Renters (Reform) Bill: Key Provisions, Implications For Landlords & Tenants

*This article was originally written by Sarah Cummins, Senior Associate at Anthony Gold for LexisNexis.*

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What are the main provisions of the Renters (Reform) Bill?

There is a lot packed into the Renters (Reform) Bill which was introduced in the House of Commons on 17 May. The key items include:

1. Abolishing section 21 notices and ending assured shorthold tenancies

There will be no more Section 21 notices which means going forward all notices seeking possession will be ground-based notices under s.8 Housing Act 1988. The end of s.21 also means the end of assured shorthold tenancies (‘ASTs’) so that all tenancies will be assured tenancies. Tenancy deposit protection, a key feature of the current AST regime, will continue apply so that a failure to comply with the tenancy deposit rules will prevent service of a valid s.8 notice for almost all grounds.

2. Ending fixed-term tenancies

Fixed-term tenancies will no longer be allowed and all tenancies will be periodic. The periods must be monthly or not longer than 28 days. Tenants will be able to end the tenancy by giving 2 months’ notice to quit.

3. Reform of possession grounds

There are changes to existing possession grounds together with new grounds. Reference should be made to the Bill itself for full details. Key changes include the expansion of Ground 1 – landlord requires possession as his or his spouse’s/civil partner’s only or principal home – to include close family members. There will be a new Ground 1A for landlords who intend to sell. Both grounds can only be used after 6 months and where a tenant leaves following service of a notice, the landlord is prohibited from letting or marketing the property for 3 months.

There will be a new mandatory rent arrears ground ‘Ground 8A’ where a tenant is in at least 2 months’ arrears on 3 separate occasions over a 3 year period prior to service of the notice. The current mandatory Ground 8 (2 months’ arrears at the date of service of the notice and the hearing) will remain but the notice period will be increased from 2 weeks to 4 weeks.

Discretionary Ground 14 (nuisance) will be broadened so that any behaviour ‘capable of causing’ nuisance or annoyance will provide a ground for possession (as opposed to behaviour ‘likely to cause’ nuisance or annoyance).

There is also a new mandatory ground (Ground 6A) for compliance with enforcement action, allowing a landlord to seek possession if, for example, the landlord is in breach of a local authority enforcement notice or the landlord has been refused a property licence.

4. Restricting rent increases

Landlords will only be able to increase rent annually using the statutory notice procedure set out in s.13 Housing Act 1988 and the notice period will be increased from 1 to 2 months.  Tenants can challenge a rent increase in the First-tier Tribunal (Property Chamber). Landlords can no longer rely on contractual rent review clauses in their tenancy agreements.

5. Ombudsman and Private Rented Property Database/ Portal

All landlords will be required to join a redress scheme regardless of whether they use an agent to let the property. Landlords who fail to join can be fined. In addition, the Bill provides for the creation of a new PRS Database membership of which will be mandatory. This will provide the foundation for the Government’s future PRS Property Portal.

6. Right to request a pet

There will be a new term implied into assured tenancies that a tenant may keep a pet with the landlord’s consent unless the landlord’s refusal is reasonable. Landlords will be able to require tenants to obtain insurance to cover pet damage and the Tenant Fees Act 2019 will be amended to make this a permitted payment.

7. Written statement of terms

The Bill includes a new duty on landlords to give tenants a written statement of terms and information on or before the first day of the tenancy. This may be how the Government intends to incorporate information currently provided into the ‘How to Rent Guide’ into the new tenancy regime.

8. Financial Penalties and Offences

The Bill contains a range of new landlord duties and prohibitions, for example, prohibiting a landlord from purporting to grant a fixed-term tenancy or serving a notice specifying a ground they are not entitled to use. Breach of these prohibitions may result in financial penalties and/or constitute an offence. An important, but perhaps less publicised change, is that the Bill will amend the Protection from Eviction Act 1977 ‘PEA’ so that local authorities can impose financial penalties as an alternative to prosecution for unlawful eviction/harassment offences under s1 of the PEA.

How will the Renters (Reform) Bill affect landlords and tenants?

It is expected that the Bill will evolve as it proceeds through Parliament but there is no doubt that it will bring about significant change to the private rented sector.

Fixed term tenancies will become a thing of the past and landlords will have to adjust to all tenancies being open-ended and capable of termination by a tenant at any time on 2 months’ notice. This has raised concern particularly in the student let sector where landlords have argued that they rely on fixed-term tenancies to coincide with the academic year. There have already been indications that the Government is contemplating a carve out for the student lettings which may be inserted as the bill progresses.

While section 21 notices will also cease to exist it is not entirely true to say that there will no longer be any form of ‘no fault’ eviction. There will still be grounds for possession that do not require any fault on the part of the tenant, for example, possession required for occupation by a landlord’s close family member or because a  landlord intends to sell the property. These are common reasons why some landlords serve s21 notices now.

Aside from tenancy deposit requirements, the Bill, in its current form, does not make service of a s.8 notice conditional on landlords complying with their other duties, for example, giving a tenant a Gas Safety Certificate or Energy Performance Certificate. Restricting the ability of non-compliant landlords to regain possession has been popular in recent years and this is therefore likely to be disappointing to tenants.

It will be some time before the provisions affect landlords and tenants. Even once the final version of the Bill receives Royal Assent, the Act will not affect existing assured shorthold tenancies straight away. There will be a phased application of the provisions so that existing tenancies will be brought into the new regime later by way of an ‘extended application date’.

Will the Renters (Reform) Bill achieve its aims?

The explanatory notes explain that the objective of the Bill ‘is to ensure private renters have access to secure and decent home and that landlords retain the confidence to repossess their properties where have good reason to’.

