Renters Reform Bill – Update

Renters Reform Bill – Update

The government introduced the Renters’ Reform Bill on 17 May 2023 to deliver on the it’s commitment to “bring in a better deal for renters”, creating “safer, fairer, and higher quality homes”.

The aim of the bill is to tackle some of the problems in rented housing, namely lack of homes, lack of security for tenants and failure to meet basic decency standards.

The Second Reading of the Renters Reform Bill – expected some weeks ago – will now not take place until the autumn. The House of Commons went on it Summer recess on July 20th 2023, but this Bill was not included in the business timetable released by the government. Although there has been no progress on the Bill being debated, government has released some information related to the proposed Private Rental Sector Ombudsman.

This Scheme is proposed to operate as a non-profit body and may also be utilised as a combined letting agent, tenant and landlord redress scheme. Many of the details are still being discussed. A round table discussion between a member of the Levelling Up, Housing and Communities Committee, and senior representatives from lettings agencies is proposed this Summer. There is currently a survey being conducted with letting agencies to prepare for this opportunity to discuss the terms of the Bill.

The main items in the Renters Reform Bill include:

• Abolishing ‘no fault’ 2 months’ notice pursuant to section 21 Housing Act 1996 and assured shorthold tenancies, instead making all tenancies assured and periodic. Government states they hope this will provide more security for tenants and empower them to challenge poor practice and unfair rent increases without fear of eviction. Concerns envisaged from these substantial legal amendments are that it will become more difficult for non-commercial landlords, such as landlords with one or two properties as their pension, to evict tenants and manage their assets. Many Landlords are turning to short term lets such as Air B&B as the return is better and the management costs and compliance requirements much lower. There is a risk this change will have a “knock-on” effect, compounded by increased tax burdens for landlords will reduce the amount of private rental property, rather than make it more freely available.
• Government intends to introduce more comprehensive possession grounds to counter the effect of removing “no-fault” grounds for eviction, by including a ground enabling a landlord to sell their property or move in close family and to make it easier to repossess properties where tenants are at fault for rent arrears and anti-social behaviour. It must be noted these grounds are already partly included in current grounds, but these new grounds cannot be used if a tenant has been present for less than 6 months. By default this will create a fixed term even though the new tenancy will be periodic, if action cannot commence for six months for some grounds.
• The Government highlights the right for a tenant to appeal excessively above-market rents purely designed to force them out, however, it is questionable whether this is a serious problem for many tenants. Landlords retain the right to increase rents to market value. The First-tier Tribunal will continue to be able to determine the actual market rent of a property if an application is made by a tenant or a landlord. Rents are increasing due to the increased costs of living with most landlords not charging “excessive” rents, simply market rents. This provision will assist a minority of tenants struggling with excessive rent increases but may not change the position of most tenants but will increase costs for landlords if faced with a number of rent review challenges.
• Government plans to introduce a Private Rented Sector Ombudsman which they hope will be faster, cheaper, and less adversarial than the court system. It is unclear how this will be funded at this stage and what powers will be provided to the Ombudsman as Regulations for the Scheme are not yet being considered.

A proposal to create a Privately Rented Property Portal to assist landlords with understanding their legal obligations and compliance requirements; linked to local councils’ licensing schemes. This is to assist with targeting enforcement action, but that is already the aim of local licensing schemes. In reality the licensing schemes need proper funding so without that will this proposed scheme improve the position for tenants or landlords?

We now wait for Government to put this Bill before the House of Commons for the Second Reading and await feedback from ongoing discussions on the proposed changes.

If you are a landlord or tenant who would like a free initial consultation with a member of the Proerty Litigation team simple click on the “Speak to Our Experts” button on this page, call us on 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This is not legal advice; it is intended to provide information of general interest about current legal issues.