A Closer Look At The Renters Reform Bill 2023

In May 2023 the government officially unveiled the Renters (Reform) Bill 2023, which they believe will assist in resolving England’s housing crisis and create a fairer rental market. The government consider the market is too landlord friendly and that the new measures will strengthen the rights of tenants.

Please note that the Bill is in its early stages and may be subject to significant amendment before it is passed. With that said, the key provisions of the Bill (in its current form) are set out below.

Summary

The Bill significantly increases the level of regulation in the private rented sector and will remove the freedom landlords and tenants must negotiate the terms of a tenancy agreement.

Similar changes have already occurred in Wales whereby Tenancy agreements have been replaced with ‘occupation contracts and early indications are that the rental market is suffering as a result.

While the Bill could be significantly amended, it is estimated that the new Bill will become law in or around October 2024. Landlords should become aware of the potential changes so they can ensure that they are compliant when the new system comes into place.

If you require any assistance reviewing your Tenancy Agreements, seeking to recover possession of your property or pursuing rent arrears please do not hesitate to contact us.

What is the effect of the Bill?

The Bill looks to abolish assured shorthold tenancies. There will be a unified system whereby most residential tenants (other than long leaseholders) will be assured tenants.

An assured tenancy is a more secure form of tenancy. It can be terminated only by the tenant leaving the Property or the landlord satisfying one of several specific statutory grounds.

Section 21 Notices

The abolition of Assured Shorthold Tenancy Agreements also entails the abolition of section 21 of the Housing Act 1988 which allowed landlords to recover possession of the property without any specific reasoning.

Period of Tenancy and Tenant(s) Notice Period

All assured tenancies will be periodic, rather than for a fixed term. The period of the tenancy must either be one month or no longer than 28 days in duration. Tenants will be able to terminate the tenancy on serving two months’ notice at any time. The notice must take effect at the end of a period of the tenancy. A landlord cannot require a tenant’s notice to quit to be in a particular form, and any clause in a tenancy agreement to that effect will not be enforceable.

It is hoped the notice period will change as the lack of anything more than two months’ certainty in the term of a tenancy could cause serious difficulties for landlords, who will be unable to plan with any certainty how long their property will be rented for.

Section 8 Notices

Landlords will only be able to seek to terminate the tenancy if they can make out at least one of the statutory grounds. They will need to serve a Section 8 Notice identifying the ground(s) upon which they intend to rely, and then to commence possession proceedings if the tenant does not comply with the notice and vacate.

There are at present several statutory grounds that a Landlord can rely upon when serving a Section 8 Notice. There will be amended/supplemented.

A new mandatory ground will be introduced allowing a landlord to recover possession if they intend to sell. There is however at present no guidance upon what evidence the court will expect a landlord to produce to support the intention to sell. 

There will also be an amended mandatory ground if the landlord or close member of landlord’s family requires the property as their only or principal home. 

The current Ground 8 (mandatory ground for at least 2 months’ rent arrears) will be amended to disregard from the arrears any universal credit payment that the tenant is entitled to receive which has not yet been paid. The notice period will also increase from 2 weeks to 4 weeks. Increasing the notice period to 4 weeks will now mean most landlords will have 3 months of arrears by the time possession proceedings are issued.

A further new mandatory ground for repeated rent arrears i.e., at least 2 months’ rent unpaid on at least 3 separate occasions within a 3-year period. This will be welcomed by landlords as it will assist with the issue of a tenant paying off or reducing rent arrears shortly before a hearing and avoiding the court making an order for possession on the existing mandatory ground 8.

Rent Reviews

Contractual rent review provisions will no longer be enforceable. The rent can only be increased once each year by the landlord following the existing statutory process under Section 13 Housing Act 1988 by giving the tenant 2 months’ notice of its intention to increase the rent (as opposed to one month’s notice, as is currently the case). The tenant will have the ability to challenge the proposed new rent by applying to the First Tier Tribunal.

Rent increases which have been agreed and have become binding on the tenant before the extended application date will be unaffected.

Prohibition of Pets

Often tenancy agreements provide that a tenant cannot keep a pet. A landlord will not be able to unreasonably refuse a tenant’s request for permission to keep a pet, however, the landlord will be able to demand that the tenant has insurance in place for any damage caused by a pet or to pay the landlord’s reasonable costs of obtaining such insurance.

Terms of the Tenancy Agreement

A landlord will be required to give a tenant a written statement of terms and information about the tenancy (those terms are to be prescribed by separate regulations). Failure to comply with the provisions of the Bill can result in fines and in some circumstances will be a criminal offence.

Tenancy Deposits

The rule that applied to Section 21 Notices whereby any deposit must be held in a government authorised scheme will now apply to all orders for possession. In the circumstances where a deposit has been taken, the court can only make an order for possession if the deposit is held in an authorised scheme and the requirements have been complied with, unless the deposit has been returned. It is not yet clear whether the other requirements of serving a valid gas safety certificate, EPC and How to Rent booklet will also be carried across.

Property Portal

The government will be introducing a Property Portal containing a register of residential landlords and properties. Properties will not be able to be marketed until registration requirements have been complied with. Registration may involve the payment of a registration fee and letting a property without registering may result in prosecution.

When will the New Rules Apply

The Bill will apply to all new tenancies granted on or after its commencement date. For existing tenancies, it will apply once the fixed term expires.