Renters Reform Bill 2023

[modellingman]

The bill was presented to Parliament today in the form of a first reading in the Commons.

The bill as introduced can be downloaded from the parliamentary website at https://bills.parliament.uk/bills/3462/publications. The bill is fairly lengthy and contains 5 parts and 4 schedules. It makes a number of changes to existing legislation in England (such as the long trailed abolition of Section 21 [so called no-fault evictions]) and introduces some new stuff including mandatory redress schemes and a property database.

Although the bill will no doubt be featured in newspapers and other forms of media in the coming weeks and months a good introduction to it is provided in the explanatory notes available from the same page as the bill itself. Pages 9, 10 and 11 of these notes provide a summary of the policies intended to be implemented through the legislation and are reproduced below.

Abolishing section 21

The Bill abolishes section 21 ‘no fault’ evictions and fixed term tenancies. All tenants who would previously have had an assured tenancy or assured shorthold tenancy will move onto a single system of periodic tenancies. Tenants will need to provide two months’ notice when leaving a tenancy. Landlords will only be able to evict a tenant in reasonable circumstances as set out in this legislation.

Purpose-Built Student Accommodation (PBSA) will be exempt from these changes as long as the provider is registered for government-approved codes, since these tenancies are not assured. Lettings by PBSA landlords are governed by the Protection from Eviction Act 1977.

The Bill also mandates that landlords must provide a written statement of terms setting out basic information about the tenancy and both parties’ responsibilities while retaining both parties’ right to agree and adapt terms to meet their needs.

Reforming landlord possession grounds

The Bill reforms the grounds for possession with the intention of ensuring they are comprehensive, fair, and efficient. As far as possible, the grounds have been defined unambiguously, to seek to offer landlords certainty about whether the ground will be met if going to court. Grounds have also been made mandatory where it has been judged reasonable to do so. This means judges must grant possession if the landlord can prove that the ground has been met. The Bill introduces a new ground for landlords who wish to sell their property and amends the ground for moving in to include close family members. These grounds will not be available to be used in the first 6 months of a new tenancy, mirroring the protection tenants currently receive.

The Bill also introduces a new mandatory ground for repeated serious rent arrears. Evictions will be mandatory where a tenant has been in at least two months’ rent arrears three times within the previous three years, regardless of the arrears balance at hearing. This seeks to support landlords,
while making sure that tenants with longstanding tenancies are not evicted due to one-off financial shocks that occur years apart.

The Bill increases the notice period for the existing rent arrears ground to four weeks and retains the mandatory ground in cases where a tenant has two months’ arrears at both the time of serving notice and of the hearing. This is intended to ensure that tenants have reasonable opportunity to
pay off arrears without losing their home.

The Bill also expands the discretionary eviction ground to clarify that any behaviour ‘capable’ of causing ‘nuisance or annoyance’ can lead to eviction. The government is also considering how to implement the proposal announced in the March 2023 Anti-Social Behaviour Action Plan to set out the principles that judges must consider when making their decision, such as giving weight to the impact on landlords, neighbours, and housemates, and whether the tenant has failed to engage with other interventions to manage their behaviour.

The Bill introduces new grounds for possession for the supported housing sector to end tenancies where necessary, to enable them to continue to operate housing safely or effectively, or otherwise protect the viability of their service.

The Bill also introduces new grounds for possession in relation to temporary accommodation for homelessness and for sectors that give accommodation tied to employment. This is intended to ensure that these services can continue to be delivered.

The Bill makes consequential changes to Part VII of the Housing Act 1996 to remove reference to section 21 notices, as section 21 is being abolished by this Bill, and replace the references to assured shorthold tenancies and fixed term tenancies with assured tenancies. The majority of these changes will be minor wording amendments, excepting the changes to the threatened with homelessness definition which remove the requirement for a local housing authority to accept a homelessness duty if they are served with a section 21 notice (since such a notice will no longer exist). The Bill also repeals, ‘the reapplication duty’, as we move to a new tenancy framework.

Rent increases

Landlords will be able to raise rents annually to market prices (replicating existing mechanisms) and must provide two months’ notice of any change. Tenants will be able to challenge above-market rent increases through the First-tier Tribunal (Property Chamber), - this seeks to prevent above market rent increases being used to force tenants to vacate a property. Terms which allow rent increases outside of the statutory mechanism will be of no effect.

