Renters Reform Bill – what does it mean for landlords?
Mon 24 Jul 2023
On the 17th May 2023 the UK government proposed a reform of the laws within the private rented sector, the ‘Renters Reform Bill’. It is likely to be passed in early 2024, thereafter it will take at
least 6 months before it comes into force for new tenancies and 18 months for existing tenancies. A few key changes that the bill proposes to implement are the following:
*Section 21 no fault evictions are to be abolished: instead, landlords will only be able to evict tenants under reasonable circumstances such as if the landlord wishes to reside in the property themselves or sell the property. There will also be a law that allows a landlord to re-let the property once the tenant has been evicted but not before the property has been vacant for three months. In place of section 21, the bill outlines proposals to strengthen section 8. This allows a landlord to end a tenancy agreement early if they have a legal reason to do so and includes the introduction of a new mandatory ground for repeated rent arrears. This will make eviction mandatory where a tenant has been in at least two months’ rent arrears three times within the previous three years, regardless of the arrears balance at hearing. There will also be grounds that allow a landlord to apply a section 8 to a tenancy if they wish to sell a property, or if they wish to allow their family members to move into a rental property.
*Abolishing of fixed term tenancies: The bill confirms the government's ambition to simplify existing tenancy structures, by moving all Assured Shorthold Tenancies onto a single periodic tenancy. The Renters (Reform) Bill proposes that all rental properties will be under a periodic tenancy - rolling by every month without having a specified end date. Tenants would need to provide two months’ notice when leaving a tenancy, to "ensure landlords can recoup the costs of finding a tenant and avoid lengthy void periods".
*Notice Periods for rent increases to be doubled: Currently the law specifies one clear month’s notice, the new laws will state that two months must be given. Landlords will still be able to raise rents once a year in line with market rents similar to a S13 notice. Automatic rent increases clauses will be removed from contracts. Here at Shouler & Son this does not cause concern as rents are only ever increased in line with market value.
*Pets: Landlords will not be able to unreasonably refuse a tenant’s request to house a pet within a property. The bill indicates that a tenant must provide in writing confirmation that they have acquired insurance for their pet, or that they are willing to pay the landlord reasonable costs to cover the landlord's insurance in case of pet damage.
*Landlord Ombudsman: It will be mandatory for all landlords to join a government approved ombudsman when renting out a property either privately or through an agent. The ombudsman would have powers to "put things right for tenants", including compelling landlords to issue an apology, provide information, take remedial action, and/or pay compensation of up to £25,000. The government also intends for the ombudsman to be able to require landlords to reimburse rent to tenants where the "service or standard of property they provide falls short of the mark".
*New property portal for landlords and tenants: A new digital property portal will be introduced to help landlords understand and demonstrate compliance within their legal requirements. Again, at Shouler & Son this does not cause concern as we ensure every property is compliant with UK legislation before a tenancy is entered into.
*Bans on renting to families with children or those on benefits to be outlawed: The government has indicated that it plans to bring forward legislation "at the earliest opportunity" to further protect people with children or people on benefits so they are not unjustly discriminated against when looking for a property. This does not form part of the proposed Renters' Reform Bill at this stage. Of course, some properties will always be unsuitable for families to reside in, such as one-bedroom apartments or properties so it would be reviewed on a case by case basis.
EPC LEGISLATION
The proposed legislative changes surrounding EPC standards have yet to be signed off as legislation by the UK government. These changes in legislation have now been delayed until potentially 2028. After much lobbying by landlords and others, it looks possible that Department for Energy Security and Net Zero has decided to alter these deadlines. It’s understood that the 2025 deadline will be scrapped. If so, this will mean all rental properties must have an EPC rating of A-C by 2028. Beforehand, there was an upper limit of £3,500 expenditure on upgrading properties, this is likely to change and be capped at £10,000.