Renters’ Reform Bill

The announcement of the Renters’ Reform Bill has caused quite a stir with many, questioning what this could mean for the property sector.

The document outlines the Government’s pledge to:

  • Abolish Section 21 ‘no fault’ evictions so that landlords can only evict a tenant in reasonable circumstances defined in law.
  • Reform section 8 grounds of possession so they are ‘comprehensive, fair, and efficient, striking a balance between protecting tenants’ security and landlords’ rights to manage their property’.
  • Move Assured Tenancies & Assured Shorthold Tenancies (ASTs) onto a single system of periodic tenancies. With this, tenants will be required to give 2 months’ notice to leave their tenancies. Landlords will be able to evict tenants in reasonable circumstances, defined by law.
  • Increase notice periods for rent increased by double. This is a move to combat the increasing cost of living, and will mean rent increased will be limited to one per year and landlords must give at least two months’ notice for any change in rent.
  • Introduce minimum housing standards to the private rented sector by widening the Decent Homes Standard. The Decent Homes Standard states that homes must not have any serious health and safety hazards and landlords must keep properties in a good state of repair so tenants have clean, appropriate and useable facilities. This will also mean that Rent Repayment Orders will be broadened to cover repayment for homes that do not meet the Decent Homes Standard.
  • Give tenants more rights in keep pets in properties. Landlords will be given protection with regards to this by the amendment of the Tenant Fees Act to Act 2019, so they will be able to require pet insurance to cover any damages.
  • Outlaw bans on renting to families with children or those on benefits.
  • Introduce a single government-approved Ombudsman covering all private landlords who have properties to rent in England, with membership being mandatory. The Ombudsman will have powers to ‘put things right for tenants’, by compelling landlords to issue apologies, proving information, take remedial action and/or pay up to £25,000 in compensation. The Ombudsman will also require landlords to reimburse rent to tenants where the ‘service or standard of property they provide falls short of the mark’.
  • Create a new digital Property Portal to assist landlords in understanding and demonstrating compliance with legal requirements.

The White Paper has received generally positive feedback, with housing and homelessness charity, Shelter, stating that the Bill will ensure that, once in place, gives every private renter ‘long-term security in their home and the power to assert their rights’.

The Law Society explains that they ‘are broadly supportive of the proposals to end no-fault evictions’ and ‘favour proposals to widen the grounds for possession under section 8’.

The Landlords Guild conclude that the changes to periodic tenancies ‘shouldn’t be an issue, especially if you’re the best landlord in the area charging a fair rent and providing a good service, in particular, attending to repairs swiftly’.

The National Residential Landlords Association (NRLA) have mentioned their concerns with the proposed Bill: ‘Our organisational objective is a private rented sector that works for all. We do not believe that reforms need be a zero-sum game that pits tenants and landlords against each other in a struggle for advantage. Rather, a collaborative approach will benefit everyone living and legitimately working in the sector’.

What does it mean for the student sector?

NRLA is proposing that tenancies remain fixed term, for a term that doesn’t exceed twelve months as well as:

  • Before the beginning of the tenancy, the landlord gives notice in writing to the tenant that the property may be recovered on this ground
  • The property was let out by an educational establishment or to an entire household in full-time education

For this ground, the notice period would be two months.

One reason that the student sector would need different proposals compared to the rest of the Private Rented Sector due to the market being unique in terms of having a set seasonal term in which students need to move and then vacate their property. Landlords will need to have confidence they can provide a vacant property every September, which is not necessarily the case with periodic tenancies. This would then potentially result in void periods or having to house residential tenants, meaning a decline in available student properties.

Students would also need certainty around council tax, because if one student drops out of their course, then the property would be liable for paying council tax. Some courses also last longer than others and students in one household can sometimes be in different years, which could also result in the property being liable for council tax as at some point, the students would become professionals. Having a tenancy fixed in with the academic year prevents this occurring, as then everyone can reassess their options and circumstances before this happens.

It can also be difficult to switch between student lets and family lets due to the specific window in which students will be looking for properties. The HMO license for the property could also be affected as, once a property is let to a single family, it changes the planning use of the property meaning the landlord cannot switch back to letting to students without the council’s permission.

Read more about the Renters’ Reform Bill here.