Renters’ Rights Bill’s Royal Assent: Actions for landlords

The Renters’ Rights Bill is a significant piece of legislation which will bring wide-ranging reforms to the private rented sector.

Emily Stark, Solicitor in the Dispute Resolution team, explores the bill and what will be required of landlords.

Key takeaways

Currently the Bill is nearing the end of its legislative journey and is expected to receive Royal Assent in September. Once the Bill becomes law, there are some key takeaways and actions that landlords should be taking notice of. 

Section 21

Section 21 notices (no fault evictions) are set to be abolished under the new Bill. This means it will be almost impossible to evict a tenant without one of the mandatory grounds set out in Schedule 2 of the Housing Act 1988.  

Unlike its predecessor, the Renters (Reform) Bill, the Renters’ Rights Bill will abolish Section 21 notices with immediate effect, without waiting for a reform of the court system to deal with the increased volume of court hearings and additional work generated by Section 8 proceedings.

Section 21 possession proceedings, known as accelerated possession proceedings, are ordinarily dealt with by written documents submitted by the parties (without an oral hearing) and take up little court time. Once this option is removed, all possession proceedings will result in a court hearing. This means landlords can expect delays at court.

Section 8

A Section 8 notice will be required for all evictions. The Bill introduces new grounds for evictions and has doubles the notice periods for the existing grounds. The key amended grounds include the ability to evict a tenant where possession is required by a landlord or a member of the landlord’s family, or when a tenant is at least three months in arrears with their rent (increased from two). A new ground allows landlords to gain possession to sell a property or grant a lease of over 21 years.

A word of caution, if a landlord or their agent serves a Section 8 notice which relies on a ground which they do not reasonably believe they can rely on, or which recklessly relies on a ground they may not be able to rely on, they face a civil financial penalty of up to £30,000 per breach, or a criminal conviction and an unlimited fine. If the landlord is a limited company, then the company commits a criminal offence, as does every company Director.

Tenancy types

Assured Shorthold Tenancy (AST) agreements are currently the most common type of tenancy agreement in England and Wales. Once the Renters’ Rights Bill receives Royal Assent, these are going to be abolished with all tenancies becoming periodic automatically. 

Rent

When it comes to securing a tenant, the Bill puts an end to rent bidding wars. Landlords and agents will not be able to accept offers above the advertised price.

Should a landlord wish to issue a rent increase, this will only be possible by issuing a Section 13 notice once a year. Tenants wishing to challenge this can apply to the First Tier Tribunal who will decide a fair market rent for the property.

Unlike the current Section 13 process where the First Tier Tribunal can decide a fair market rent above or below the proposed new rent, the Tribunal will only be able to award the lowest figure of the proposed rent or the fair market rent. It is therefore anticipated that more tenants will challenge rent increases, as they will have nothing to lose. The knock on effect of this is likely delays in the tribunal.

To exacerbate matters, rent increases will only take effect following the decision of the tribunal, and not from the date of the proposed rent increase specified within the Section 13 notice which is the current position.

Additionally, tenants will be able to challenge the agreed rent of a tenancy within six months from commencing the same.

Currently, landlords can request payment of rent in advance. Under the Renters’ Rights Bill, advance rent will be banned for new tenancies, but this will not impact existing tenancies. Tenants will also need to provide 2 months’ written notice to terminate a tenancy.

Pets, benefit recipients and children

Tenants will be permitted to keep pets in rental properties unless a landlord has reason to deny a request. The Bill was initially drafted with a provision that tenants had to have mandatory pet insurance to cover any damage to the property but this has since been removed. It is being discussed whether a separate pet damage deposit of up to three weeks’ rent will be allowed.

To prohibit further discrimination, landlords can no longer refuse tenants with children or those in receipt of benefits.

Penalties

Local councils have enhanced enforcement powers against landlords who do not comply with the legal requirements. They will be able to issue fines of up to £40,000 per breach. It will not be a defence for a landlord to say they did “not know the law”, so it is vital landlords are aware of these changes, as well as agents.

Laws coming into effect at a later date 

Following implantation of further regulations, a landlords’ ombudsman will be introduced to help resolve disputes between landlords and tenants. A digital private rented sector database will also be created. Registration will be compulsory for each rental property, with landlords paying a fee per property. The exact amount is unknown at present.

The Decent Homes Standard will also be extended from the public housing sector into the private. This means properties:

• Must be in a reasonable state of repair
• Must have reasonably modern facilities and services
• Must provide efficient heating systems and insulation

This includes the expansion of Awaab’s law to the private rental sector, meaning landlords must follow strict timescales to inspect and repair hazards such as damp and mould. There will likely be a zero-tolerance approach to mould, and landlords will no longer be able to blame any damp or mould within a property on tenants’ lifestyles. This could be a particular challenge for landlords letting properties in Cornwall given the county’s damp climate and where there is a prevalence of older properties which lack proper damp-proofing.

Next steps

Landlords may want to take the appropriate steps to evict any tenants they are not entirely satisfied with now. Alternatively, landlords may want to recover possession to bring a home up to the Decent Homes Standard before the transition. Landlords would be wise to be proactive instead of reactive if their circumstances allow.

There is still time to serve a Section 21 or Section 8 notice as per the existing legislation, but time is running out.

If you require any legal advice on the proposed shake up to renters’ rights, Coodes’ Dispute Resolution team can help. Our Personal Disputes team has wide-ranging experience in landlord and tenant disputes. We help our clients to reach a resolution as quickly and cost-efficiently as possible.

For further legal advice, please get in touch with Emily Stark by calling 01872 246 219 or emailing emily.stark@coodes.co.uk. Alternatively, you can also fill in our online contact form and the most appropriate member of the team will get back to you.