The Renters (Reform) Bill was published amid much fanfare in May of this year. Will the Bill live up to its billing as the ‘biggest shake-up of the private rental sector for 30 years’ comprising ‘a once in a generation reform to deliver safer, fairer and higher quality homes’ forming part of the commitment to ‘bring in a better deal for renters’?
The Bill reflects a desire to protect private residential tenants against ‘rogue’ landlords perceived to be acting unreasonably or unfairly following a period where there has been much focus on the poor condition of some rental properties and the use of section 21 notices’ by unscrupulous landlords to end tenancies where a tenant complains about the condition of their property or rent increases.
The Bill is currently being debated in Parliament and could therefore be significantly revised before coming into force. On first sight, the proposals are, however, relatively wide ranging and would indeed trigger key reforms to the current rental system including those detailed below:
- The wholesale reform of the structure of residential tenancies. All new tenancies will be continuous periodic tenancies, rather than coming to an end on notice after a fixed period as is the current practice. Transitional provisions will also provide for existing tenancies to be migrated to the new structure.
- The abolition of the so called 'no fault' section 21 notice evictions, meaning it will no longer be possible for a landlord to evict a tenant at the end of a fixed term simply because it wants to do so. Eviction will only be possible if one of the statutory grounds can be proved.
- The introduction of more comprehensive statutory grounds for landlords to recover their property where tenants are at fault, but only exercisable in what is described as “reasonable circumstances”.
- Rent reviews will be limited to annual reviews, triggered by a formal notice process with the tenant able to challenge any proposed increase via the First Tier Tribunal with conventional rent review clauses of the type we are used to in practice now being deemed ‘vague’ and ‘unconnected to the market’.
The reforms outlined above will perhaps impact most on the 'occasional' landlord perhaps wanting to let a family home whilst overseas, or other temporary relocation. For this group of landlords, the current section 21 regime allows the landlord that the certainty that it can terminate a tenancy at the end of the fixed term with minimal fuss or expense and return to their home or indeed choose to sell the property should they wish. Whilst this will be addressed in part by a new statutory ground allowing a landlord to evict a tenant if it can prove it intends to sell the property or allow a family member to move into the property, such a change may prove too risky for some landlords in this sector, who may opt to simply leave a property vacant rather than run the risk of having to take costly and potentially time consuming court proceedings to regain possession of a family home that has been let on a short-term basis.
Another important factor to consider is quite how the court system will deal with the likely increase in possession proceedings under the new statutory grounds once the section 21 notice procedure is no more. Without considerable investment in the current court system, this may mean that it will be slower and more expensive for landlords to evict problem tenants such as those with significant arrears or where there has been a significant breach of the tenancy. This may be addressed by proposals for the creation of a new Ombudsman scheme, tasked with providing cheaper and quicker dispute resolution together with a new online portal.
Reform is still some way off. It is anticipated that the earliest the proposals outlined in the new Bill could come into force is early 2024, subject to first being passed by Parliament. Quite how the changes will impact on existing tenancies, in particular those with a fixed term that will run beyond the likely implementation date in 2024, is currently unclear.
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