Renters’ Reform Bill Update

9th March 2023

A response to the call for evidence on the Renters’ Reform Bill A Fairer Private Rented Sector White Paper proposal has been published by The Levelling Up, Housing and Communities (LUHC) Committee; this outlines a list of recommendations informed by the opinions of a wide range of industry representatives. Since the White Paper:  A Fairer Private Rented Sector publication, there have been widespread concerns that the government’s approach to improving the security of tenure and housing quality will in turn discourage landlords from remaining in the Private Rented Sector (PRS). The existing proposals do not currently serve the interests of both the landlord and tenant and therefore the recommendations from LUHC appear to present a fairer and more efficient housing procedure moving forward. We recommend you read the full report here, however we have identified the main areas of concern that our existing network is voicing.

Is there any more certainty surrounding tenant notice periods?

The original White Paper proposed that tenants give two months’ notice to leave a property, once all Assured Tenancy or Assured Shorthold Tenancy (AST’s) move onto a single system of periodic tenancies. The inflexible nature of AST’s and costs incurred by renewing tenancies were the main influences when the proposal was drafted, however, the call for evidence response recommends adding the requirement for tenants to wait at least four months before they can give the two months’ notice. This is to give landlords the “legal certainty” of at least six months’ rent at the outset of the tenancy and sets a reasonable balance between tenant security and landlord assurance. As for students, the call for evidence committee proposes that:

• fixed-term tenancies should remain across the whole student housing sector
• all landlords sign an existing code of conduct
• the government replace the current codes with one, national code
• The government introduces financial penalties for any landlords that try to use this exemption to rent to non-students

So far, the above recommendations have been welcomed by both landlords and letting agents alike; the previous proposal has been described as “nothing short of unworkable” and would detriment the student lettings market to such a degree that it would ‘cease to exist’. The Purpose-Built Student Accommodation (PBSA) exemption has also been discouraged throughout the sector as it would either force students into the PBSA market (which is considerably more expensive than a HMO property) and give PBSA an “unfair competitive market”. In Brighton and Hove, where the PBSA numbers are on the rise, it would be fair to say that the recommendations above would provide market confidence and not detriment the HMO market further.

What changes are being made under section 8?

The White Paper outlines how certain section 8 grounds will be strengthened, yet the call for evidence response suggests making the ground addressing the sale or occupation of the property more rigorous. It proposes:

• increasing the notice period that the landlord has to give when gaining possession to sell or occupy the property to four months
• extending the amount of time that must pass in the tenancy before the grounds can be applied, from six months to one year
• Increasing the notice period from two months to four months
• not allowing landlords to remarket or re-let the property within six months of the grounds being exercised
• encouraging landlords to sell to the sitting tenants

Ground 14 addressing antisocial behaviour would also become mandatory, with more guidance to define “antisocial behaviour” and the circumstances where possession would be granted.

How could court processes be sped up?

While the white paper highlights the need for “wide-ranging court reforms” to speed up proceedings, the call for evidence response recommends creating a specialist housing court to unblock the process – and to consider better prioritising and fast-tracking claims for rent arrears and antisocial behaviour. The response also suggests working with landlords on adapting the court process before abolishing section 21, to make sure that landlords have “confidence in the system.” The feasibility of this recommendation remains uncertain, but if this particular recommendation is actioned, there is a risk of “overwhelming” the already fragile and backlogged court system.

Could Minimum Energy Efficiency Standards be included under the Decent Homes Standards?

The committee appear to support introducing the Decent Homes Standard to the private rented sector (PRS).The response suggests including the Minimum Energy efficiency standards (MEES) within the framework of the Decent Homes Standard under Criterion D, which requires homes to offer a “reasonable degree of thermal comfort”.

It also recommends that the government invests in new financing solutions to support landlords that have to pay out more than £10,000 on improvements works, as well as reviewing the properties currently exempt from the requirements to understand the “merits of legislating to revoke this exemption.” To read how you can make your investment property more energy efficient, we encourage you to read our previous articles here.

How could the affordability issues in the PRS be addressed?

Having recognised the current issues with the affordability of rents in the PRS, the committee recommended a review of the current tax regime for buy-to-let landlords with the view to make investing in the sector more “financially attractive”. Additionally, they recommended realigning housing benefit with the “30^th percentile in each broad rental market area” to ensure it covers the tenants’ housing costs. Likewise, there was a strong emphasis on implementing the tourism accommodation registration scheme in England “as soon as possible” to provide further clarification in this market.

Upcoming Webinar

As part of the Coapt Network, you are invited to our Webinar discussing updates relating to the white paper: A Fairer Private Rented Sector, on 5^th April. Our expert panellists will be discussing the wider context surrounding the bill and the market consequences that will affect your property. We will also be providing complementary guidance notes after the webinar. To express your interest, please sign up here. We encourage you to submit your questions beforehand so we can address any concerns you may have and look forward to seeing you there!