While the Bill contains a range of financial penalties and offences to deter non-compliance commentators have pointed out that for a number of the new duties enforcement is dependent on local authorities being made aware of a breach. At present, the Bill contains no incentives for tenants to take action in respect of breaches, for example, by enabling them to seek rent repayment orders or compensation. Tenant bodies will be working to ensure loopholes are closed before the Bill is finalised so that the possession grounds are not open to abuse.

There are also items not included in the Bill including the Government’s plan for the Decent Homes Standard to apply to the PRS and proposals to improve the court process by way of ‘end to end digitisation.’ While the Government states it is still committed to these reforms and will bring forward separate legislation, many landlords are likely to be unconvinced by these reassurances particularly given the current lengthy delays applying for and enforcing possession orders.

What are the implications of the Renters (Reform) Bill for Family Lawyers?

*This section of the article was originally written by Robin Stewart and Sarah Cummins, Joint Managers of Private Sector Residential Landlord and Tenant at Anthony Gold for Resolution’s magazine – The Review.*

An end to “no fault eviction” may be nudging closer to reality, but there will still be avenues for landlords, and the Bill is at an early stage.

The end of “no fault eviction” in the private rented sector in England was promised by Theresa May’s government in April 2019, and the Renters (Reform) Bill 2023 will, when passed, finally bring this policy into effect. Tenants hope the bill will end unfair evictions and provide them with more stable homes. Meanwhile, landlords have complained that the reforms are leading to a reduction in the supply of homes available to rent, and they are wary of losing the right to evict tenants without having to prove a reason for doing so. When the plans were announced in 2019, the government focussed on the benefits for families who rented, with then Prime Minister Theresa May stating that landlords would “no longer be able to unexpectedly evict families with only eight weeks’ notice”.

In this article, we outline the most important parts of the bill for family law practitioners. These changes apply only in England as housing is a devolved issue and separate tenancy laws apply in other parts of the UK.

“In the future, landlords who wish to recover vacant possession of a property will need to serve a notice seeking possession under s8 of the Housing Act 1988.”

1. Abolition of section 21 notices and changes to evictions

The most prominent aspect of the reforms is the abolition of section 21 notices. These are the notices given by landlords to assured shorthold tenants to require them to leave without giving any specific reason.

The entire category of “assured shorthold tenancy”, the tenancy type which makes up an overwhelming majority of private sector lettings, will be scrapped, with the
result that private renters will have the similar security of tenure to housing association tenants.

Section 21 notices are popular with landlords who want to recover possession to sell their properties or remove a tenant they consider unsuitable. A section 21 notice (a
reference to notice being given under s21 of the Housing Act 1988) must give a minimum of two months’ notice. There are formal requirements and various prerequisites
for a valid section 21 notice, including that any deposit taken by the landlord must have been protected with a government-approved scheme. If these rules are complied with, tenants cannot prevent their eviction.

In the future, landlords who wish to recover vacant possession of a property will need to serve a notice seeking possession under s8 of the Housing Act 1988. Section 8 notices must cite one or more of the grounds for possession, which are set out in Schedule 2 to the Act.

The grounds include rent arrears, a breach of tenancy agreement, the tenant causing nuisance and several more niche situations. Importantly, not all of these grounds involve any “fault” by the tenant. There is a ground available to landlords who wish to move into the property themselves.

The Renters (Reform) Bill balances out the abolition of section 21 notices by strengthening the grounds for possession.

The existing right for landlords to obtain possession for the property to be used for them or their spouse or civil partner is expanded to include close family members. A
new ground 1A will be added, giving landlords a specific right to evict tenants because they intend to sell. These grounds will be available after six months has passed from the start of a tenancy, and where a tenant leaves following service of a notice under ground 1A, the landlord is prohibited from letting or marketing the property for three months.

The existing rent arrears grounds will be supplemented with new “Ground 8A”, which will apply when a tenant is in at least two months’ arrears on three separate
occasions over the three-year period prior to service of the notice.

New Ground 6A will allow a landlord to seek possession if, for example, the landlord is in breach of a local authority enforcement notice or the landlord has been
refused a property licence.

These changes are particularly significant because they all relate to “mandatory grounds” – where a mandatory ground is established (both at the time the notice was given and at the date of the court hearing) the court must make a possession order against the tenant. In contrast other discretionary grounds give the court a discretion to
make a possession order if it is reasonable to do so.

The expanded and strengthened grounds for possession will allow landlords to evict tenants easily in certain situations.

2. Implications for family breakdown and housing for children

Overall, private sector tenancies should become more secure and stable, but an assured tenancy in the private sector will still not be reliably a tenancy for life. Where
judges are considering housing options for children it would be reasonable to consider an assured tenancy with a private sector landlord will have similar security
to a tenancy with a social landlord. However, much will depend on the identity of the landlord – an institutional private sector landlord is much less likely to want to sell
a house compared to a private investor. An investment fund also cannot decide to move a family member in. This means that in real terms, not all private sector tenants
will enjoy equal security of tenure.

Nothing in the Bill affects the court’s power to transfer a tenancy under Schedule 7 to the Family Law Act 1996, but landlords might be more likely to object to a vesting order when they perceive themselves to be “stuck” indefinitely with the replacement tenant. The Family Court must give landlords an opportunity to make representations before making an order to transfer a tenancy.

Another problematic area for tenancies and relationship breakdown arises out of the right of any one joint tenant to give a notice to terminate the tenancy which is binding on all tenants. The bill as drafted would not change this, but it does specify that two months “notice to quit” must be given by tenants. That will at least provide a bit more time for tenants to make new arrangements.

Proposed New and Amended Grounds Affecting Private Landlords