Renting with pets

The Bill requires landlords not to unreasonably withhold consent when a tenant requests to have a pet in their home, with the tenant able to challenge a decision. It also amends the Tenant Fees Act 2019 to include pet insurance as a permitted payment. This means landlords will be able to require pet insurance, with the intention of ensuring the costs of any damage to their property is covered.

Landlord redress schemes

The Bill enables the government to approve or designate one or more redress schemes which all private landlords who rent out property on an assured or regulated tenancy in England will be required to join, regardless of whether they use an agent. This will ensure all tenants under relevant
tenancies have access to redress services to deal with their complaints, and that landlords remain accountable for their own conduct and legal responsibilities. The intention is that the government will approve or designate only one scheme to act as Ombudsman for the sector.

The Bill provides for membership of an approved or designated scheme to be mandatory and for landlords to remain members, including for a specified period after ceasing to let the property. It provides for local councils to be able to take enforcement action against landlords that fail to join an approved or designated scheme, or who are expelled for failure to adhere to their member obligations. It also sets out the redress powers of a scheme, which will include compelling landlords to issue an apology, provide an explanation, take remedial action, and/or pay compensation.

Private Rented Sector Database.

The Bill legislates for a Private Rented Sector Database, which will support the new digital Property Portal service. Landlords will be required to sign up and register all properties they let out, and the Bill provides for local authorities to be able to take enforcement action against landlords who do
not meet their obligations to register their properties. The Bill provides for an Operator of the database, who will be the Secretary of State, or an organisation appointed by the Secretary of State. The Bill provides for regulations, which will set out further details about how the database will be
operated and overseen, what information will be collected and made public, and details about how renewals will work.

Lead Enforcement Authority

The Bill gives the Secretary of State the power to appoint a lead enforcement authority, or lead enforcement authorities, for the purpose of any provisions in the relevant landlord legislation (which is defined in Clause 58). A lead enforcement authority’s functions will include providing guidance, information and advice to local housing authorities about how to exercise their functions under that legislation, helping the provisions to be enforced in a consistent way. In addition, a lead enforcement authority will have the power to enforce, allowing it to take on complex or high-profile cases for which the responsible local housing authority may lack the capacity or capability to pursue.


modellingman

[Lootman]

You already know what I am going to say. These provisions will deter those who offer rental housing long-term. The result will be fewer places for rent and so of course higher rents.

The inability to regain vacant possession is particularly punitive and, were I still a landlord, this plan would at a stroke have caused me to immediately evict all my tenants to avoid being stuck for life with them, no matter how much I might otherwise like them. Otherwise the risk is that you can never sell with vacant possession.

One major response to this that I predict is that landlords will start doing more of what we are already seeing and that is offering housing units via Airbnb or other short-term platforms. Set the rents you want and no risk of being stuck with a lifer.

As with most tenant "protections", this will harm tenants.

[modellingman]

The inability to regain vacant possession is particularly punitive and, were I still a landlord, this plan would at a stroke have caused me to immediately evict all my tenants to avoid being stuck for life with them, no matter how much I might otherwise like them. Otherwise the risk is that you can never sell with vacant possession.

Although not spelt out in the explanatory notes the bill does provide (in Schedule 1, p66) that a proposed sale by a landlord will be a ground for eviction. The bill does this by adding a new ground for eviction, Ground 1A, to Schedule 2 of the Housing Act 1988. Previously, of course, landlords would simply have used Section 21. Like Section 21, this new ground cannot be used for the first 6 months of a tenancy and is a mandatory ground (ie a court will not have discretion to refuse to issue a possession order if the ground is established). The new Ground 1A only requires an intention to sell not an actual sale (though I suspect there may also be provisions to discourage the new ground being used in bad faith).

One major response to this that I predict is that landlords will start doing more of what we are already seeing and that is offering housing units via Airbnb or other short-term platforms. Set the rents you want and no risk of being stuck with a lifer.

The risk is not so much of being stuck with a lifer but being stuck with an awkward tenant who steers clear of the grounds for eviction. Previously, section 21 allowed a way out for a landlord at the end of his/her tether. So the trend of conversion of long term lets to AirBnB may well continue. There is nothing in the bill (as far as I can see) to arrest this trend but I suspect there will be legislative changes at some time in the future - probably from a new Labour government - which will introduce changes to planning law allowing local authorities to place limits on short-term serviced accommodation.

modellingman

[Mike4]

My instinctive response is to serve notice on the one 'iffy' tenant I have and batten down the hatches with all the solid gold tenants I have.

