At last, the Government has released some much-needed details regarding the Bill to Reform Renters. On October 23, 2023, the Second Reading of the Bill was passed in the Commons after a four-hour session.
To do this, the Bill focuses on a number of reforms, such as removing the landlord's ability to use Section 21, doing away with assured shorthold tenancies (ASTs), establishing a new register of PRS landlords, introducing a property portal, and setting up a Landlord Ombudsman for the Private Rented Sector to assist in resolving disputes between tenants and landlords.
The Government has recently disclosed that Section 21 would stay in effect for the time being, notwithstanding the Bill's primary talking point—the removal of Section 21. The government intends to promote the use of a more robust mediation and dispute resolution procedure, and the Section 21 notice will only be permanently eliminated after the court system has undergone reforms.
Enhancements to the legal system will encompass:
streamlining the court system through digitization; prioritising specific case categories, such as those involving antisocial behaviour and large rent arrears; and strengthening enforcement by better hiring and retaining bailiffs.
What has altered in the Bill, then?
The end of the Assured Shorthand Tenancy (AST)
The most popular form of contract in the PRS since its inception under the Housing Act 1988 (1996) is the Assured Shorthand Tenancy. Since the Bill would do away with fixed-term tenancies, we will be utilising a new type of tenancy called periodic tenancy. Every tenant with an assured tenancy or assured shorthold tenancy will switch to a monthly "periodic" tenancy system that has a start date but no set duration.
Additionally, tenants will be able to serve notice.
A Revised Notice Under Section 8
There will be changes to the Grounds under Section 8. The response acknowledges the challenges that student landlords had with the original Bill and suggests adding a new ground under Section 8 to help landlords ensure possession at the conclusion of the "academic" year.
If a landlord wants to sell the property or if they or their family wants to reside there, they can reclaim possession under the new grounds 1 and 2. There will be a two-month notice period for these grounds. This is not a defence that landlords can use during the first six months of a tenancy. They will not be allowed to rent or sell their property again for three months after utilising them.
In addition, the bill will establish a new, required basis for eviction in situations when a renter has three instances in the preceding three years of rent arrears of at least two months. Unusually, the two-week notice period for rent arrears will now be extended to four weeks.
The Bill includes annoyance or nuisance as a new discretionary ground for evicting renters who have engaged in anti-social activity. Landlords have the right to start the eviction process right away on this basis.
Every year, landlords will have the option to raise rent to market rate, but they will need to give two months' notice.
Tenants will still have the option to file a "excessive" rent increase complaint with the First-Tier Tribunal (Property Chamber).
The aim of the rent increase reforms is to stop landlords from using rent hikes above market value as a means of evicting tenants from rental properties.
This topic has been the subject of extensive discussion. The Bill will allow renters to contest a landlord's decision through the Landlord Ombudsman and mandate that landlords not unreasonably deny permission to tenants in the PRS who seek to have pets.
There will be an amendment made to the Tenant Fees Act 2019 to allow landlords to require insurance to cover any damage caused by dogs. In addition to insurance, tenants will also be required to submit a thorough 'description' of their pet, which should include breed, size, age, veterinarian information, dates of vaccinations, and a lot more information than is now asked.
The Landlord Ombudsman
In order to fulfil its promise to establish a new Ombudsman for the private rental sector, the government will launch a redress programme for renters in private homes. Prospective, present, and past residential landlords will be required by law to register with the reparation scheme.
A Landlord Database
All potential residential landlords and properties that are currently or want to be rented under residential tenancies must register with a database that will be put into place. The foundation of the upcoming Privately Rented Property Portal will be this new database. The following data will be present in the database:-
Before a property can be rented out or advertised for rent, both the private landlord and the property must be registered in the database.
After enrolling on the database, landlords will have 28 days to meet all regulatory criteria.
For an entrance to stay operational, landlords must maintain it current with any necessary paperwork, such as gas safety certificates.
In the event that the database cannot be automatically updated, Local Authorities will be responsible for managing it, which includes verifying, changing, and eliminating inaccurate entries.
In order to register in the database, landlords need to pay a fee. There will be late registration costs if this is not done.
The public will be able to observe any instances in which landlords have been hit with financial penalties or banned from the property.
Landlords who violate the database's criteria, such as by giving false information, will be subject to fines that cannot be more than £5,000 or £30,000.
If you would like to see the details that the Parliamentary Committee discussed in more information, click here for the 7th sitting.