What do you need to know about the Renters Reform Bill 2023
The Renters (Reform) Bill (the Bill) first came before Parliament in May this year. The Bill aims to improve the private rental system most predominantly for private renters, providing a higher level of security for tenants especially in the current economic climate but also for private landlords, ensuring that they are supported in understanding their obligations.
There are six key aspects of the Bill. These are as follows:
Abolish ‘no fault’ evictions under section 21 of the Housing Act 1988
Amend/add to the grounds which a landlord can apply for possession under section 8 of the Housing Act 1988
Ensure tenants are able to appeal excessively above-market rents
Introduce a new Private Rented Sector Ombudsman
Create a Privately Rented Property Portal
Give tenants the right to request to keep pets
Let’s break those down
‘No fault’ evictions abolished
Evictions under Section 21 of the Housing Act 1988 (the Act) will be abolished. This is an attempt to provide a higher level of security to private renters in order to allow them to find a more permanent place in today’s housing market. To achieve this, the Bill will move to a structure where all tenancies are periodic rather than assured. Tenant’s will be able to end a tenancy by simply giving two months’ notice, however a landlord will instead only be able to seek possession under section 8 of the Housing Act 1988 when their circumstances have changed or tenants do not fulfill their obligations.
Grounds under section 8 extended
In the absence of being able to make a claim for possession under section 21 of the Housing Act 1988, further grounds will be added which landlords can claim under section 8 of the Act. The new grounds appear to mostly relate to specialist sectors to ensure that there is enough supply for new tenants however there are also a few grounds which appear to benefit landlords, namely a new mandatory ground for ‘repeated serious arrears’ where there are at least three separate instances of at least two months of arrears over a three-year period as well as a new mandatory ground for landlords wishing to sell their property.
The apparent predominant reason landlords choose to evict tenants under section 21 of the Act is due to issues such as late rent payments or absence of rent payments which are likely to be less than two months arrears at the time of any hearing. This is because they can obtain possession as of right rather than at a Judge’s discretion as Judges do seem less likely to grant possession under discretionary grounds, especially in relation to minor breaches of a tenancy agreement. With the only option to obtain possession now being to claim under section 8 of the Act, discretionary or not, this makes life harder for landlords looking to evict tenants who are for example continuously late paying rent.
Appeal of excessively above-market rents
The Bill amends section 13 of the Act which governs rent increases. All rent increases will be via one mechanism which replicates the section 13 process. Landlords will need to give a minimum of two months’ notice of increases in rent and if the tenant does not accept the new increase (because they believe it to be above market rate) they must refer the case to the First Tier Tribunal who will be able to determinate the actual market rent of a property.
Private Rented Sector Ombudsman
Landlords will be required to join a government approved redress scheme, an ombudsman, even if they use a letting agent. Tenants will be allowed to seek redress for free, if the landlord has failed to deal with a legitimate complaint regarding the tenancy, for example lack of repairs to a property.
The ombudsman will have powers to compel landlords to pay compensation of up to £25,000,00. There will be a civil penalty for landlords who fail to register as a member of the ombudsman. Landlords will incur a fee in registering.
Private Rented Property Portal
The introduction of a property portal aims to increase transparency for landlords in regards to their obligations and enable them to access guidance through a single service. The portal also aims to increase transparency for tenants in regards to accessing the information available prior to making the decision to rent a property.
This appears to be a step in the right direction for managing awareness of private renters as well as private landlords. All landlords will be legally required to sign up to the portal and will however need to pay for such registration. The added fees for landlords for signing up to these new services are simply increasing the cost of renting and it is fair to assume that some landlords will no longer wish to participate in the rental market due to the added hassle and cost.
Request for pets
Landlords will be required to fully consider all requests for pets on a case-to-case basis. If a tenant wishes to challenge a refusal they can refer the case to the ombudsman. The Bill will amend the Tenant Fees Act 2019 so that landlords can require insurance to cover any damage to the property caused by pets.
Overall impact
As a whole, the Bill provides a level of structure to the private rental market which currently does not fully exist. This structure however does appear to lean towards the benefit of tenants more than landlords due to the abolishment of section 21 evictions without any substantial alternative provision offered, as well as the added cost implications for landlords who will all be required to register for certain schemes.
Although more security will be provided to tenants, and there is no doubt this is desperately sought given the current economic climate, the Bill stands to make renting a property ‘harder work’ as such for landlords who may now simply just choose to sell up rather than deal with the added cost and quite frankly the added ‘hassle’ of renting a property.
