A closer look at The Renters Reform Bill 2023
In May 2023, the government introduced The Renters (Reform) Bill 2023, with the aim to address England’s housing crisis and create a fairer rental market.
The government believes the current system favours landlords and that these changes will strengthen tenants’ rights. The Bill is still at an early stage and may change before it becomes law.
The main points, as things stand, are set out below.
The Overall Concensus…
The Bill will bring more regulation to the private rented sector, landlords and tenants will have less freedom to agree their own tenancy terms.
Wales has already made similar changes, replacing tenancy agreements with occupation contracts, yet early signs suggest the rental market there has faced difficulties.
While the Bill could be amended, it is estimated that the new Bill will become law in or around October 2024; landlords should be aware of the potential changes so they can ensure compliance when the new system comes into place.
If you need help reviewing tenancy agreements, recovering possession, or dealing with rent arrears, please get in touch with the team at Orwins.
How the Bill Affects Landlords and Tenants
The Bill will abolish assured shorthold tenancies, most residential tenants, except long leaseholders, will become assured tenants under a single system.
An assured tenancy is a more secure form of tenancy, it can be terminated only by the tenant leaving the Property or the landlord satisfying one of several specific statutory grounds.
#1 Section 21 Notices
The abolition of Assured Shorthold Tenancy Agreements also entails the abolition of section 21 of the Housing Act 1988, this allowed landlords to recover possession of the property without any specific reasoning.
#2 Period of Tenancy and Tenant(s) Notice Period
All assured tenancies will be periodic, rather than for a fixed term, the tenancy must be either 1 month or no longer than 28 days.
Tenants may terminate the tenancy by serving two months’ notice at any time, the notice must take effect at the end of the period of the tenancy. A landlord cannot require a tenant’s notice to quit to be in a particular form, and any clause in a tenancy agreement to that effect will not be enforceable.
It is hoped the notice period will change, as the lack of more than two months’ certainty in the term of a tenancy could cause serious difficulties for landlords, who will be unable to plan with any certainty how long their property will be rented.
#3 Section 8 Notices
Landlords will only be able to seek to terminate the tenancy if they can make out at least one of the statutory grounds.
They will need to serve a Section 8 Notice identifying the ground(s) upon which they intend to rely, and then to commence possession proceedings if the tenant does not comply with the notice and vacate.
There are several statutory grounds a landlord can use when serving a Section 8 Notice. These grounds will be updated and added to.
A new mandatory ground will allow landlords to recover possession if they intend to sell, although it is not yet clear what evidence the court will require to prove this intention.
There will also be an amended mandatory ground if the landlord or a close member of the landlord’s family requires the property as their only or principal home.
The current Ground 8 (mandatory ground for at least 2 months’ rent arrears) will be amended to disregard from the arrears any universal credit payment that the tenant is entitled to receive, which has not yet been paid.
The notice period will also increase from 2 weeks to 4 weeks; increasing the notice period to 4 weeks will now mean most landlords will have 3 months of arrears by the time possession proceedings are issued.
There will also be a new mandatory ground for repeated rent arrears, this applies if at least two months’ rent is unpaid on three separate occasions within three years. This change aims to prevent tenants from paying off arrears just before a hearing to avoid possession.
#4 Rent Reviews
Landlords will no longer be able to rely on rent review clauses in tenancy agreements, rent can only be increased once a year, using the statutory process under Section 13 of the Housing Act 1988.
Landlords must give tenants two months’ notice of any increase. Tenants can challenge the new rent by applying to the First Tier Tribunal. Rent increases which have been agreed and have become binding on the tenant before the extended application date will be unaffected.
#5 Prohibition of Pets
Often, tenancy agreements provide that a tenant cannot keep a pet. A landlord will not be able to unreasonably refuse a tenant’s request for permission to keep a pet; however, the landlord will be able to demand that the tenant have insurance in place for any damage caused by a pet or to pay the landlord’s reasonable costs of obtaining such insurance.
#6 Terms of the Tenancy Agreement
Landlords must give tenants a written statement of terms and information about the tenancy.
These terms will be set by separate regulations, not following the rules can lead to fines or, in some cases, a criminal offence.
#7 Tenancy Deposits
The rule that applied to Section 21 Notices, whereby any deposit must be held in a government-authorised scheme, will now apply to all orders for possession.
Where a deposit has been taken, the court can only make an order for possession if the deposit is held in an authorised scheme and the requirements have been complied with, unless the deposit has been returned.
It is not yet clear whether the other requirements of serving a valid gas safety certificate, EPC and How to Rent booklet will also be carried across.
#8 Property Portal
The government will introduce a Property Portal containing a register of residential landlords and properties.
Properties cannot be marketed until they are registered, registration may require a fee, and letting a property without registering could lead to prosecution. For existing tenancies, it will apply once the fixed term expires.
Legal Guidance for Tenants & Landlords
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