The Renters’ Rights Bill and proposed abolition of Section 21 evictions is causing uncertainty for landlords.
The Renters’ Rights Bill was introduced to Parliament on 11 September 2024. The new changes under the Bill are anticipated to become law in 2025 and have left landlords facing significant changes to the residential rental sector.
Both existing and current landlords may need to prepare for a turbulent and potentially very costly ride, once the Bill becomes law, as non-compliance could incur significant financial, and even criminal, penalties. The lack of clarity around the Bill has left residential landlords in legal limbo.
What has happened to the previous Renters (Reform) Bill?
The previous UK Government introduced the Renters (Reform) Bill into the House of Commons on 17 May 2023.
The Bill contained changes aimed at improving the rental system for both the 11 million private renters and 2.3 million landlords in England. When proposed, the Bill generated many different responses from MPs, tenants, landlords, and letting agents. The main headlines in the media focussed on the proposed abolition of Section 21 (so-called ‘no-fault’ evictions) and the enhanced rights for tenants proposed by the Bill.
However, the Bill was not passed and is no longer active in the UK.
Is the Renters’ Rights Bill a replacement?
No, the Renters' Rights Bill is not a replacement for the Renters (Reform) Bill. Rather, the Bill contains new proposals from the current UK Government albeit the proposals address many of the same measures as the previous Bill.
The Renters’ Rights Bill has not been passed and is currently at the report stage, which will be followed by further readings and scrutiny in both the House of Commons and the House of Lords.
The Bill proposes several changes to the current rental regime, such as:
No-fault evictions: A ban on ‘no-fault’ section 21 evictions. Landlords must now provide specific grounds for possession.
Fixed-term tenancies: The abolition of fixed-term tenancies, replaced by periodic tenancies that tenants can end by providing two months' notice, from day one of the tenancy. Conversely, a periodic tenancy may not be brought to an end by a landlord within the first twelve months of its commencement, unless certain circumstances apply.
Rent increases: Rent can only be increased once a year, only after only after service of a valid Section 13 Notice. Within the first 6 months of a new Tenancy agreement, Tenants will be able to apply for a rent reduction, even if they agreed the monthly rent figure at the outset.
Awaab's Law: Extended to private rentals, requiring landlords to fix serious health hazards like dampness or mould within a set timeframe.
Decent Homes Standard: Extended to private rentals, ensuring properties are safe and habitable.
Private Rented Sector Ombudsman: A new body to handle disputes between landlords and tenants.
Private Rented Sector Database: All landlords must register themselves and their properties on this database for a fee which is yet to be determined. Documents such as EPC, Electrical Certificates and Gas Certificates for example will also need to be kept up to date. Failure to comply with the necessary paperwork may prevent the use of a Section 8 notice,
Pet ownership rights: Tenants will have increased rights to request permission for pets.
Bidding wars: A ban on rental property bidding wars whereby landlords will no longer be allowed to ask for, encourage, or accept offers above the listed price.
Discrimination: It will be illegal for landlords and agents to discriminate against prospective tenants in receipt of benefits or with children.
What does this mean for Landlords?
We have provided a summary of the uncertainties surrounding the Bill, below:
- Lack of clarity on alternative grounds for eviction: While the bill proposes reforms to extend Section 8 eviction grounds, landlords may worry that these grounds may come with higher evidential burdens, which could lead to lengthy and costly litigation.
- Delays in the court system: The Bill, and the abolition of Section 21 notices in particular, will undoubtably cause strain on the Court system due to the additional hearings that will be required to repossess a property under Section 8. The average waiting time for repossession has already increased. Landlords can now face waits of up to 24.5 weeks, up from 23 weeks last year, according to the Ministry of Justice. Increased waiting times and an overloaded Court system may delay, frustrate and cause landlords to incur additional financial losses, whilst tenants remain in their properties.
- Impact on rental market dynamics: Some landlords, particularly those with smaller portfolios, may fear the changes and increased financial risk proposed by the Bill. These concerns may prompt landlords to exit the rental market entirely, reducing housing supply for tenants.
- Uncertainty around implementation: As the bill progresses through Parliament, landlords are unclear on the timeline and final details of the reforms, making it difficult to plan, logistically and financially, for future tenancies.
- Penalties for non-compliance: Fines and Penalties may be imposed for a wide variety of breaches, such as threatening to evict, not serving proper notices, discrimination, harassment, poor housing conditions, refusing tenants to rent a property if they have children, an unreasonable refusal to allowing tenants to keep pets at the property, to list a few. Whilst there are already some laws in place to deal with these matters, the failure to comply may be dealt with more swiftly more seriously. Criminal penalties are also proposed and may result in summary convictions, a criminal record and unlimited financial penalties.
This is not intended to be a detailed or exhaustive summary of all the changes that may be imminent, however if you are involved in the residential rental sector, it may be prudent to ensure that you review your tenancy documentation and are ready to take proactive by taking steps to ‘put your house in order’.
You will need to plan ahead and prepare for inevitable long delays while the courts deal with backlogs of work, and most importantly take steps to ensure that you do not allow yourself to be subjected to any of the substantial penalties that may be imposed or put yourself in a position where criminal proceedings may be brought against you.
Get Expert Legal Advice
Worried about the impending legal changes? Concerned about the impact of the Renters’ Rights Bill?
Seeking legal advice and staying updated on the Bill's progress is essential for landlords navigating these changes.
Get expert legal advice from Coles Miller’s highly experienced Debt Recovery Manager Eric Holt, whose specialisms include landlord and tenant disputes. He is based at our Poole office.
For more info and the progression of the Renters’ Rights Bill, visit https://bills.parliament.uk/bills/3764
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