The Renters (Reform) Bill was introduced to parliament on 17th May 2023. It follows the 2022 private rented sector white paper, which outlined the government’s aspirations for the future of privately rented homes. The bill aims to deliver on the government’s plan to “bring in a better deal for renters”, which includes the ending of ‘no fault’ evictions. These changes of course have implications for landlords too, but the bill aims to allay some of their concerns by strengthening Section 8 powers under which landlords can recover their properties.
Further regulation includes proposals for a new property portal and rental redress scheme, which aim to make it easier for landlords and tenants to resolve issues and for councils to track and penalise rogue landlords. For landlords, increased use of Section 8 could also make it easier to identify tenants with a history of rent arrears and antisocial behaviour, aiding the tenant referencing process and mitigating risk for those taking on new tenants.
But we are still at an early stage. The bill is entering the approval period, where questions on the detail behind the proposals can be answered and views sought. The bill must follow a set path before receiving Royal Assent and becoming law. The next step will be a second reading, giving MPs the opportunity to scrutinise the bill and make any amendments to the proposals. This will also be an opportunity for interested parties to contact their MP to put forward their views on the proposals.
The bill must then progress through committee, parliament, and the House of Lords before details are agreed and Royal Assent is sought. This is a lengthy process, with the time from bills being introduced to becoming law often exceeding 12 months.
Current proposals include:
The end of the AST - Section 21 will be abolished, aiming to provide tenants with greater security. Fixed term tenancies will be scrapped, meaning a tenancy will end only if the tenant chooses to leave (usually by giving two months’ notice) or the landlord is able to provide a valid reason to end the tenancy. To assist with this Section 8 will be strengthened to allow landlords to recover their properties. From six months into the tenancy landlords may give the tenant notice (usually two months) to vacate if they are looking to move back into the property, sell or redevelop. Landlords can also gain possession if the tenant is in breach of their tenancy or falls into arrears.
If implemented, it is likely changes will apply first to new tenancies, with existing tenancies transitioned across into the new structure within a pre-defined period. There are some exemptions for students lets, however this could we be one of the elements of the bill where we see some changes introduced.
Annual rental reviews – Rental increases will be limited to one per year, with new powers for tenants to challenge above market rate rental increases through a tribunal.
Pets – Landlords must have reasonable grounds to refuse a tenant the right to request a pet in their rented property. It is not yet clear what constitutes ‘reasonable grounds’, hopefully this will become clearer as the process progresses, but tenants who are refused can use the new redress scheme to refer the final decision to the ombudsman. For landlords, existing regulations will be strengthened to ensure tenants are liable for any damages caused by their pets.
Redress scheme – Proposals for a single redress scheme for both landlords and tenants. The ombudsman will provide a free service if tenants have complaints regarding their landlord, the standard of the property, or any outstanding repairs. Under current proposals landlords would not be able to make a complaint about a tenant to the ombudsman but they could be offered mediation services to settle disputes between them and their tenants. Landlords would be required to join the scheme with local councils empowered to take enforcement action against those who fail to sign up. Lettings agents will not be required to join.
New property portal – Landlords will need to sign up to a new property portal. This will be a digital record of the landlord and their properties. Landlords will need to be registered and keep records on themselves and their rental properties up to date to legally market a property to let. Proposals are for councils to have access to the portal to enable them to flag any unspent offences or restrictions in the landlord’s name.
More detail on the bill can be found here.
Our team here at JLL will keep you updated throughout the process and are here to answer any questions you may have on the bill or the implications for you as a landlord or tenant.
JLL Research | June 2023
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