This blog post explains the 10 key changes proposed by the 89 page Renters Reform Bill, which will affect landlords and renters alike.
The Bill had its first reading in parliament on 17 May. The next stage is the second reading, which is when it will be first debated in parliament.
Click here for more on the timetable for its progress through parliament, and when it’s likely to come into force.
Guide to Key Changes in the Renters Reform Bill at a glance
- Overview of the Renters Reform Changes
- 1. Abolition of Section 21
- 2. Abolition of fixed term tenancies
- 3. New Section 8 Grounds for Possession
- 4. New single procedure to increase rent
- 5. New right for tenants to request consent for a pet
- 6. New Property Ombudsman
- 7. New Private Rented Sector Database (aka Rented Property Portal)
- 8. Decent Homes Standard?
- 9. Bans on families or benefits?
- 10. New offences and financial penalties
- Final thoughts
- Other Rental Reforms Content
Overview of the Renters Reform Changes
The Renters Reform Bill has been a long time coming, and is I suspect is something that will end up pleasing no-one. Renters are already saying it’s not gone far enough. And some landlords have accused Michael Gove of “betraying buy-to-let Britain to win the avocado vote”, according to the headline in the Daily Telegraph.
As a landlord who also eats avocado, I’m going to try to step back from all the political fuss and concentrate on what I think this new Bill is likely to mean in practice.
The Bill isn’t an easy read, full of things like: “in subsection (1)(a) for “(4B)” substitute “(4AA)”. This is because it is layered on top of other legislation. These include the Housing Act 1988, the Housing Act 2004 and the Housing and Planning Act 2016. The Bill therefore needs reading alongside these Acts, making it a bit tricky to read.
It’s important to stress that this is just a draft Bill. The one thing we know is that it won’t pass into the statute book without amendment. There will also be follow up regulations. The Bill is also not complete, as key measures referred to in the official Press Release aren’t included. These are the Decent Homes Standard for the PRS, blanket bans on children and renters on benefits, and councils’ enforcement powers.
I therefore concentrate on the big picture, explaining what the words currently on the page are likely to mean in practice for renters and landlords alike.
1. Abolition of Section 21
As widely expected, the Renters Reform Bill proposes abolishing Section 21. The abolition of Section 21 is the change most welcomed by renters, and (I think) is the proposal most hated by landlords.
Once the abolition comes into force, landlords will only be able to terminate a tenancy using the new Section 8. Tenants will be able to terminate their tenancy by giving two months’ notice.
In terms of when Section 21 is to be abolished, my best estimate is in spring 2025 at the earliest. This assumes the Bill receives Royal Assent by November 2023, which is a big assumption.
I base this estimate the reference in the Bill to the changes coming into force for existing tenancies on the “extended application date”. The White Paper, A Fairer Private Rented Sector (pages 31-32) says this will be at least 18 months after Royal Assent.
Click here for my blog post on the potential impact of abolishing Section 21 for both landlords and renters.
2. Abolition of fixed term tenancies
The Bill abolishes fixed term tenancies for all private residential tenancies. There’s no exception at present in the draft to exclude student tenancies.
This ignores the findings of the Levelling Up Select Committee from February 2023 that not excluding student tenancies “could push up rents or reduce the availability of student rental properties, at a time when the market in many university towns and cities is already very tight.” It also ignores their recommendation to retain fixed-term contracts in the student private rented sector.
The Government Guidance justifies abolishing all fixed term tenancies by saying it will “provide greater security for tenants while retaining the important flexibility that privately rented accommodation offers. It will enable tenants to leave poor quality properties without remaining liable for the rent, or to move more easily when their circumstances change, for example to take up a new job opportunity.”
There is widespread dismay and disbelief among landlords with student HMOs that the government hasn’t listened to their pleas. The likely impact is for student landlords to leave the market or target working renters, who aren’t tied to the academic year. Alternatively, they may put increase rents to reflect the fact that most students only want a property from September to May, and not the usual 11 or months.
From a practical point of view, it may make things very tricky for students, who will inevitably find it even harder to find available rooms at the start of each academic year.
3. New Section 8 Grounds for Possession
Alongside abolishing Section 21, there’s some fairly limited widening of the Section 8 Grounds for Possession in Schedule 1 of the Bill. Click here for a reminder about Section 8.
Here’s a summary of the key new and revised Section 8 Grounds in the Renters Reform Bill:
- Revised Mandatory Ground 1: Occupation as principal home for landlord or family
- Only once the tenancy has lasted more than 6 months.
