Renters Reform Bill: What Does It Mean For Landlords?

The long-awaited Renters Reform Bill has finally been published, aiming to improve the leasehold system through increased regulation and standardisation. In this blog, we will highlight the key aspects of the bill and discuss their implications for landlords and tenants. Although the bill had its first reading in the commons on May 17th, it is expected to take the remainder of the year to navigate through parliament, possibly undergoing amendments along the way.

1. Abolition of Section 21: No More 'No Fault' Evictions

The most significant change in the bill is the abolition of Section 21 'no fault' evictions. This change raises concerns for landlords who may no longer be able to swiftly remove tenants when necessary. Instead, landlords will have to rely on the reformed Section 8 Notice for evictions. They can still serve notice if they need to move a family member or themselves in (Ground 1) or sell the property (Ground 1A), both of which are mandatory grounds for possession.

2. Section 8 Notices: Rent Arrears & Grounds for Possession

Although Section 21 will be abolished, new mandatory changes will be made to the Section 8 Notice, facilitating the eviction of tenants who fall into rent arrears. Ground 8A allows landlords to serve a notice for possession if the tenant has been in two months' rent arrears three times or more over a three-year period. This prevents situations where tenants temporarily clear arrears to halt proceedings. Ground 7A permits immediate notice if the tenant is convicted of a serious criminal offense while living in the property or on its grounds. Ground 14 can be used to serve notice if the tenant causes nuisance to the agent or landlord. In summary, landlords will have options to serve notice for property sale, rent arrears, or criminal behaviour.

3. Section 13 Notices: Rent Increases

Under the current system, landlords can serve a Section 13 notice to increase rent at any point during a tenancy. However, the bill proposes that landlords will only be able to raise rent once a year and must provide two months' notice. Additionally, these increases cannot surpass market value, and tenants can challenge them through a tribunal if they feel they are unfair.

4. No More Assured Shorthold Tenancies (AST)

The bill proposes the elimination of ASTs and their replacement with Assured Tenancies. Under Assured Tenancies there will be no fixed terms and no tenancy can have an 'official' end date. All tenancies will be 'periodic', but tenants will need to serve two months' notice to terminate the agreement. Rent periods will be at least 28 days with rent due at the start of each period. If a tenant serves notice midway through a rental period they will be liable until the end of that period.

5.  Greater Protection for Tenants with Pets

The bill ensures that landlords cannot discriminate against tenants with pets unless a 'superior lease' specifically prohibits them (e.g. in apartment blocks). Landlords may request tenants to obtain pet insurance to cover potential property damage, which would be at the tenant's expense. Landlords will have 42 days to respond to a pet request and must provide suitable evidence if declining. This timeframe can be extended with mutual agreement or if the landlord requests further information, granting an additional 7 days for a response.

6. A New Landlord Ombudsman: Membership for Landlords

Similar to Letting & Estate Agents, landlords will be required to register with a government-approved ombudsman. This registration will be mandatory, even when using an agent, and landlords will need to pay an annual fee. Tenants will have the right to complain to this body in case of issues with their landlord during or after the tenancy regarding property standards or unsatisfactory services. The specific powers of the ombudsman are yet to be confirmed but are likely to range from requesting apologies or resolving ongoing maintenance issues to imposing fines of up to £25,000 in severe cases.

7. Landlord Database: Consolidating Property Information

To ensure tenant safety, the government will establish an online database that replaces the current 'Rogue' landlord database. This database will include details of current or prospective residential landlords and properties intended for residential letting. It will also contain information regarding landlords with banning orders, financial penalties, or relevant convictions. Landlords will need to apply online for inclusion in this database, which will not be public. Tenants can request access to view the information only if they have a legitimate interest. Agents will be responsible for verifying landlord registration on the database and may face fines of £5,000 for marketing properties not listed, increasing to £30,000 for repeat offenses.

It is important to note that the bill is still in progress, and further amendments may occur during the remaining course of 2023 before it becomes final legislation.

If you want to understand how this proposed legislation may impact your portfolio, get in touch with us and we will be glad to provide further support.