Renters Reform Bill - Overview for Landlords
Understandably there is a lot of chatter around this renters reform bill and what it means for landlords, there is also a lot of mixed messages and worrying misinformation.
Whilst the reform bill as published is just a white paper following consultations and will likely evolve and is still missing a substantial amount of detail at this point, there is some key information available which we will outline below.
As the bill passes through government, we will of course continue to keep our landlords up to date with the changes and what they mean for you.
A single system of periodic tenancies
It is proposed that all tenancies will become periodic tenancies. This will be implemented in two stages, with the first stage being for any new tenancies and the second stage introduced 12 months later being for all existing tenancies.
What this actually means -
Tenants are able to serve notice to leave the property at any point throughout their tenancy. This notice will be increased to two months notice instead of one months notice as per the current system.
Landlords will no longer be able to renew tenancies however they are able to carry out rent increases once every 12 months. These rent increases however will be implemented by serving a section 13 notice and will have to be justifiable and the tenant will have the ability to appeal the rent increase via the courts.
Landlords can still serve notice (We will go into more detail about this later in this overview) in certain situations, but a large majority of the notices cannot be served for the first 6 months. In reality that is not much different to the current system, as landlords have not been able to serve notice to end earlier then a fixed term tenancy without breach of contract, and even when outside of a fixed term tenancy notice cannot expire before the end of the first 6 months.
Abolishing Section 21 Eviction Notices
Section 21 notices (non fault evictions as they are commonly referred to) will be abolished and replaced with new and strengthened section 8 grounds so landlords can be confident that “when they need to manage their assets or a tenant does not meet their obligations they can regain access to their properties.”
What this actually means -
Section 21 notices have been the most common notices since the swap to assured shorthold tenancies, and it was recently reformed to introduced the prescribed 6a form combined with the “accelerated possession order” a faster route to gaining possession back with a mandatory notice, so long as you can demonstrate to the judge that you had complied with all legal requirements at the start of and during the tenancy, a decision could be made in chambers and a possession order issued, meaning the process was a lot faster. The truth is since courts halted possession orders at the start of 2020 lockdown they have never restarted the accelerated possession process, so now, all notices that go to court require a hearing, locally hearings are taking anywhere between 4 to 6 months to be arranged.
Due to the big backlog on section 21 notices, section 8 notices have become much more prevalent, as the notice can be as short as 2 weeks based on the “grounds” being used for eviction. So long as the move to section 8 notices is paired with in the introduction of additional grounds as they have proposed, these grounds being mandatory such as when you decide to sell your property, or move a family member in to the property, and a speedier court process, in our opinion moving the eviction process to a single notice, which can in some circumstances have shorter notice periods, will be a positive step.
In summary, you will still be able to remove a tenant for anti social behaviour (with notice decreasing to 2 weeks) rent arrears (notice increasing to two months) and new grounds for selling the property or moving a close family member in to the property (proposed two months). Section 8s by default go to court for possession currently however they are proposing creating a mediation service which can help resolve issues or advice tenants of the mandatory possession orders before reaching court. In our experience unless a tenant is being evicted for rent arrears or antisocial behaviour, most tenants choose to avoid courts. Even now, serving a section 21 notice which is assumed would not end in a court proceeding, would do, if the tenant didn’t vacate, so in reality the landlords are not going to be more exposed by these changes, and hopefully more safeguarded in certain circumstances.
Other Points Raised
At this point there is less detail available on the other parts of the reforms, instead they tend to be sweeping or generalised statements, so we will continue to keep you updated of changes, but so far other proposed sections of the bill include;
The requirement for kitchens to be less then 20 years old.
The requirements for bathrooms to be less then 30 years old.
Strengthened processes around enforcing HHSRS requirements (we previously posted about landlords responsibilities around HHSRS when the fitness for habitation law was passed but this can be viewed by clicking here)
A Landlord/Property portal is proposed so that there is a register of all rented properties within the UK.
Landlords will be unable to unreasonably withhold consent for tenants to have pets HOWEVER there will be a change to the Tenant fees act to include Pet Insurance against damages to the property to be charged to the tenant in order to allow a pet.
There will be an outright ban on allowing landlords to blanket ban against letting to families or those in receipt of benefits. There of course is a need for this ruling to be sensible as part of the HHSRS requirements is to not allow a property to become overcrowded. The government has said as part of this change they will be looking into the mortgage providers and insurers approach to housing people receiving benefits to ensure a landlord can get mortgages and insurance without restriction.
Any Questions?
Should you have any questions relating to your rental property and how the upcoming changes may impact you, call us on 01525 40 22 66 or email adam@orchards.co.uk or naomi@orchards.co.uk for more information.