The main changes of the proposed Renters’ Rights Bill

Key changes the Bill will enforce

Under the current regime, landlords have two routes to obtaining possession: the section 21 route (non-fault based eviction) and the section 8 route (fault based eviction). The new Bill will see this system largely reformed, including:

• Fixed-term tenancies are being scrapped and all tenancies will automatically become periodic (i.e. rolling monthly or weekly). This will provide greater flexibility for  tenants but potentially harder for landlords to plan long-term lets.

• No more ‘no fault’ evictions. Landlords will have to rely on a ground for possession  to evict a tenant, and all eviction cases will need to be determined at a court hearing- this will likely increase the cost and length of time for these to be resolved. 

• New grounds for eviction if landlords want to sell the property, but evidence in support will be required

• Notice periods for eviction notices will increase – Landlords can expect, in most circumstances, notice periods to be either 4 weeks or 4 months, depending on the possession ground being relied upon.

• Landlords will be required to advertise rent costs upfront and not accept rent at any higher level than that advertised, banning ‘bidding wars’. This aims to keep rental costs fair and transparent.

• Rent increases are limited to once a year by prescribed form (i.e. section 13 procedure).

• Tenants will have the right to request a pet - Landlords can’t unreasonably refuse. Parliament are currently debating whether a Landlord can require pet damage insurance to be taken out or request a deposit to cover pet damage (additional three weeks’ rent) 

• Landlords cannot discriminate against tenants with children or who are claiming benefits. Refusal to rent to those tenants will be unlawful. 

• The Decent Homes Standard and Awaab’s Law (currently applicable to  social housing) will be extended to private rentals, ensuring tenants benefit from homes which are safe and to a decent standard

• Landlords must join a new landlord database and Ombudsman scheme. Registration will be mandatory and the Ombudsman will handle some tenant complaints providing a ‘free, fair and impartial’ method of dispute resolution for tenants.

• Penalties for non-compliance are tough – ranging from fines of up to £7,000 for initial breaches to fines of £40,000 for repeat or significant breaches, rent repayment orders or even a criminal conviction.

What this will mean for landlords 

There’s no doubt the proposed Bill will significantly impact the PRS.  There are both opportunities and risks for landlords and we advise landlords to familiarise themselves with the proposed changes to ensure compliance. 

We advise landlords to be aware of the proposed changes for now. Once the Bill is passed, they should keep an eye out for the new Database and Ombudsman (to make sure they sign up as soon as possible), diarise annual rent increases and respond rapidly to complaints about mould or damp. They might start to budget for any works they have to do to comply with the Decent Homes Standard (although the details of the Standard as it applies to the PRS are not yet clear and will be set out in secondary legislation which might not be implemented for a number of years (a recent consultation has suggested 9 years  after the Bill becomes law).

Courts, already feeling the strain of existing possession claims, will struggle to cope and delays will increase. It is likely that the First Tier Tribunal, tasked with dealing with the anticipated increase in appeals against rent increases, may also experience delays. 

Penalties for non-compliance on landlords and/or agents will be significant and that, together with the risk of having a tenant that falls into arrears with a delayed Court process, could disproportionately impact smaller and individual landlords.

Clare Castillo, Associate Chartered Legal Executive in the Real Estate Litigation team at Blacks Solicitors