The Renters Reform Bill, introduced to Parliament on 17 May 2023, set out to address a number of issues facing landlords and tenants in the private rental sector. Despite the government insisting the bill has been designed to benefit both parties, many landlords remain concerned that the introduction of unreasonable requirements and hefty fines of up to £30,000 could drive many out of the industry and even bankrupt some. Whilst the bill was expected to become law sometime in 2024, the government recently announced it will be delayed until after the court system is reformed – a process that could take years. Unsurprisingly, this decision has been welcomed by most landlords and agents.
What is the Renters Reform Bill?
The Renters Reform Bill aims to deliver on the government’s commitment to “bring in a better deal for renters” by fundamentally reforming the private rented sector, improving the system for both landlords and tenants, and levelling up housing quality across the UK. However, landlords are concerned that the bill goes too far and will make operating in the private rental sector unsustainable. The bill, in its current form, would enact a number of reforms recommended by the Department for Levelling Up, Housing and Communities in its 2022 whitepaper, A Fairer Private Rented Sector. These include:
- Abolishing section 21 ‘no fault evictions’.
- Bolstering possession grounds, ensuring landlords can recover their property if they want to move in or sell, as well as making it easier to evict tenants that are at fault.
- Preventing backdoor evictions by ensuring tenants can appeal excessive rent increases.
- Establishing a Private Rented Sector Ombudsman to provide a quicker, cheaper, and less combative route for dispute resolution.
- Launching a Privately Rented Property Portal to act as a ‘national landlord database’, providing tenants with reliable information about landlords so they can make an informed decision when signing a tenancy agreement.
- Providing landlords with information about their legal obligations through the Privately Rented Property Portal to help them understand where they stand legally in any disputes with tenants.
- Making it illegal to reject tenants because they are on benefits or have children.
- Giving tenants the right to request a pet in the property, which the landlord must consider and cannot unreasonably refuse (although, the landlord will be able to require tenants to have pet insurance to cover any damage to the property).
Has the Renters Reform Bill been passed?
The Renters Reform Bill was published on 17 May 2023; however, it is yet to be passed. In the UK, a bill must go through a comprehensive legislative process and be approved by both the House of Commons and the House of Lords before it can become an Act (law). The 2nd reading of the bill took place on 23 October 2023, with the government announcing it would be delayed indefinitely.
When will the Renters Reform Bill become law?
Whilst the Renters Reform Bill had been expected to receive royal assent and become law sometime in 2024, the government has now delayed it until after the court system can be reformed, which could take years.
What does it mean for landlords?
Despite the government’s best efforts to reassure landlords, the bill has been met with widespread criticism from across the industry. Many have suggested that a lack of consultation with individuals and businesses operating in the private rental sector has resulted in a bill consisting of unrealistic standards and regulations. If introduced, simple mistakes could result in fines of up to £30,000 being imposed on landlords by local housing authorities (LHAs).
The Renters Reform Bill will require landlords to register on a ‘national database’ and join an ombudsman scheme, as well as giving LHAs the power to fine landlords and agents for common errors with paperwork or notice forms. Complying with the proposed standards and regulations will significantly increase the administrative burden on those operating within the private rental sector, driving up costs that could be passed on to renters.
In addition to these changes, proposals to expand the scope of rent repayment orders could result in tenants being able to claim back up to 12 months’ rent for some offences, further heightening the financial risk facing private rental sector landlords.
However, despite the many faults of the bill, some proposed changes could be beneficial. The introduction of more comprehensive possession grounds and a government commitment to prioritise serious court cases means that evicting problem tenants or recovering properties to sell or move into will be much easier.
Throughout this process, the government has reiterated that the Renters Reform Bill will celebrate landlords that are doing a good job, however few in the industry feel that the current bill achieves that. Whenever the bill does return, landlords and agents will be hoping the government can find a way to “bring in a better deal for renters” that is not at their expense. If it fails to do so, many landlords will find themselves forced out of the industry, potentially reducing the number of rental properties available and compounding the housing crisis.
What does it mean for tenants?
The Renters Reform Bill will stop ‘no fault’ evictions without a relevant reason, prevent unreasonable rent increases and, in the government’s own words, level up housing quality across the country. It aims to give tenants greater protection from unscrupulous landlords. However, the bill must balance the needs of tenants with the needs of good landlords to ensure that it does not drive-up rents.
At Scott Bailey, our expert Landlord and Tenant Solicitors have extensive experience supporting clients with everything from tenancy agreements and rent recovery to litigation. If you need expert legal advice on the Renters Reform Bill or any other rental issues, contact our team today.