The Renters’ Rights Bill (RRB) proposes significant reform within the private rental sector. The bill itself has been making fast progress through Parliament, having already passed through the House of Commons. It is now widely expected to come into effect from this spring onwards.
Whilst the bill contains added flexibility to tenants, Landlords retain much needed protection around possession and annual rental increases. The bill is intended to even the balance and is expected to encourage greater long-term security for both Tenants and Landlords. Key parts of the bill include;
- The abolishment of Section 21 notices, and the ending of Assured Shorthold Tenancies (ASTs).
- Tenancies to become periodic by default, and Tenants can serve 2 months’ notice at any time.
- Rent payment/collection limited to one month in advance.
- Rent increases to be restricted to once per year (twelve months from previous increase) via a Section 13 notice.
- Tenants can challenge rent increases deemed above market via the First Tier Tribunal.
- Rent agreed cannot be higher than the advertised property price.
- Tenants have the right to request a pet and that request cannot be unreasonably refused.
- Landlords will be prohibited from discriminating against tenants who receive benefits or have children residing with them or visiting their premises.
- Awaab’s Law will apply to the Private Rented Sector (PRS) rather than in social housing only.
- Decent Homes Standard will also apply to the PRS.
- There will be a requirement for Landlords to sign up to a Landlord Redress Scheme as well as a PRS database.
- A written tenancy agreement will need to be provided to all Tenants.
As your trusted letting agent, JLL are already taking steps to prepare for this upcoming change and have successfully guided thousands of clients through previous legislative changes, most recently the Tenant Fees Act (2019). We will work with you, endeavouring to ensure that your needs are met and minimise any concerns following the introduction of the upcoming changes.
Below is the current timeline and summary of key changes that are expected to take effect. We have also answered some of the key questions that our clients and partners have been asking.
WILL IT AFFECT ALL RENTAL PROPERTIES?
The vast majority yes. Most Landlords rent to individuals and receive a rent of under £100,000 per year making their tenancy an Assured Shorthold (AST), so these changes will apply to most Landlords in England. Landlords renting to company Tenants or receiving rent exceeding £100,000 per year will continue to be exempt as the bill will not apply to company or contractual (Non AST) tenancies.
WHEN WILL THIS TAKE EFFECT?
Once the bill passes into law, it will apply to new and existing tenancies, defaulting fixed term tenancies to periodic immediately. It should be noted that existing tenancies with clauses for future rent increases and/or break clauses will no longer apply as the new legislation takes precedent.
HOW LONG CAN MY TENANT(S) STAY IN MY PROPERTY?
As above, leases will no longer have a fixed end date and will roll over indefinitely until a valid notice is served by Landlord or a Tenant. Tenants will have a minimum twelve month protected period.
WHAT HAPPENS IF I NEED MY PROPERTY BACK?
Current Section 21 notices will no longer exist and will be replaced by an existing (evidence based) Section 8 notice framework. Landlords needing to sell or move themselves or their immediate family into a property, can do so under a newly extended notice period of four months, which cannot be served until eight months after a Tenant takes occupancy, guaranteeing them one year minimum. Landlords must be prepared, and able, to provide evidence of their need for possession and will be prohibited from marketing their property for rent for twelve months from the date the notice expires. These requirements are to ensure notices remain legitimate. How such evidence might be called on or presented remains unclear at this time.
BREAKCLAUSES IN GENERAL
Tenants will be able to give Landlords two months’ notice at any point once they have moved in. Whilst not ideal the cost, time, and effort of moving home means few Tenants would have any interest relocating and would be expected to remain much as they do now, moving only when circumstance require change so Landlords should not be too concerned here.
Outside of Landlords wishing to sell or move in, Landlords will be permitted to serve notice should their Tenant breach their rental contract. A list of notices covering breaches can be viewed here.
RENTAL PAYMENTS AND ARREARS
All rent will be payable monthly only. All advance payments will be prohibited. JLLs due diligence and processes ensure 97% of all JLL client rental monies are received within three working days of due date and 99.8% paid within 30 days of any due date.
Tenant arrears of three months will enable Landlords to serve four weeks’ notice.
WHAT ABOUT STUDENTS AND OVERSEAS TENANTS?
The same applies. Despite it being widely accepted that the student market is higher risk, there is no exemption in the bill at present. Landlords are advised to consider rent protection insurance policies or guarantors to offset any risk.
ADVERTISING AND INCREASING RENTS
When marketing, Landlords will no longer be able to accept a rental offer or bid that exceeds the advertised property price.
Landlords will be able to propose market rent increases annually using a Section 13 notice, providing two months’ notice to Tenants. Tenants may challenge the increase via the First-Tier Tribunal Service (FTT), if they feel it exceeds market value.
The FTT are unable to increase rent beyond the Landlords proposed amount but may rule the same amount (or lower) to determine an impartial market valuation. The increased rent will take affect from the date of the ruling (or a following date set by the FTT, typically the next due date). Crucially, it will not be backdated to the Section 13 expiry date. How long a ruling will take is not clear, but reports suggest it could be up to six months. There are concerns this may encourage Tenants to challenge increases. Fair market linked increases will reduce Tenants challenging annual increases.
PETS
Landlords can no longer reasonably refuse pets but can require Tenants to acquire appropriate pet insurance. A Landlords superior lease that prohibits pets might be considered a reasonable reason to refuse for example.
PENALTIES AND FINES
Up to £7,000 for first time offences and £40,000 for more serious and repeat non-compliance.
