The upcoming Renters' Reform Bill, as discussed by Housing Secretary Michael Gove, aims to fundamentally alter the relationship between landlords and tenants in the UK. The bill is designed to offer tenants enhanced protection against unpredictable rent increases and other issues. In this blog, we’ll explore exactly what the proposed reforms mean for landlords.
On 17 May 2023, the government introduced the Renters’ (Reform) Bill to parliament, a legislation described as "once-in-a-generation" reforms designed to ensure "safer, fairer, and higher quality homes." The bill is now due for consideration and debate at its Second Reading.
Michael Gove stated, "Our new laws introduced to Parliament today will support the vast majority of responsible landlords who provide quality homes to their tenants, while delivering our manifesto commitment to abolish Section 21 ‘no-fault’ evictions."
Arguably the most significant change is the removal of Section 21 of the Housing Act 1988. This legislation currently allows landlords to evict tenants without giving a reason, a provision known as "no-fault evictions." Once the bill is passed, a tenancy will only end if the tenant chooses to terminate it or if the landlord has a valid ground for possession. This means landlords will no longer be able to evict tenants without going to court, which can be a lengthy process.
Although the means of eviction are changing, landlords will retain the ability to evict tenants under certain circumstances. This can be done using Section 8, which is invoked if a landlord believes the tenant has breached the tenancy agreement. However, this also requires going to court.
The bill also introduces new grounds for eviction, including persistent arrears (if a tenant has been in arrears for two months at least three times in the previous three years) and if the landlord wishes to sell their property. The Government has also promised to make it easier for landlords to evict tenants responsible for anti-social behaviour.
The new legislation is expected to replace standard fixed-term tenancies with open-ended ones, increasing the flexibility of the rental sector. However, landlords who rent to students and rely on short-term tenancies may face challenges, as their tenants typically vacate at the end of the academic year.
Under the new legislation, landlords will be required to register on a new property portal. This platform is designed to ensure compliance with regulations and will integrate information from the Database of Rogue Landlords, making it publicly accessible. This registration process may involve a fee.
The Renters' Reform Bill introduces new stipulations around rent increases. Firstly, landlords must now give their tenants two months' notice prior to any rent increase, as opposed to the previously required one month notice. Additionally, the bill imposes a limit on the frequency of rent increases, allowing landlords to raise the rent only once in a year. Furthermore, the legislation bans the inclusion of rent review clauses in rental contracts.
The proposed bill also addresses the issue of tenancy refusal. Landlords will no longer be permitted to deny tenancies to certain demographic groups. Specifically, the legislation targets and prohibits the practice of refusing tenancies to families with children or individuals who are in receipt of benefits. This measure aims to put an end to the blanket bans that are occasionally observed in rental listings.
The new bill mandates landlords to consider renting to tenants with pets, putting an end to blanket bans on pets. If landlords wish to refuse a pet, they will need to provide a valid reason.
The Decent Homes Standard, requiring public housing to be free from serious health and safety hazards, is expected to extend to the private rented sector.
Finally, a new ombudsman will be introduced to enforce the bill and settle low-level disputes between tenants and landlords, reducing the need for court proceedings.
The Renters' Reform Bill is a substantial piece of legislation with wide-reaching implications for landlords. As we await the final draft of the bill, landlords should prepare for these changes and consider how they will impact their operations. This is an evolving situation, and keeping informed is the key to a smooth transition.
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