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In January 2023, we prepared a property litigation blog describing what legal changes we would likely see in 2023 in the property market.
One of the biggest changes we are likely to see is concerning residential renting in England with the Renters Reform Bill.
In June 2022, the government published a White Paper outlining the proposed changes to the private residential sector in England.
The proposals aim to provide new measures to ensure decent, well-looked-after homes are available for rent.
The proposals provide greater protection for the tenants to challenge poor practices from landlords.
This blog will set out the proposed changes in more detail and will also set out where the Bill is up to now.
Decent Homes Standard
The reforms introduced a legally binding Decent Homes Standard that will apply to privately rented homes and a digital property portal that will be more comprehensive than the existing rogue landlord database.
All landlords will be legally required to register their properties on this portal.
The portal aims to improve the flow of information to prospective tenants about housing options. The portal is also intended to improve landlords' awareness of their responsibilities.
Local authorities will also be given the power to take enforcement action against a private landlord who does not join the portal.
Bringing an end to tenancies
Under the proposals, assured and assured shorthold tenancies will be replaced with "periodic tenancies".
The paper also proposes the abolition of no-fault evictions under section 21 of the Housing Act 1998.
It will also reform the grounds for possession under section 8 available to landlords of assured shorthold tenancies. This will effectively mean landlords can only regain possession of their property in reasonable circumstances relying on the new statutory grounds.
It is understood that the grounds permit a landlord to end the tenancy if they intend to sell the property or a close family member wishes to move into the property. However, at least six months must have passed since the beginning of the tenancy.
The grounds permitting landlords to take back possession for rent arrears will remain. However, where a tenant has been in arrears for at least two months, a landlord can provide two weeks' notice before issuing proceedings. This is to be increased to 4 weeks' notice.
The changes to the existing rules aim to create a renter's market where homes are for life. However, the proposed reforms allow the tenant to end their tenancy at any time giving two months' notice.
Other changes
The reforms set out that increases in the rent can still be made. However, these will only be permitted once a year and two months' notice must be provided. This is to allow tenants to consider their options.
Rent review clauses will also be prohibited.
Regarding pets, the landlord can refuse permission. However, currently, this can be prohibited. Yet, the new changes will only allow a landlord to refuse pets where it is reasonable.
Furthermore, the proposals state that landlords cannot ban renting properties to individuals with children or those in receipt of benefits.
Landlords can impose affordability criteria or state that potential tenants must undergo credit checks.
Changes to the Court system
There were discussions about the introduction of a Housing Court. However, those proposals have been rejected.
It is understood that process reforms will be put in place to improve the efficiency of possession matters.
A new Ombudsman is to be introduced, which will require all landlords to be members of the scheme.
It is intended that tenants will have access to a quicker and less adversarial means of compensation and support for vulnerable consumers.
Where are the reforms up to?
The latest update was that the government has stated that the Renter's Reform Bill will be brought forward at the end of the parliamentary session.
We expect the Bill to be debated and voted on before May 2023.
Once the Bill comes into force, six months' notice will be given of the first implementation date. The new rules from this date will govern all new qualifying tenancies.
At least 12 months after the first implementation date, the second implementation date will mean that all other tenancies will automatically transition to the new system.
The impact of the reforms
Due to the reforms, some private landlords may exit the market. Concerns have been expressed by the residential landlord's association that there needs to be "a workable replacement … if Section 21 is to be abolished".
There may be concerns that landlords will be unable to recover possession of the property at the end of the fixed term without the tenant's breach of the agreement.
However, tenant groups and the charity Shelter see the reforms as beneficial for tenants as abolishing section 21 notices will ensure that tenants do not have the constant fear of eviction, and the register will mean that landlords are compliant with the law.
However, for some, the reforms swing too far in favour of the tenant, and there needs to be a fair system for all.