Reform of the private residential rental market has been a hot topic for some time and the Government had made it clear that they are committed to reforming the residential rental market to offer protection for private residential tenants. Following on from the various consultations, the Government introduced the Renters' (Reform) Bill to Parliament on 17 May 2023.
Some of the key themes of the Bill are as follows:
Tenancy Structure
1. The Bill proposes a move to simpler tenancy structure where assured shorthhold tenancies are abolished and all assured tenancies are periodic.
2. A fixed term tenancy of more than seven years cannot be an assured tenancy which will give some comfort to mortgage lenders regarding the potential risk of a long residential lease becoming an AST when the ground rent increases above the relevant levels.
Obtaining possession
3. The current Section 21 "no fault" eviction procedure will be abolished. This is the standard two month notice process which does not require a landlord to provide any grounds for requiring possession from the tenant.
4. The Bill inserts new grounds of possession into the grounds set out at Schedule 2 of the Housing Act 1988.
5. The Bill proposes new grounds for possession and amends the current grounds. Some of the main changes are as follows:
a. A new ground for possession; if the tenancy has existed for at least six months and the landlord requires possession of the property as the only or principal home for the landlord, the landlord's spouse, civil partner or person the landlord lives with or the landlord's family.
b. A new ground for possession; If the landlord intends to sell (or transfer) the property and the tenancy has existed for at least six months or a compulsory purchase order has been made.
c. A new ground for possession; If the landlord requires the property for the purpose of housing a person who will be employed by the landlord in agriculture as a seasonal or permanent employee.
d. If the property was let to a tenant in consequences of their employment and the employment has ended which now becomes a mandatory ground for possession
e. There are new provisions relating to supported accommodation and obtaining possession in specific circumstances encountered in that sector.
f. There are amendments to the redevelopment ground to refer to the "relevant landlord" and to ensure that possession cannot be obtained unless the tenancy began at least six months before the date specified in the notice.
g. There are a new grounds to deal with repeated rent arrears, which will be satisfied if within a three year period if the rent is payable monthly at least two months' rent was unpaid for at least a day on at least three separate occasions, or if the rent is payable more frequently at least eight weeks rent was unpaid for at least a day on at least three separate occasions.
h. The anti-social behaviour ground is amended to, in theory, make it easier to establish.
6. The Bill also proposes new notice periods for the grounds set out within Schedule 2 of the Housing Act 1988 including changing the rent arrears notice period from two weeks to four weeks.
7. There will be reforms to the Court possession procedure to make the process smoother and to lessen the number of cases which end up in Court.
8. There are new provisions relating to what a landlord can do following possession. For example, if a landlord successfully obtains possession on the basis that they require the property for their own use, they will be unable to let or market the property for a period of three months beginning on the date specified in the relevant notice. There are other similar provisions in relation to other grounds of possession.
9. There will be a new statutory form of notice of proceedings for possession published which will be a prescribed form.
Rent control
10. A landlord will still be entitled to increase their rent to a market rent but the Bill proposes stronger protections to stop "backdoor" evictions by allowing tenants to appeal against the imposition of above market rents designed to force them to move out.
Pets
11. The Bill proposes a new implied term into every assured tenancy to allow a tenant to keep a pet at the property if the tenant asks and the landlord consents. A tenant does not have to be the owner of the pet but they must permit the pet to live at the property.
12. The request for consent must be in writing and include a description of the pet for which consent is sought.
13. The landlord's consent cannot be unreasonably refused. It would be reasonable to refuse consent if it would cause the landlord to be in breach of their superior lease or they have sought consent from their superior landlord and it has not been forthcoming.
14. The Bill includes time frames for the provision of a response to any such request for consent (i.e. 42 days).
15. There will be an implied term that at the time of consenting the landlord must confirm that as a condition of the consent the tenant must maintain insurance that covers the risks of the pet damage to leave that is reasonable given the nature of the pet and the property or that the tenant indemnifies the landlord for maintaining the relevant insurance. The Tenant Fees Act 2019 will be amended to allow for the landlord to recover these sums.
Ombudsman and Property Portal
16. The Bill provides for the provision of a new Ombudsman that all private residential landlords must join.
17. A private residential landlord will need to be registered with the Ombudsman before marketing a property for rent.
18. Additionally there will be a new Property Portal which will act as a database of all residential landlords and privately rented properties in England.
19. A person must not market a property for the purposes of creating a residential tenancy unless there is an active landlord entry in respect of the person who will grant the tenancy and there is an active dwelling entry in respect of the property.
20. There will be unique identifiers which will need to be stated on all marketing documentation.
21. There is likely to be a fee levied in respect of the Property Portal but this is subject to separate regulations.
Other issues
22. The Bill introduces stricter financial penalties and offences with regard to the breaches of the Bill and/or other relevant legislation such the Protection from Eviction Act 1977.
23. It is envisaged that there will be transitional provisions made via regulations to deal with existing tenancies. No guidance has been given on those transitional provisions at this stage.
The Bill has had its first reading but there is a still long way to go before the Bill is enacted and it is likely that there will be substantive changes to the proposed reforms as it passes through Parliament.
As your trusted advisers, we will continue to keep an eye on the progress of the Bill and keep you abreast of any major developments. However, if you have any queries, please contact Guy Knight or Gwyneth Barton of our Property Litigation team.
