenants from their properties at two months’ notice without needing to give any reason. These will be abolished, eventually. However, before being introduced the Government has said it will publish a review into the operation of residential possession proceedings and the enforcement of possession orders in the County Courts used by landlords and tenants.
However, possession notices can still be made. Under proposals, landlords will be able to regain their properties if they or their family want to live in it, or they wish to sell it. The notice for this will be the same as Section 21 at two months. If a landlord issues this notice, they will be banned from reletting or remarketing their property within three months.
Landlords will also be able to issue eviction notices if tenants have been in at least two months’ rent arrears three times within the previous three years. This notice period will be increased to four weeks from two weeks. The Bill will also expand the existing ground to evict tenants who exhibit anti-social behaviour. This includes behaviours “capable of causing” nuisance or annoyance. Currently, the landlord must demonstrate that a tenant’s behaviour is “likely to cause” a nuisance or annoyance. On this ground, landlords can begin eviction proceedings immediately.
Introducing a six month fixed-term in all tenancies
This new clause will see tenants unable to give notice on their lease until they have lived in the property for four months unless agreed to by the landlord in writing. This means the earliest tenants can give notice after living in the property for four months – with two months’ notice – so six months overall. The amendment was introduced in order to give landlords more assurance. The bill does include a number of exemptions, such as the death of a tenant, domestic abuse, or significant hazards in the property.
Rent increases
No rent caps have been announced in the legislation, and landlords will be able to raise rents “annually” to “market prices”. This means landlords will be able to raise rents once a year to match the price of other properties in the area e.g. what they could expect to receive if letting a new tenant.
Alongside this, landlords will also need to provide two months’ notice of any increases to rent. This is from the one month a landlord has to provide now with a rolling contract tenancy. Tenants will also be able to challenge above-market rent increases through the First-tier Tribunal in the property chamber. This proposal aims to prevent above-market rent increases from being used to force tenants to vacate a property.
Renting with pets
The Bill also states that landlords cannot “unreasonably” withhold consent when a tenant requests to have a pet in their home. If a landlord declines, then challenge their decision through the Ombudsman. The Bill does not include information about those who already have pets who are looking to move into a property. The Bill will also reform the Tenant Fees Act 2019 so that landlords can require insurance to cover any damage caused by pets living in the property, although this will not apply to tenancies of social housing.
Preventing bidding wars
A proposed amendment will also prevent landlords or agencies acting on their behalf from inviting or “encouraging” bids that exceed the rental price stated in the advertised price. For example, landlords would not be allowed to say: “I would let the property to you, but I’ve had another offer of £200 above the advertised price, I would give this property to you if you offered £250 more.” The measure has been proposed to prevent the inflation of prices caused by over-bidding.
The need for guarantors
This new clause would prohibit landlords from requiring tenants to provide rent guarantors or equivalent upfront payments to secure a property. A guarantor is someone who agrees to pay your rent if you don’t pay it and many low-income renters have to provide one to rent a home.
There are no set rules of who can be a guarantor and it depends on the landlord or agency you are renting from. Commonly, a guarantor will need to be a homeowner and have good credit. Often, people cannot be guarantors if they claim a pension or benefits, are not homeowners, or have a low income. Currently, this means those who do not have this type of support around them can lose out on properties. The bill also bans letting agents and landlords from prioritising those who can offer them over those who can’t.
Blanket bans on renting to families with children or claiming benefits
The Bill has kept the proposal which will make it illegal for landlords and agents to have blanket bans on renting to families with children or those claiming benefits. This is known as a “no DSS” policy and is currently allowed in the rental market.
Fines for landlords that break the rules
The Bill adds new provisions to the Housing Act 1988, to introduce financial penalties for landlords who breach the rules. This includes rules relating to the misuse of possession grounds.
Local housing authorities will be able to impose financial penalties of up to £5000 when a landlord or former landlord has contravened provisions in the Rental Reform Act. If the landlord is found guilty of an offence through the courts, they may be liable for a fine of up to £30,000 or prosecution. There is a minimum fine limit of £500.
Private Rented Sector Database and the PRS Ombudsman
The Bill also confirmed that the Government will create a Private Rental Sector (PRS) Ombudsman which will offer a redress scheme for private renters. It will also prospective, current, and former residential landlords to register with the redress scheme. This new database is the basis for the future “Privately Rented Property Portal service” and will include existing residential landlords, prospective residential landlords and properties which are, or intend to be, rented in the private rental sector.
The database will also record when landlords are subject to banning orders, have been convicted of other offences under the bill, have received a fine for breaching the rules, or if they are subject to any other regulatory action.
