Earlier this year, the Government published the Fairer Private Rented Sector White Paper, which sets out a plan of action to reform the private rental sector in the UK.
The purpose of the plan is to level the playing field between landlords and tenants so that tenants can stay longer in their rental properties unless they choose to leave or their landlord has a good reason to ask them to leave.
The most significant change for landlords will be the removal of the ability to issue a non-fault s21 notice to recovery possession for any reason.
Renters Reform Bill: Key Changes
- Require privately rented homes to meet the Decent Homes Standard for the first time. This is designed to give renters safer, better value homes and remove the blight of poor-quality homes in local communities.
- Introduce quality improvements in the areas that need it most. Pilot schemes will be run with a selection of local councils to explore different ways of enforcing standards and work with landlords to speed up adoption of the Decent Homes Standard.
- Section 21 ‘no fault’ evictions will be abolished, and a simpler, more secure tenancy structure will be introduced. A tenancy will only end if the tenant serves notice or the landlord has a valid ground for possession.
- The grounds for possession will be reformed to ensure landlords have adequate means to gain possession of their properties when necessary. The Government plans to expedite the landlord’s ability to evict those who disrupt neighbourhoods through antisocial behaviour and introduce new grounds for persistent arrears and sale of the property.
- Landlords will not be able to rely on rent review clauses in their tenancy agreements, and they will only be allowed to increase rent once each year.
- An Ombudsman will be introduced, and it will be mandatory for landlords to join. This is designed to make landlords accountable. It is hoped that this will provide fair, impartial, and binding resolution to many issues and be quicker, cheaper, and less adversarial than the court system. Alongside this, the Government are considering how to bolster and expand existing rent repayment orders and enable tenants to be repaid rent for non-decent homes.
- The Government will work with the Ministry of Justice and Her Majesty’s Courts and Tribunal Service to target the areas where there are unacceptable delays in court proceedings. The Government will also strengthen mediation and alternative dispute resolution to enable landlords and tenants to work together to reduce the risk of issues escalating.
- A new Property Portal will be introduced to ensure tenants, landlords, and local councils have the necessary information. The portal will provide a single route for landlords to understand their responsibilities. Tenants can access information about their landlord’s compliance, and local councils will access better data to root out rogue landlords.
- Local councils’ enforcement powers will be strengthened against landlords who do not comply with the legislation.
- It will become illegal for landlords or agents to have blanket bans on renting to families with children or those receiving benefits. They will also explore if similar action is needed for other vulnerable groups, such as prison leavers.
- Tenants will have the right to request a pet on their property, which the landlord must consider and cannot unreasonably refuse. The Tenant Fees Act 2019 will be amended so landlords can request that their tenants buy pet insurance.
- The Government will work with industry experts to monitor the development of innovative market-led solutions to passport deposits. This will help tenants who struggle to raise a second deposit to move around the private rented sector more easily and support tenants to save for ownership.
Recovering possession of your property
Under the proposed Renters Reform Bill, landlords lose the freedom to regain their property for any reason. They will be able to seek to recover their properties if they need to sell or move into the property. Both grounds will require 2 months’ notice and the use of the moving in and selling grounds will be limited in the first six months of a tenancy. The landlord’s right to recover possession if the tenant breaches the tenancy remains unchanged. Read more about how to recover possession of your property.
Can a landlord increase the rent?
The proposed changes are that a rental increase can only take place once a year by the landlord serving a section 13 notice to increase the rent. If the tenant does not agree to the increase the matter can be referred to the Tribunal who will decide on the appropriate level of increase.
When will the Renters Reform Bill become law?
The former Secretary of State for Levelling Up, Housing and Communities, Michael Gove pledged to turn the bill into law by the end of 2022.
Will the proposed changes impact on the landlord’s investment?
Landlords can still recover the property if the tenant breaches the tenancy and have new rights to seek possession when they need to sell or occupy the property themselves.
If the tenant refuses to agree to a rent increase, the landlord has the right to make an application to the Tribunal to increase the rent to market rate.
Much of the other introductions are arguably not new so, any impact on investment in the private rented sector could well be limited for good landlords especially as the demand for rental properties is likely to continue.
If the changes result in better fairness and regulation of the private rented sector as a whole, that could be positive for a landlord’s investment in the longer term.
Why Moore Barlow?
We have considerable experience advising commercial landlords, developers, lenders, commercial tenants, private individuals and landowners on all real estate disputes.
Our approach focusses on providing advice at an early stage to help you reach a cost-effective solution as quickly as possible.