A Summary of the Renters’ Reform Bill and what it means for the Private Rented Sector

More than 2.8 million people in the UK are spending a third of their income on housing that is ‘non-decent’, with 12% of privately rented properties posing an immediate risk to tenants’ health and safety.

Published earlier this year, the Government’s Levelling Up White Paper aimed to halve the number of poor quality homes by 2030.
On 16 June 2022, the Government published its 12-point action plan to deliver a fairer, safer, more secure and higher quality Private Rented Sector in its White Paper entitled ‘A Fairer Private Rented Sector’, aimed at levelling up the quality of private rented housing in all parts of the country via reforms contained in the Renters’ Reform Bill.

The Government’s key 12-point action plan includes:

1.    Legislating to introduce a legally binding Decent Homes Standard in the Private Rented Sector for the first time.

This is key to the Government’s mission to halve the number of poor quality rented housing by 2030.

2.    Accelerating quality improvements in the areas that need it most.

The Government plan to run pilot schemes with some local councils to trial improvements to the enforcement of existing private housing standards and explore ways of working with landlords to speed up adoption of the Decent Homes Standard.

3.    Abolishing Section 21 ‘no fault’ evictions and deliver a simpler, more secure tenancy structure.

The current tenancy system is lacking in flexibility and security; it offers renters fixed term tenancies with rolling periodic tenancies, which can be difficult to understand and negotiate. The Government’s reforms aim to move all tenants who would have previously had an Assured Tenancy or an Assured Shorthold Tenancy onto a single system of rolling ‘periodic’ tenancies.

Tenants will be required to give two months’ notice to terminate a tenancy and landlords will only be able to evict a tenant in reasonable circumstances, to be defined in law, so that grounds for repossession must be fair, comprehensive and efficient.

Arguably, some renters may prefer to have an end date to their tenancy and may be put off by a rolling term.  It will therefore be important that the Government sufficiently prepares landlords and tenants by raising early awareness of this change and what it might mean for both landlords and tenants.

4.    Reforming grounds for possession to make sure landlords have effective means to gain possession of their property where necessary.

A new ground for repossession will be introduced for landlords who wish to sell their property and another to allow landlords and their families to move into a rental property.  Such grounds cannot be used in the first 6 months of a tenancy, providing security to tenants at the same time as providing a greater degree of flexibility to landlords.

A new ground for repossession will also be introduced where a tenant has been in at least 2 months’ rent arrears 3 times within the previous 3 years, thereby supporting landlords financially and also protecting tenants from eviction for one-off arrears.

5.    Allowing increases to rent once per year (replicating existing mechanisms) , ending the use of rent review clauses and improving a tenants’ ability to challenge excessive rent increases through the First Tier Tribunal.

When a landlord needs to adjust rent, changes should be predictable and allow time for a tenant to consider their options.  Rent increases will only be permitted once per year and landlords will be required to provide tenants a minimum of 2 months’ notice of any change in rent.

6.    Strengthening a tenants’ ability to hold landlords to account and introduce a new single Ombudsman that all private landlords must join.

Powers of the Ombudsman will include compelling landlords to issue an apology, take remedial action and/or pay compensation to a tenant of up to £25,000.  Where the service provided by a landlord or a property is not up to standard, the Ombudsman will be able to require landlords to reimburse rent to its tenants.

7.    Working with the Ministry of Justice and Her Majesty’s Courts and Tribunals Service (HMCTS) to target the areas where there are unacceptable delays in court proceedings.

The aim is to introduce court reforms in areas that particularly hold up landlords’ possession proceedings, including county court bailiff capacity, paper-based processes, a lack of advice and a lack of prioritisation of cases. The court process will also be made easier by becoming further digitalised, so that better advice and guidance can be given.

Mediation services for landlords and tenants will be improved and increased.

8.    Introducing a new Property Portal to make sure that tenants, landlords and local councils have the information they need.

This will help landlords to understand their legal obligations by accessing advice and guidance on one comprehensive portal and will allow tenants to view a register of landlords/properties.  Clear communication and guidance will help landlords and tenants to better understand their rights and responsibilities.  Landlords will also be required to provide a written tenancy agreement to avoid disputes about what has been agreed.

9.    Strengthening local councils’ enforcement powers and their ability to crack down on criminal landlords.

Local councils will be given increased powers to investigate and target illegal business activity and a national framework for setting fines will be introduced.

10.    Making it illegal for landlords or agents to have blanket bans on renting to families with children or those in receipt of benefits.

The Government will also explore whether action is needed for other vulnerable groups that may struggle to access accommodation within the Private rented Sector, such as prison leavers.

11.    Giving tenants the right to keep a pet in their property, by requiring landlords not to unreasonably refuse such a request.

The Tenant Fees Act 2019 will also be amended to include pet insurance as a permitted payment, making it easier for landlords to accept pets.

Landlords will also be encouraged to allow reasonable requests by tenants to redecorate, hang pictures or change appliances, provided they return the property to its original state when they leave.

12.    Working with industry experts to monitor the development of innovative market-led solutions to passport deposits.

The reforms recognise that funding a new deposit before the deposit for a tenant’s current home has been returned can prevent tenants from moving out of sub-standard properties and push home ownership further out of their reach.  The Government therefore aims to work alongside groups such as the Tenancy Deposit Working Group to monitor and review market-led solutions and the current deposit protection market, taking further action, including legislating, if required.

The Renters’ Reform Bill will be the first step to levelling up the Private Rented Sector, and ensuring renters have a safe, secure home that is up to standard and provides better value, wherever they are in the country, whilst ensuring landlords are adequately supported and that local councils have greater powers to use against landlords who provide sub-standard accommodation.