What is the Renters Rights Bill?
The Renters Rights Bill (“RRB”) is the biggest change to the lettings sector in a generation. It will alter the balance of power between landlords and tenants.
The three main political parties all campaigned on a manifesto which included a commitment to pass RRB. Landlords may remember the previous government’s Renters Reform Bill that did not quite manage to pass into law.
Why is the Renters Rights Bill being introduced?
The stated aim of RRB is to improve security for tenants. This means removing ‘no-fault’ Section 21 eviction notices, increased regulation and oversight over rent increases, and removing fixed term contracts. The general idea is that as long as a tenant behaves normally they should expect to be able to live in a home for as long as they like.
When can we expect RRB to become law?
It will pass parliament likely in the next few months but it will be brought into force on a date to be confirmed. The housing minister has suggested that RRB will come into force in Summer 2025 but aims to give “as much notice as possible” to the sector, so it should not come as a surprise.
What the Renters Rights Bill means for Landlords
No More Fixed-Term Tenancies
Landlords will be familiar with fixed term tenancies. Although it has always been possible to create purely periodic contracts, a lot of landlords – and tenants – prefer the security that comes with a fixed term as it means there is no scope for either party to serve notice.
In a purely periodic system a tenant will still be able to give notice to end the tenancy but, unless a landlord has a ground to rely upon (see below), they have no way of ending the tenancy.
Restrictions on Rent Increases
A landlord can currently include a rent increase clause in a contract that allows for a periodic adjustment of the rent. Rent increase clauses are banned under RRB and the only method of increase is for a Section 13 Notice to be served. Section 13 Notices already exist; they can be given in a periodic contract every year and the rent increase can be inline with ‘market rates’. The tenant can challenge a Section 13 Notice by applying to the Property Tribunal who will then set what they think is a market rate as well as set a deferred date on which the tenant must start to pay that increase. If a Section 13 Notice is challenged then the rent increase does not take effect until the date the tribunal set.
No Bidding Wars
A property must be marketed with a clear rent. A landlord cannot accept a bid from a tenant above that rate. Essentially, the rent is capped at whatever the landlord markets the property at. Some landlords may want to set a rate higher than they expect to receive as it allows them scope to accept the highest bid.
Enhanced Eviction Grounds
Whilst RRB does remove Section 21 notices, it does provide for new Section 8 ‘grounds for possession’ which means, if the circumstances apply, a landlord can still recover possession. The two key grounds that landlords are interested in is Ground 1 (which already exists, but has been amended) and Ground 1A, which is entirely new.
Ground 1 is where a landlord, or a member of their family, wants to move back into the property. Ground 1 as currently written requires a landlord to have given notice to the tenant before they moved into the property that the landlord might want to move back in. The amended Ground 1 removed the pre-notice requirement so the landlord has greater flexibility should their circumstances change in an un-anticipated way.
Ground 1A is where a landlord intends to sell the property. This is an entirely new ground and the sale of the property is likely a major reason why Section 21 notices are currently served. A landlord does not need to have the property on the market for sale, nor does there need to be a buyer; there simply has to be an intention to sell.
Both Ground 1 and Ground 1A come with a ‘prohibition period’ in that if the landlord re-lets the property within 12 months of the notice expiring then the tenants and local authority can claim/fine them. See Strengthen Rent Repayment Orders below.
Landlord Register
Landlords will need to join a register to provide information about themselves and the properties they intend to rent out.
Why is a landlord register important?
The intention is that it will provider greater transparency into the quality and quantity of housing stock available in an area, as well as making enforcement of rogue landlords easier for local authorities.
Strengthen Rent Repayment Orders
Rent Repayment Orders (RROs) are a mechanism whereby a tenant can claim back up to 12 months’ rent from a landlord who has committed a housing offence. Some examples of current offences are failure to apply for a housing licence and unlawful eviction. The offences for RROs will be expanded to include relying on Ground 1 and 1A to evict a tenant and then re-letting the property within the prohibition period and failure to join the landlord register or ombudsman.
Strengthen local authority enforcement
Note: it doesn’t really do this
Pets in Properties
There will be a process for tenants to request that they are allowed pets in a property. A landlord will need to respond within a few weeks and, unless they have a very good reason to refuse, permission must be granted. Some examples of good reasons will be if there is some form of third party consent required, as may be common in blocks of flats.
What the Renters Rights Bill means for Tenants
Section 21 ‘no fault’ evictions abolished
Section 21 notices allowed for two months’ notice to be given to end a tenancy outside of its fixed term. This meant that tenants had a perpetual threat of eviction and there was nothing they could do about it.
How will scrapping section 21 reform renting?
The intention is that tenancies will last longer simply because it will be harder to evict a tenant.
Fairer possession grounds
With Section 21 notices a thing of the past, a Section 8 Notice will be the only way to recover possession of Assured Tenancies. A Section 8 Notice must provide a ground and this means the tenant will be given a reason – even if it a reason that the tenant does not like – for the eviction. Currently a landlord has no obligation to explain why a Section 21 Notice is served.
That said, Ground 1 and Ground 1A are both fulfilled in circumstances that are unrelated to the tenant’s behaviour so there will still be some ‘no fault’ evictions, but there are recourses if those grounds are abused which do not currently exist because Section 21 notices do not require a reason.
Protect against backdoor eviction via rent rises
With additional oversight on rent increases it is hoped that a landlord could not increase the rent to a level that the tenant cannot afford. In practice, the ‘market rate’ may well be unaffordable for a tenant particularly given the increase in rents compared to the average wage over recent years.
Introduce a new Private Rented Sector Landlord Ombudsman
Letting agents currently have to be a member of several government approved ombudsman to ensure that if a complaint is not adequately dealt with then the complainant has recourse. This principle is being applied to landlords, particularly those who self-manage.
Further protection from discrimination
Currently a landlord cannot discriminate against someone who has a ‘protected characteristic’ such as disability, sexuality or gender. The list of protected characteristics is being expanded to those in receipt of government benefits and tenants with children. It has not been advisable to overtly market a property as ‘no benefits, no children’ for some time, but this makes it an actual offence.
Improved housing standards
RRB will introduce a ‘Decent Homes Standard’ but this has not yet been fully fleshed out. This is new in that most obligations on landlords are to do with property maintenance and repair; these standards include a requirement to update facilities simply owing to their age.
Awaab’s Law
Awaab’s Law requires specific timescales between disrepair being reported, an investigation taking place and work starting. Currently the requirement is for works to take place in a ‘reasonable’ period of time. The exact periods underwent consultation and it suggested 14 days to investigate and 7 days to start work. The requirement is for works to start within 7 days, not for works to be completed. Emergency repairs must take place within 24 hours. The consultation has not yet been converted into law so these timeframes have not been finalised.
