The private rented sector remains a crucial part of England’s housing supply, accommodating a significant portion of the population. Despite being subject to continuous changing legislation the industry is about to see the biggest reform in a generation with the introduction of the Renters (Reform) Bill.
The Bill has already been introduced to Parliament and will be undertaking its 2nd reading in the Autumn. This blog seeks to confirm the key points and dispel the myths currently creating unnecessary confusion in the market.
The End of the ‘no fault’ s.21 Possession Notice:
One of the core provisions of the Bill is to abolish the existing Section 21 notice of the Housing Act 1988. This has been the primary route to obtaining vacant possession for a landlord for over 30 years enabling a property owner to request a tenant to leave in a set time frame on a statutory or periodic tenancy (usually two months on a standard monthly tenancy).
The removal has led to landlord concern that in the event of a change in circumstances there may be no route to obtaining vacant possession. This is a myth and under other sections of the Bill there will be an increasing number of routes to possession via the s.8 notice where – and only where – there is genuine requirement.
For tenants the Bill strikes a balance of offering increased security through an indefinite right to remain in the property in a normal scenario. They cannot be subject to arbitrary evictions and are better protected from rogue landlords.
A move to Periodic Tenancies:
The Bill will see the end of the current Assured Shorthold Tenancy (AST) agreement that most are familiar with, which will be replaced with a simpler Assured Tenancy. Unlike fixed term AST’s that have a defined end date, these tenancies will be periodic from their commencement date.
Tenants can be assured of having a secure tenancy unless the landlord triggers one of the legitimate s.8 reasons for requiring possession which will be discussed shortly.
Whilst this in theory does mean a tenant has the ability to vacate shortly after taking occupation it is worth noting that most ASTs are left to hold over on a periodic basis currently, and with supply short in the sector tenants are generally looking for longer term commitments & stability. A key point is that the required notice period from a tenant on a standard monthly tenancy will move to a two- month period giving landlords more time to plan for re-letting in the event of a tenant vacating.
Rent Increases:
Rent increases will be governed by the statutory S.13 notice process as many utilise under existing legislation at present. Under a monthly tenancy this will allow an independent rent review at annual anniversaries of the tenancy, subject to an increased two-month notice period giving tenants more time to financially plan.
The Bill makes no mention of Rent Control so it will be left for landlords to review market rates in relation to the economy, and tenants will still retain the right to appeal via Tribunal.
Changes to S.8 Notices:
With the loss of s.21 comes the reform of the s.8 notice. This aims to simplify the process for landlords to regain possession of rental properties where there is genuine reason which includes anything from rent arrears to anti-social behaviour, or any other breach of tenancy.
It will also cover legitimate changes in landlord circumstances that may require for example a need to sell, or move a relative into the accommodation. A full list of the grounds can be found here.
Tenants retain greater security with the absence of the ‘no-fault’ eviction, but landlords do not lose control to manage their investment in what is a constantly changing environment.
Other key elements:
Property Ombudsman:
The existing requirement for an agent to be a member of a mandatory Ombudsman service will extend to landlords bringing a fairer sector where private landlords and those using regulated agents have the same code of conduct to abide to.
The simplification to a single Ombudsman will also reduce confusion in the marketplace so that tenants (and landlords) know where to turn if they are the subject to a breach of regulations.
Property Register:
Whilst the details are still to emerge, there is an expressed desire to have a formal register or ‘Private Rental Sector Database’ which will require landlords to be listed, properties to be detailed, and naming of rogue landlords via a list of those subject to banning orders. This database aims to improve regulation and accountability within the rented sector – protecting landlords who operate within the law and ensuring those that are not can easily be identified and prosecuted.
Written Tenancy Agreements:
To enhance transparency and clarity, the bill mandates landlords to provide written tenancy agreements and terms before the start of the tenancy. This ensures that both parties are aware of their rights and responsibilities from the outset.
As the Bill goes through the various readings in Parliament before becoming law there will be more detail released and possible amendments to existing details.
There is no exact date for the Bill to become law but given the Government’s existing pledges and manifesto we would anticipate it coming into place for new tenancies later in 2024 prior to the General Election, with a back stop date for existing tenancies perhaps set for 2025.
If you are a landlord and wish to speak with us about how the proposed Bill can affect your property or portfolio, then please get in touch via our contact us page.