In what has been labelled as ‘the biggest shake-up of the private rented sector for 30 years’, the Renters Reform Bill will have a range of implications for private landlords that they should be aware of.
It is expected that the bill will finally come into legislation in 2023, following its first pledge in parliament under Theresa May’s government back in 2019. With over 4.4 million tenants now privately renting in the UK the bill’s impact is predicted to be far-reaching.
On top of this, property investment companies such as RWInvest have pointed out that we are now firmly in what has become termed ‘Generation Rent’ – this is where the number of those renting between 18-40 has taken a significant upturn.
As a result, the bill is expected to be wide-reaching – both in its influence and the issues it covers. These will range from an ombudsman for all private landlords to rent reviews, security of tenure, right to keep pets as well as improving grounds for possession. It has been said that this will provide the estimated 2.3 million private landlords of UK properties with much greater confidence in their dealings.
1. Decent Homes Standard
Whilst a ‘Decent Homes Standard’ has traditionally been the product of public housing to ensure such households meet a minimum standard of housing conditions – the Renters Reform Bill is set to expand this to the private sector.
This will ensure that privately rented homes meets a certain criterion of liveability – this means that homes must not wield any health or safety risks such as fire hazards, for example. They must also have a suitable standard of bathroom and kitchen facilities alongside adequate noise insulation and heating to ensure homes are warm and dry.
2. Gaining Possession and Eviction
The government is set to reform the grounds for possession in order to ensure the process is “comprehensive, fair, and efficient, striking a balance between protecting tenants’ security and landlords’ right to manage their property.”
In turn, a new mandatory ground will be introduced for tenants in arrears. Evictions will now be served for those tenants who have been in at least two months’ rent arrears three times over a three-year period. The eviction notice is set to expand to four weeks for those in arrears, but this time period will decrease in cases of criminal behaviour, for example.
In addition, landlords who wish to sell their rented property or move into it themselves will not be able to do so for the first six months of the tenancy.
3. Mandatory Ombudsman
A new government-approved ombudsman will be introduced to all private landlords renting out property in England – membership will be mandatory and will be applicable regardless of they using a letting agent or not.
Bringing in this ombudsman will allow for disputes to be settled much more smoothly without having to go to court. The ombudsman will ultimately have the power to ensure landlords provide clarity should tenants require it – including taking remedial action where needed and even providing compensation in cases of misconduct.
Failure to comply with an ombudsman decision may result in a Banning Order which will prevent landlords and agents from letting or managing any future residential properties.
4. Section 21 Abolished
One of the main components of the bill is the promised abolition of Section 21 of the 1988 Housing Act – this has traditionally allowed for landlords to evict tenants without providing a reason (for what has been termed a ‘no-fault’ eviction).
Under the proposed changes, landlords must now have reasonable circumstances to evict a tenant – this will allow for greater security for the tenant and incentivise landlords to engage and resolve issues that may arise.
These ‘reasonable circumstances’ are yet to be defined under the proposed bill – yet tenants who wish to move out on their own accord will have to provide two months’ notice to lessen the length of void periods the landlord may be subject to.
5. Right to Keep Pets
If any tenant wishes to keep a pet within their home, they can request this to their landlord – the Rental Reform Bill will prevent any landlords from withholding the right to do so without good reason. Tenants will also be eligible to challenge any decisions made too.
Landlords may require that tenants who want to own a pet must hold adequate pet insurance to cover any damage to the property that may occur.
More generally, it has also been suggested the government will encourage landlords to be more lenient with the extent to which tenants may wish to redecorate their rental property as long as it is returned to its original state upon moving out.
6. Property Portal
A new digital property portal will see landlords now legally required to register their property on the portal to provide clarity for landlords to understand and practise compliance of the legal duties required of them.
Information will also be made available to tenants and local councils to offer insight into their specific rights and obligations – this will allow for landlords in breach of these to be better identified.
The Database of Rogue Landlords will form part of the portal to which means landlords who repeatedly break such laws will be made public and subsequently much easier to identify. The government hopes that the introduction of the portal will cut the number of non-decent rented homes by up to 50% by 2023.
7. Ban on ‘No DSS’
A ‘No DSS’ requirement is when a landlord refuses to rent to a tenant who is in receipt of universal credit, disability benefits, housing benefits or tax credits. Such blanket bans will be challenged under the Rental Reform Bill which will seek to stop any unjust discrimination.
On top of this, this will also apply to bans on renting to families with children which – whilst not widespread – has been noted as an issue in need of reform.
The Rental Reform Bill is set to be the biggest shakeup the private rental sector has been subjected to in 30 years. With such a wide range of changes proposed across a diverse array of areas it is important to let landlords have a firm understanding of them.
It is therefore recommended that potential property investors seek professional advice from a specialist to further learn of any implications the introduction of the bill may have.