The Renters (Reform) Bill – the end of ‘no fault’ evictions
The Renters (Reform) Bill 2022-23 (the Bill), introduced into Parliament on 17th May, aims to deliver on the government’s 2019 manifesto commitment to bring in a ‘better deal for renters’ by abolishing ‘no fault’ evictions. Other reforms proposed by the Bill seek to create a private rental sector which is fair to landlords and tenants. The Bill has not been passed into law yet and this summary of its key headlines provides guidance only. It is likely that the current version of the Bill will change as it goes through the various stages of Parliament, and readers should rely on their own research for up-to-date information.
The end of ‘no fault’ evictions
The Bill proposes to abolish Assured Shorthold Tenancies (ASTs), the most common form of private residential tenancy in England. Landlords of ASTs are entitled to evict tenants by serving a Section 21 notice at the end of a fixed term without providing a legitimate reason or establishing any fault on the part of the tenant (‘no fault’ evictions). Abolishing ASTs will mean that the practice of ‘no fault’ evictions will come to an end.
If the Bill passes into law in its current form, most new tenancies created in England will be assured tenancies, a type of private residential tenancy introduced by the Housing Act 1988 (the Act). By virtue of Section 8 of the Act, Landlords of assured tenancies can only evict tenants if they serve notice specifying a ground for possession (the grounds for possession are set out in Schedule 2 of the Act). A tenant can only be evicted using the Section 8 procedure if the landlord can prove to the Court that a ground for possession can be established.
Fixed term assured tenancies to be abolished
Assured tenancies with a fixed term will be abolished meaning that all assured tenancies will be periodic. Periodic tenancies do not have a fixed end date but continue indefinitely with rent being paid on a periodic basis (i.e. weekly or monthly). The Bill provides that rent periods may not exceed one month. Requiring all assured tenancies to be periodic will give tenants greater flexibility to end tenancies when they need to or when landlords are failing to meet their obligations.
The Bill also proposes to increase the notice period that the tenant must give to a landlord to terminate a periodic assured tenancy from one month to two months. This change is intended to provide landlords with sufficient notice to relet the premises.
Section 8 grounds for possession to be more comprehensive
The Section 8 grounds for possession referred to above will remain with additions and changes, including the following:
- A new mandatory ground has been added relating to repeated rent arrears. Landlords are entitled to repossess if two months’ rent is unpaid on three separate occasions within a three-year period. Mandatory means that the Court must grant possession if the ground can be established. This adds to the existing mandatory ground that two months’ rent is unpaid at the date of service of the notice and at the date of the possession proceedings.
- The existing mandatory ground that the landlord or their spouse or civil partner requires the property to live in has been extended to family members (i.e. children, parents, siblings and grandchildren).
- A mandatory ground has been added so that landlords have a right to repossess if they wish to sell the property. This ground cannot be used in the first six months of a new tenancy.
- Landlords can now bring proceedings immediately rather than after one months’ notice if relying on the ground that the tenant has been convicted of a specified criminal offence or has breached a relevant order put in place to prevent anti-social behaviour. The Court cannot make a possession order until at least 14 days after service of the notice.
- The wording of the existing ground that the tenant has been guilty of conduct likely to cause a nuisance to the landlord or anyone living in the locality has been changed. The words ‘likely to cause’ have been replaced with ‘capable of causing’, thus lowering the threshold for establishing anti-social behaviour.
The changes outlined above will make it easier for landlords to evict tenants who are wilfully not paying rent or are engaging in anti-social behaviour. It could be argued that giving landlords the right to repossess for the purposes of selling or occupying the property (grounds which require no fault on the part of the tenant) could amount to creating ‘no fault’ evictions. Tenant bodies have raised this issue and argue that evidence thresholds should be strengthened (it has been suggested by the government that a landlord may prove intention to sell merely by instructing an estate agent or solicitor).
Rent increase clauses to be void
If the Bill is enacted, landlords of assured tenancies will no longer be able to increase rent by relying on rent increase clauses in tenancy agreements. Landlords will only be able to increase the rent by serving notice on the tenant proposing new rent (the tenant will be able to challenge the notice of proposed increase) or by a determination by the First-Tier Tribunal.
The government hopes that removing the use of rent increase clauses will prevent landlords from increasing the rent exorbitantly as a way of forcing a tenant to surrender their lease in the absence of ‘no fault’ evictions.
As the law currently stands, tenants have no statutory right to keep a pet at their rental property or request to keep one. Whether or not a tenant can keep a pet depends on the terms of the tenancy. The Bill changes this position so that it will be an implied term of every tenancy that tenants have a right to request permission from the landlord to have a pet. The landlords cannot unreasonably withhold this permission. What is reasonable will depend on the type of pet and property, and it is likely that landlords and tenants will need further guidance about this.
As part of giving consent, landlords may require that insurance covering the cost of pet damage is maintained at the cost of the tenant.
Tenancy Deposit Schemes
It will now be compulsory for landlords of an assured tenancy to protect tenant deposits by joining a tenancy deposit scheme. This requirement currently only applies to ASTs.
The Private Rented Sector Ombudsman and Property Portal
The Bill will require all private landlords to join an Ombudsman which will allow tenants to seek redress where a landlord has failed to deal with a legitimate complaint about the tenancy, for example, if repairs have not been completed within a reasonable timeframe. The Ombudsman would have the power to compel landlords to issue an apology, provide information, take remedial action or pay compensation up to £25,000.00.
Whilst on the face of it the introduction of the Ombudsman would appear unfavourable to landlords (who will not be able to use it to complain about tenants), landlords could benefit from a route for resolving disputes which is quicker and cheaper than litigating through the Courts.
Along with the Ombudsman, the Bill will introduce an online property portal. Landlords will be legally required to register themselves and their properties on this portal. One important aim of the portal is to give local authorities more information so that they can identify and take enforcement action in respect of poor quality and non-compliant properties.
When will the Bill be passed into law?
The first reading of the Bill is complete and the second reading is currently in progress. It is not possible to give exact timings, but the Bill will likely receive Royal Assent in around spring 2024. Implementation of the reforms will be a two-stage process. The first implementation date (for which at least six months’ notice will be given) is when all new tenancies will be governed by the new rules. There will then be a second implementation date, which is likely to be more than twelve months after the first, when existing tenancies will transition to the new system.
In summary, whilst the abolition of ‘no fault’ evictions provides greater security for tenants, this is counter-acted by the expansion of the grounds for possession for landlords. It remains to be seen if the extension and addition of grounds which do not require a breach on the part of the tenant will amount to a ‘no fault’ eviction in practice. What the Bill does address, is the mischief of rogue landlords using the threat of eviction as a tool to force rent increases and vice versa. Responsible landlords need not fear the reforms, as they will be able to repossess properties when they need to, will be indemnified for damage caused by pets and could benefit from the Ombudsman if it leads to the effective resolution of disputes.