In this blog we pick out the key aspects of the long-awaited and now finally published Renters Reform Bill and highlight what they mean to landlords, agents and tenants. The bill has taken some five years to consult on and to refine, with its stated aim being to improve the leasehold system through increased regulation, digitisation and standardisation. It is worth noting that even though the bill had its first reading in the commons on 17th May, it is likely to take the rest of the year to make its way through parliament, with possible amendments along the way.
1. No More ‘No Fault’ Evictions – Abolishment Of Section 21.
Under this part, Section 21 ‘no fault’ evictions will be abolished. The biggest concern for landlords is not being able to move their tenant on quickly if required, as landlords will only be able to evict their tenants under the new reformed Section 8 Notice. They will still be able to serve notice on their tenants should they wish to move themselves or a family member back in (Ground 1) or sell the property (Ground 1A) both of which being mandatory grounds so the judge must reward possession, so it is vital for you as the agent to ensure all relevant paperwork is served at the start of the tenancy.
2. Section 8 Notices – Rent Arrears & Grounds For Possession
Although Section 21’s are to be abolished, there will be new mandatory changes made to the Section 8 Notice to evict tenants who fall into rent arrears, making it easier for landlords to evict them under this notice.
Under Ground 8A, if the tenant has been in two months rent arrears three times or more over a three-year period, the landlord or agent can serve notice for possession. This will help prevent scenarios where a tenant is in two months arrears or more, possession is applied for and then the tenant clears these so proceedings stop.
Should the tenant be convicted of a serious criminal offence whilst either residing in the property or this happens whilst on the grounds of the property, under Ground 7A the landlord or agent can serve notice immediately. This has been changed from 4 weeks’ notice. This again is mandatory so the judge will need to grant possession and once granted will take 14 days – which is still sooner than the previous 4 weeks’ notice.
Ground 14 will allow the landlord or agent to serve notice on the tenant if the tenant is causing nuisance to either the agent or landlord. This is not a new ground brought in with the bill but will need to be used instead of the section 21 used previously.
Overall, landlords will be able to serve notice on their tenants should they require to sell the property, the tenant be in arrears, or causing antisocial behaviour.
3. Section 13 Notices – Rent Increases
At present, under certain tenancies this can be done throughout the tenancy by serving a section 13. The new bill is proposing that landlords will only be able to increase the rent on a property once a year and must give tenants two months’ notice before this can take effect, this notice previously being one month.
These increases cannot be over and above market value and if the tenant feels they are they can challenge them through a tribunal.
4. No More AST’s – Assured Tenancies
The bill has proposed that Assured Shorthold Tenancies are a thing of the past and in its place will come Assured Tenancies. Under the Assured Tenancies there will be no fixed terms and no tenancy can have an ‘official’ end date. There are no exceptions to this rule meaning all tenancies will be ‘periodic’ but tenants will need to serve two months’ notice.
Rent periods will be deemed as a minimum of 28 days and rent will be paid at the start of the period. If a tenant serves notice halfway through a rental period, they will be liable until the end of that period.
5. Renting To Tenants With Pets – Greater Protection
Under the bill, a landlord will no longer be able to discriminate against a tenant who has a pet unless evidence can be shown in a ‘superior lease’ that pets are not allowed. In most cases, a ‘superior lease’ will apply to apartment blocks. However, the landlord can request the tenant to take out a pet insurance to cover any potential damage caused to the property, this will be at the tenant’s cost.
The landlord will have 42 days to respond to a pet request and must provide suitable evidence should they decline. This timeframe can be extended should both landlord and tenant agree or if the landlord requests further information from the tenant, at which stage they will have a further 7 days to provide an answer.
6. A New Landlord Ombudsman – Membership For Landlords
Landlords will be required to register with a government approved ombudsman just like Letting & Estate Agents currently do. This is compulsory even if using an agent and they will be required to pay an annual fee to do so.
Under this, tenants will be able to complain to this body in the event of them having issues with their landlord throughout or after the tenancy in situations where the standard of the property or the service provided to them by the landlord during the tenancy is below satisfactory.
It is not yet confirmed the exact powers the ombudsman will have. These might range from asking the landlord to apologise to the tenant, asking them to rectify any ongoing maintenance issues or fine them up to £25,000 in compensation in severe cases.
7. Landlord Database – Property Information All In One Place
The government’s focus on ensuring homes are safe for tenants continues through the creation of an online database which will replace the current ‘Rogue’ landlord database. This database will include details of people who are, or who intend to become, residential landlords, and details of properties which are, or are intended to be let as residential properties. Also included will be information relating to landlords who have received banning order or financial penalties or convictions relating to banning orders.
Landlords will need to apply online to be a part of this database, the database will not be public, and tenants will need to request access as they will only be able to view the information should they have a legitimate interest.
It will be the agent’s responsibility to check that the landlord is registered on this database and they can expect to be fined £5,000 if they market a property that isn’t on the database. For repeat offenders this will increase to £30,000.
It is important to note that while this legislation has had its first reading in parliament, there may be amendments to the bill over the rest of 2023 as it progresses through the steps needed to get to final legislation. If you would like further information or support in understanding how this proposed legislation may affect your portfolio, please don’t hesitate to get in touch and we will be happy to help further.