A Fairer Private Rented Sector
The Government has released details of its Rental Reform Bill as part of its 'Fairer Private Rented Sector White Paper. The Rental Reforms outlined certainly have teeth and Shelter's CEO Polly Neate commented that:
"The Renters Reform Bill is a game-changer for England's 11 million private renters.
In this article, Twindig looks at the key elements of the proposed rental reforms
The Government hopes that the fairer private rented sector white paper published today (16 June 2022) will ensure millions of families benefit from living in decent, well looked-after homes as part of the biggest shake-up of the private rented sector in 30 years.
The proposed rental reforms seek to rebalance the power balance between landlords and 4.4 million private rented tenants. It also seeks to provide new support for cost of living pressures with protections for the most vulnerable, and new measures to tackle arbitrary and unfair rent increases.
The rental reforms are part of the Government's wider reform agenda to improve lives and level up the country, delivering more housing and greater protections for tenants and homeowners.
The Rental Reform Bill is a highly ambitious plan to restructure and improve the private rented sector. Whilst the main theme appears to be a rebalancing of power away from landlords to tenants, essentially it enshrines the practices and policies followed by most good landlords and professional letting agencies. Not all landlords will agree with all of the proposals, but in our view, they work towards the greater good and should lead to a more transparent and better functioning Private Rental Sector.
Rental reform ambitions
The Rental Reform Bill has the following ambitions five ambitions:
All tenants should have access to a good quality, safe and secure home.
All tenants should be able to treat their house as their home and be empowered to challenge poor practice.
All landlords should have information on how to comply with their responsibilities and be able to repossess their properties when necessary.
Landlords and tenants should be supported by a system that enables effective
resolution of issues.
Local councils should have strong and effective enforcement tools to crack down on poor practice.
Rental reform - the 12 point plan
The Government's REntal Reform Bill has 12 key action points:
To deliver their levelling up housing mission to halve the number of non-decent
rented homes by 2030 and require privately rented homes to meet the Decent Homes Standard for the first time. This will give renters safer, better value homes and remove the blight of poor-quality homes in local communities.
To accelerate quality improvements in the areas that need it most. The Government will run pilot schemes with a selection of local councils to explore different ways of enforcing standards and work with landlords to speed up adoption of the Decent Homes Standard.
To deliver the manifesto commitment to abolish Section 21 ‘no fault’ evictions
and deliver a simpler, more secure tenancy structure. A tenancy will only end if the tenant ends it or if the landlord has a valid ground for possession, empowering tenants to challenge poor practice and reducing costs associated with unexpected moves.
To reform the grounds for possession to make sure that landlords have effective
means to gain possession of their properties when necessary. To expedite
landlords’ ability to evict those who disrupt neighbourhoods through antisocial behaviour and introduce new grounds for persistent arrears and sale of the property.
To only allow increases to rent once per year, end the use of rent review clauses,
and improve tenants’ ability to challenge excessive rent increases through the First Tier Tribunal to support people to manage their costs and to remain in their homes.
To strengthen tenants’ ability to hold their landlord to account and introduce
a new single Ombudsman that all private landlords must join. This will provide fair, impartial, and binding resolution to many issues and be quicker, cheaper, and less adversarial than the court system. Alongside this, we will consider how we can bolster and expand existing rent repayment orders and enable tenants to be repaid rent for non-decent homes.
To work with the Ministry of Justice and Her Majesty’s Courts and Tribunal
Service (HMCTS) to target the areas where there are unacceptable delays in court proceedings and to strengthen mediation and alternative dispute resolution to enable landlords and tenants to work together to reduce the risk of issues escalating.
To introduce a new Property Portal to make sure that tenants, landlords and
local councils have the information they need. The portal will provide a single ‘front door’ for landlords to understand their responsibilities, tenants will be able to access information about their landlord’s compliance, and local councils will have access to better data to crack down on criminal landlords.
To strengthen local councils’ enforcement powers and ability to crack down on
criminal landlords by seeking to increase investigative powers and strengthening the fine regime for serious offences.
To will legislate to make it illegal for landlords or agents to have blanket bans on
renting to families with children or those in receipt of benefits and explore if similar action is needed for other vulnerable groups, such as prison leavers. The Govvernment also wants to improve the level of support to landlords who let to people on benefits, which will reduce barriers for those on the lowest incomes.
To give tenants the right to request a pet in their property, which the landlord
must consider and cannot unreasonably refuse and to amend the Tenant Fees Act 2019 so that landlords can request that their tenants buy pet insurance.
To work with industry experts to monitor the development of innovative market led solutions to passport deposits. This will help tenants who struggle to raise a second deposit to move around the PRS more easily and support tenants to save for ownership.
Rental reform: no more Section 21 evictions
The so-called 'no fault' Section 21 evictions, which allow a landlord to terminate tenancies without giving a reason will be banned.
More than a fifth of private renters who moved in 2019 and 2020 did not end their tenancy by choice, including 8% who were asked to leave by their landlord.
The Government intends to move all tenants who are on Assured Tenancy or Assured Shorthold Tenancy agreements onto a single system of Periodic Tenancies, which will provide flexibility for tenants who will be able to leave a tenancy by providing two months notice.
Landlords will only be able to evict a tenant in reasonable circumstances, which will be defined in law, supporting tenants to save with fewer unwanted moves. The Government believes that removing Section 21 will level the playing field between landlord and tenant, and that a single tenancy structure, will provide both parties with a better understanding of their rights and responsibilities.