- The landlord must intend it to be their (or their family member’s) only or principal home. The Bill defines the landlord’s family as including their spouse/partner, and their respective parents, grandparents, siblings, children and grandchildren. It also includes “half-blood” versions.
- It doesn’t include nieces, nephews, uncles and aunts etc.
- New Mandatory Ground 1A: Sale of property
- A landlord can only this ground once the tenancy has lasted more than 6 months.
- Landlord must intend to sell.
- New Mandatory Ground 5: For occupation as supported accommodation
- New Mandatory Ground 8A: Repeated Rent Arrears
- At least 2 months’ rent was unpaid for at least a day on 3 or more separate occasions within a three-year period.
- If the rent isn’t by calendar month, at least 8 weeks’ rent needs to be unpaid.
- The calculation of rent arrears should exclude any sums due to delays from the payment of Universal Credit. The government clearly wants to excuse its own rental arrears!
- Revised Discretionary Ground 14: Anti-social Behaviour
- The wording will replace a reference to guilty of “behaviour causing or likely to cause nuisance or annoyance” with “capable of causing“.
- Personally, I’m not sure there’s much of a difference between the two. However, the Guidance says it will make ASB easier to demonstrate for landlords. As it’s a discretionary ground, the judge will make the decision.
There are lots of other new and revised Grounds. For further detail, this Government Guidance is useful. Here’s the table in the Bill that sets out the new notice periods for each of the new or revised grounds.
4. New single procedure to increase rent
The Renters Reform Bill proposes introducing a single way of increasing rent with the following new procedure:
- To increase the rent, a landlord will need to complete a form, which will be on GOV.UK, and serve it on the tenant with 2 months’ notice.
- If the tenant accepts the proposed rent increase, the rent will change on the rent day after expiry of the notice.
- If the tenant doesn’t agree with the increase and think it’s above the market rate, they can dispute the increase through referring a case to the First-tier Tribunal. They will need to do this before the new rent is due and let their landlord know.
- Landlords will only be able to increase rents once a year.
The government will issue guidance “to make sure it is clear for everyone”. The press releases stress that landlords will still be able to increase rents to the market rent. There’s no cap on the amount of the increase. That said, tenants will be able to challenge increases above the market.
David Smith, a property law specialist, has explained the mechanics of removing the ability to agree rents. The Bill deletes that part of Section 13 that allows for landlords and tenants to agree rent between themselves.
I can’t see the logic of forcing everyone to use an officious notice, so it’ll be interesting to hear the reasoning. I’ll probably chat to my tenants before increasing the rent as a courtesy, and then send them the notice afterwards.
5. New right for tenants to request consent for a pet
This is one of the proposals that’s causing the most amount of discussion in the landlord community, if my WhatsApp groups are a representative sample. This is mostly because of concern over the vagueness of the concept of reasonableness.
On the other hand, it’s also one of the most popular provisions in the Bill for renters, many of whom would love a pet.
I personally already allow pets, and think it’s a good thing that renters will be able to find it easier to find places to live that accept pets.
I’ve outlined the key changes below, but you can read about the implications of the proposed changes in this blog post: Renters Reform Bill: Let’s talk about Pets.
Summary of how tenants can request permission for pets
Here’s a summary of the proposed new right for tenants to request permission for a pet in the Renters Reform Bill:
- Tenants will have the legal right to request a pet in their home. The landlord must consider the request, and can’t unreasonably refuse to give consent.
- The request must be in writing and include a description of the pet. The landlord can ask for more information and there are time limits for a decision.
- The time limit for a decision by the landlord is 42 days. If the landlord request more information, they have an extra 7 days from receiving that information.
- Landlords will be able to require pet insurance to cover any damage to their property. They can also ask the renter to reimburse them if the landlord takes it out themselves.
- If the tenant doesn’t agree with the decision, they’ll be able to escalate their complaint to the PRS Ombudsman. They will make the final decision based on the evidence provided by both parties
When can a landlord refuse consent for a pet?
Section 7(1) says that the consent to a request a pet “is not to be unreasonably refused by the landlord”.
There is a lot of debate on what’s reasonable, but it’s a concept thoroughly embedded in English law. It is an objective test. This means it’s not what the landlord thinks is reasonable, or what the tenant things is reasonable. It’s what is reasonable from an objective point of view. This will take into account the size of the property, the suitability of the type and breed, the number of animals, allergies etc etc. I also think it would be reasonable to refuse consent for most pets in HMOs. Common sense would need to apply.
