The Renters’ Rights Bill has been highly debated in the House of Commons over the last year. Alanis Ingham-Cotterell explores the big proposed changes as the Bill moves into the House of Lords.
The Renters’ Rights Bill has been a topic of significant discussion and debate, particularly in the context of the relationship between landlord and tenants. The Bill has been labelled as “a new blueprint that will end the injustice of unfit homes and help protect renters from the rising cost of living”.
Progress along the road to reform was paused under the Conservative government due to concerns that the Court systems needed reform first. The Labour government, however, have lifted that pause and progressed what was started by the Conservatives. It is rumoured that the Bill will become law this summer.
As the Bill has now moved into the House of Lords, it is timely to explain to you what the current changes are. These are the main reforms that are being proposed:
- The abolition of section 21 and no-fault evictions. This is perhaps the biggest talking point. Currently, under the Housing Act 1988, landlords are able to serve a section 21 notice to commence the possession process and do not need to prove any ‘fault’ on the tenant’s part in order to do so. This is unlike a “section 8 notice”, where the landlord is required to evidence that the tenant is at fault, for example by not paying their rent or otherwise breaching the tenancy agreement. Section 21 notices are therefore the most common way that landlords get back possession of their property.
The intention of this reform is to give tenants more security, as landlords will now require a reason to evict a tenant.
- Reform of section 8. The government is seeking to reform the grounds under which a section 8 notice can be served. There are currently 19 grounds that allow a landlord to seek possession from a tenant under section 8. These include rent arrears, anti-social behaviour or breach of tenancy. The government is seeking to expand on these grounds to include scenarios such as where the landlord would like to sell the property. This is a small counterbalance to the removal of section 21. There have also been proposals relating the level of rent arrears that a tenant must be in before possession can be sought. For example, currently the level of arrears is at least 2 months, whereas the Bill proposes that the arrears must be at least 3 months.
Whilst it is welcome news that the grounds are being expanded, there are concerns that it will still be incredibly difficult for landlords to take back possession when it is needed. Nevertheless, it is hoped by the government that this will provide greater security to tenants, whilst permitting landlords to still seek possession.
- The abolition of fixed term tenancies, making all residential tenancies periodic. This change has been proposed to give tenants more flexibility. Landlords, however, are concerned that they will have less certainty in relation to how long tenants will be staying in their properties, and its interplay with section 21 being abolished increases that concern.
- Cap on advance rent payments. Landlords will be prevented from requiring tenants to pay multiple months’ rent in advance. The Bill proposes that landlords may only request that a tenant pays in advance for each rental period. Therefore, if the rent is monthly, the landlord can only request a months’ rent to be paid in advance. This eliminates the common practice of landlords taking rents far in advance, to get around the limit on the quantum of deposits, and the practice of letting in a letting auction (see below) to tenants who could pay afford rents far in advance in priority to tenants who were unable to.
- Limits on guarantors. Landlords will no longer be able to insist upon a guarantor in certain circumstances. These include where a tenant has paid a deposit or if the tenant’s income can be reasonably assessed to be sufficient.
- Tenants will be given more powers to challenge rent increases. All rent increases will be required to use the same processes. In particular, rent increases will only be permitted once per year, up to the market rate. A section 13 notice will need to be served in order to effect the rent increase. These notices are currently just one of the ways that rent can be increased, so it is hoped that this will not be a cumbersome burden on landlords. Nevertheless, more tenants may try and challenge rent increases which they consider to be unfair in the First-tier Tribunal.
- New Ombudsman. The government is looking to introduce a new Ombudsman that will assist in providing binding resolutions where tenants make a complaint about their landlord. This should be beneficial for both landlords and tenants, as it is hoped that any complaints can be resolved quickly and fairly.
- Data Capture. The government is also looking to create a database for the private rented sector. This database is said to aim to assist landlords to understand their legal obligations and to demonstrate their compliance with the same. Tenants will also have access to the database so that they can be informed when making the decision to enter into a new tenancy agreement. Councils will have access to the database so that they can make targeted enforcement decisions.
- Tenants will have the right to request a pet. Landlords will be required to fully consider the request and must not unreasonably refuse it. Landlords will, however, be able to insist that pet insurance is taken out to cover any damage that may be caused to the property as a result of the pet.
- The Decent Homes Standard and Awaab’s Law are set to be introduced, to make residential properties less hazardous for tenants.
- Anti-discrimination. It will be illegal for landlords and agents to discriminate against prospective tenants where they are in receipt of benefits and/or have children.
- Preventing rent auctions. Landlords and agents will be required to publish the rent that they are seeking for the property. It will be made illegal to accept offers that are made above the published rent in an effort to end the practice of rental bidding.
- Enforcement Powers. Local authority enforcement powers are set to be expanded together with a strengthening of rent repayment orders. It will therefore be more important than ever for landlords to ensure that they are complying with all of their legal obligations.
Overall, the commentary surrounding the Bill has highlighted that it is very tenant-friendly with very few benefits for landlords. Although it was originally thought that the Bill would only apply to new tenancy agreements, but it has since been confirmed that it will be retrospective and, therefore, will apply to all residential tenancy agreements once it is in force. This Bill should be considered by both tenants and landlords alike, as it will have a wide-ranging impact.
We will be keeping up to date with the latest developments and will be publishing further articles on this subject, so please keep an eye out! If you need any assistance in relation to residential tenancies, please do contact Alanis Ingham-Cotterell or the other members our Property Litigation team.
