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SURREY CORPORATE MEMBER ARTICLE
Renters’ Rights Bill:
Top ten key changes for landlords and tenants
A Feature Article by SLS Corporate Member, Charles Russell Speechlys
By Bella Stuart-Bourne
Introduction
Following a change of Government in July, Labour introduced the new Renters’ Rights Bill to Parliament on 11 September 2024 (the Bill). This followed the Conservative’s Renters’ (Reform) Bill which was dropped when the general election was announced. The top ten key changes for landlords and tenants which will be made by the Bill are summarised below. However, the usual caveat applies that the Bill may change as it moves through Parliament.
1 There is a ban on Assured Shorthold Tenancies (ASTs) and Section 21 Notices
Many short-term residential tenancies that exist today are ASTs, which are often for fixed terms, though can also be periodic. Under the Bill, it will only be possible to create assured monthly periodic tenancies. Fixed-term short residential tenancies will be a thing of the past. In addition, landlords will only be able to obtain possession of a property from a tenant if they satisfy one of the grounds in the legislation, given that “no-fault” (or perhaps more accurately described as “no-reason”) evictions will disappear with the abolition of Section 21 Notices. Tenants will be able to vacate upon two months’ notice.
2 Grounds for possession will be extended and amended
A landlord must be able to establish a ground for possession in the legislation if they want to obtain possession of a property. The Bill extends some of the existing grounds and introduces some new grounds for possession.
• Ground 1: Mandatory ground for possession: occupation by the landlord or a member of their family – This is widened to enable a landlord to seek possession where the landlord or a member of their family including their parent, grandparent, sibling, child or grandchild intend to occupy the property for the ground to be established.
• A new ground 1A: Mandatory ground for possession: landlord wants to sell the property – A landlord can seek possession where they intend to sell or transfer the property (but only after 1 year of the tenancy has elapsed).
For grounds 1 and 1A there is also a significant factor for landlords to be aware of. Where a Section 8 Notice is served and/or proceedings issued for possession on either of these grounds, the landlord is prevented from re-letting or marketing the premises for re-letting
for a period of 12 months after service of the Section 8 Notice or issue of possession proceedings. Otherwise, they could be liable for a financial penalty of up to £7,000 enforced by the local housing authority. This is to deter landlords from mis-using these grounds.
• A new ground 4A: Mandatory ground for possession: landlord seeking possession from full-time students in an HMO – Where the property is an HMO for full-time students, and the landlord seeks to let the property to other students during the next academic year.
• Ground 6: Mandatory ground for possession: redevelopment –Possession for redevelopment purposes on this ground is expanded to include private landlords, though can only be used after 6 months of the assured tenancy if a notice of compulsory acquisition is not given.
• Ground 8: Mandatory ground for possession based on arrears –Possession may be sought on this ground if rent, payable weekly or fortnightly, is outstanding for 13 weeks (increased from 8 weeks). Where rent is payable monthly, it must be outstanding for 3 months (increased from 2 months).
3 Notice periods are altered and, in some cases, lengthened
The minimum notice periods a landlord is required to give a tenant when obtaining possession of a property are amended as follows:
Ground
1, 1A, 1B, 2, 2ZA, 2ZB, 2ZC, 2ZD, 4A, 6, 6A
Notice Period
4 months beginning with the date of service of the notice
Ground
5, 5A, 5B, 5C, 5D, 5H, 7, 9
Notice Period
2 months beginning with the date of service of the notice
Ground
5E, 5F, 5G, 8, 10, 11, 18
Notice Period
4 months beginning with the date of service of the notice
Ground
4, 7B, 12, 13, 14ZA, 14A, 15, 17
Notice Period
2 months beginning with the date of service of the notice
The notable changes are that the ground 1 (family members intending to occupy the property) notice period is extended from 2 to 4 months. This same notice period is introduced for ground 1A (sale by landlord). The notice period for ground 8 (arrears) is extended from 2 to 4 weeks.
4 An order for possession can only be made where the tenancy deposit scheme rules are complied with
An order for possession may only be made in respect of an assured monthly periodic tenancy if the tenancy deposit is held in an authorised scheme within 30 days of receipt, and the prescribed requirements and initial requirements of the scheme have been complied with. This is one of the hurdles which currently exists in order to serve a valid Section 21 Notice, but with the removal of such notices, the TDS requirement is shifted to apply to assured tenancies.
