News

The Bill no landlord wanted to receive…

May 19, 2023

The long-awaited Renter’s (Reform) Bill* was (finally!) released just over 36 hours ago. We have poured through all 89 pages of the Bill to update landlords on everything they want to know at this stage.

Contents

The Bill is split into five parts which in turn are split into a total of seven chapters, with four Schedules:

+ Part 1 – Tenancy Reform:

Chapter 1 – Assured Tenancies

Chapter 2 – Tenancies that cannot be Assured Tenancies

Chapter 3 – Penalties for Unlawful Eviction or Harassment of Occupier

+ Part 2 – Residential Landlords

Chapter 1 – Meaning of “Residential Landlord”

Chapter 2 – Landlord Redress Schemes

Chapter 3 – The Private Rented Sector Database

Chapter 4 – Part 2: Supplementary Provision

+ Part 3 – Enforcement Authorities

+ Part 4 – Supported and Temporary Accommodation

+ Part 5 – General

+ Schedule 1 – Changes to grounds for possession

+ Schedule 2 – Consequential amendments relating to Chapter 1 of Part 1

+ Schedule 3 – Financial penalties

+ Schedule 4 – Application of Chapter 1 of Part 1 to existing tenancies

 

The key parts of the Bill relating to what landlords want to know at this stage are contained predominantly in Part 1, Chapter 1, and Schedule 1. We will therefore concentrate on that Part and Schedule within this update.

 

When?

At this stage, nothing will change in terms of fixed terms, section 21, or rent increases. However, over the coming months, the contents of the Bill will be debated by Parliament. During these debates, Parts, Chapters, and sections may be added, amended, or removed.

Given the Bill contains a considerable number of changes to current legislation, it is unlikely to be implemented as an Act (i.e., law) on a quick timetable. It is our view that implementation is more likely to be in the latter part of 2023 or early 2024. In addition, even when the Bill becomes law, it is likely that some elements will take even longer to become applicable.

At this stage, we are understandably unable to say with any certainty when the Bill will become an Act. We have, however, been able to pull together a good indicator of what landlords should expect in relation to what they want to know:

 

New Tenancies & Section 21

As indicated in the White Paper, the Bill changes the current system where a tenancy can be assured or assured shorthold and fixed or periodic, to a new single system of periodic tenancies. Such tenancies appear to be allowed to take rent only monthly and must be in writing (see sections 1 and 9). Failure to provide written terms for the tenancy can result in a fine of up to £5,000 (see section 11).

Under the Bill, tenants will need to provide two months’ notice to end a tenancy and landlords will only be able to end a tenancy via grounds under section 8 of the Housing Act 1988 (‘the Act’) as section 21 will be removed from the Act (see sections 14(3), 3(1) and 2 accordingly, and Schedules 1 and 2 accordingly).

These changes will be implemented in two stages, such stages to be set by the Secretary of State (see sections 67(1) and 67(4)). Interestingly, whilst the White Paper indicated that at least six months’ notice would be given of the first stage (where any new tenancies will be governed by the new rules) and at least a further 12 months’ notice after the first for the second stage (after which all existing tenancies will be transitioned to the new rules), there is no such provision set out in the Bill.

Landlords of tenants who have become periodic following a fixed term prior to the implementation of the second stage can be reassured to note that they can bring accelerated court proceedings following expiry of a valid section 21 notice at any time prior to the implementation of the second stage and that such proceedings will be allowed to conclude even if the second stage begins before its conclusion.

Pleasingly, the Bill has recognised that the compliance requirements regarding safety and information (required by sections 21A and 21B of the Act) are not proportionate! Therefore, only deposit protection will be required to ensure a section 8 notice is valid in compliance terms (see sections 2 and 19(5)).

 

Grounds for possession

The updated existing and new grounds in Schedule 2 of particular interest are:

Ground Type Notice period Of note
1 – Occupation by landlord or family

 

 

Updated

Mandatory 2 months ·        Landlord, partner, parent, grandparent, sibling, child, or grandchild to live in the property.

 

·        Cannot be used within first 6 months of a new tenancy.

·        Cannot relet for 3 months following use of this ground (see section 10(3)).

·        Breach can result in a criminal conviction or fine of up to £30,000 (see section 11).

 

1A – Sale of dwelling house

 

 

New

Mandatory 2 months ·        Landlord to demonstrate intend to sell.

