The Renters (Reform) Bill received its first reading in the House of Commons on 17 May 2023, following the publication of the government’s White Paper ‘A Fairer Private Rented Sector’and the response to the consultation ‘A new deal for renting’. B P Collins’ property team explores the potential impact for tenants and landlords.
What is it?
The Bill aims to reform the private rented sector in England by abolishing section 21 ‘no-fault’ evictions, introducing a new system for rent increases, simplifying the tenancy structure, and strengthening the rights of tenants.
The Bill will allow for landlords to increase rent to the market value once per year during the period of the tenancy and landlords must give two months’ notice of the rent increase to their tenants.
The Bill also seeks to make it easier for landlords to repossess their properties where tenants are at fault, including in cases of anti-social behaviour and repeat rent arrears. Landlords will have new grounds to repossess their property if they wish to sell it or move themselves or family members into the property. These grounds will have to be used instead of landlords proceeding down the route of a no-fault eviction.
The Bill will bring with it a new Ombudsman to resolve disputes between landlords and tenants and a Property Portal which will provide information on landlords’ past performance to allow greater transparency and increased accountability. These introductions are proposed to protect both renters and good landlords, with the intention of driving rogue landlords out of the market.
Under the proposed Bill landlords will not be allowed to unreasonably refuse a tenants’ right to have a pet in the property, however landlords will have a right to insist tenants pay for appropriate insurance to cover to costs of any damage caused by the pet. The Tenant Fees Act 2019 will be updated accordingly to reflect this new permitted payment. Landlords and letting agents will also be unable to have blanket bans on renting to people with children or to those in receipt of benefits.
What concerns have accompanied the change?
The Bill has been welcomed by housing campaigners, who have long called for reforms to the private rented sector. However, some landlords have expressed concerns about the Bill, arguing that it will make it more difficult for them to manage their properties. Landlords are concerned about the increased costs that will come with the changes, such as Ombudsman and Portal registration fees, and the risk that a rent cap with further increase their costs. This could have a knock-on effect and see more landlords withdraw from an already depleted market, further raising market rents for tenants.
When will the changes take effect?
The Bill is currently being debated in Parliament. The new reforms will be implemented in two stages which will be dependent on when Royal Assent is received, and when the court system is ready to implement the new system. At least six months’ notice will be given of the first implementation date when all new tenancies will fall under the new rules. There will then be a second implementation date not less than twelve months after the initial implementation date, when all existing tenancies will transition to the new rules.
It is not expected that any changes will be seen before Summer 2024.