This requirement does not apply in relation to the anti-social behaviour grounds for possession (7A and 14) nor if the deposit has been returned to the tenant.
5 More notices of increase in rent will be served
As tenancies will no longer be for a fixed term, more notices of increase in rent will be served on tenants by landlords as that will be the only mechanism for a landlord to increase the rent.
The existing procedure will be amended so that a notice of increase in rent must be given at least 2 months before any proposed rent-increase is to take effect, which also must coincide with the beginning of a new period of the tenancy. Notices of increase of rent can be challenged by a tenant in the FirstTier Tribunal (Property Chamber) (the FTT). In addition, there will be a general right to challenge the rent during the first 6 months of the assured tenancy.
6 The Bill bans discrimination against tenants with children and upon the benefit status of the tenant
The Bill bans discrimination against children when choosing a tenant from multiple candidates and discrimination based on the benefit status of a prospective tenant. However, the Bill confirms that none of its provisions prevent a landlord from taking a person’s income into account when considering whether the prospective tenant can afford to pay the rent under the tenancy.
7 New right for a tenant to request permission to keep a pet at the property
There is to be a new implied term into every assured tenancy that a tenant may keep a pet if the landlord consents, such consent not to be unreasonably withheld.
There is a specific procedure for giving or refusing consent which requires the landlord to respond within 28 days after the tenant’s request for consent. Pet insurance must be obtained at the cost of the tenant and is a permitted payment under the Tenant Fees Act 2019.
8 New features of the Bill include the Decent Homes Standard and an online property portal
The following are new features within the Bill as compared to the Conservative’s Renters’ (Reform) Bill:
• A ban on prospective tenants bidding for the tenancy. A landlord is not permitted to accept an offer of rent that is higher than the advertised rent.
• A private rented sector database operated by the Government will be established. The database will contain information for active or prospective residential landlords and properties. An active entry on the database will be required in order for a landlord to obtain a Court order for possession of a property (unless the anti-social behaviours grounds (Ground 7A or 14) apply). Failure to comply may incur financial penalties.
• Landlords must be members of a Government-approved redress scheme to deal with complaints, which is to be further particularised in secondary legislation.
• The creation of a decent homes standard in the private rented sector as currently exists in the social sector. Secondary legislation will specify the requirements that must be met by qualifying residential premises to meet the standard.
9 The Bill imposes toughened penalties for non-compliance
The Bill imposes penalties on landlords for the following offences:
• Failing to sell a property after obtaining possession on ground 1A, and re-letting the property before 12 months have elapsed since possession was obtained.
• Financial penalties in the event of discrimination against children or the benefit status of a tenant.
• Financial penalties in the event allowing “bidding” by accepting a higher rent than was advertised.
• Financial penalties of up to £7,000 or £40,000 for failing to be a member of a relevant redress scheme or committing some breach in respect of the private rented sector database requirement (see above).
10 The Bill does not address Court reform or strengthen antisocial behaviour possession grounds
The Conservative Government halted the Renters’ (Reform) Bill to examine reforming the Court process in respect of possession proceedings. However, reference to Court funding or reform is conspicuous in its absence from the Bill.
There is also no mention of lowering the threshold of anti-social behaviour in any of the grounds for possession, despite reference to this in the Renters’ (Reform) Bill. The only change made is to enable the effect of anti-social behaviour on other occupiers in an HMO to be a factor which the Court can take into account when considering whether to make an order for possession in relation to ground 14. Certain anti-social behaviour may therefore continue to fall short of satisfying the relevant grounds for possession.
Conclusion
It is clear that the Bill is going to shake up the residential housing landscape for both landlords and tenants, who would be well advised to keep an eye on any changes to the Bill over the coming months. However, as the commencement date of the Bill is not yet known, there is realistically little that existing landlords or tenants can sensibly do at this stage to prepare for the Bill becoming law. ■
Bella Stuart-Bourne
Associate, at Charles Russell Speechlys LLP
Laura Bushaway
Knowledge Development Lawyer, Real Estate Disputes Team at Charles Russell Speechlys LLP
“It is clear that the Bill is going to shake up the residential housing landscape for both landlords and tenants...‘
