What’s new in the Renters’ Rights Bill?

Greater rights and protections for renters were promised in the King’s Speech and the new Renters’ Rights Bill aims to deliver on that promise. While similar in name and content to the Renters (Reform) Bill put forward by the Conservative government, the new Bill goes further on the proposed changes and introduces new ones. This is a move in the right direction, but some of these changes could lead to an influx of possession claims between landlords and tenants. What does the Bill do? In summary, the Bill: Abolishes fixed term tenancies All residential tenancies will become periodic assured tenancies with no end date. Abolishes “no fault” evictions Landlords will need to rely on the grounds of possession under the Housing Act 1988. These grounds are expanded to include where the landlord or a member of their family wants to occupy the premises or where the landlord wants to sell. Enables easier termination of tenancies by tenants Tenants will be able to terminate their tenancies by giving two months’ notice. Limits increases in rent Landlords can only increase rent once a year, following service of a notice and giving tenants the ability to challenge any increases by applying to an independent tribunal. Requires landlords to register on the Private Rented Sector Database In particular, a landlord will usually be unable to terminate any tenancies unless it is registered. Introduces a Private Rented Sector Legal Ombudsman The new ombudsman will deal with landlord and tenant disputes. Gives tenants increased rights to request consent for pets, which landlords must consider and not refuse unreasonably Landlords can require tenants to obtain or contribute towards pet insurance to cover any property damage. Applies the Decent Homes Standard (which currently only applies to social housing) to private rentals It will be interesting to see how this differs from the protection currently provided by the Homes (Fitness for Human Habitation) Act 2018. Introduces Awaab’s Law to private rentals This will imply terms into all private tenancy agreements that certain requirements (to be specified in regulations) must be met. The example provided by the government is timescales for landlords dealing with hazards, such as damp and mould. If landlords do not comply with these requirements, tenants can bring a claim against them for breach of the tenancy agreement. Prohibits discrimination against prospective tenants This will stop discrimination against those with children or in receipt of benefits when landlords or their agents are seeking to let their properties. Prohibits rent bidding wars Landlords or their agents will be prevented from asking for or accepting offers above the advertised rent. This is significant as many renters will be painfully aware of how competitive the rental market currently is and how some agents require prospective tenants to make sealed bids. What are the new grounds for a landlord wanting to regain possession? The most significant new grounds the government has introduced are if the landlord intends to occupy a property for themselves or their family or if they wish to sell the property. In both scenarios, the landlord cannot terminate a tenancy within the first 12 months and must provide at least four months’ notice to allow tenants time to find a new home. It is yet to be seen what evidence a landlord will need to demonstrate that they genuinely intend to move in or sell their property. The government has stated that the legislation will not prescribe this and it will be up to the courts to clarify the parameters. However, the government will put in place various restrictions on marketing the property for re-letting within a certain time period after regaining possession to prevent landlords from falsely claiming they want to move back in or sell as a ruse to get their property back. Are there any changes where a tenant is in rent arrears? Unlike the previous Bill, the Renters’ Rights Bill extends the minimum amount of rent arrears that a tenant must be in before a landlord can serve notice to obtain possession from two to three months. In addition, the minimum notice period will be increased from two to four weeks. In practice, this means that a landlord will need to wait until the tenant has not paid rent for four months before they can even start proceedings to terminate a tenancy. How will student accommodation be treated? There are three types of student housing – university owned/let accommodation; purpose-built student accommodation (large developments); and “on-street” student housing (generally houses or flats owned by private individuals). The previous Bill did not include an exemption for the “on-street” student housing market. This caused consternation among these private landlords over the removal of any certainty around their ability to recover their houses and flats at the end of the academic year, and therefore their ability to relet for the next academic year. The new Bill addresses this by introducing a new ground for terminating a tenancy that will allow landlords to recover possession of a house in multiple occupation let to full-time students. Landlords will need to give at least four months’ notice, which can only expire between 1 June and 30 September of any year (tying in with the academic year). If an HMO is occupied by a combination of full-time and part-time students and non-students, landlords can only use this ground to terminate the tenancies of the full-time students. The landlord can only relet the property to full-time students or to people who they reasonably believe will become full-time students during the tenancy. This contrasts with tenants who can terminate their tenancies at any time by giving two months’ notice. If student tenants serve notice two months into their tenancy or substantially before the end, this could leave a landlord with a difficult choice of finding new student tenants after the academic year has started, leaving the property vacant until the new academic year, or exiting the student rental market by letting to non-students. More detail is awaited to fully understand what is being proposed for the PBSA sector. However, as with the previous Bill, the explanatory notes to this Bill indicate that fixed-term tenancies and the abolition of no fault evictions will not apply to PBSA as long as the provider is registered for government-approved codes. Under the Housing Act 1988, university-owned and let accommodation is exempted from the tenancy regime, so is unaffected. How will the courts cope with these changes? One of the most significant changes between the Bills is that the Renters (Reform) Bill did not envisage abolishing no fault evictions until the court system was ready. Since the previous government provided no details as to how and when this would happen, the prospect of any actual change seemed fairly distant. In contrast, the Renters’ Rights Bill, which is expected to become law by summer 2025, will abolish fixed-term assured shorthold tenancy agreements as soon as it becomes law. The government’s guide to the Bill indicates that it is working with the Ministry of Justice and HM Courts and Tribunal Service to ensure that the county court is prepared for the changes to the tenancy system, but no solution has yet been published. Anyone who has experience of the court system will be aware that it is under-resourced, leading to considerable delays in getting proceedings issued, having a substantive hearing date listed (the initial 10-minute hearing is usually insufficient to resolve matters) and getting a county court bailiff appointment for an eviction. It is not unheard of for landlords to wait over a year after starting the eviction process to get their property back. The introduction of no fault evictions also introduced what is referred to as the accelerated possession procedure. This envisaged a process where possession orders could be made without an in-person hearing in certain circumstances, which should have eased the administrative burden and backlog facing the court. In practice, this accelerated procedure faces similar delays referred to above and it is now to be abolished. Without knowing how the court system will be improved, it is difficult to see how this problem can be fixed. The government has referred to continuing to work towards digitising the possession process. This reform is long overdue and will be welcomed by all so long as it materialises. What’s next? The Bill will have its second reading in parliament on 9 October 2024. The rebalancing of rights and responsibilities between landlords and tenants in the Bill is a move in the right direction. How it will work in practice is impossible to judge until detail is provided on improving the efficiency of the courts. Until the court system is improved, an already under-resourced system will likely face an influx of possession claims when the Bill becomes law, potentially causing a log-jam of claims and landlords to exit the market. Stephen Burke is a real estate disputes lawyer at Taylor Wessing Image © Tomas Anunziata/Pexels