Renters Reform Bill Published

Landlord News

CONTENTS

Renters (Reform) Bill published

Page 3 – 5

Changes to grounds for eviction in England

Page 6 – 8

The end of Assured Shorthold Tenancies

Page 9 – 11

Private Rented Sector Database

Page 12 – 14

Landlords to fully consider pet requests

Page 15 – 17

Renters (Reform) Bill published Introduced to the House of Commons on Wednesday 17 May 2023, the Bill sets out the UK Government’s plan to deliver on the Conservative Party’s policies to reform the private rented sector in England.

The legislation will implement many of the measures that the UK Government included in its ‘A Fairer Private Rented Sector’ White Paper that was published in June 2022.

The objective of the Bill is to ensure renters have access to a secure and decent home and that landlords retain the confidence to repossess their properties where they need to. The Bill will:

• Abolish Section 2 1 ‘no fault’ evictions and reform tenancy agreements where all assured tenancies are periodic • Introduce more possession grounds where tenants are at fault, for example in cases of anti-social behaviour and repeat rent arrears

• Provide stronger protections against retaliatory evictions

• Introduce a new Ombudsman that all private landlords must join

• Introduce a new Property Portal including a database of residential landlords and privately rented properties in England • Give tenants the right to request a pet in their property, which the landlord must consider and cannot unreasonably refuse Further measures the UK Government will legislate for include:

• Apply the Decent Homes Standard to the private rented sector

• Make it illegal for landlords and agents to have blanket bans on renting to tenants in receipt of benefits or with children • Strengthen local council’s enforcement powers and introduce a new requirement for councils to report on enforcement activity

Next steps for the Bill

Now that the Bill has been introduced to Parliament and published in full, this is known as ‘First Reading’. It is also the first stage of a Bill's passage through Parliament. The next step is the Second Reading, which is the first opportunity for MPs to debate the general principles and themes of the Bill. This is expected to take place the week commencing 5 June 2023, and Propertymark will be issuing a briefing to all parliamentarians. The measures contained in the Bill will need to overcome normal legislative hurdles, and the changes will be introduced in stages as the provisions are passed into law. The Bill will be debated in Parliament and then approved by the House of Commons and the House of Lords and once it has received Royal Assent, it becomes law and is known as an Act. Reassuring landlords and investors This publication of the Bill has generated significant media coverage and it is important that letting agents communicate with their landlords and tenants that nothing has changed at this stage. Propertymark member agents can provide confidence to their landlords that they will be updated by their professional body with factual timely information.

Propertymark lobbying As the Bill progresses, it will be subject to amendments, during which time our governing body Propertymark will be lobbying to represent the interests of our member agents and their clients and support them to understand the changes to ensure they are implemented successfully.

Andrew ’ s Comments

Reforms to the private rented sector in England have been long awaited and the Bill will bring much needed clarity to letting agents and their landlords and tenants. Our governing body Propertymark have said they will support the UK Government to ensure the specific details and policies work in practice for those on the ground, whilst providing security and fairness for both parties of the rental agreement. It is also important implementation is well planned and managed as these reforms are significant for the sector and everyone will need time to understand and prepare for the new measures.

Changes to grounds for eviction in England The Renters (Reform) Bill has made amendments to the grounds for eviction under Section 8 of the Housing Act 1988. These have been changed and, in some cases, strengthened, to give landlords better protections when evicting a tenant. These changes will be necessary if the Bill becomes law because a Section 21 notice will no longer be valid.

The Bill has introduced Ground 1A to be used where the landlord has an intention to sell. Previously a landlord would have used a Section 21 notice if they intended to sell their property without sitting tenants. This new ground is mandatory, which means that if it is challenged by the tenant, or they do not leave, the judge must grant an order for possession. A judge cannot use their discretion whether or not to enforce this ground for eviction if it has been used correctly. There are further grounds which support this, including if the mortgage lender of a property requires repossession of the property in order for it to be sold (Ground 2) and if the property’s lease ends (Ground 2ZA) or the superior landlord of a lease requires repossession (Ground 2ZB).

