The Renter’s (Reform) Bill - A Step in The Right Direction or Trouble in Waiting?

In May 2023, the UK government finally published its long-awaited plans to overhaul the private rented sector (PRS) in England in the form of the Renters (Reform) Bill.

The Bill claims to do the following:

“Make provision changing the law about rented homes, including provision abolishing fixed term assured tenancies and assured shorthold tenancies; imposing obligations on landlords and others in relation to rented homes and temporary and supported accommodation; and for connected purposes.”

Reactions from the PRS in England have been mixed, to put it mildly, and having recently written about the differences in the PRS between England and the rest of the UK in terms of regulation, it seemed sensible to see what might change.

So, with years of buy-to-let experience behind us, and a keen interest in anything which affects the market for our clients, let’s see what this Bill is all about.

Why introduce the Bill at all?

The government set out its reasons for introducing this bill in their Guide to the Renters Reform Bill. They claim that it is fundamentally intended to ensure the health of the PRS, while better serving tenants and encouraging ‘good’ landlords.

Along with other changes covered in the Decent Homes Standard consultation, the government hopes to increase the quality of housing in the PRS, whilst addressing areas of concern such as sudden eviction under Section 21.

In brief, the Bill aims to achieve the following:

• Abolish section 21 ‘no fault’ evictions and reform tenancy agreements where all assured tenancies are periodic.
• Introduce more possession grounds where tenants are at fault, for example in cases of anti-social behaviour and repeat rent arrears.
• Provide stronger protections against retaliatory evictions.
• Introduce a new Ombudsman that all private landlords must join.
• Introduce a new Property Portal including a database of residential landlords and privately rented properties in England.
• Give tenants the right to request a pet in their property, which the landlord must consider and cannot unreasonably refuse.

One of the headline changes in the Bill is the scrapping of Section 21 ‘no fault’ evictions, replacing these with a series of powers to enable landlords to reasonably repossess their property.

The Ombudsman scheme, enabling binding judgements to be made where there are disputes between tenants and landlords, will be mandatory. This should hopefully reduce the amount of time spent in court cases for all parties.

Landlords who refuse, or fail, to sign up to the scheme will potentially face a fine of up to £30,000.

How has the PRS reacted?

As anticipated, the publication of the Bill occasioned a flurry of comment in the press. By and large, these responses were positive, concerns being expressed on the details, or lack thereof.

The National Residential Landlords Association (NRLA) broadly welcomed the Bill, but expressed concerns about the removal of Section 21 evictions and the current lack of further details about how their replacements would work.

For the NRLA, there are two areas of concern: the periodic tenancy and the state of the court system presently. Periodic tenancy effectively means a rolling, monthly tenancy.

The concern is that for some tenants, especially student renters, this removes the current certainty landlords have regarding when students will arrive and depart. Accordingly, NRLA is campaigning to exempt private student lets from this provision.

The removal of Section 21 evictions raises concerns because of the current state of the courts and the considerable backlogs they’re encountering. The government in their Guide does say that this process would be streamlined.

They state that their intention is to have a wholly digital process for the “small proportion of tenancies where court action is required”. Understandably this raises concerns that this system will be in place and actually work.

Other organisations have commented on other aspects of the Bill, highlighting significant changes to the existing prevalence of assured shorthold tenancies, replacing them with a universal periodic (rolling) system.

Others have been more critical: The New Statesman opines at some length that local authorities are not equipped to enforce many of the new provisions contained in the Renters (Reform) Bill, and that it is consequently ‘unenforceable’.

Shelteron the other hand acknowledges the important steps contained within the Bill, but insist that it must be the first step on a journey to even greater tenant protections.

Basically, no one thinks the Bill is either unnecessary or a bad idea, but as is always the case with legislation, the devil is in the details. With sufficient will, the Bill should reach the statute books before the next general election in 2024.

It is reasonable to expect some changes to any Bill during its passage through Parliament, but we wouldn’t expect the resulting Act to contain significant changes.

Advice from the property pros

The Renters (Reform) Bill has had a long gestation period. The PRS has been expecting it for quite some time and its representatives have lobbied the government on their behalf.

Many commentators have referenced the abolition of no-fault eviction, however we won’t know how significant this change is until we see the final wording of the Act and how its replacement is intended to function.

We’ve also seen anecdotal evidence that landlords are serving Section 21 notices and selling up, as a result of the coming changes, but it’s entirely possible that this may be tied to the challenging economic conditions in the UK at present.

There seems to be nothing in the Bill which is obviously objectionable or which directly threatens buy-to-let investors. We would hope that as and when the Bill becomes law, we’ll see a better-regulated, more even playing field across the UK.

The bottom line is that at present this Bill should result in a better regulated private rented sector which still represents a positive environment for committed investors.

In summary…

Despite the initial interest generated by the publication of the Bill, other matters have rather supplanted it at the forefront of landlord’s and investor’s attention as interest rates continue to lurch upwards.

In addition to improving the lot of tenants, the government has accepted that landlords sometimes have no option but to serve tenants with a notice to quit. The Bill seeks to make the reasons for doing so more specific than at present.

There will be an obligatory register of landlords – the ‘privately rented property portal’ referred to in the Guide, intended to increase transparency for local councils and tenants regarding landlords.

In short, the changes will move the PRS in England closer to that of Scotland, although there will still be some differences.

If you’re interested in the buy-to-let market anywhere in the UK, but need some advice or more practical help with finding suitable opportunities we are always delighted to sit down and talk through your personal circumstances and needs.

With decades of experience, we’re well placed to ensure that your first (or second) steps into the market are well-planned and considered to realise the best return for you.

Written by John Forth CIHM, Property Consultant at Portolio

Get in touch on 07714 758 320 or email to [email protected]