What does the new Renters’ Rights Bill mean for residential landlords?

The Government published its first major new bill last week in the form of the Renters' Rights Bill.

Time ran out for the Conservative Government's Renters' Reform Bill earlier this year, with the Bill failing to make it to the statute book before the dissolution of Parliament before the General Election. Whilst the provisions of the Bill, including the demise of s21 "no-fault" evictions, were not universally welcomed by landlords, its demise had led many to question whether the change of Government would result in further, more radical, reforms eroding the interests of landlords.

The new Government's Renters' Rights Bill is substantial, and, like its predecessor it is not a straightforward piece of draft legislation, with most of its provisions amending and replacing existing statutes.  The Renters' Rights Bill will have to pass through the Parliamentary committee and debate stages before becoming law, but it is anticipated that the reforms will come into force at some point late 2025.

The key provisions of the Renters' Rights Bill are extensive, running to 215 pages.  We have set out below details of the points of most relevance to private landlords of high-end residential properties.

A simple periodic tenancy structure 

All assured tenancies, including those already in place, will become periodic tenancies, allowing tenants the ability to stay in occupation until such time as they decide to end the tenancy on giving their landlord at least 2 months' notice (to align with the end of a rent period).   This is aimed at giving tenants greater security and stability when setting up home and flexibility to deal with changing circumstances but will be a major change for landlords used to the financial security afforded by an agreed fixed term. 

The abolition of s21 evictions

The abolition of the ability of landlords to bring a tenancy to an end using the current "no fault" section 21 regime will mean landlords will instead have to satisfy one of the statutory reasons for retaining possession and, where disputed, section 8 court proceedings will be required to retain possession.   Unlike the last-minute amendments made to the previous Bill, there are not proposals to delay the implementation of this change until reforms are made to speed up the court system.  It therefore remains to be seen how the court system will deal with the anticipated rise in the number of proceedings under the new regime.

The existing mandatory grounds for possession will be revised

• Sale: Where the landlord intends to sell the property, or the landlord (or close family member) intends to move into the property, a tenant may be given 4 months' notice to vacate (not to be used in the first 12 months of the tenancy).  
• Significant arrears: Where the tenant has at least 3 months of rent arrears (at the time that notice is served and at time of the possession hearing) the tenant may be given 4 weeks' notice to vacate.  This is an increase from the 2 months of arrears under the existing regime.
• Conviction: Where the tenant has been convicted of severe anti-social behaviour landlords can begin procession proceedings immediately.

The existing discretionary grounds for possession will be revised

• Alternative accommodation: Where suitable alternative accommodation is made available a tenant may be given 2 months' notice to vacate.
• Arrears: Where the tenant is in arrears and or has persistent delayed payment of rent the tenant may be given 4 weeks' notice to vacate.
• Breach: Where the tenant is in breach of the tenancy agreement (except for payment of rent) and or has caused the deterioration of the property a tenant may be given 2 weeks' notice to vacate.

Future rent increases must be made by service of a section 13 notice

Landlords will be able to increase rents just once each year, to the market rent by serving a section 13 notice.  This can be challenged by the tenant at the First Tier Tribunal which may then determine the appropriate rent (not to exceed the rent proposed by the landlord) with the new rent payable from the date of determination (rather than being backdated to the date of the landlord's notice).  Rent review clauses, including those in existing tenancy agreements will not be permitted and landlords will not be able to collect advance rent for more than a one month period.

A private rented sector database will be established

All landlords of assured and regulated tenancies will be required to register themselves and their properties on a new private rented sector database.  Penalties will apply to those that let a property without registering or supplying the required information.  A registration fee will be charged.

Ending rental discrimination

Landlords and their agents will continue to have the final say as to who a property is let to, and referencing checks may still be undertaken, but decisions must be made by reference to ability to pay the rent, rather than, for example whether an applicant has children or is in receipt of benefits.

Prohibiting rental bidding

Landlords will not be permitted to ask prospective tenants for "best offers" when renting a property.  An asking rent must be published, and landlords will not be permitted to encourage bids above this sum.

Renting with pets

The new Bill includes measures to ensure that landlord do not unreasonably withhold consent when a tenant requests to have a pet in their home.  Landlords will however be able to require pet insurance to cover any damage is put in place and the Tenant Fees Act 2019 will be revised to allow such payments.

Decent homes standard and Awaab's Law

Regulations will be put in place to set a Decent Homes Standard to apply to all privately rented homes with enforcement obligations placed on the relevant local authority.  In addition, Awaab's Law will be extended to apply to the private rented sector as well as to social housing to ensure that dangerous conditions such as mould and damp must be addressed within a specified period, failing which tenants may bring enforcement action against the landlord.

Implementation - no transition period

Once in force, the new tenancy system for the private rented sector will be introduced for all private tenancies on a single implementation date.  Unlike the previous bill, there will be no transition period for existing tenancies.  Instead, "sufficient notice" will be given to "ensure a smooth transition" to the new regime.

• Existing tenancies will convert to the new tenancy system.  Any rent review provisions and contractual break clauses will cease to be of any effect and the tenancy will become a periodic tenancy that can be terminated by the tenant on two months' notice or by the landlord using the established section 8 court process where it is able to satisfy one of the discretionary or mandatory grounds for possession.
• New tenancies signed on or after the implementation date will be governed by the new regime as outlined above.

Indications are that the implementation date will not be before Summer 2025. The advantage of the single implementation date is that it will avoid the disruption and confusion that would perhaps have been inevitable if a two-tier strategy had been implemented as envisaged by the original Bill.  However, the disadvantage for landlords is that tenancy agreements in place today, on terms agreed by all parties, including the soon to be prohibited stepped rents, rent review, fixed terms and / or options to break will, if still in place at the implementation date, migrate to the new regime without the previously agreed contractual terms.