Commercial Update 98: Renters and Reform, What’s Being Planned?

You will have been made aware of the Renters’ (Reform) Bill (the Bill),  introduced to Parliament on 17 May with the stated aim of transforming the rental housing landscape in England. The key aim of the bill is ‘providing safer, fairer, and higher-quality homes’ for the roughly 11 million tenants currently renting across the country.

This translates to 2 key concepts, greater security and better-quality housing with the Bill being designed to work alongside Banning Orders (against criminal, negligent landlords) to ensure that a tenant is better protected. Key changes proposed include:

  1. Fixed terms are to be a thing of the past with proposals to make tenancies periodic and give tenants flexibility to move out when their housing needs change.
  2. Assured shorthold tenancies to be abolished bringing about the end of the “Section 21” notice and no-fault evictions. New grounds for possession under Section 8 of the Housing Act 1988 will be introduced. The proposed grounds make provisions in the event the landlord wishes to sell, or a member of their family wishes to move into the property. There are also new grounds to obtain possession if a tenant is at fault, for example, on the basis of antisocial behaviour or if there are repeat rent arrears, i.e. if there have been at least two months’ arrears on any three occasions within a three-year period, regardless of the balance of arrears at the hearing date.
  3. A statutory mechanism to affect rental increases and aims to provide protection to tenants from “back-door” evictions from landlords who might have considered raising rents to price tenants out. These include a requirement for landlords to give at least two months’ notice before increasing rent and provides that rent increases will only be permitted once a year.
  4. Tenants will have a right to request permission to have pets in the property. There is now an obligation on landlords not to unreasonably refuse such a request (although landlords can require the tenant to maintain pet insurance or cover the landlord’s reasonable costs for doing the same).
  5. A  promise of a new Ombudsman that will bring ‘quicker and cheaper resolutions to disputes, while a new digital Property Portal will enable landlords to understand their obligations and help tenants make better decisions when signing a new tenancy agreement’. Further detail of the Ombudsman or the Portal, the remit or each, or how they interact with each other, is yet to be published

The bill raises some less well publicised considerations for commercial developers acquiring residential or mixed-use properties for future development with existing tenants in situ.

Although the removal of Section 21 evictions is a notable change, the bill seeks to strengthen landlords’ eviction powers under Section 8, introducing new possibilities that were previously unavailable. An example of this would be that whilst protecting tenants against unscrupulous landlord evictions, the Bill aims to strengthen the ability for a rightly-behaved landlord to evict anti-social tenants. Landlords will be able to push for a lawful eviction (and make representations in support of this) on a larger pool of ‘disruptive and harmful activities’ that can lead to eviction.

Whilst some of the aims are laudable, concerns remain that the proposals are likely to result in many investors and buy-to-let landlords selling their portfolios which may inadvertently create a housing shortage and worsen the current housing crisis.

The anti-social ground for possession could also have an unexpected impact on victims of domestic violence and the key problem around how this will all be processed by the already overwhelmed court system, has not been addressed.  

The Bill is in the early stages of its journey (it only had its first reading in the Commons on May 17) and will need to progress through the House of Commons and House of Lords before it can gain royal assent. It will certainly be interesting to see if any amendments are introduced to deal with these criticisms – commercial developers and landlords should keep an eye on its progress, as it could have significant implications for their future projects.

Regards to all