The Renters Reform Bill was unveiled by the Government in May representing a seismic shake-up of the private rented sector, perhaps the biggest in over 30 years. The Renters Bill sets out the Government’s plans to fundamentally reform the private rented sector (PRS) and level up housing quality and "bring in a better deal for renters". This bill follows almost a year after the publication of the ‘A Fairer Private Rented Sector’ White Paper in June 2022 which set out its long-term vision for the private rented sector.
Most of the measures proposed in the White Paper were included in the Bill published in May 2023, with a few exceptions that will be considered as "further improvements". This includes requiring rented properties to meet the Decent Homes Standard and making it illegal for landlords and agents to have blanket bans on renting to families with children or those in receipt of benefits. The White Paper proposed measures such as making all tenancies periodic, doubling the notice periods for rent reviews, establishing a new property portal, a requirement for all privately rented properties to and a new property Ombudsman in an attempt to improve the system for the 11 million private renters and 2.3 million landlords in the UK.
The Renters Reform Bill includes a host of reforms, including a ban on no-fault evictions. The backbone of the Bill is a ban on landlords evicting tenants who have done nothing wrong. A long-running issue has seen landlords use Section 21 of the Housing Act to break contracts to bring in new tenants paying higher rent. The abolishment of no-fault evictions was a Conservative Manifesto pledge back in 2019, so the Bill has been a long time coming. The Government says the changes will 'empower renters to challenge poor landlords without fear of losing their home'.
In place of section 21, the Bill outlines proposals to strengthen section 8. This allows a landlord to end a tenancy agreement early if they have a legal reason to do so. This includes the introduction of a new mandatory ground for repeated serious rent arrears, and it will be made easier to evict tenants for anti-social behaviour. The Bill will broaden the disruptive and harmful activities that can lead to eviction and make it quicker to evict a tenant acting anti-socially. New repossession grounds in Section 8 are also set to be introduced for landlords who wish to sell their property or want to move themselves or family members into it. This can apply after a tenant has been in a property for at least six months.
The Government has committed to work in partnership with the Ministry of Justice (MOJ) and HM Courts and Tribunals Service (HMCTS). In the White Paper, the Government stated its intention to introduce a package of "wide-ranging court reforms that will target the areas that particularly frustrate and hold up possession proceedings". The Bill confirms the Government's ambition to simplify existing tenancy structures, by moving all Assured Shorthold Tenancies onto a single system of periodic tenancies.
Assured Shorthold Tenancies are currently the most standard type of rental agreement in the private rented sector. It is a common process for tenants to enter a contract of six or twelve months. After this time has elapsed, a decision would be made to either renew the contract or switch to a periodic (e.g., month-by-month) payment. Instead, the Renters (Reform) Bill proposes that all rental properties will be under a periodic tenancy, rolling by every month without having a specified end date. The proposals outline that tenants would then need to provide two months’ notice when leaving a tenancy, to "ensure Landlords can recoup the costs of finding a Tenant and avoid lengthy void periods". In addition, landlords would only be able to evict a Tenant under "reasonable" circumstances.
In a move to combat the cost-of-living crisis, rent increases will be limited to once per year and the minimum notice landlords must provide of any change in rent will be increased to two months, according to last year's White Paper. The Renters’ (Reform) Bill outlines plans to end the use of rent review clauses, "preventing tenants being locked into automatic rent increases that are vague or may not reflect changes in the market price" and says that "any attempts to evict tenants through unjustifiable rent increases are unacceptable". In cases where increases are disproportionate, the Government will "make sure that Tenants have the confidence to challenge unjustified rent increases through the First-tier Tribunal" and it will "prevent the Tribunal increasing rent beyond the amount Landlords initially asked for when they proposed a rent increase".
Under the Bill, tenants will have the right to request to keep a pet in their rented property. Landlords will be expected to consider all requests and won't be allowed to unreasonably refuse them. If they do so, the tenant will be able to challenge the decision. The Bill is slightly stricter than the White Paper as it indicates that a tenant must provide in writing confirmation that they have acquired insurance for their pet, or that they are willing to pay the landlord reasonable costs to cover the landlord's insurance in case of pet damage.
Landlords "may" be required to join a Government-approved Ombudsman covering all private landlords who rent out property in England regardless of whether they use a letting agent. A landlord redress scheme would enable a former or current tenant to be able to make a complaint against a landlord, which would then be independently investigated. The Ombudsman would have powers to "put things right for tenants", including compelling landlords to issue an apology, provide information, take remedial action, and/or pay compensation of up to £25,000.
The Government also intends for the ombudsman to be able to require landlords to reimburse rent to tenants where the "service or standard of property they provide falls short of the mark". The Ombudsman’s decision will be binding on landlords, should the complainant accept the final determination and failure to comply with a decision may result in repeat or serious offenders being liable for a Banning Order. It will be mandatory for landlords to join a scheme, and they will not be able to let out or advertise a property if they are not part of one. The White Paper states that "making membership of an ombudsman scheme mandatory for landlords who use managing agents will mitigate the situation where a good agent is trying to remedy a complaint but is reliant on a landlord who is refusing to engage". It will also ensure that tenants have access to redress services in "any given situation and that landlords remain accountable for their conduct and legal responsibilities".
A new digital Property Portal will be introduced to "provide a single ‘front door’ to help landlords understand, and demonstrate compliance with their legal requirements". The Government claimed that "too often tenants find out too late that they are renting a substandard property from landlords who wilfully fail to comply, and councils don’t know whom to track down when serious issues arise". The nature of the portal is yet to be determined, with the Government to conduct extensive testing of potential solutions for the portal to make sure the system works for tenants, landlords and local councils". The portal should be flexible enough to support future policy developments, "supporting efforts to raise standards in the sector and reduce the number of non-decent rented homes by 50% by 2030". This could include a system where Landlords and agents must meet minimum standards before properties can be let.
Landlords will be legally required to register their property on the portal and local Councils empowered to take enforcement action against private landlords that fail to join the portal.
The Property Portal will increase the local council’s ability to enforce against criminal landlords with plans to incorporate some of the functionality of the existing Database of Rogue Landlords and Property Agents.
Further legislation is due to be added to the Bill later down the line, including a better standard of homes. The White Paper suggested that there would be the introduction of minimum housing standards requirements that would require privately rented homes to meet the Decent Homes Standard which currently only applies to the social housing sector. It outlines that homes must be free from serious health and safety hazards and landlords must keep homes in a good state of repair, so renters have clean, appropriate, and useable facilities.
The Government hopes to make it illegal for landlords or letting agents to have blanket bans on renting to families with children or those in receipt of benefits. The Government says everyone should have access to safe and secure housing, regardless of whether they are receiving benefits. Households with dependent children make up 30% of the private rented sector, and 26% of those receive housing benefits to help with rent payments.
The Bill will need to pass through Parliament before becoming law. With the Government's proposals now revealed, it will start its journey through the House of Commons and House of Lords, before receiving Royal Assent which is when it formally passes into law. This process will likely take months, so the reforms may not be implemented until 2024.
Click here for further detail on the Renters (Reform) Bill.
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