New grounds have been proposed to ensure that a landlord can repossess their property for specific tenancy requirements, such as if the property is required for use as part of employment (i.e. accommodation tied to a workplace). Anti-social behaviour Ground 7A has been amended to change the amount of notice required. This means that if the landlord is seeking repossession due to a conviction of a serious offence, including anti-social behaviour, they can serve notice immediately. However, a possession order can only be granted by a judge 14 days after the notice is served. This is a mandatory ground for eviction. Ground 14 has also been amended so that notice can be served immediately if the tenant is involved in anti social behaviour, however, this ground is discretionary, meaning that the judge can use their discretion to decide whether this ground applies to eviction. The wording of ground 14 has been amended from “likely to cause” to “capable of causing” nuisance and annoyance. A judge would have to consider if the case met these criteria. Rent arrears There have been changes to the grounds relating to rent arrears. Ground 8 can still be used if the tenant is in rent arrears of 2 months or more at the time of serving notice and at the time of the court hearing, however, the ground is not applicable if the tenant is due an award of Universal Credit. Ground 8A is a new ground proposed for repeated rent arrears. This ground can be used where the tenant is in arrears of 2 months or more on three separate occasions over three years. This new ground is intended to tackle those who repeatedly fail to pay rent on time, but not penalise tenants who have had only one period of difficulty and managed to clear the arrears. Other grounds for rent arrears (grounds 10 and 11) remain the same but the notice period for all rent arrears grounds has now been amended from two weeks’ notice to four weeks.

Court system The proposed changes to grounds for eviction will mean that more court action is likely to be required by landlords. Not all notices will end in a court procedure, but because the landlord must give a reason (unlike under a Section 21 notice to quit) for eviction, these are open to challenge from a tenant and in some cases are up to the discretion of a judge to enforce. Propertymark has long campaigned that changing the grounds of eviction will cause much more stress for both tenant and landlord and will put an enormous amount of pressure on the, already struggling, court system.

Andrew ’ s Comments

The Renters (Reform) Bill is a significant piece of legislation that will impact on the future of renting across the country.

Through the Bill, the UK Government are extensively altering the grounds for possession. Landlords and their agents will need clear explanations of what this means as well as how the grounds can be strengthened – grounds for anti-social behaviour and substantial arrears must be effective.

The end of Assured Shorthold Tenancies The flagship change proposed under the Renters (Reform) Bill is the end of Assured Shorthold Tenancies (ASTs). These types of tenancy have been in place since the Housing Act 1988 and have allowed landlords to create fixed-term tenancies which can be ended using a Section 21 notice to quit without citing a reason.

The Bill proposes that the Section 21 notice will be removed from legislation entirely and that there can be no end date on a tenancy. This means two things:

• Firstly, all tenancies will become open-ended. A fixed term gave a specific period that the tenancy would last for, this is often 12 months and would be renewed annually. A fixed term gave flexibility to tenants, who did not want to be held into a contract for a long time, and for landlords, who may wish to make changes to the terms of the tenancy. With no fixed term provision, a tenancy can effectively last indefinitely, until ended by either party.

• Secondly, if a landlord wants to bring a tenancy to an end, they will need to use other grounds for eviction, under Section 8 of the 1988 Act. Propertymark has been lobbying for these grounds to be strengthened in order to give assurances to landlords that they will be able to regain their property when they need to.

Some Section 8 grounds have been amended and updated and some new grounds have been added in order to give landlords protections in certain circumstances. Please see our information on the Section 8 grounds and the changes.

22 MAY 2023 CHANGES TO GROUNDS FOR EVICTION IN ENGLAND The Renters (Reform) Bill has made amendments to the grounds for eviction under Section 8 of the Housing Act 1988. These have been changed and, in some cases, strengthened, to give landlords better protections when evicting a tenant. These changes will be necessary if the Bill becomes law because a Section 21 notice will no longer be valid. Under the proposals in the Renters (Reform) Bill, tenancies which give a fixed term will not be legally effective and all tenancies will be on a monthly (or in some cases, depending on the rental period, 28 days) basis. The tenant will be required to give two months’ notice to leave their agreement, however, unlike now, the notice could apply at any point during the tenancy, and they would only need to pay rent until the end of the notice period. The notice period a landlord must give is dependent on which ground for eviction they need to use.

Andrew ’ s Comments

A key concern of agents is around student accommodation where fixed-term contracts currently play an important role.

