The Renters (Reform) Bill is one of the most significant pieces of legislation for both landlords and tenants, in the last few decades. More than 4 million properties are privately rented across the UK, so the impact of this Bill will be felt across all four nations. It’s important to note at the start, the Bill is not yet law; however it’s moving through the stages to make this happen.
In this article we’ll discuss what the Renters (Reform) Bill is, what is included in the Bill and what the Parliamentary process is.
What is the Renters (Reform) Bill?
The government has been working on reform for tenants and landlords for some time. They have perceived the tenant-landlord relationship to be swayed, for some time, against tenants. The government’s Guide to the Renters (Reform) Bill notes this Bill, made of numerous reforms, will deliver their commitment to “bring in a better deal for renters”.
Landlords can rest assured, though, that some of their concerns have been considered in the Bill too. In fact, the government has undertaken consultation with both groups for over five years prior to developing the Bill. Elements of the Bill will protect tenants from unfair evictions. Landlords, on the other hand, will be protected from having to compete against unethical, ‘low-balling’ landlords in the rental market.
What is included in the Bill?
The Renters (Reform) Bill is made up of various elements. Here we’ll discuss the detail of just a few. The government website details all elements in their Guide to the Renters (Reform) Bill article.
Abolition of Section 21 “no fault” evictions
“Section 21” is the term used to reference termination of tenancy, or eviction, notices. At the moment, private landlords are able to evict tenants and repossess a property without a reason needing to be given. This can be used to evict tenants who have significant rental arrears, or if the landlord decides to sell the property, for example. This does not allow any security for a tenant, and this is looking to be addressed in the Renters (Reform) Bill.
Through the Bill, going forward, landlords will only be able to evict under reasonable circumstances. There is also provision for tenants to be able to challenge unfair rent increases. As the Bill has passed through the different stage of Parliament, amendments have been made. One such amendment acknowledges that this abolition will only be possible once the court processes surrounding these legalities have improved.
To assuage landlords’ concerns, the new provisions include plans to add mandatory grounds for eviction to the Bill. This will enable a landlord to evict a tenant based on repeated rent arrears. If a tenant is in arrears by at least 2 months, on three occasions within a three year time period, they may be evicted. The plan also allows for landlords wishing to sell their property or move family members in. So long as the tenants have been in for at least 6 months, this will be possible.
Simplification of existing tenancy structures
The current standard for rental agreements is an Assured Shorthold Tenancy. After 6 or 12 months, tenants are able to renew their contract, or move to periodic (monthly) tenancies. The plan with the Renters (Reform) Bill is to move to a rolling month-by-month tenancy with no specified end date.
Tenants must also provide two months notice when leaving a tenancy. This simplification will be of benefit to landlords as they have the opportunity to recoup the cost of finding a tenant. They will also be able to avoid long periods of having vacant properties.
Rent increase restrictions
The new Bill will limit landlords to one rent increase per year, and only in line with market rates. If wishing to make a rent increase, landlords must give a minimum of two month’s notice. This is double the current required notice period.
Pet Ownership
Until the Bill become law, landlords are able to withhold consent for pet ownership by their tenants. However the Bill will stop them being able to unreasonably withhold consent for a pet at home, if requested by the tenant. The tenant must provide written confirmation that the relevant insurances are held by them. They must also confirm they are willing to pay reasonable costs in the event of any damage caused by the pet. These conditions make the new plan less risky for the landlords.
Government-approved ombudsman
Private rented sector ombudsmen will be appointment by the government as part of the Reform Bill. Landlords will be required to join one of these ombudsman, regardless of whether they manage their rentals themselves or through letting agents. Former or current tenants will be able to make complaints against their landlords via the ombudsman. They will be independently investigated and judgements made.
Through the Parliamentary process, there have been many discussions and debates on how this can be delivered. At this time, no plan has been determined on the roll-out of this component.
Anti-discrimination of those on benefits
Following the passing of the Bill into law, landlords will not be able to specify in adverts that they do not want those on benefits as tenants. They are also unable to say that such people are unwelcome to view the property.
The Parliamentary Process
As with the movement of any Bill into law, there is a significant Parliamentary process that must be followed. There must be three readings in both the House of Commons and the House of Lords. The first reading is the announcement of the Bill to the House. The second reading gives the opportunity for all MPs to debate the Bill. Between the second and third readings there is a Committee Stage. This gives the representatives a chance to examine the Bill line by line. The third reading is a final chance for the Bill and any amendments proposed at each stage to be debated, before the Bill passes to the House of Lords.
Once this same process has occurred in the House of Lords, and both Houses have approved the final version of the Bill, the King will be asked to give Royal Assent to the Bill. Even after this stage the Bill will not be law – it will be an Act of Parliament. Laws are usually introduced twice per year: on 1st April and 1st October. The law will be mandated first for any new tenancies. A year later it will be expanded to include all existing tenancies.
So what next for landlords?
The Renters (Reform) Bill is currently awaiting its third reading in the House of Commons. It is currently estimated that the first part of the law (for new tenancies) will come into force in October 2024. Landlords must make sure they are compliant with the new law by the time it is enacted.
If you are a landlord and are unsure of what will be expected of you once this Bill becomes law, we invite you to get in touch.
