Latest analysis of the Renters (Reform) Bill has revealed a few flashes of light and hope at the end of the tunnel. But this impending legislation continues to send shockwaves through the private rented sector.
Landlords are quite rightly worried and aggrieved by the likely onslaught of tenant-centric legislation, and new procedures. Many are serving notice to regain possession of their properties before the imminent abolition of Section 21 ‘no fault’ evictions.
Meanwhile, the tenants – the very people whom this legislation is supposed to benefit – have also been hit hard by the evictions and rent rises triggered by landlords’ need to remain commercial in view of the current economy and likely changes in the law.
Citizens Advice reports a record number of enquiries about Section 21 evictions in the first five months of 2023 as landlords quit the sector. There were around 2,000 in May alone (up 25% year-on-year).
The government acknowledges that “a healthy private rented sector is a vital part of our housing market” – but so far, the proposed reforms have damaged the market by:
further denting landlords’ confidence in the government and the market
Sadly, the damage has already been done – regardless of how much of this Bill becomes law and when.
The government says that “some renters face a precarious lack of security as a result of Section 21 ‘no fault’ eviction notices”.
But now this impending legislation has made tenants’ position all the more precarious…because the government has precipitated the very thing it was trying to avoid!
Under the reforms, landlords would be able to gain possession of their properties only if there were valid grounds for them to do so. Evictions under Section 21 of the Housing Act 1988 would be abolished.
Section 8 evictions for rent arrears (of at least two months), anti-social behaviour or other tenancy breaches would be the only way to gain possession. However, the mandatory grounds for a Section 8 eviction would be strengthened:
Under the new legislation, there would be no such thing as a fixed tenancy. Instead, all tenancies would be periodic (not more than one month) from the outset.
They would be rolling tenancies with no fixed end date. In some instances, landlords may be required to wait at least six months before starting eviction procedures.
But there would be exceptions:
Assured shorthold tenancies would instead become assured tenancies. The period would be determined by the frequency of payments (weekly, fortnightly).
Rent review clauses would be banned, replaced by a statutory regime comprising Assured (two months’ notice) and Relevant Low-Cost (one month’s notice) tenancies.
Rent could not be increased until 52 weeks after the start of the tenancy. Or 53 weeks if the last increase took effect more than six days before the anniversary of the date on which the first increase took place.
Tenants would be able to challenge rent reviews at tribunal.
Tenants would have the implied right to keep a pet. The landlord would have the right to refuse on reasonable grounds…but the key word here is ‘reasonable’. That has yet to be determined or outlined in detail.
Pets are a highly divisive issue in the rented sector. Many landlords have a ‘no pets’ rule because of concerns about damage, hygiene and the safety of their tenants and neighbours.
Under the proposed new rules, landlords would have 42 days in which to consider a request for pets before replying. That gives them plenty of time to find an alternative tenant without a pet – not too difficult in a seller’s market.
If landlords did allow pets, they might recover the cost of the pet insurance policies from tenants. That might sound okay in theory, but real-world insurance premiums tend to rise if one ever dares to claim.
So, will landlords be enthusiastic about pet insurance as a solution to tenants’ wayward cats and dogs? Probably not.
Think about it. How much do you think a landlord’s (and therefore tenant’s) pet insurance premiums will cost after a few claims?
Pet insurance sounds like hassle in the short term. And it could be positively expensive in the long term.
All landlords who rent out property in England will have to join a government-approved redress scheme – regardless of whether or not they use an agent.
The Ombudsman’s decisions will be legally binding. They will be able to force landlords to take remedial action, apologise to tenants, provide information and/or pay tenants compensation up to £25,000.
Membership of the scheme will be mandatory for private landlords. Local authorities will have the power to take enforcement action against landlords who fail to join:
Joining the Ombudsman scheme will mean an added cost for landlords. They will almost certainly pass this cost on to tenants in the form of higher rents.
Tenants with complaints about their landlord/property will be able to seek redress from the Ombudsman for free. Landlords, however, will still be required to incur the cost of having to use the court system to seek compensation for damage to their properties.
And landlords may find their claims in court are frustrated by counterclaims for disrepair. This may cause their proceedings to be stayed while an Ombudsman considers a tenant’s claim.
Landlords worry that bad tenants would flood the Ombudsman with spurious and vexatious complaints to delay court proceedings (or out of sheer spite).
But HM Government likes the idea of an ombudsman scheme because it will reduce the number of cases going through the country’s overburdened courts.
However, it does not bode well. With landlords in the crosshairs, and no cost to tenants if they ‘try it on’, this Bill may tip the scales of justice too far in tenants’ favour.
Were this to happen, even more landlords may consider selling up and quitting the sector.
Contact our lawyers if you need to litigate or are planning to use the Ombudsman service when it goes live.
At the time of writing this blog post, the Bill was still only at second reading in the Commons. It still has a long way to go.
The Bill is expected to receive the Royal Assent and become law in the summer of 2024.
View the passage of the Bill through the Commons, Lords and final stages.
Contact Coles Miller Debt Recovery Manager Eric Holt for specialist legal advice on evicting tenants and dealing with rent arrears.