The Bill has amended Ground 4 for eviction in student accommodation, but this only applies to purpose-built student accommodation. It is unclear currently how other student accommodation will operate unsure a periodic tenancy.

Our governing body Propertymark will continue to work with the UK Government to address the issues raised by its members.

Private Rented Sector Database The Renters (Reform) Bill, published on 17 May 2023 sets out the UK Government’s objectives for reducing the number of poor-quality homes by 2030 which the Department for Levelling Up, Housing and Communities states is critical to levelling up the country.

Within the White Paper, the UK Government made a commitment to establish a new Property Portal that would include all the vital information agents, tenants and landlords need to know. This information would range from legal requirements to rights and the landlord’s history of compliance. If enacted, the Renters (Reform) Bill would establish the Private Rented Sector Database, a precursor to a future digital Privately Rented Property Portal service which the UK Government hopes to establish. The Database would contain the following information:

• Details of people who are, or who intend to become, residential landlords • Details of properties which are, or are intended to be, let as residential properties • Details of landlords who have received banning orders, including details of financial penalties or convictions relating to banning orders A letting agent or landlord would be unable to let or market a property to rent if there is no active landlord or property entry for that property registered on the Database. If a landlord fails to join the Database, they will be fined up to £5,000 by their local council. Repeated offences could lead up to fines of £30,000. Letting agents It will be the expectation that letting agents will need to check if a landlord and property are correctly registered on the Database before they market a property for let. Property agents will face penalties if they advertise or market residential properties for rent which are not registered. Once established, the Database will incorporate the Privately Rented Property Portal and start to include further information related to property standards, although the exact information continues to be deliberated by the Department for Levelling Up, Housing and Communities. Database of Rogue Landlords and Property Agents The Privately Rented Property Portal will replace the functionality of the Database of Rogue Landlords and Property Agents with landlords required to pay to register for the Property Portal. Propertymark has long called for the Database of Rogue Landlords and Property Agents to be made public and it is therefore positive to see steps taken to establish this.

Andrew ’ s Comments

A key area for us as letting agents is how the private rented sector database, property portal and landlord ombudsman will interact with registration, unique identifiers and requirements before and when advertising property to rent. These are key policies that we will engage government and parliamentarians on in order to ensure they understand the value that letting agents play in delivering well managed, safe and secure rented property. The legislation must be workable, and evidence based.

Landlords to fully consider pet requests Following the release of the ‘A Fairer Private Rented Sector’ White Paper in June 2022, the Renters (Reform) Bill, published on 17 May 2023, has adopted the UK Government's commitment to the right for tenants to request permission to keep a pet, and amending the Tenant Fees Act 2019 to permit pet insurance.

Under the new tenancy system, it will be an implied term of every assured tenancy that a tenant will be able to keep a pet in the property if they ask for consent in writing and receive the landlord’s consent. Landlords will be required to fully consider all requests on a case-by-case basis. A landlord must give or refuse consent in writing on or before the 42 nd day after the date of the request, although there are some exceptions detailed in the Bill. Guidance on what will be considered a reasonable refusal for a pet request will be

provided by the UK Government closer to the Bill’s enactment date. If the tenant believes the request has been unreasonably refused, they will be able to raise it to the Private Rented Sector Ombudsman which is to be set up as part of the Bill or through the courts. Pet insurance Under the Tenant Fees Act 2019, a landlord cannot require a tenant to enter into a contract with a third party to provide a service or insurance related to the property. However, the Renters (Reform) Bill now provides an exception for pet insurance, in the same way, some tenants are still required to organise and pay for utility bills. Under the reforms, agents and landlords who consent to the tenant keeping a pet must inform the tenant in writing that either: • The tenant maintains insurance to cover the risk of pet damage to a reasonable level. • The tenant must pay the landlord’s reasonable costs of maintaining insurance that covers the risk of pet damage. Propertymark has long-supported methods to make it easier for landlords and tenants to discuss solutions so that tenants to keep pets in their property, without the landlord incurring unreasonable costs. The UK Government has produced information on how the Renters (Reform) Bill supports responsible pet owners in the private rented sector .

Andrew ’ s Comments

Whilst amendments to the Tenant Fees Act to allow for insurance when tenants rent with pets is welcome, it’s not simply about consent but suitability of the type of property and pets.