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Renters (Reform) Bill…

Date Added 08.06.23

The government introduced the Renters (Reform) Bill (‘the Bill’) to Parliament on 17 May 2023 proposing significant reforms to the residential letting sector in England. Some provisions also affect Wales.

The Bill is likely to be subject to change as it passes through parliament and the purpose of this update is to highlight some of the possible changes coming down the road and what these could mean for landlords.

The changes will affect new residential tenancies other than purpose-built student accommodation.

The key points in the Bill are:

Rent increases

Currently a landlord can provide mechanisms for reviewing or increasing the rent to avoid the statutory regulation of rent increases. The Bill will prohibit landlords from increasing rents other than by serving a statutory notice, and only where the market rate rises. Tenants will be able to challenge the rent increase. The First-tier Tribunal (FTT) will continue to hear those challenges and will determine the correct market rent. The Bill also includes a requirement for landlords to give at least two months’ notice before increasing rent and rent increases will only be permitted once a year.

Abolishing fixed-term tenancies

Fixed-term tenancies will be abolished and tenancies can only be periodic. The period can be no longer than one month. Tenants will be able to end their tenancy by giving two months’ notice (unless the parties have agreed to a shorter period) or a landlord can provide evidence for a valid ground of possession. Note that a fixed-term tenancy of more than seven years cannot be an assured tenancy.

Abolishing assured shorthold tenancies (‘ASTs’)

ASTs have been the standard form of tenancy granted by private landlords in the residential property market since they were introduced in 1997. The Bill will abolish them. New residential tenancies are likely to be assured tenancies.

Abolishing ‘no fault’ possession notices

As a consequence of abolishing ASTs, the mechanism to end quickly and at no fault (by the landlord serving a section 21 notice), also falls away. Existing fault-based grounds can be used to end a tenancy. These will require service of a notice specifying a particular ground for possession and then, most likely, a court hearing.

New grounds for possession
  • Landlord selling property: Landlords who wish to sell the property will have a mandatory right to seek possession so long as the tenancy has existed for at least six months.
  • Landlord wishing to move in: A mandatory ground for possession should the landlord or close family members wish to move into the property as their only or main home, so long as the tenancy has existed for at least 6 months.
  • Serious rent arrears: Where there have been at least two months arrears on any three occasions within a three-year period, a longer notice period must be given (four weeks rather than two at present), but the court must grant possession, even if the arrears have been cleared at the hearing.
  • Serious anti-social behaviour: This wording arguably introduces a lower threshold for the landlord to meet, although possession is not mandatory and the court will still have to find it reasonable. The notice period required is shortened and a possession claim will be capable of being made immediately.
Property Ombudsman

The Bill proposes a new “property ombudsman” who can deliver binding decisions in landlord-tenant disputes (including payment of compensation), and these decisions can be enforced just like court orders. This will be free to tenants and funded by landlords. Private landlords will be required to join this scheme.

Written statements

Landlords will have to provide tenants with a written statement, including terms of the tenancy before the tenancy starts.

Pets

Tenants will be given a right to request permission to keep a pet in their home, which cannot be unreasonably refused (although landlords can require the tenant to maintain pet insurance or cover the landlord’s reasonable costs for doing the same). A decision must be given within 42 days.

Penalties

Various financial and criminal penalties will be introduced for landlords who breach their obligations. For example, if a landlord uses the new possession ground to move a family member into the property and subsequently lets the property within the prohibited three-month window, the local authority may impose a financial penalty of up to £5,000 (which may be recurring if the contravention continues for more than 28 days) or prosecute for a criminal offence.

If the abolition of ASTs and ‘no fault’ notices become law, investment landlords are likely to want to see a commitment by the government to introduce court reforms to provide an effective mechanism to remove tenants who are withholding rent payments. In any event, Landlords will need to consider the increased legislative burdens and costs of these proposals.

Talk to Tollers

We will provide more updates on the Renters (Reform) Bill as it progresses through parliament.

If you are a landlord and would like more information on how the Renters (Reform) Bill could affect you and the properties you own and rent…Talk to Tollers on 01604 258558, our experienced Commercial Property experts are on hand to guide you and provide the latest updates on the progress of the bill.

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