What might the Renters’ Rights Bill mean for landlords of existing Assured Shorthold Tenancies?

The Renters' Rights Bill 2024 published in September 2024 includes revisions to the Housing Act 1988 that, if passed in the current form, will have a significant impact on the current assured shorthold tenancy regime.  

The Bill is currently in committee stages and we cannot yet advise as to the final form of the revisions, or the date on which the revisions will come into force, save that the changes are expected to come into force on a single date (to be confirmed but possibly as early as Summer 2025) with no transition period.  Once fully in force, the revisions will take retrospective effect, and will therefore apply to all existing assured shorthold tenancies as well as new tenancies.  

If you are the landlord of a property that is currently let on an assured shorthold tenancy, or you are intending to grant an assured shorthold tenancy in the next few months, you should be aware of the following key points: 

• Term: Assured shorthold tenancies will automatically become periodic tenancies.  Any fixed term agreed between the parties will no longer apply.  The tenant will be able to terminate the tenancy at any point on giving the landlord not less than two months' notice.  This is intended to allow tenants security to establish and stay in a home, as well as the flexibility to terminate the tenancy should their circumstances change.  Landlords will no longer have the security of rental income for a minimum 6 month term or longer fixed term (where agreed) and will not be able to set the rent with regard to an anticipated short or long term tenancy. Tenants will be able to move in and serve notice to vacate immediately giving the landlords just two months' rental income before needing to find another tenant. 
• Possession: Landlords will no longer be able to terminate the tenancy using the "non-fault based" section 21 procedure and, instead, will have to satisfy one of the mandatory or discretionary section 8 grounds for possession. Where disputed this will require court proceedings.  One exception is that the landlord may end a tenancy on giving the tenant at least 4 months' notice if it intends to sell the property or occupy the property itself but this will not be exercisable within the first year of the tenancy.  Landlords will no longer be able to terminate a tenancy after the first six month due to a change in their own circumstances or where they simply wish to find a new tenant (for whatever reason).   Where a landlord is able to satisfy one of the mandatory or discretionary grounds for possession and court proceedings are required, this will inevitably lead to additional costs and delays in obtaining possession.
• Rent and rent review: Landlords will not be able to require tenants to pay rent to be paid more than one month in advance and all rent will be payable on a monthly basis (rather than quarterly or other frequency). Any rent review provisions will be of no further effect.  The landlord will be permitted to review the rent once each year, to the open market rent, using a revised section 13 procedure.  This procedure allows the tenant to challenge the proposed rent at the First-tier Tribunal (FTT).  The FTT may decrease the rent, but cannot increase it from the sum proposed in the landlord's notice and, where challenged, rent will not be backdated and will not be payable at the revised sum until the date of determination by the FTT.  This will take away the ability for the parties to agree terms for rent review (such as an easily calculated annual index linked review, upwards only rent review or agreed percentage review) payable from an agreed date.  Where a tenant challenges the revised rent under the s13 notice procedure, the FTT will determine a market rent and this may result in a rent decrease. 
• Regulation:  Landlords will be required to register on a newly created private rented sector database, and will be regulated by a private rented sector landlord ombudsman.  Landlords will be required to comply with decent homes standards and hazards such as damp and mould must be dealt with within a suitable timescale.  These changes should not unduly concern landlords save for the anticipated cost and administrative burden associated with registration.
• Pets: Landlords will not be able to unreasonably withhold consent to a requests from tenants to have a pet.  Whilst attracting many of the headlines, this change is perhaps not so significant to landlords who will still be able to refuse consent where reasonable (for example with regard to the nature of the property and / or the type of pet).  Where consent is given landlords will be able to require that the tenant pays for additional insurance to cover damage by the tenant's pet.

The combined result of the changes outlined above, if enacted in this form, is that it will be significantly harder for landlords to obtain possession of the property should a tenant wish to stay in occupation and contractual terms in existing tenancies such as rent review, agreed fixed terms and provisions prohibiting pets will be unenforceable and will instead be replaced with the statutory provisions outlined above. 

Landlords with existing assured shorthold tenancy agreements in place may want to take steps in the forthcoming months to review the terms and current tenants of any tenancy agreements that are likely to continue under the new periodic tenancy regime.  Where a tenant is frequently in rent arrears or is undesirable (for whatever other reason) landlords may elect to make use of the section 21 no fault eviction process now, rather than find themselves stuck with an undesirable tenant under the anticipated new regime. Landlords looking to enter into new tenancy agreements will also be mindful of the new regime and it will be more important than ever to ensure that appropriate references and tenant checks are undertaken before entering into what may be a long term landlord and tenant relationship.