The government has laid out its proposals for the Renters’ Reform Bill, detailed in its A Fairer Private Rented Sector white paper. This white paper develops the Levelling Up White Paper and details the government’s plans to overhaul the Private Rented Sector and improve housing quality. The proposals for the PRS in England go much further than many initially though, with it being dubbed “the biggest shake-up of the private rented sector in 30 years”.
What are the proposals?
The proposals include abolishing section 21, ensuring private rented properties to meet the Decent Homes Standard and creating a new ombudsman that covers private landlords and a new property portal.
The government has also put forward several fresh propositions, which include removing fixed term tenancies and making them all periodic; doubling the notice periods for rent reviews; prohibiting landlords from having a blanket bans on tenants in receipt of benefits or renting to families with children; and improving the tenants rights to keep pets in properties.
Why are these changes being put forward?
The government says the A Fairer Private Rented Sector white paper will address the balance between Landlords and Tenants.
In light of the cost of living pressures, it gives additional support and protections for the most vulnerable, and new measures to prevent unfair rent increases.
To protect the interests of Landlords, the proposals to introduce Private Renters’ Ombudsman will improve grounds for possession under section 8, and introduce a new property portal to provide ” the estimated 2.3 million private landlords with greater clarity and support”.
1. Section 21 to be abolished – No more “no fault” evictions
It is proposed that Section 21 will be abolished, so that landlords will only be able to evict a tenant in “reasonable” circumstances, which will be defined in new legislation yet to be compiled.
The government says that abolishing Section 21 evictions “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”.
How will Section 8 be change?
The white paper will also reform the grounds of possession for Landlords under Section 8 so that they are “comprehensive, fair, and efficient, striking a balance between protecting tenants’ security and landlords’ right to manage their property”.
A new mandatory ground for repeated serious arrears, making eviction 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 hearing. A new ground will also be introduced for landlords who wish to sell their property and allow landlords and their family members to move into a rental property.
The notice period for the existing rent arrears eviction ground will be increased to four weeks while the mandatory threshold of at two months’ arrears at time of serving notice and hearing will stay as it is.
When it comes to incidents of criminal behaviour or serious anti-social behaviour, the notice period for the existing mandatory eviction ground will be going down.
Will the court process be changed?
Collaborating with the Ministry of Justice (MOJ) and HM Courts and Tribunals Service (HMCTS), the government details it will also introduce a package of “wide-ranging court reforms that will target the areas that particularly frustrate and hold up possession proceedings”, including county court bailiff capacity, paper-based processes, a lack of adequate advice about court and tribunal processes, and a lack of prioritisation of cases.
The government will also look to “strengthen and embed mediation services for landlords and renters, preventing avoidable evictions”.
2. Periodic tenancies to become standard
It is proposed that all tenants who would previously have had an Assured Tenancy or Assured Shorthold Tenancy will be moved onto a single system of periodic tenancies.
Tenants will be required to provide 2 months’ notice when leaving a tenancy, to “ensure landlords can recoup the costs of finding a tenant and avoid lengthy void periods”. Landlords will only be able to evict a tenant in reasonable circumstances, as detailed above.
There has been no mention of Non-Housing Act Tenancies, so it remains to be seen if Company Lets (e.g. Japanese Corporate Tenants) will be allowed to remain on fixed terms, offering Landlords more security.
Why are periodic tenancies being introduced?
There are hopes that a single tenancy system will mean that “both parties will better understand their rights and responsibilities”, providing “greater security for tenants, while retaining the important flexibility that privately rented accommodation offers,” says the white paper.
“This will enable tenants to leave poor quality properties without remaining liable for the rent or to move more easily when their circumstances change, for example to take up a new job opportunity.”
3. Minimum housing standards to be introduced
Minimum housing standards for the private rented sector (PRS) will be introduced by widening the application of the Decent Homes Standard, which currently only applies to the social housing sector.
What’s included in the Decent Homes Standard?
Under the Decent Homes Standard, homes must be free from serious health and safety hazards and landlords must keep homes in a good state of repair so renters have clean, appropriate and useable facilities.
The government will also expand Rent Repayment Orders to cover repayment for non-decent homes. Periodic tenancies will also enable tenants to end a tenancy without remaining liable for the rent in unsuitable and unsafe accommodation.