Oddly the 'iffy' one is the only one on HB and seems recently to have developed an 'entitlement' attitude. Today I think need to get rid before I get lumbered.

I really don't see this panning out well.

Just typing aloud. Mebbe I'll see it differently as the bill progresses through parliament and the more ridiculous clauses get demolished.

[Lootman]

One major response to this that I predict is that landlords will start doing more of what we are already seeing and that is offering housing units via Airbnb or other short-term platforms. Set the rents you want and no risk of being stuck with a lifer.

The risk is not so much of being stuck with a lifer but being stuck with an awkward tenant who steers clear of the grounds for eviction. Previously, section 21 allowed a way out for a landlord at the end of his/her tether. So the trend of conversion of long term lets to AirBnB may well continue. There is nothing in the bill (as far as I can see) to arrest this trend but I suspect there will be legislative changes at some time in the future - probably from a new Labour government - which will introduce changes to planning law allowing local authorities to place limits on short-term serviced accommodation.

Trying to micro-manage short-term lets the way this proposed law micro-manages long-term lets is really hard to do in practice. Right now councils do not even know about who rents long-term to whom, where. With short term, where many renters will be temporary guests from overseas in units that were marketed overseas, it will be nigh on impossible.

But the bigger worry is why that the framers of these laws and possible laws cannot see how they end up harming tenants, by reducing the stock of available housing. It is the classic case of "no good deed going unpunished". The government should be encouraging people into this business and not driving them out of it. This law almost guarantees a reduction in the availability of the very long-term rental homes that it purports to want to protect.

the 'iffy' one is the only one on HB and seems recently to have developed an 'entitlement' attitude. Today I think need to get rid before I get lumbered.

I generally avoided renting to HB tenants, with a couple of exceptions where I already knew the person, exactly because of the risk of that.

Imagine the attitude of a HB tenant who knows that he can never be evicted?

[Mike4]

I generally avoided renting to HB tenants, with a couple of exceptions where I already knew the person, exactly because of the risk of that.

Imagine the attitude of a HB tenant who knows that he can never be evicted?

Me too. This tenancy is about 15 years old and the HB thing started mebbe five years ago.

I hear in the news that refusing a tenant on the basis of them claiming HB is also to be banned. Hard to see how they are gonna achieve that.

But I think you're right. She is gonna have to find a new mug landlord.

[Lootman]

I generally avoided renting to HB tenants, with a couple of exceptions where I already knew the person, exactly because of the risk of that.

Imagine the attitude of a HB tenant who knows that he can never be evicted?

Me too. This tenancy is about 15 years old and the HB thing started mebbe five years ago.

I hear in the news that refusing a tenant on the basis of them claiming HB is also to be banned. Hard to see how they are gonna achieve that.

But I think you're right. She is gonna have to find a new mug landlord.

If a landlord is barred from taking into consideration the source of funds from which the rent will be paid, then that is an utter nonsense. It will mean in effect that a landlord has to take any applicant regardless of employment status and income.

And this is a Tory government! Who knows what Labour would do. It is complete insanity and the world has gone mad.

[scrumpyjack]

And this is a Tory government! Who knows what Labour would do. It is complete insanity and the world has gone mad.

I agree, these 'reforms' are utterly stupid, and it's not as if the tenants are going to vote conservative anyway. Gove must be off his rocker.

[SPURLEY]

We seem to be moving from the the real world "to the woke world ". Education has been dumbed down now for so long we have idiots ruling the roost .

[Nimrod103]

And this is a Tory government! Who knows what Labour would do. It is complete insanity and the world has gone mad.

I agree, these 'reforms' are utterly stupid, and it's not as if the tenants are going to vote conservative anyway. Gove must be off his rocker.

I see many similarities between Gove and David Willetts, the politician who persuaded Margaret Thatcher that his idea for a Poll Tax was a winner.

I can only assume Gove thinks that shutting down the 'rental market' will flood the 'houses/flats for sale market', thus bringing prices down. This would then appeal to his target cohort of young aspirational home buyers. But the implications for society in general, trying to absorb the Tory Party's 1 million new immigrants/year, are going to be highly disruptive, or even devastating.

