Housing policy was a key concern for voters in the last General Election.
The Renters’ Rights Bill was introduced on 11 September 2024. The Bill is still in its early stages, and specific details may change as it progresses through the legislative process. Some of the key changes are outlined below.
An end to Assured Shorthold Tenancies
Most private rental sector tenancies are granted as assured shorthold tenancies (granting a fixed term of not less than six months) or assured tenancies for a longer period. The Renters’ Rights Bill will remove fixed term tenancies which will be replaced by periodic tenancies which continue indefinitely unless validly terminated. Thus, it will no longer be possible to create assured shorthold tenancies which have long provided landlords with liquidity in the Private Rental Sector through the more flexible process of regaining possession of rented property. For tenants, this change aims to provide them with greater security and flexibility.
An End to Section 21 Evictions in respect of Assured Shorthold Tenancies
Section 21 of the Housing Act 1998 allows a landlord to evict a tenant after the expiry of the initial six-month fixed term granted by the assured shorthold tenancy or where the assured shorthold tenancy is on a periodic basis on provision of not less than two months’ written notice.
It is not necessary for the landlord to provide a reason, and this is known as the “no fault” eviction process. The Renters’ Rights Bill aims to change this by placing a ban on ‘no fault’ evictions and instead requiring the Landlord to prove a ground for eviction.
Under the new arrangements, landlords may not evict a tenant, move in or sell the property within the first 12 months of the tenancy, which is restrictive for a landlord should their circumstances change. The tenant on the other hand can end the lease by giving just 2 months’ notice to the landlord at any time during the tenancy agreement.
Grounds For Possession of Assured Periodic Tenancy
The Renters’ Rights Bill will only allow landlords to seek to regain possession of their property on certain prescribed mandatory and discretionary grounds through service of a section 8 notice.
The specific grounds and notice periods are detailed in Section 4 of the Bill. Mandatory grounds for possession include (but are not limited to) circumstances where a landlord wishes to sell the rented property or move itself or a family member back in but subject to provision of not less than 4 months’ written notice which cannot be served before expiry of the first year of the tenancy.
Where arrears of rent accrue, the Bill will only allow proceedings for termination to begin where tenants fall into arrears of more than three months (currently two months) and subject to provision of not less than four months’ prior notice.
This means that a tenant could remain in occupation of the Property having not paid rent for a period more than 7 months prior to the Section 8 Notice becoming enforceable.
Given that the maximum security deposit than can be taken from a tenant at the commencement of the tenancy under the current rules where the annual rent does not exceed £50,000 per annum is 5 weeks’ rental, this requirement seems prejudicial for landlords.
Rent Increases
As a landlord, you have certain expenses such as maintenance, repairs, taxes and insurance. You are also not immune from things like inflation. This means that you may need to increase rent according to market rates. However, the Renters’ Rights Bill will restrict how you can do this.
You will only be able to increase rents once per year in line with market rates by serving a section 13 notice. The tenant is entitled to two months’ notice of the increase and has the right to challenge any increase through a formal tribunal process. The new rent will not be payable until any challenge has been concluded.
Landlord Ombudsman
The new Bill also introduces a Landlord Ombudsman Service, which all private landlords must join. The Ombudsman Service is designed to act as an alternate dispute resolution method should disputes arise. This will be funded by landlords via a new landlord subscription fee the amount of which remains to be confirmed.
The Decent Home Standard
The Bill proposes a ‘decent home standard’. This sets minimum requirements for private rentals in terms of safety and comfort for the tenant and incorporates the concept known as Awaab’s Law to ensure that private landlords deal swiftly with any mould or damp conditions in the rented property.
Preventing Rental Discrimination
We understand the need to review the financial status of potential tenants. Nonetheless, this must be done based only on affordability. The Renters’ Rights Bill aims to prevent rental discrimination by prohibiting adverts like ‘No DSS’.
Set Rental Prices
The new Bill attempts to crack down on rental “bidding wars” by requiring landlords to publish a set rental price when marketing a property. Landlords will not be able to encourage or accept bids above the published price.
How 3CS can help
The Bill is in its early stages and could be subject to change. Our experienced team of property solicitors will be following the Bill’s progress carefully and are more than happy to keep you informed.
For further advice on the subject or anything else regarding property law, don’t hesitate to get in touch.
