A Landlord's Complete Guide to the Renter's Reform Bill

Posted by Accommodation on 24th June 2022 -

The day has finally arrived!

The long-anticipated Renter’s Reform Bill Whitepaper has been released, outlining the biggest changes to the private rented sector in over 30 years.

In this article, we’ll be going over the main talking points from the 86-page document and what it means for you as a landlord and your property portfolio.

First of all, the Renter’s Reform Bill is nothing to fear if you are a landlord who looks after your property and maintains it to a good standard, as well as one who looks after your tenant.

The Bill, however, is focused on 3 core areas when it comes to renting in the UK:

• Ensuring tenants have good quality accommodation
• Making renting and good quality accommodation more accessible to tenants of all demographics
• Holding landlords who don’t take care of their properties accountable and cleaning up the market

In order to make this achievable, the Government wants to halve the number of non-decent homes in the private rented sector by 2030, as well as ensure all properties in the sector have an EPC rating of at least C or above by 2030 also.

Grounds For Possession

‘No fault’ evictions under section 21 will be abolished, meaning tenants will have more stability and won’t need to move unless they end their tenancy or their landlord has a valid ground for possession.

However, the grounds of possession are also going to be reformed under Section 8 which will aim to “strike a balance between protecting tenants’ security and landlords' right to manage their property”, for example, a new mandatory ground is being brought in for repeated arrears that are deemed serious. Serious arrears are where more than two months’ rent is outstanding, and tenants who have had this outstanding balance of two months or more on at least three occasions within the previous three years will face eviction, regardless of what the outstanding balance is at the time of the hearing.

New grounds are also being brought in for landlords who wish to sell their rented property as well as allow landlords and their family members to move into a privately rented property. 

When it comes to evictions in general, the notice period will be increased to a minimum of 4 weeks. However, if the grounds for eviction are based on antisocial behaviour or criminal behaviour the notice period has been lessened.

The time it takes to pass a repossession order or an eviction that is being disputed through the court system does in many cases take months, which is something the Government is aware of and is intent on fixing for landlords. The Government says it intends to work with the Ministry Of Justice & HM Courts & Tribunals Service to reform areas that “particularly frustrate and hold up possession proceedings”. These involve:

• County court bailiff capacity
• Paper-based processes
• Lack of adequate advice about court and tribunal processes
• Lack of prioritisation of cases

Decent Homes Standard (DHS), Periodic Tenancies, and Rent Increases

If you don’t know what the DHS is already, it is a minimum standard that is applied to all social housing currently but will now be brought into the private rented sector to help increase the minimum housing standard and make the accommodation more suitable for tenants.

The DHS is based on ensuring tenants have clean & useable facilities. Homes must be free from serious health and safety hazards and be kept in a good condition when it comes to repairs and maintenance. Local councils will also be given the powers to enforce the DHS on any property that doesn’t meet minimum requirements, which is a move said to “crack down on non-compliant landlords and protect the reputation of responsible ones”.

Periodic tenancies are also being brought in, and tenants who would previously have had an Assured or assured shorthold tenancy will be moved to a periodic tenancy.

A periodic tenancy is one where there is a rolling tenancy with no fixed end date. Tenants will, however, need to give 2 months’ notice when ending their tenancy so the landlord has can recoup the costs of finding a new tenant and “avoid lengthy void periods”.

Landlords are also set to be notified 6 months prior to all new tenancies becoming periodic tenancies and a separate date will be announced for when current tenancies will be switched to periodic ones.

More information on changes to standards and tenancies include:

• Landlords only being able to increase rent once per year and landlords must give at least 2 months' notice before doing this, which is also said to be a move aimed at tackling the cost of living crisis
• Rental charges on properties will also be expected to be kept in line with market price, and landlords who are trying to evict tenants through “unjustifiable rent increases” will no longer be able to do so and tenants will be able to challenge these increases through the first-tier tribunal 
• The Government also reiterated its desire to upgrade “as many homes as possible” to EPC band C by 2030

Pets & Who You Can Rent Your Property To

One of the biggest pieces of legislation is that there is no longer a blanket ban on pets. Although this is not new to landlords, tenants will be able to challenge a decision not to allow them to have pets in the property.

For those who do move into rented accommodation with a pet, they will be required to pay pet insurance as part of an amendment to the Tenant Fees Act, so that landlords are covered for any damage to their property without the extra expense of having their own pet insurance as a result of their tenant.

The Government, whilst not passing any legislation, has encouraged landlords to allow reasonable requests by tenants to redecorate, hang pictures or change appliances. These requests will be allowed providing they return the property to its original state when the tenant leaves.

Any landlord or letting agent that has a blanket ban on renting to families with children that claim benefits will be in breach of the law under new legislation aimed at making good accommodation accessible for all renters who are in or trying to get into the private rented sector.

New Ombudsman & Property Portal For Landlords

A new ombudsman is being brought in by the Government that will cover all landlords who rent out a property, whether they use an agent to let or manage the property or not. Membership in the new ombudsman is also going to be made mandatory for all landlords too.

The formation of this new ombudsman is to hold landlords accountable, and it will have the power to make landlords issue apologies, make changes to the standard of their properties to meet minimum requirements, and pay fines of up to £25,000.

Any landlords who fail to comply with a decision may be hit with a banning order and any decisions made by the Ombudsman will be binding.

With all of these changes that will be taking place, the Government intends to set up a new property portal that landlords can go to in order to understand legal requirements as well as demonstrate their compliance with them.

Local councils will also have the power to take enforcement action against any landlords that fail to join the portal and the portal will “dramatically increase local councils’ ability to enforce against criminal landlords”.

Whilst the Government is still deciding upon the nature of the portal, its main aims will be to support good landlords who are compliant and help to attract potential tenants, whilst it may also be used to ensure landlords and letting agents meet minimum standards before they let out a property.

Conclusion

All in all, we feel these changes will help landlords and tenants work better together, and will not have a negative impact on landlords who look after their properties and have good accommodation for tenants.

It is good to see that the Government has listened to many landlords on court proceedings when it comes to possession of a property and aims to make changes to help landlords recover their assets quicker and more effectively.

It remains to be seen how some of these changes will affect the way landlords, letting agents, and tenants work together, but it is clear that landlords who are not compliant with regulations and don’t provide good living conditions to their tenants will face more serious action under these new reforms.

If you have any questions on how these changes may affect your asset & your position as a landlord, request a callback below and one of our expert team will be happy to go over the information you need.