Renters Reform Bill to return to the Commons after Easter Recess
On the 27th March 2024, Jacob Young MP wrote to Conservative MPs regarding the Renters Reform Bill. He stated that the Conservatives are committed to “creating a fairer private rental sector” – standing on the promise that: - “if you’re a tenant, you will be protected from revenge evictions and rogue landlords, and if you are one of the many good landlords, we will strengthen your rights of possession”.
During her time as Housing Minister, Rachel Maclean MP made amendments to the Bill to bolster landlord protections which included making it clear that legislation would not be implemented until sufficient progress has been made improving courts, and scrapping proposals that would have both forced landlords to make expensive energy efficiency upgrades to their homes.
The Commons Committee reviewed concerns that have been put forward and as such, Government will bring forward further improvements at Commons Report Stage.
So, what improvements can we expect?
Establishing an initial six-month period for tenants –the Bill allows tenants to serve two months’notice at any point with the tenancy. There is a recommendation to bring forward an amendment toprevent tenants ending contracts in a tenancy’s first six months. There may be exemptions, such as the death of a tenant, or domestic abuse, or significant hazards in the property. A minimum six-month period will ensure landlords can rely on a letting period that covers costs of finding tenants and making repairs between tenancies and will prevent tenants using rented properties as short-term lets. The intention is to balance protecting landlords’ investment, alongside ensuring tenants can still leave a property after sixmonths if their circumstances change. In effect, it creates a default fixed term of six months in all contracts.
Providing an assessment on the county court possession system before abolishing section 21 – Government has been clear that section 21 will be abolished when the courts are ready, and is taking significant steps to deliver court improvements, including providing £1.2m for the digitisation of the court system. The intention is to bring forward an amendment at Commons Report to require the Lord Chancellor to publish an assessment on the barriers to possession and the readiness of the courts in advance of abolishing section 21 for existing tenancies.
Undertaking a review of Local Authority licensing schemes – The introduction of the new PropertyPortal will not duplicate the existing licensing system and as such, there will be a review of licensing schemes, with the aim of reducing the burden on landlords. This review will cover both selective licensingand the licensing of HMOs.
Ensuring the student market continues to work – at Commons Committee stage, there was the introduction of a new mandatory Ground under Section 8 to facilitate student lets. This would allowlandlords to evict students living together in a house of multiple occupation (HMO) and ensure tenants move out after an academic year. An additional amendment at Commons Report will broaden this ground ensuring it applies to any property let by students providing landlords write the ‘student possession ground’ into the tenancy agreement.
Protecting the balance of longer and shorter term lets in local areas – the Bill currently prevents landlords marketing or re-letting properties for three months after using possession grounds to move into or sell their property. To close a loophole, landlords will be prevented from turning properties into short term lets during this period.
Expanding homelessness prevention duties – Serving a section 21 means that tenants could be threatened with homelessness and as such, Local Authorities owe all tenants a homelessness prevention duty. With the abolition of Section 21, an amendment will be put forward to give tenants certainty that a prevention duty would be owed when they are served with a valid Section 8 notice. This will mean any household served with Section 8 notice can access support from Local Authorities to help prevent homelessness. For households at risk of homelessness for any other reason (e.g., relationship breakdown), Local Authorities will continue to assess whether households are at risk of homelessness within 56 days.
What about Fixed Term Tenancies?
There has been a great deal of discussion about moving from Assured Shorthold Tenancies (ASTs) to Assured Periodic Tenancies.
A fixed term tenancy ties in both tenants and landlords – tenants cannot end the tenancy during the fixed term, and landlords can only serve a section 21 notice to bring the tenancy to an end on the last day of the fixed term. A common misconception is that the end of a fixed term means the tenancy also ends, however, the law stipulates that a tenancy automatically continues as a periodic tenancy, unless another fixed term is agreed. This applieseven if the tenancy includes an express end date. Under the framework set by the 1988 Act, a tenant has a guaranteed right to continue living in the property and a landlord must use section 21 or section 8 to end thetenancy. Landlords must always serve a notice to end the tenancy, otherwise it continues indefinitely.
In the future system, all tenancies will be periodic. This position reflects the fact that, once section 21 is abolished, fixed terms will have little benefit. In the new system, both landlords and tenants will continue to be able to communicate about when either party wishes to end the tenancy, landlords will have more grounds under section 8 to rely upon, and the new amendment on the initial six months, detailed above, will provide landlords certainty that a tenant cannot leave for the first six months, replicating the benefits of fixed terms for landlords.
Further information will be provided once the next reading takes place in the House of Commons.