The Government will provide at least six months’ notice of the first implementation date, after which all new tenancies will be periodic and governed by the new rules. Specific timing will depend on when the Rent Reform Bill becomes law.
Rental reform: Periodic Tenancies
The majority of tenancies start as an Assured Shorthold Tenancy (AST), which offer a fixed term rental agreement for eith 6 or 12 months.
During a fixed term, landlords cannot use Section 21 to evict a tenant, though they can use other grounds for possession. Tenants can only leave during a fixed term with the landlord’s agreement, and they must pay rent for the duration, unless agreed otherwise. At the end of a fixed term, tenancies do not automatically end – instead becoming periodic unless a new fixed term is agreed, or notice is served.
Periodic tenancies are weekly or monthly tenancies that do not last for a fixed period. They offer more flexibility to tenants and landlords. If a tenant wants to leave the property, they are liable for the rent until the required notice period has expired. This is typically one month but can vary. A landlord can end a periodic tenancy with two months’ notice by using a Section 21 eviction notice or by using other grounds for possession.
All tenants will transition to periodic tenancies this means that they can leave poor-quality housing without remaining liable for the rent and it will also allow them to move more easily when their circumstances change.
Under the Rental Reform Bill, a tenancy will only end if a tenant ends or a landlord has a valid reason, as defined in law.
Rental reform: No more arbitrary rent reviews
Tenants will be given more powers to challenge arbitrary rent increases which they believe are unjustified. The Rental Reform Bill proposes that rents will only be allowed to be increased once a year and it will end the use of rent review clauses, which lock tenants into automatic rent increases that are vague or may not reflect changes in the market price. The Rental Reform will also improve tenants’ ability to challenge excessive rent increases through the tribunal system.
The minimum notice landlords must provide of any change in rent will increase to two months.
Rental reform: No blanket bans
The Renters Reform Bill will outlaw blanket bans on renting to families with children or those receiving benefits.
It is only fair that everyone should have access to safe and secure housing, regardless of whether they are in receipt of benefits or their family circumstances. The GOvernment believes 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.
The English Private Landlord Survey 2021 found that 44% of landlords were
unwilling to let to tenants on either housing support or Universal Credit. This can severely restrict the ability of a person on a low income to live in a decent home.
Some landlords will refuse to allow benefit claimants to view an affordable property or to consider them as apotential tenant, or they will advertise properties with restrictions like ‘No DSS’, ‘No Benefits’,
or ‘Working Professionals Only.’ A quarter (26%) of PRS households and families receive some form of Housing Benefit and are at risk from these kinds of restrictive practices.
Rental reform: Doubling notice periods for rent increases
The amount of notice to be given by the landlord to the tenant will be doubled, to two months and tenants will have more powers to challenge the rent increases if they believe they are unjustified
Rental reform: decent homes
The majority of tenants enjoy safe and secure rentals, but for the 21% of private renters and households who currently live in unfit homes, this ‘New Deal’ will extend the Decent Homes Standard to the private sector for the first time, levelling up opportunities. This means 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.
If a property does not meet the decent homes standards, tennats can challenge the landlord and seek a repayment of rent when the home is judged to be of a non-decent standard
Rental reform: lets for pets
Tenants will be given the right to request keeping a pet in their home and the landlord must consider the request and not unreasonably refuse the request.
Domestic pets can bring joy, happiness, and comfort to their owners, as well as supporting their mental and physical wellbeing including through challenging times.
The English Private Landlord Survey 2021 found that 45% of landlords were unwilling to let to tenants with pets.
However, landlords will be able to require pet insurance, so that any damage to their property is covered.
Rental reform: Private Renters' Ombudsman
A new private renters Ombudsman will be created to provide a quicker and lower-cost alternative than going to court to settle disputes. The Government will create a single government-approved Ombudsman covering all private landlords who rent out property in England, regardless of whether they use an agent. This will ensure that all tenants have access to redress services in any given situation, and that landlords remain accountable for their own conduct and legal responsibilities.
It is likely that the Rental Reform Bill will make membership of an Ombudsman scheme mandatory for landlords who use managing agents which 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.
The Ombudsman will have powers 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.
Rental reform: Compliance, obligations and enforcement
The Rental Reform Bill will introduce a new Property Portal to make sure that tenants, landlords and local councils have the information they need.
The new property portal will acts as a a single ‘front door’ to help landlords understand, and demonstrate compliance with, their legal requirements. 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. The Property Portal will provide a simple solution to these issues, with landlords legally required to register their property on the portal.
Local councils will be able to take enforcement action against private landlords that fail to join the portal. By removing unnecessary, frustrating administration, and providing a trusted and consistent intelligence source, council staff will be able to focus on enforcement against criminal landlords.
The portal will act as a trusted one-stop-shop for guidance on renting in the PRS – levelling up awareness of tenants’ and landlords’ rights and responsibilities across the country.
Rental reform: view from the Government
Levelling Up and Housing Secretary Michael Gove said: "For too long many private renters have been at the mercy of unscrupulous landlords who fail to repair homes and let families live in damp, unsafe and cold properties, with the threat of unfair 'no fault' evictions orders hanging over them.
"Our New Deal for renters will help to end this injustice by improving the rights and conditions for millions of renters."
You can access s the full White Paper A Fairer Private Renter Sector here