The long-awaited Renters Reform Bill has been unveiled, as Ministers bid to address the housing crisis and create a fairer rental market.
We welcome any measure that supports the rights of tenants, however at the same time we also know the vital role that good landlords play in the housing market and appreciate that they haven’t had the easiest ride as of late. With this in mind, it is important that there are no short-sighed knee-jerk reactions – i.e panicked sales of properties, which ultimately reduces stock and choice for tenants with the unintended consequences of driving rents up.
As we have seen throughout history, the fear of change is often worse than the change itself, which has been our experience in Scotland in regards to changes in legislation.
While set out with good intentions, I believe this new Bill does not in practice improve a tenant’s security of tenure if only because a landlord can end a tenancy should they wish to sell or move back in. As such, there is no reason to sell in advance of this bill.
Previously, a tenant could enjoy a certain fixed term, now they can’t.
The headline element of the Bill is the ending of section 21 notices on Assured Shorthold Tenancies in accordance with the Government’s manifesto. In future all evictions will need to be based on an approved reason provided by the landlord through a notice under section 8 of the Housing Act 1988. The section 8 structure is pretty similar, although the various grounds for possession in Schedule 2 of the 1988 Act have been extensively re-worked and this will require detailed cross referencing.
The Bill deletes the concept of ASTs altogether so in future all tenancies will be periodic. In addition, rental periods will be restricted so that they can only be 28 days or one month. Anything else is prohibited. If a landlord attempts to create a fixed term tenancy or seeks to serve a notice to quit, then they can be penalised by the local authority.
The grounds for possession are substantially amended. There are new grounds for sale of a property and for landlords wanting to move back in themselves. A lot of the prior notice grounds under schedule 2 of 1988 Act have been removed. There is an increase of grounds to deal with scenarios where a private landlord would find themselves in breach of the law if they allowed the tenancy to continue. The promised new ground for possession for repeated arrears is there, as are the expected changes to ground 14 (anti-social behaviour) to allow eviction for behaviour “capable of causing” a nuisance. There will remain a burden of proof upon the landlord.
There is to be no fixed terms for tenancies at all. Therefore, tenants will be able to give two months’ notice to leave a property at any time. Where this was introduced in Scotland, this had very little effect as it’s not cheap to move, find another deposit, set up broadband and Sky TV etc.
Effectively they could move in and immediately serve notice. This is likely to be the change that most substantially alters the sentiment on a day-to-day basis. It has implications for short-letting, for agency fee models, and for how landlords set rents. I expect that this will be the focus of a lot of lobbying as the Bill proceeds and I will need to consider how we charge our landlords going forward.
Also, from the White Paper, other provisions are in the Bill. The Portal is mentioned, but there is no detail, as well as a Private Rented Sector Ombudsman. Interestingly, the Bill did not include a ban on “no DSS” or “no kids”, even though the White Paper suggested it would.
The Government made reference to an Ombudsman but dropped the word ‘single’. I suspect the existing redress schemes will be pitching for this which makes sense to me.
There is a new provision which requires all landlords to give a written statement in a form prescribed by the Secretary of State. A financial penalty can be levied for not doing this. This will be a risk area for a lot of landlords and agents but, in reality brings England into line with the other parts of the UK and most recently Wales.
There are quite specific provisions relating to pets. All tenants will be allowed to keep a pet if the landlord consents. That is subject to a provision that the consent cannot be unreasonably refused or withheld, and refusal or consent must be given within 42 days of permission being sought. In a change to the Tenant Fees Act 2019, Landlords will be allowed to insist that the tenant obtains pet damage insurance. That’s good news and doesn’t mean your landlord is compelled to allow a pet.
It is worth noting that a lot of the provisions are lacking on actual detail. Instead, they allow ministers to pass regulations to fill in the gaps and bring them into effect later on as I predicted. We simply don’t know when those provisions will be brought into effect, if indeed ever. It also means that the detail of these provisions will largely evade Parliamentary scrutiny as regulations are less closely examined than Bills.
In terms of overall timing, industry understanding is that the Bill will be carried over any King’s speech with the aim of it getting Royal Assent in spring 2024. That does not mean it will be in force at that time and it is likely that there will be a further wait for the key provisions to come into play and, undoubtedly, some form of transition for existing tenancies. Once Royal Assent is received, we were told by Government there would be a lead in time of 6 months for new tenancies and a further year for existing tenancies.
The key takeaway from all of this is that no landlord needs to sell their property as the bill will allow them to seek possession on that ground. Tenant demand is high and landlords will also have strengthened grounds for rent arrears and anti-social behaviour.
As the famous WW2 poster says – ‘keep calm and carry on.’ The market has been through changes before and will continue to do so. We can get through this.
* Rob Smith is managing director of Hunters lettings and sales agency *
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