Welcome to the fourth edition of RED Alert of 2024.
Also featuring in this month's update:
The King’s Speech recently promised enhanced rights and protections for renters, and the new Renters’ Rights Bill aims to fulfil that commitment. While it shares similarities with the Conservative government's Renters (Reform) Bill, the new legislation expands on existing proposals and introduces additional measures.
Key provisions of the Bill
The changes introduced by the Bill are substantial. In brief, the following are heralded as the most significant changes proposed:
- Abolishment of Fixed-Term Tenancies: All residential tenancies will be converted to periodic assured tenancies without an end date.
- Ending “No Fault” Evictions: Landlords must now cite specific grounds for possession as outlined in the Housing Act 1988, which have been broadened to include situations where the landlord or a family member intends to live in the property or if the landlord plans to sell.
- Easier Termination for Tenants: Tenants will be able to end their tenancies with two months' notice.
- Limitations on Rent Increases: Rent can only be raised once a year, following proper notice, and tenants can challenge increases by applying to an independent tribunal.
- Mandatory Registration for Landlords: Landlords will generally need to be registered on the Private Rented Sector Database to terminate tenancies.
- Introduction of a Private Rented Sector Ombudsman: This new body will handle disputes between landlords and tenants.
- Pet Ownership Rights: Tenants will have increased rights to request permission for pets, which landlords cannot unreasonably refuse although pet insurance can be required to cover potential damages.
- Decent Homes Standard for Private Rentals: This standard, previously applicable only to social housing, will now extend to private rentals, alongside protections from the Homes (Fitness for Human Habitation) Act 2018.
- Implementation of Awaab’s Law: This law will establish requirements within tenancy agreements for landlords to address hazards like damp and mould within specified timescales. Tenants can claim for breaches.
- Prohibition of Discrimination: The Bill prevents discrimination against tenants based on family status or receipt of benefits.
- Ban on Rent Bidding Wars: Landlords and agents cannot solicit or accept offers above the listed rent, a crucial measure given the competitive rental market.
New grounds for possession
Whilst the Bill would put an end to the system of "no fault" evictions, it does seek to introduce new grounds for Landlords to rely on in exchange. The most notable of these includes where landlords want to occupy the property themselves or sell it. However, there are limitations to these new grounds. In particular, a landlord cannot rely on either ground to terminate a tenancy within the first year and must give at least four months' notice.
The exact evidence needed to prove genuine intent to move in or sell has yet to be defined, as the government says it will allow the courts to clarify these terms. Additionally, restrictions will be placed on marketing the property for re-letting shortly after regaining possession, to prevent misuse of these grounds. Landlords granting new tenancies will therefore have to bear this in mind if they think their plans will change in the near future.
Changes regarding rent arrears
The Bill modifies the conditions under which a landlord can serve notice for possession due to rent arrears, extending the required period from two to three months. The notice period will also increase from two to four weeks, meaning landlords must wait up to four months of unpaid rent before initiating proceedings.
Treatment of student accommodation
The Bill acknowledges the three types of student housing: university-owned, purpose-built student accommodation, and private “on-street” housing. A new provision allows landlords of houses in multiple occupation rented to full-time students to regain possession, provided they give four months’ notice, effective only between June 1 and September 30.
In mixed-occupancy scenarios, landlords can only terminate the tenancies of full-time students. This contrasts with student tenants’ ability to end their leases with two months’ notice, which may complicate landlords' ability to fill vacancies.
Further clarification is anticipated regarding the application of these rules to purpose-built student accommodation, which, if registered under government-approved codes, may not be subject to the same restrictions as private rentals.
Implications for the court system
A significant shift in this Bill is the immediate abolishment of no fault evictions, unlike the previous Bill, which delayed such changes until the court system was ready. The new legislation is expected to become law by summer 2025.
The government claims to be collaborating with the Ministry of Justice and HM Courts and Tribunal Service to prepare the county court for these changes, though no specific solutions have been announced yet.
Given the current court backlog and resource issues, delays in processing eviction claims are likely to persist. The accelerated possession procedure, which allowed for faster resolutions, is also being abolished, raising concerns about further delays without improvements to the system.
Moving forward
The Bill had its second reading in Parliament on 9 October 2024 and has now passed on to the Committee stage. While the revisions aim to rebalance rights and responsibilities between landlords and tenants, the actual effectiveness of these measures hinges on enhancements to court efficiency.
Without such improvements, the already strained system may face a surge in possession claims, potentially leading to a bottleneck and prompting some landlords to exit the market.
A different version of this article was first published in EG News (subscribers only). Please find a link to this here.
