Renters' Reform Bill - White Paper

This article looks at the recently announced white paper for the Renters' Reform Bill, which includes the proposal to abolish section 21 notices.  

Its broad scope is apparent, and several other proposals are included. You can read the white paper here.

Safe and Decent homes

The Decent Homes Standard is a standard in the Social Rented Sector, but there is no requirement for PRS properties to meet the standard. The PRS continues with the HHSRS and fitness for human habitation rules, which are proposed to be extended to the Decent Homes Standard. 

The current version of the Decent Homes Standard (2006) includes:

• the dwelling must be free of a category one hazard (HHSRS),
• in a reasonable state of repair,
• a reasonable degree of thermal comfort, and
• have reasonably modern facilities and services, which are:
  • a reasonably modern kitchen (20 years old or less);
  • a kitchen with adequate space and layout;
  • a reasonably modern bathroom (30 years old or less);
  • an appropriately located bathroom and WC;
  • adequate insulation against external noise (where external noise is a problem); and
  • adequate size and layout of common areas for blocks of flats.

There is no indication at this stage what standard will apply to the PRS, but it's likely to use the existing standard as a starting point. 

The decent standard is likely to include minimum EPC levels of C as reference is made in the white paper to the Clean Growth Strategy, which consists of the statement:

Develop a long-term trajectory to improve the energy performance standards of privately rented homes, with the aim of upgrading as many as possible to EPC Band C by 2030 where practical, cost-effective and affordable.

The white paper says that the government will:

... run pilot schemes with a selection of local councils to trial improvements to the enforcement of existing standards and explore different ways of working with landlords to speed up adoption of the Decent Homes Standard.

Rent Repayment Orders will be extended to cover repayment for non-decent homes.

Increased Security and More Stability

The white paper states that government intends to

abolish Section 21 'no fault' evictions and deliver a simpler, more secure tenancy structure.

According to the white paper:

Landlords will only be able to evict a tenant in reasonable circumstances, which will be defined in law, supporting tenants to save with fewer unwanted moves. Removing Section 21 will level the playing field between landlord and tenant, empowering tenants to challenge poor practice and unjustified rent increases, as well as incentivising landlords to engage and resolve issues.

In place of section 21, the white paper says the government will:

reform grounds of possession so that they are comprehensive, fair, and efficient, striking a balance between protecting tenants' security and landlords' right to manage their property.

There is proposed a new ground for landlords who wish to sell their property and allow landlords and their close family members to move into a rental property. There is proposed a new mandatory ground for repeated severe arrears. Eviction will be mandatory where a tenant has been in at least two months' rent arrears three times within the previous three years, regardless of the arrears balance at the hearing. 

The notice period for the existing rent arrears eviction ground will be increased to four weeks and will retain the mandatory threshold of two months' arrears at the time of serving notice and hearing. There will also be grounds for criminal behaviour or severe antisocial behaviour. The length of notice is proposed to be:

... two months' notice in circumstances beyond a tenant's control, such as the landlord selling, with less notice required for rent arrears and serious tenant fault.

You can find a complete list of the proposed grounds here.

Periodic tenancies

The government intends there to be a single system of periodic tenancies. The government will abolish fixed terms. It is possible that assured and assured shorthold tenancies might be replaced with something new to achieve this. The white paper says (our highlights):

we will move all tenants who would previously have had an Assured Tenancy or Assured Shorthold Tenancy onto a single system of periodic tenancies

Interestingly, the use of the words would previously have had indicates it's something entirely new. But, it might be that assured shorthold continues in an amended format. It is proposed that tenants will need to provide two months' notice when leaving a tenancy. 

These new periodic tenancies will have to be in writing. 

Under these tenancies, it will be illegal for landlords or agents to have blanket bans on renting to families with children or those in receipt of benefits. 

The new tenancies will be required to ensure landlords do not unreasonably withhold consent when a tenant requests to have a pet in their home, with the tenant able to challenge a decision. The government will also amend the Tenant Fees Act 2019 to include pet insurance as a permitted payment, and this means landlords can require pet insurance so that any damage to their property is covered. It is proposed to implement the new system in two stages. 

There will be at least six months' notice for the first implementation date, after which all new tenancies will be periodic and governed by the new rules. Specific timing will depend on when Royal Assent is secured. 

All existing tenancies will transition to the new system on a second implementation date. After this point, all tenants will be protected from Section 21 eviction. There will be at least twelve months between the first and second dates.

Rent increases

The government proposes only to allow rent increases once per year (replicating existing mechanisms) and increase the minimum notice landlords must provide of any change in rent to two months. They also intend to end the use of rent review clauses.

A new Ombudsman covering all private landlords

The government wants to ensure PRS tenants have the same access to redress as those living in other housing types. They intend to introduce a single government-approved Ombudsman covering all private landlords who rent out property in England, regardless of whether they use an agent. 

The new Ombudsman will allow tenants to seek redress for free when they have a complaint about their tenancy. This could include complaints about the landlord's behaviour, the property's standards or where repairs have not been completed within a reasonable timeframe. Local councils can take enforcement action against landlords that fail to join the Ombudsman. 

The Ombudsman will have powers to put things right for tenants, including compelling landlords to issue an apology, provide information, take remedial action, and pay compensation up to £25,000. As part of providing compensation, it's also intended for the Ombudsman to be able to require landlords to reimburse rent to tenants where the service or standard of property they provide falls short of the mark.

A more efficient court process

The white paper has ruled out a new housing court, but they propose to:

introduce a package of wide-ranging court reforms that will target the areas that particularly frustrate and hold up possession proceedings. These are county court bailiff capacity, paper-based processes, a lack of good advice about court and tribunal processes, and a lack of prioritisation of cases.

A new Property Portal

A new digital Property Portal is proposed to:

provide a single 'front door' to help landlords understand and demonstrate compliance with their legal requirements. Too often, tenants find out 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. The Property Portal will provide a simple solution to these issues, with landlords legally required to register their property on the portal. 

The portal will support good landlords to demonstrate regulatory compliance and attract prospective tenants. And tenants have told us that having clear and easily accessible information would help them to make decisions about their tenancies and undertake due diligence before they sign a new rental contract. The portal will act as a trusted one-stop-shop for guidance on renting in the PRS – levelling up awareness of tenants' and landlords' rights and responsibilities across the country.

Conclusion

We will have to see how this progresses and what effect it may have on the sector. We didn't expect the change to periodic tenancies, but the intention is clearly to allow tenants to leave without being locked in. For our subscribers, this shouldn't be an issue, especially if you're the best landlord in the area charging a fair rent and providing a good service, in particular, attending to repairs swiftly. It will make the business model of poor landlords more challenging to achieve if they have a constant changeover in tenants who are no longer locked in by fixed terms. 

Almost all our fixed-terms are at an end and now rolling periodic with a good number of existing tenants remaining five-plus years (some are over 20 years on periodic). 

The proposed start of the new rules of March 2023 is optimistic but, in theory, possible.