Renters (Reform) Bill: Everything you need to know

30th May 2023

Landlords will now have seen the long-awaited Renters (Reform) Bill which has been released. It will be one of the most significant changes of England’s private rented sector in more than thirty years.  Whilst its still in its early phases, the legislative Bill will be proposed by the Government to the Parliament for consideration of amendments to the existing housing laws. It must go through multiple phases in the Houses of Commons and Lords and, in most situations, acquire approval from both Houses before becoming law.  

What is the Renters (Reform) Bill?

The Renters (Reform) Bill outlines the government’s plans to significantly reform the Private Rented Sector (PRS) and improve housing quality.

The proposed revisions promise to “bring in a better deal for renters” and represent “the most significant shake-up of the private rented sector in 30 years.”

The Bill, which was introduced in parliament on 17th May, 2023, must be passed by parliament before it becomes law. Housing Secretary Michael Gove told BBC Newsbeat that he hoped the Bill will be in place “as soon as possible.”

What is the purpose of the Renters (Reform) Bill?

The PRS is an important section of the housing market in the United Kingdom. More than four million homes are privately rented, with the number more than doubling since 2004.

According to the government, present legislation exposes some renters to a “precarious lack of security,” particularly in the case of Section 21 “no fault” evictions. Meanwhile, respectable landlords face challenges from “a minority of criminal landlords.”

Although the government has outlined its goals in the Bill, it has stated that roughly a quarter of private rental dwellings “do not comply with basic decency criteria.” It intends to implement a Decent Homes Standard to the private rental sector in the years to come.

What’s included in the bill? 

1. Section 21 “no fault” evictions to be abolished

The Bill confirms proposals to repeal Section 21, which allows private landlords to repossess their properties. Instead, landlords will only be permitted to evict a renter under certain conditions.

According to the 2022 government white paper, “removal of Section 21 will level the playing field between landlord and tenant, empowering tenants to challenge poor practice and unjustified rent increases, while incentivizing landlords to engage and resolve issues.”

Michael Gove went on to say that the government believes that no-fault evictions can be “cruel and heartless.” 

Section 21s have already been abolished in Wales in line with the Renting Homes Wales Act.

How will the grounds for Section 8 change?

Instead of Section 21, the Bill proposes to strengthen Section 8. This enables a landlord to terminate a tenancy arrangement early if there is a legal cause for doing so.

This includes instituting a new required ground for recurrent significant arrears. This makes eviction necessary if a tenant has been in rent arrears for at least two months, three times in the previous three years, regardless of the arrears balance during the hearing.

There is also a new ground that allows landlords to apply Section 8 to a tenancy in order to sell a home or allow family members to relocate into a rental property. After a tenant has lived in a residence for at least six months, this may apply.

2. A single system of periodic tenancies

The Bill reaffirms the government’s desire to streamline existing tenancy structures by converting all Assured Shorthold Tenancies to a single system of periodic tenancies. 

Assured Shorthold Tenancies are the most common type of rental agreement in the private rented sector at the moment. It is normal practice for tenants to sign a 6 or 12-month lease. After this period has passed, a decision will be taken on whether to extend the contract or transition to a periodic (e.g., monthly) payment.

The Renters (Reform) Bill, on the other hand, proposes that all rental premises be subject to a periodic tenancy, with no set expiration date.

Tenants would therefore be required to give two months’ notice when terminating a tenancy to “ensure landlords can recoup the costs of finding a tenant and avoid lengthy void periods,” according to the suggestions.

Furthermore, landlords would be entitled to evict a renter only on “reasonable” grounds.

3. Notice periods for rent increases to be doubled

According to last year’s white paper, rent hikes will be limited to once per year, and the minimum notice landlords must offer of any rise in rent will be extended to two months.

This is different from Wales where the legislation is a minimum 6 months notice period.

4. Tenants are allowed more freedom to keep pets in their homes.

The Renters (Reform) Bill states that tenants may ask for approval to have a pet in their house and that landlords cannot refuse approval unfairly.

By the 42nd day after the date of the application, a landlord has to grant or deny authorisation. If a landlord requests more information, this period can be extended by one week. 

5. The establishment of a new ombudsman to represent all private landlords.

Landlords “may” be obliged to join a government-approved ombudsman covering all private landlords in England who rent out property – whether or not they employ a rental agent.

A landlord redress scheme would allow a former or current tenant to file a complaint against a landlord, which would then be investigated independently. 

The Bill defines the parameters for the redress plan, but further information is needed on when the scheme will be established.

6. A brand-new property portal for private landlords and tenants will be launched and necessary to use.

The introduction of a new digital Property Portal would “provide a single ‘front door’ that will assist landlords comprehend and show that they meet their legal obligations.”

According to the government, “too often, tenants discover too late that they are renting a substandard property from landlords who willfully fail to comply, and councils don’t know who to track down when serious issues arise.”

It further states that the platform will “assist good landlords in demonstrating compliance with regulations and attracting potential tenants.”

As part of the Bill, the government will also introduce legislation to:

• For the first time, apply the Decent Homes Standard to the private rented sector, providing renters with safer, higher-quality houses and removing the blight of low-quality housing in local communities. This will contribute to the government’s Levelling Up aim of halving the number of substandard leased dwellings by 2030.

• Making it illegal for landlords and agents to impose blanket bans on leasing to tenants on welfare or with children, ensuring that no family faces unfair discrimination while seeking a place to live.

• To help target illegal landlords, strengthen council enforcement authorities and implement a new need for councils to report on enforcement activity.

What comes next?

Nothing will change for the time being. The Bill’s provisions will be debated in the Houses of Commons and Lords in the following months. Clauses may be added, changed, or removed during these debates. Any of these improvements will most certainly take 18 months to execute, and other aspects of the Bill would take considerably longer. 

If you want to read the Bill in detail, please click here. If you have a property in England or Wales and would like a specialised property management company to take care of this. Please don’t hesitate to contact us.

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