The Renters’ (Reform) Bill – Landlords lose Section 21
On 17 May 2023 the government introduced to Parliament what is seen by many as a controversial bill known as The Renters’ (Reform) Bill.
Landlords should be aware that the legislation will seek to abolish no fault Section 21 and for periodic tenancies to become the standard form of agreement.
The government tells us that in delivering its 2019 manifesto commitment to abolish Section 21 ‘no fault’ evictions the legislation will empower the eleven million tenants across England to challenge poor landlords without fear of losing their home.
Whilst many landlords will be apprehensive about the consequences of not having Section 21 to use to evict a tenant when all other avenues have failed, we are told by Michael Gove, the Secretary of State for Levelling Up, Housing and Communities and Minister for Intergovernmental Relations, that “Our new laws introduced to Parliament …. will support the vast majority of responsible landlords who provide quality homes to their tenants…”.
So is it bad news for landlords and should they act now to remove their tenants?
The highlights of the Renters (Reform) Bill:
The end of Section 21 “no fault” evictions
The Renters’ (Reform) Bill (the Bill) will bring to an end the current Section 21 no fault process which allows private landlords to easily repossess their properties without needing to show cause. The new law will allow eviction of a tenant only under reasonable circumstances.
The government believes that “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.” Whilst laudable in theory, in practice the removal of Section 21 will be a major obstacle to genuine landlords who may have good cause to want to remove a tenant.
The new law will provide additional force to the alternative Section 8 process and will allow a landlord to end a tenancy agreement early if they have a legal reason to do so.
Section 8 will allow eviction where there is repeated serious arrears which is defined as 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 hearing.
There will also be a new ground that means landlords can apply Section 8 to a tenancy if they wish to sell a property, or if they wish to allow their family members to move into a rental property. This can only apply after a tenant has been in a property for at least six months.
So as long as there are genuine grounds as defined by the new Section 8, a landlord will still be able to use the law to evict a tenant and regain possession of their property.
A single system of periodic tenancies
The Bill will also simplify the current different types of tenancies by making them all into a unified single system of periodic tenancies.
Assured Shorthold Tenancies are generally the standard type of rental agreement in the private rented sector. The Bill if passed into legislation will force all rental properties to be under a periodic tenancy meaning that the rental agreement will be on a month-to-month basis without a set end date. In addition, the tenants are allowed to give two months’ notice when leaving a tenancy.
New notice periods for rent increases
The new legislation will limit rent increases to one per year with the landlord having to provide the tenant a minimum of two months’ notice of the increase.
Tenants to have right to keep pets
The Bill provides that tenants will have the right to request permission from their landlord to be able to keep a pet in their rented home and that the landlord cannot unreasonably withhold their consent to the request.
New Property Portal for private landlords and tenants
The Bill will create a new digital property portal to ensure that landlords understand, and demonstrate compliance with their legal requirements in respect of the tenancy agreement that they have with their tenants.
The Renters’ (Reform) Bill is a 89 page long preliminary draft document and will become legislation, in whatever form it ultimately takes, by early Spring 2024. Whilst we have sought to highlight the parts of the bill that have attracted the most attention the final legislation may look much different.
If you have any queries about the proposed changes or about any other landlord and tenancy matter, please contact us.
James Davies is a solicitor specialising in dispute resolution in the Business Services Team at Barker Gotelee Solicitors.
Suffolk Business Solicitors – for more information on our range of legal services, please call the team on 01473 611211 or email [email protected]
