The hot topic this week has been the Renters Reform Bill being published and having its first and second reading in the House of Commons. First of all, do not panic, as it’s just a bill at this stage. It’s still got to go through houses of parliament, then receive Royal Assent, and then come into force so we are a few years away yet. The one thing that we can count on is that it won’t pass without any amendments and follow up regulations so things will change. Below are my top key changes briefly so read on for more details and hit reply if you have any comments or want my advice on anything lettings.
Abolition of Section 21 notices
As we probably all expected, the bill proposes to abolish the use of section 21 notices. This change is probably the one that renters are most happy about and the one that most Landlords are angry about. Landlords will still be able to terminate a tenancy using a section 8 notice on new introduced mandatory grounds (I can already see loopholes for Landlords in some) and if a Tenant wants to terminate their tenancy, they will now need to serve a two-month notice which is better than the previous one-month notice.
Abolition of fixed term tenancies
Fixed term tenancies could be a thing of the past as they are looking to introduce rolling tenancies for all private residential tenancies. The justification for this is that the government says it will “provide greater security for tenants whilst retaining the important flexibility that privately rented accommodation offers. It will enable tenants to leave poor quality properties without remaining liable for rent or to move more easily where their circumstances change, for example to take a new job opportunity”. Is this a bad thing for Landlords? Not really in my eyes as a property is always going to rent and a tenant will always be available as we have seen over the past couple of years and with the supply of rental properties going down even further, I don’t see any issues with a Tenant wanting to leave anytime.
New grounds for a section 8 to be served
With the section 21 being abolished it will now move over to a section 8 needing to be served for a Landlord to gain repossession of their property with the promise of a digital court service to speed up the process of getting possession. New grounds and amended grounds will be introduced and according to the government this will “still give flexibility to Landlords to get their property back if they need to”. Having looked at the new and amended grounds there are things there that can benefit Landlords more than the previous ones and some loopholes that could be identified to gain repossession.
Procedure to increase rent
The bill proposes to introduce a single procedure to increase rent which is the following.
- To increase the rent, a landlord will need to complete a form, which will be on GOV.UK, and serve it on the tenant with 2 months’ notice.
- If the tenant accepts the proposed rent increase, the rent will change on the rent day after expiry of the notice.
- If the tenant doesn’t agree with the increase and think it’s above the market rate, they can dispute the increase through referring a case to the First-tier Tribunal. They will need to do this before the new rent is due and let their landlord know.
- Landlords will only be able to increase rents once a year.
Landlords will still be able to increase rents in line with market conditions and there will be no rent increase cap but Tenants will now be able to challenge increases if they feel it’s not acceptable. How do we try and avoid disputes on rent increases? Have a conversation with your tenants out of courtesy before and give them comparables of similar properties to justify the rent increase and come to an agreement on the rent and then serve the notice to them.
Right for Tenants to request a pet
I personally don’t see any issues with this. Most people/families have a pet or want a pet so you would attract better tenants, more tenants if you allow one. Obviously, there will be times where you cannot allow a pet, for example if it goes against a head lease which will be a reasonable ground not to allow one and if the Tenant wants a pet then you can ask for pet insurance to be taken out by the tenant and see proof that this has been done to cover any damage caused. You also have the security deposit which you can use for any damages caused by the pet. Summary below of what the renters reform bill states.
- Tenants will have the legal right to request a pet in their home. The landlord must consider the request and can’t unreasonably refuse to give consent.
- The request must be in writing and include a description of the pet. The landlord can ask for more information and there are time limits for a decision.
- The time limit for a decision by the landlord is 42 days. If the landlord requests more information, they have an extra 7 days from receiving that information.
- Landlords will be able to require pet insurance to cover any damage to their property. They can also ask the renter to reimburse them if the landlord takes it out themselves.
- If the tenant doesn’t agree with the decision, they’ll be able to escalate their complaint to the PRS Ombudsman. They will make the final decision based on the evidence provided by both parties.
New Property Ombudsman
Compulsory for all private Landlords to join a government approved redress scheme regardless of whether they use a letting agent, and the Landlord will have to abide by the decision of the ombudsman. The guidance also states and claims that the new ombudsman will “tackle the root cause of problems, address systemic issues, provide feedback and education to members and consumers, and offer support for vulnerable consumers.” Landlords will have to pay for the costs of the ombudsman but it will be free for tenants to use, if the Landlord hasn’t dealt with a “legitimate complaint” and Landlords won’t be able to use it if they have a legitimate complaint about their tenants so this is a one way road unfortunately but it comes down to whether a Landlord wants to look after their investment properly and if they do, then nothing to worry about. If you don’t, then maybe you want to have a re-think. Costs of joining the ombudsman have not been discussed or published yet.
A private rented database
A new digital database to be introduced where each Landlord and each property will have an entry into the system and unique identifiers. The government refer to this as the “Rented Property Portal.” They will make this compulsory to have active entries for both the landlord and property before marketing a property for let and must include information and documentation relating to the property and must be kept up to date by the Landlord or Letting Agent. This will give transparency to local councils and tenants to the property that is being rented and also provide information to a Landlord with any compliance changes in the rental sector, so they are educated more rather than the wishy washy stuff they get at the moment. There is nothing in the bill to suggest what information will be needed to input into the new database or any mention of what the cost will be.
Decent Homes Standard?
Announcements have been made to say the bill would apply the Decent Homes Standard to the rental sector giving renters safer, higher quality homes and remove the blight of poor-quality homes in local areas, but the current bill doesn’t include this. I’m sure at some point it will be introduced but right now, not much to talk about.
Bans on benefits or families?
Like above, announcements were made to say the bill would make it illegal for landlords and agents to have blanket bans against renters with children or those receiving benefits but again, nothing in the bill that’s been released to state this so again, not much to talk about currently.
So, final thoughts? Remember this is the first draft of the bill and will go through a lot of changes before the final version is created which is going to take time. Things are missing from the bill which they need to sort out, so we are looking at a lengthy process to get right and get introduced. My view is we are not going to see anything introduced until late 2024, early 2025 so right now for Landlords, nothing changes so it should be business as normal.
If you need any help with anything Lettings, Investments or Developments then get in contact with me and I will be more than happy to help. Make sure to follow our socials and podcast, so you never miss out:
Thank you
Avocado Lettings Director
Tel: 07585 913 564
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