[MrFoolish]

And this is a Tory government! Who knows what Labour would do. It is complete insanity and the world has gone mad.

Maybe a Labour government would allow more new homes and council houses to be built, which would be good for renters. You are just viewing this through the prism of what affects landlords.

[Mike4]

Can anyone suggest how long it is likely to take for this Renters' Reform Bill to get Royal assent?

I have one 'iffy' tenant I plan to give notice to quit while I still can but I'd rather not until I absolutely need to.

More generally, major changes might happen to the bill as it progresses through the stages in parliament. And it seem unlikely to me it will get Royal assent until after the general election. In fact it might get totally binned by the Labours when they get in and replaced with something even more anti-landlord. But whatever, I can see that taking another five years.

Also more generally, I can imagine large numbers of landlords packing it in right now and selling up. As the number of properties remains the same, I can see this depressing house prices as the market gets flooded and rents rocketing as supply of rentals dwindles. Presumably this is what Gove wants to happen, I'm sure he must have figured it out. The question is, "Why?" Presumably to hand Labour a poison chalice to sort out when they get back in.

[MrFoolish]

Also more generally, I can imagine large numbers of landlords packing it in right now and selling up. As the number of properties remains the same, I can see this depressing house prices as the market gets flooded and rents rocketing as supply of rentals dwindles. Presumably this is what Gove wants to happen, I'm sure he must have figured it out. The question is, "Why?" Presumably to hand Labour a poison chalice to sort out when they get back in.

Who do you think they are going to sell to? It will either be to other landlords, so the supply of rentals won't in fact dwindle. Or will be to first time buyers, in which case the demand for rentals will drop. Or will be home owners re-locating, which frees up a home somewhere down the chain.

[Nimrod103]

Also more generally, I can imagine large numbers of landlords packing it in right now and selling up. As the number of properties remains the same, I can see this depressing house prices as the market gets flooded and rents rocketing as supply of rentals dwindles. Presumably this is what Gove wants to happen, I'm sure he must have figured it out. The question is, "Why?" Presumably to hand Labour a poison chalice to sort out when they get back in.

Who do you think they are going to sell to? It will either be to other landlords, so the supply of rentals won't in fact dwindle. Or will be to first time buyers, in which case the demand for rentals will drop. Or will be home owners re-locating, which frees up a home somewhere down the chain.

Who are they are going to sell to? Interesting question, as the increase in mortgage rates so far, with more to come, must be rapidly cooling demand. And I do not see other landlords stepping in, because they realise the business is being relentlessly targetted by politicians. They get the message loud and clear.
It is certainly true that the number of residential units won't change, just as the sell off of council housing never caused a reduction in unit numbers, no matter what Socialists claimed. But these are different pools of people. Many renters cannot save enough for a deposit or have a chequered borrowing history. Perhaps many of the influx from Hong Kong have access to ready money?

[Lootman]

And this is a Tory government! Who knows what Labour would do. It is complete insanity and the world has gone mad.

Maybe a Labour government would allow more new homes and council houses to be built, which would be good for renters. You are just viewing this through the prism of what affects landlords.

Actually no, I was quite careful to explain how these changes would harm tenants, if only indirectly by deterring landlords from offering units for long-term rental.

Can anyone suggest how long it is likely to take for this Renters' Reform Bill to get Royal assent? I have one 'iffy' tenant I plan to give notice to quit while I still can but I'd rather not until I absolutely need to.

Also more generally, I can imagine large numbers of landlords packing it in right now and selling up. As the number of properties remains the same, I can see this depressing house prices as the market gets flooded and rents rocketing as supply of rentals dwindles. Presumably this is what Gove wants to happen, I'm sure he must have figured it out. The question is, "Why?" Presumably to hand Labour a poison chalice to sort out when they get back in.

Careful with this. Sometimes laws are made retrospective to the date the Bill is first presented. This is to prevent landlords doing exactly what you are suggesting - evicting before it becomes law.

So right now you can evict. But by the time the Bill is working its way through Parliament, it may already have baked in a prior effective date.

As for housing units flooding the market, that could happen. But other landlords will switch to short-term or commercial rentals, which is what I started doing 20 years ago, even before Airbnb and before all these punitive LL-TT laws started.

