Over the last few weeks, we have seen an increasing number of headlines and discussions in the media about planned changes to the law and regulations around renting, including the modernisation of the tenancy system, particularly with regards to the rights of tenants.

In his latest article, Rikki Foster, Solicitor in our litigation team breaks down the latest information and the facts behind the headlines.

What stage is the Bill at?

The Renters (Reform) Bill (“the Bill”) has been introduced to Parliament.

On 17th May 2023, the Bill passed the 1st reading stage in the House of Commons and the 2nd reading date is yet to be announced. The 2nd reading should be no sooner than 2 weeks after the 1st reading.

There are several further stages that the Bill needs to go through until it can receive Royal Assent.

Why is the Bill being introduced?

The Government first introduced the full extent of its plans in a White Paper entitled ‘A fairer private rented sector, in June 2022: https://www.gov.uk/government/publications/a-fairer-private-rented-sector/a-fairer-private-rented-sector.

The Government’s mission is to: “halve the number of poor-quality homes by 2030.” The White Paper states that the Bill represents the Government’s commitment to: “ensure all private landlords adhere to a legally binding standard on decency.”

Part of the plans also included replacing Section 21 ‘no fault’ eviction notices with a modern tenancy system, and empowering tenants so that they can make informed choices, raise concerns and challenge unfair rent increases.

It is thought that some renters face a precarious lack of security, a common argument being that a landlord can serve a Section 21 notice (otherwise known as a ‘no fault’ eviction notice) under the Housing Act 1988, without reason.

Under the current rules, after service of a Section 21 notice (provided that various legal requirements have been complied with), if a tenant fails to give up possession of a property, proceedings can be issued and an order for possession obtained, requiring a tenant to give up possession, usually within 14 days of the date of the hearing. If a tenant fails to vacate the property in accordance wit the order, bailiffs can be instructed to execute either a Warrant (County Court) or Writ (High Court) of Possession.

These ‘no fault’ notices are often issued when a landlord wants to sell a property.

What are the key changes in the Bill?

The key changes to be introduced by the Bill are: –

• Section 21 (‘no fault evictions’) will be abolished.
• Grounds to gain possession under Schedule 2, Section 8 of the Housing Act 1988 will be amended to:

i. Introduce a new mandatory ground for repeated serious rent arrears.
ii. Introduce Ground 1A in order to gain possession if a landlord wants to sell a property, provided the tenant has been in the property for at least 6 months.
iii. Amend discretionary Ground 1 in order to gain possession if a family member wants to move into the property, provided the tenant has been in the property for at least 6 months.

• Assured shorthold tenancy agreements will have no effect and instead, all tenancies will be periodic tenancies.
• Rent increases will be limited to once per year and notice of any change in rent must be a minimum of 2 months.
• Landlords cannot unreasonably withhold consent for a tenant to have a pet in their home:

i. The landlord must accept or refuse consent by the 42nd day after the date of the request.
ii. A tenant must provide confirming, in writing, that insurance has been acquired for the pet, or that they are willing to pay the landlord reasonable costs to cover the landlord’s insurance in case of pet damage.

• Landlords may be required to join a Government approved ombudsman redress scheme, in which:

i. The ombudsman would have powers to compel landlords to issue an apology, pay compensation, or take other action as may be deemed appropriate.
ii. The ombudsman’s decision would be binding on landlords and any failure to comply could result in a banning order.

• A new property portal, or ‘Database’:

i. Which would include important information for agents, tenants and landlords such as legal requirements and a landlord’s history of compliance.
ii. Under which a letting agent or landlord would be unable to let or market a property to rent if there is no entry in the database for the property being marketed for rent.
iii. A landlord could be fined up to £5,000 by the local Council for a failure to join the database and repeated offences could lead to fines of up to £30,000.

What does this mean for landlords?

On 9th February 2023, Shelter published that between October and December 2022, 6,101 landlords started Court proceedings under Section 21.

In addition, the number of bailiff instructions as a result of Section 21 proceedings increased by 143% in one year. The increase was from 792 households between October and December 2021, and 1,924 between October and December 2022.

(Source: https://england.shelter.org.uk/media/press_release/section_21_no-fault_evictions_by_bailiffs_up_143_in_a_year)

However, these figures only represent part of picture as often, tenants vacate a property without Court proceedings or bailiffs being required.

Given the plans to abolish Section 21 together with the many other changes that the Bill seeks to introduce, landlords will inevitably be panicked by the Bill.

As a result of this disturbance in the market, it seems highly likely that: –

(a) There will be a surge in Section 21 notices being issued over the next several months;

(b) There will be a large increase in the use of Section 8 notices when the Bill receives Royal Assent;

(c) Landlords will be seeking to increase rent as soon as possible which may mean more rent increase challenges for determination by the Tribunal;

(d) Tenants trying to rent a property at present may find it more difficult if they have a pet.

If you own or rent property, or would like to know more about the legalities of renting out your property, our friendly team is here to help you. Talk to us today by calling 01482 325242 or email enquiries@andrewjackson.co.uk.