From the ‘Renters (Reform) Bill’ to the ‘Renters’ Rights Bill’ – an update on the reforms

The Renters (Reform) Bill was introduced to Parliament in May 2023 by the previous Conservative Government. The proposals in that Bill included a number of important changes to the contractual relationship between landlords and their tenants. 

The most important change in the Renters (Reform) Bill was the abolition of Section 21 (“no fault”) Notices. This is a mechanism by which a landlord can serve an eviction notice upon their tenant and, so long as the landlord has complied with all statutory requirements (including the service of an EPC, gas safety records, the ‘How to Rent’ guide, and has protected the tenant’s deposit in time) they are entitled to evict their tenant without giving any reason. Other changes in the Bill included the ending of fixed term tenancies, with both new and existing tenancies to be converted to periodic tenancies from the outset, the introduction of a private rented sector database, and the introduction of new grounds for possession; such as the landlord wanting to sell their property. 

Despite various promises to do so, the previous Conservative Government did not pass the Bill into law prior to the General Election earlier this year. The main reason for their failure to do so was their contention that the court system is not sufficiently equipped to deal with the additional burden that will be placed upon it by more cases being heard in court; one of the important features of a Section 21 Notice being the ‘accelerated process’ which enables such cases to be determined by a Judge without a hearing.

The two main parties committed to passing the reforms in their manifestos and, upon forming the new Government, Labour published their Renters’ Rights Bill. This version of the Bill is currently making its way through Parliament; it had its first reading on 11th September 2024, its second reading on 9th October 2024, and has now been sent to a Public Bill Committee for further scrutiny. The Committee are expected to report to the House of Commons by 28th November 2024, where the Bill will then be further debated and voted upon. 

The Bill in its current form is relatively similar to that published previously under the last Conservative Government. For example, there are no changes to the plans to abolish Section 21 Notices and nor are there any changes to the ending of fixed term tenancies. However, whereas before there were transitional provisions to deal with existing tenancies rather than new ones, it is now expected that there will be a single date after which all new and existing assured shorthold tenancies (whether statutory periodic, contractual periodic, or inside a fixed term) will become assured periodic tenancies. The only exception is expected to be those already subject to existing possession proceedings. 

There are also some changes to the proposed new grounds for possession; the most important being those in relation to the landlord wanting to sell the property, and rental arrears. 

It is unclear at this stage what evidence a landlord will be required to produce to evidence an intention to sell. The notice period that a tenant will be required to be given is 4 months, and this cannot be served within the first 12 months of a tenancy. If a landlord is successful in obtaining possession on the basis of this ground, they will be unable to re-market or re-let the property for a period of 12 months. Any breach of this restriction may lead to a fine being levied by the Local Authority. The potential for a fine is designed to prevent abuse of this ground; but there is some uncertainty as to what monitoring requirements (if any) will be in place. 

In relation to rental arrears, currently a tenant who owes 2 or more months’ rent can be served an eviction notice giving 2 weeks’ notice before court proceedings can be commenced. This is to be increased to 3 months’ rent and 4 weeks’ notice respectively. 

The reforms will continue to generate much debate between landlords, tenants, and those who operate in the property market. Concerns have been raised that the reforms will lead to more landlords selling their properties, something which has already begun to happen following the increase in interest rates. In addition, the impact on the court system has already been raised. The civil courts are already subject to significant backlogs in many arears, and questions have been raised as to what reforms may be necessary to prevent the courts from being overwhelmed. The Government has pledged to digitise the court system and to ensure the courts are ready to cope with the additional work, no further detail has been provided as yet.

The Renters’ Rights Bill undoubtedly represents a significant reform of the private rented sector.  If you are a landlord seeking advice upon how the reforms will impact your property portfolio, a lettings agent facing enquiries from your landlords about the effect of the reforms, or a tenant seeking advice upon how the reforms will impact your living arrangements, please contact Daniel Dickson on djd@deanwilson.co.uk or 01273 249232.