Moreover those who buy these units will be the better off renters. It won't help the poorer renters on HB and the like, who probably could not afford to buy even if house prices halved, which they won't.

[Mike4]

Who do you think they are going to sell to? It will either be to other landlords, so the supply of rentals won't in fact dwindle. Or will be to first time buyers, in which case the demand for rentals will drop. Or will be home owners re-locating, which frees up a home somewhere down the chain.

A naïve question for a financial board, I'd have thought.

The market will adjust. The obvious and trite answer is the buyers will be all the tenants who are being given notice to quit. As house prices tumble from the flood of properties on the market from landlords getting out, all their tenants will suddenly find they can afford to buy after all. Especially as lenders in the news today are beginning to loosen lending criteria again. In particular one is saying they will take a good record of rent payments into account. Obviously wanting to hoover up all this new business about to happen.

[MrFoolish]

Who do you think they are going to sell to? It will either be to other landlords, so the supply of rentals won't in fact dwindle. Or will be to first time buyers, in which case the demand for rentals will drop. Or will be home owners re-locating, which frees up a home somewhere down the chain.

A naïve question for a financial board, I'd have thought.

The market will adjust. The obvious and trite answer is the buyers will be all the tenants who are being given notice to quit. As house prices tumble from the flood of properties on the market from landlords getting out, all their tenants will suddenly find they can afford to buy after all. Especially as lenders in the news today are beginning to loosen lending criteria again. In particular one is saying they will take a good record of rent payments into account. Obviously wanting to hoover up all this new business about to happen.

On the one hand you say rents will be "rocketing". On the other hand you say landlords will be "getting out". It doesn't really stack up and I'd suggest you doth complain too much. Basically you don't like the government interfering in your comfortable business, which is understandable.

Anyway, if the buyers will be the previous tenants, is this a bad thing? I'm sure Thatcher would rejoice at this increase in home ownership.

[Lootman]

Who do you think they are going to sell to? It will either be to other landlords, so the supply of rentals won't in fact dwindle. Or will be to first time buyers, in which case the demand for rentals will drop. Or will be home owners re-locating, which frees up a home somewhere down the chain.

A naïve question for a financial board, I'd have thought.

The market will adjust. The obvious and trite answer is the buyers will be all the tenants who are being given notice to quit. As house prices tumble from the flood of properties on the market from landlords getting out, all their tenants will suddenly find they can afford to buy after all. Especially as lenders in the news today are beginning to loosen lending criteria again. In particular one is saying they will take a good record of rent payments into account. Obviously wanting to hoover up all this new business about to happen.

If the government wants to expand home ownership then there are other ways to achieve that. It seems very risky to me to try and achieve that by motivating landlords to exit the rental market in the hope that maybe that might drive down home prices. Because it might not, but could drive up rents.

[Mike4]

A naïve question for a financial board, I'd have thought.

The market will adjust. The obvious and trite answer is the buyers will be all the tenants who are being given notice to quit. As house prices tumble from the flood of properties on the market from landlords getting out, all their tenants will suddenly find they can afford to buy after all. Especially as lenders in the news today are beginning to loosen lending criteria again. In particular one is saying they will take a good record of rent payments into account. Obviously wanting to hoover up all this new business about to happen.

On the one hand you say rents will be "rocketing". On the other hand you say landlords will be "getting out". It doesn't really stack up and I'd suggest you doth complain too much. Basically you don't like the government interfering in your comfortable business, which is understandable.

Anyway, if the buyers will be the previous tenants, is this a bad thing? I'm sure Thatcher would rejoice at this increase in home ownership.

Please keep politics off this board.

Whether I 'like' what the government is doing or not is not relevant. I'm trying to decide how to respond to the bill. I notice no-one has attempted to answer my question about how long the bill might take to get RA!

[Lootman]

On the one hand you say rents will be "rocketing". On the other hand you say landlords will be "getting out". It doesn't really stack up

It makes perfect sense. If landlords are deterred from offering their housing units for long-term rental then, other things being equal, that will reduce supply without lowering demand. The result is higher rents.

In some locations with rent control, which is an extreme policy that even this government is not considering, landlords have been known to keep their units vacant and off the market, even though that means collecting no rent, simply so as to not have to be exposed to low rents forever. They would rather have the tax write-off.

That drives up market rents, which typically are not subject to rent control.