We recently spoke to Matthew Salvidge from Savills estate agents about the Renters (Reform) Bill about the changes that are expected to come into effect in England and Wales.
As the housing landscape evolves, the UK government is recognising the need to prioritise both tenant and landlord rights and address challenges faced in the private renting sector. In response, the upcoming Renters (Reform) Bill aims to change the UK rental sector by introducing significant provisions that enhance tenant security, improve living conditions, and develop fairer rental practices. The bill is currently in the process of going through parliament and is expected to be released in more detail in Spring 2024. Therefore, it is important to note that discussion about the contents of the bill is hypothetical, and certain details may not become law.
Applicable to assured shorthold tenancies
The first thing to mention is that the reform bill will only apply to assured shorthold tenancies. ASTs cover tenancies where the property is for an individual (or individuals) to reside in, and the annual rent is below £100,000. See our article on the difference between AST and non-AST tenancies.
ASTs to become periodic tenancies
A core element of the Renters Reform Bill will likely focus on changing the length of tenancies to increase security of tenancy length for renters. Currently, a tenancy can be any length that is agreed between the tenant and landlord, although usually it is 12, 24 or 36 months. It is expected that the bill will introduce open-ended tenancy agreements, with assured shorthold tenancies (ASTs) becoming periodic assured tenancies. A periodic tenancy would mean that a tenant will be able to serve two months’ notice at any time in line with when the rent is due to end the tenancy, and there will be no set tenancy end date, much like the current system in Scotland.
Section 21 notices abolished
Currently, a landlord can give notice to regain possession of their property at any time during a periodic tenancy, or after the fixed term tenancy ends by issuing a Section 21 notice. To serve a Section 21 notice, the landlord does not need a reason and it gives the tenants two months’ notice.
Under the Renters Reform Bill, landlords will not be able to regain possession of their properties unless they meet certain criteria, including cases in which:
- The current grounds for the service of a Section 8 notice apply
- The landlord or close family members want to move into the property
- The landlord wishes to sell the property
There will also be additional grounds for serving notice when there are rent arrears and for gaining possession when the tenants is at fault to aim to make the system fairer for landlords.
Rent controls and limitations
To address the issue of rising rental prices, the Renters (Reform) Bill is expected to include measures to limit rent increases. While the specifics are not yet clear, the bill will likely introduce guidelines or caps on rent hikes to ensure they remain reasonable and affordable for tenants, yet broadly in line with current market rates. This provision aims to strike a balance between protecting tenants from unaffordable rent increases and recognising the need for landlords to maintain viable investments.
Prohibiting blanket bans
Children and those on benefits: landlords will not be allowed to have a blanket ban on renting their property to those receiving benefits or tenants with children. Landlords can still be able to refuse tenants with children if the property is clearly unsuitable, such as one bedroom for a family of five.
Pets: landlords cannot unreasonably refuse a request from tenants to keep pets in the property. A good reason will be required for refusing such a request, including the head lease forbidding pets or proof of pet allergies if the landlord is planning on moving into the property.
Improved living conditions
Another significant aspect of the Renters (Reform) Bill will likely be the focus on improving living conditions for tenants. The bill is expected to establish robust standards that landlords must meet to ensure rented properties are safe, healthy, and habitable. These standards may encompass aspects such as insulation, dampness, mould prevention, and overall property maintenance. By holding landlords accountable for maintaining adequate living conditions, the bill seeks to protect tenants’ wellbeing and ensure they have comfortable and safe homes.
Dispute resolution mechanisms
The bill is also expected to propose the establishment of a streamlined and accessible mechanism to resolve housing-related conflicts. This may involve the creation of a housing complaints resolution service or a similar platform, enabling tenants to report maintenance issues, substandard conditions, or other concerns, and seek timely resolutions. By simplifying the dispute resolution process, the bill aims to empower tenants and foster better landlord-tenant relationships.
The Renters (Reform) Bill aims to improve the lives of millions of tenants by adding greater security and control. However, in a market where landlords have already been selling their properties, the bill may come with a risk of deterring landlords even further, lowering stock, potentially raising rents even higher and making the market even more competitive. However, for relocators — especially those on assignments with visa expiry dates — the flexibility of periodic tenancies may prove beneficial.