Renters (Reform) Bill update

On 17 May 2023, the Government introduced the long-awaited Renters (Reform) Bill to the Commons to “bring in a better deal for renters” in the rented sector  and make significant changes to the Housing Act 1988 (HA1988).

The Bill is making its way through Parliament  and is now unlikely to receive Royal Assent until the spring of 2024 and is unlikely to come into force before October 2024 at the earliest.  Therefore we are unlikely to see any immediate changes but when we do, those changes will be significant and, amongst others, include:

• Ending of certain kinds of assured tenancy.
• Changes to the grounds for possession in relation to assured tenancies.
• Changes relating to rent and other terms of the assured tenancy. Landlords will, for example, only be able to increase the rent annually by giving 2 months’ notice in accordance with section 13 of HA1988); these changes will apply to social housing and non social housing prodcuts and
• The introduction of a ‘landlord redress scheme” for prospective, current or former residential tenants to make a complaint against a member of the scheme to be independently investigated and determined by an independent individual.

The Bill is intended to address long stated concerns that some renters face a “ precarious lack of security”. These elements of the Bill have been well publicised in the media in the context of the proposed abolition of the Landlord’s right to terminate an assured shorthold tenancy (AST) which is often referred to as a ‘no-fault eviction’.

It is probably more accurate to say that the main thrust of the Bill  set out, under the heading ‘End of certain kinds of assured tenancy’, is the abolition of ASTs entirely and the removal of the ability to grant any form of fixed term tenancy. This is a significant change to the short-term lettings market and the balance of power between landlord and tenant. The Bill effectively proposes that all rental properties ( private and social housing tenancies)  will be under a periodic tenancy.

A further effect of these potentially far-ranging changes will be that any tenancy agreement entered into where the annual rent is between £750 (£1,000 in London) and £100,000 will be a full periodic (monthly) assured tenancy which may only be terminated by the landlord where one (or more) of the grounds for possession in schedule 2 HA1988 are satisfied.

To address the concerns around being able to recover possession of a property let on a full assured tenancy, the Bill proposes to amend the current grounds for possession which will allow landlords to recover possession in limited circumstances where:

1. the Landlord requires possession to occupy the property as their or their spouse’s/civil partner’s, or close family member’s only or principal home (Ground 1) or the landlord intends to sell the property (Ground 1A).

1. Grounds 1 and 1A will only be available where the tenancy has existed for at least six months and where the landlord obtains possession on these grounds the landlord will be prohibited from letting or marketing the property for three months from the date specified in the notice seeking possession.

1. Within a 3 year period at least 2 months’ rent is unpaid for at least a day on three separate occasions (Ground 8A). This will be a mandatory ground in addition to the current mandatory Ground 8 (two months’ arrears at the date of service of the notice and at the hearing for possession) and where these grounds are satisfied the court must make a possession order.
2. the tenant has been guilty of conduct causing or capable of causing a nuisance or annoyance as opposed to behaviour ‘likely to cause’ a nuisance or annoyance. This is a discretionary ground where the court must be satisfied that it is reasonable in all the circumstances to grant possession.

The explanatory notes to the Bill state that the private rented sector has doubled in size since 2002 with 4.6 million households or 11 million people renting from a private landlord.

In the private sector and the ever-expanding build to rent sector there is  some concern that the proposed changes, particularly the end of ‘no-fault evictions’, will make residential property less attractive as an investment.

Whilst the main elements of the Bill have been largely discussed in the context of the private rented sector the changes will also affect the social housing sector. RPs also of course also use assured and assured shorthold tenancies and will also lead to providers having to review the widespread use of starter tenancies.