What is the Renters (Reform) Bill?
Introduced to the House of Commons on Wednesday 17 May 2023, the Renters (Reform) Bill has been designed with the aim of bringing clarity to letting agents and their landlords and improve confidence of both parties in the property rental process moving forward.
The objective of the Bill is to ensure renters have access to a secure and decent home and that landlords retain the right to repossess their properties for valid reasons.
At present, a landlord can issue a Section 21 at any time during the tenancy period, after the fixed term of, for example, 12 months, has expired. But the Bill intends to change the type of tenancy agreements in the U.K to assured, periodic tenancies.
This means tenants will need to give two months’ notice if they wish to leave but will not have six-month or 12-month rent liabilities as under fixed-term tenancies.
Government may amend this so that landlords can retain fixed-term contracts in the student sector. This was something that a lot of student landlords were nervous about and it does seem like student tenancies will be safe from this reform.
With the abolition of Section 21, landlords will instead have the right to remove tenants through Section 8.
Section 8 is being made more robust and modified to permit landlords to remove tenants from their property for things like breach of contract, rental arrears, anti-social behaviour and so on.
Other grounds for repossession include if the landlord wants to sell the property, make major renovations to that property or move back into the property themselves.
In the event of any disputes, a Private Rented Sector Ombudsman will be appointed to make impartial and informed decisions, while there is also talk of a specific court system to back this up.
Further automation to the process through the introduction of a digital Property Portal will also, hopefully, ensure that such matters can be dealt with in a more time efficient manner.
In summary, the Renters (Reform) Bill is due to include the following measures:
- Abolishing Section 21, or “no fault evictions”.
- A move to periodic tenancies and the removal of assured short-hold tenancies.
- Strengthening Section 8 grounds – particularly for anti-social tenants.
- Reforming the courts process – with new digital processes to reduce delays.
- A new Private Rented Sector Ombudsman and digital Property Portal.
- Further legal rights for tenants to request a pet in their rental property – with tenants expected to get pet insurance or to pay for the landlord’s pet damage insurance.
- Applying the Decent Homes Standard to private rented sector for the first time
- Stopping landlords and agents from issuing blanket bans for tenants on benefits, or with dependents.
- Strengthening enforcement powers for councils
What are the next steps for the Renters (Reform) Bill?
The government now needs to pass this Bill into law – something that is pledged to take place before the next General Election in late 2024.
Now that the Bill has been introduced to Parliament and published in full, this is known as ‘First Reading’. It is also the first stage of a Bill’s passage through Parliament.
The next step is the Second Reading, which is the first opportunity for MPs to debate the general principles and themes of the Bill. This is expected to take place the week commencing 5 June 2023
The measures contained in the Bill will need to overcome normal legislative hurdles, and pass through stages known as the Committee stage and Report stage before the Third Reading takes place.
The Bill will then be debated in Parliament and then approved by both Houses and once it has received Royal Assent, it becomes law and is known as an Act.
Our View
“At the moment, 92 per cent of tenancy agreements are ended by tenants so I don’t see it changing fundamentals of the industry too much.
Here in Bristol, the market is fairly well insulated, that is our experience anyway. People are going to be a little bit more cautious when renting properties but I certainly don’t think there is any need to panic from a landlords’ perspective and we have not seen landlords leaving en masse like has been reported in other parts of the country.
I do think, however, it will disproportionately affect lower-earning tenants who could find it much more difficult to find a rental property because any applicants that present any risk will probably be looked over in what is already a congested market.”
Ben Giles, Managing Director, Balloon Letting Company