The Bill says a landlord can refuse a request if this would breach the terms of a superior lease. For instance, if the landlord is a leaseholder of a flat. However, the landlord must take reasonable steps to obtain the consent.
What if a landlord refuses consent for a pet?
The government guidance on pets issued on 17 May explains that if a renter believes a landlord has unreasonably refused their request, they’ll be able to escalate their complaint to the Private Rented Sector Ombudsman. Alternatively, they could take the case to court. As the Ombudsman will be free for the renter, it’s more likely this will be the preferred route.
The Ombudsman (or court) will make the final decision based on the evidence provided by both parties.
Ways landlords can reduce the risk of pet damage
No doubt organisations like the NRLA will draft pet policies for landlords to adopt. The government has also said it will issue new guidance.
In the meantime, here are practical suggestions landlords can take to reduce the risk of pet damage.
6. New Property Ombudsman
The Bill will make it compulsory all private landlords in England to join a government approved redress scheme. This is for all private landlords, regardless of whether they use a letting agent. Landlords will have to abide by the decision of the Ombudsman.
The Guidance also claims the Ombudsman will “tackle the root cause of problems, address systemic issues, provide feedback and education to members and consumers, and offer support for vulnerable consumers.”
Landlords will pay for the costs of the Ombudsman. It will be free for tenants to use, if their landlord hasn’t dealt with a “legitimate complaint”. On the other hand, landlords won’t be able to use it if they have a legitimate complaint about their tenants. It’s a one-way street.
The Government guidance promises it will be “quicker, cheaper, less adversarial, and more proportionate than the court system”. The Guidance gives as examples as the “behaviour of the landlord, the standards of the property” or where they have not completed repairs within a “reasonable timeframe”.
The Powers of the PRS Ombudsman
The Ombudsman will have real powers. They will be able to “put things right”, according to the press release. This includes requiring landlords to make an apology, provide information, take remedial action, and/or pay compensation of up to £25,000.
It’s not clear when the Ombudsman will be introduced – no firm dates are in the Guidance. There’s also no information on how it will work in practice in the Bill.
Penalties and offences
If landlords don’t join the Ombudsman, local councils will be able to take enforcement action against them. This will range from a civil penalty of up to £5,000, through to a £30,000 fine or criminal prosecution. There is also the potential for a Banning Order for repeat offenders.
7. New Private Rented Sector Database (aka Rented Property Portal)
The Bill proposes a new digital database where each landlord and each “dwelling” will have an entry, and unique identifiers. The database is referred to as the “Rented Property Portal” in the government press release.
It will be compulsory to have active entries for both the landlord and the property before marketing a property for let.
Landlords will pay for the running of the database.
A number of new offences will be introduced relating to the PRS database, including knowingly or recklessly providing material false or misleading information. It will therefore be vital that landlords and letting agents keep accurate records and documentation for the database.
It will also be added to the list of offences that can enable a tenant to obtain a rent repayment order under Section 40 Housing and Planning Act 2016.
Here is a link to the government guidance on the database.
8. Decent Homes Standard?
The Press Release announcing the Bill said it would “apply the Decent Homes Standard to the private rented sector for the first time, giving renters safer, higher quality homes and remove the blight of poor-quality homes in local communities”.
However, the current draft of the Bill doesn’t include this. It may be that it will be introduced at a later date, either to the main Bill or by regulation.
9. Bans on families or benefits?
Likewise, the Press Release refers to making it “illegal for landlords and agents to have blanket bans against renters with children or those receiving benefits”. However, that’s not in the Bill as currently drafted.
10. New offences and financial penalties
The words “offence” and “financial penalties” appear 104 and 131 times respectively in the Renters Renters Bill. It establishes a number of new penalties and offences, including recklessly or deliberately providing materially misleading or false information to the database.
Increasing the range of criminal offences to include what might be an administrative error is something that needs careful scrutiny.
Finally, this is just the first draft of the Bill. It’s bound to change as it goes through parliament. At the very least, it needs to include the items referred to in the press release that aren’t in the Bill.
I’ll certainly be contacting my MP to give feedback on the Bill, and I suggest we all do the same.
Other Rental Reforms Content
Renters Reform Bill: What Happens When
What will abolishing Section 21 mean for landlords?
Renters Reform Bill: Let’s talk about Pets
Making sense of the new Section 8 Grounds for Possession