·        Cannot be used within first 6 months of a new tenancy (unless compulsory purchase).

·        Original landlord cannot relet for 3 months following use of this ground (see section 10(3)).

·        Breach can result in a criminal conviction or fine of up to £30,000 (see section 11).

8 – Rent arrears

 

 

Updated

 

Mandatory 4 weeks ·         Same as current ground 8.

 

·         However, arrears because of late payment of benefits do not count.

8A – Repeated rent arrears

 

 

New

 

Mandatory 4 weeks ·         Tenant in at least 2 months arrears at least 3 times.

 

·         However, arrears because of late payment of benefits do not count.

10 – Some rent arrears

 

 

Updated

Discretionary 4 weeks ·         Same as current ground 10.
11 – Persistent late payment of rent

 

 

Updated

Discretionary 4 weeks ·         Same as current ground 11.

In adding new mandatory grounds for a landlord who wishes to live in a rented property (or their close relatives) or to sell a rented property with a requirement for two months’ notice, the Bill appears to ensure that the abolition of section 21 will not unduly penalise landlords in such circumstances.  These appear to be sensible additions to account for the removal of section 21.

Landlords will note that the mandatory and discretionary rent arrears grounds have been retained, although the notice period has been extended to four weeks. However, of note is the Bill’s introduction of the new mandatory repeated arrears ground, which seeks to rectify the burden of tenants who ‘play the system’. This addition is also to be welcomed.

 

Rent review

The Bill makes amendments to sections 13 and 14 of the Act to only allow one rent increase per year, which will require a minimum of two months’ notice (see sections 5(1) and 5(4)). In addition to this, the Bill will end the use of rent review clauses (see section 5(2)).

 

Tenant’s rights – pets

The Bill gives tenants the specific right to keep a pet where the have asked for their landlord’s consent to do so. The landlord cannot unreasonably refuse such a request and must confirm the response in writing within 42 days (see section 7(1)). If this requirement is breached, the tenant can apply to court for an order requiring compliance (see section 7(1)).

As a compromise, the Bill allows a landlord to require pet insurance and amends the Tenant Fees Act 2019 to reflect this (see sections 7(1) and 8 respectively).

 

Our View

Government has finally put the meat on the bones of its intended reforms, but we still await the final version (when the Bill becomes an Act) to allow landlords to know what these reforms will look like in practice. This will not happen until around late 2023/early 2024.

For a few years now, landlords have (rightly) feared the idea of section 21 being abolished – we now know that this is going to be a reality in around spring 2025. The fear was that landlords would be stuck with tenants when they needed the property back for reasons unrelated to tenant behaviour (such as a sale of the property) or where the tenant is playing the rent arrears game (you may have experienced tenants paying off a small amount to defeat the mandatory basis of a claim). It is therefore good to see that the abolition of section 21 is to be accompanied by revised and new grounds as to why a tenant can be evicted. It appears from considering the full detail of these grounds within the Bill that landlord’s concerns will be met. In addition, the removal of most of the compliance requirements when seeking possession is a positive (and unexpected!) highlight for landlords.

Interestingly, there is no meat on the bones in the Bill regarding court processes. Given that tenants rarely vacate on receipt of a section 8 notice – leading to a court claim and hearing – it is concerning that no proposals for streamlining the process have been provided. Indeed, government’s unwillingness to expedite the court process for section 8 claims via the accelerated procedure is unfortunate as surely acceleration would work in cases of landlords wishing to move into or sell the property. In addition, government remains of the view that it is not possible to reduce the current four to eight weeks’ hearing target (which is sometimes not met anyway depending on an individual court’s caseload levels!) for some grounds. It has been a long-standing concern of ours that court reform is required to ensure cases can be dealt with more expeditiously. We shall simply have to wait and see what ‘digitisation’ looks like in reality…

Overall, whilst change is rarely welcomed where there are long-standing and seemingly workable solutions already in place, those landlords who are decent and reasonable should have no concerns about the content of the Bill.

 

If you need support in relation to any residential landlord law related issue, then get in touch with Landlord Support for some free and friendly initial advice followed by fixed fee support throughout your case:

01704 790 532

hello@landlord-support.co.uk

www.landlord-support.co.uk

* Renters (Reform) Bill

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