What do the new standards hope to achieve?
The white paper says that “putting a legislative duty on private landlords to meet the Decent Homes Standard will raise standards and make sure that all landlords manage their properties effectively, rather than waiting for a renter to complain or a local council to take enforcement action.”
It will give local councils the tools to enforce the Decent Homes Standard in the PRS “so that they can crack down on non-compliant landlords while protecting the reputation of responsible ones”.
The white paper also reaffirmed the government’s intention to upgrade “as many homes as possible” in the private rented sector to EPC Band C by 2030.
4. Tenants offered more rights to keep pets in properties
The government will create new laws 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.
How will landlords be protected if they accept a tenant with pets?
At the same time, the government will be amending the Tenant Fees Act to Act 2019 to include pet insurance as a permitted payment. This means landlords will be able to require pet insurance, so that any damage to their property is covered.
The government will also encourage landlords “to allow reasonable requests by tenants to redecorate, hang pictures or change appliances – provided they return the property to its original state when they leave”.
5. Bans on renting to those on benefits or families with children to be outlawed
It will become prohibited for landlords or agents to have complete bans on renting to families with children or those in receipt of benefits (i.e. “No DSS”).
Why are these rules being proposed?
The white paper advises that, “while most landlords provide a professional service to their tenants, there is evidence that some landlords and agents are actively discouraging, or even preventing people in receipt of benefits or with children from renting their properties”.
6. A new Ombudsman covering all private landlords
A single government-approved Ombudsman covering all private landlords who rent out property in England – regardless of whether they use a letting agent – will be introduced and membership will be mandatory.
What powers will the new Ombudsman have?
The Ombudsman will have the power to “put things right for tenants”, including compelling landlords to issue an apology, provide information, take remedial action, and/or pay compensation of up to £25,000.
The government also intends 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”.
The Ombudsman’s decision will be binding on landlords, should the complainant accept the final determination and failure to comply with a decision may result in repeat or serious offenders being liable for a Banning Order.
Will joining the Ombudsman be mandatory for landlords?
The white paper says that “making membership of an Ombudsman scheme mandatory for landlords who use managing agents will mitigate the situation where a good agent is trying to remedy a complaint but is reliant on a landlord who is refusing to engage”.
It will also ensure that tenants have access to redress services in “any given situation, and that landlords remain accountable for their own conduct and legal responsibilities”.
7. New Property Portal for private landlords and tenants
A new digital Property Portal will be brought in to “provide a single ‘front door’ to help landlords understand, and demonstrate compliance with their legal requirements”.
The government says that “too often tenants find out too late that they are renting a substandard property from landlords who wilfully fail to comply, and councils don’t know who to track down when serious issues arise”. It advises that the portal will also “support good landlords to demonstrate regulatory compliance and to attract prospective tenants”.
How will the new property portal for landlords work?
It has not yet been decided exactly what the portal will contain, with the government to “conduct extensive testing of potential solutions for the portal, underpinned by user research and engagement with representative groups, to make sure the system works for tenants, landlords and local councils”.
The portal should be flexible enough to allow for future policy updates, “supporting efforts to raise standards in the sector and reduce the number of non-decent rented homes by 50% by 2030”. This may include a system where landlords and agents are required to meet minimum standards before properties can be let.
Will it be mandatory to register properties on the portal?
The Property Portal aims to provide a solution to these issues, with landlords legally required to register their property on the portal and local councils empowered to take enforcement action against private landlords that fail to join the portal.
The Property Portal will “dramatically increase local councils’ ability to enforce against criminal landlords”. The government plans to incorporate some of the functionality of the existing Database of Rogue Landlords and Property Agents.
What do the changes mean for you in reality?
While the white paper appears quite daunting from a Landlords perspective, there is a long way to go before it is put into law. There will be developments and changes to the above proposals, with Landlord groups and Letting Agency bodies having input into the reforms, to provide balance from this side of the perspective.
At Excel, we will continue to keep you up to date with developments and prospective timelines, so that you will be ready and fully compliant with new regulations and legislation as it is rolled out.
If you have any immediate queries or wish to discuss anything talked about in this blog post, please contact us on 020 7691 9000 or by email to email@example.com.