A Guide to The Renters Rights Bill

Its measures will undoubtedly impact property lettings and decisions for landlords, all of which offer more protection for tenants and in turn are expected to empower tenants to resist rent increases above market levels and control the rental market.

The key change will be the introduction of security of tenure for tenants, meaning that landlords can no longer serve an unconditional notice (a section 21 notice) to terminate a tenancy. Tenancies will have no end date and will operate as an Assured Tenancy, and therefore reverting to a position similar to the original Housing Act reforms before the introduction of assured shorthold tenancies in 1988.

There will be some specific grounds for possession, such as when a property is placed on the open market and sold or if the Landlord or a close family member wishes to take up occupancy. This will not be possible for the first 12 months of a new tenancy, and the notice period will be four months.

Evidence of the intended alternative use will be required.

Rent arrears will still be grounds for possession, but with an extended notice period to four weeks, and only after the tenant has accrued three months of arrears (currently two). The tenancy agreement must be signed before any rent is collected, and hence a tenant who has signed an agreement but not paid the first months rent will still be entitled to take possession.

Further changes will be:

TENANT SELECTION

Tenant selection will be a more controlled process, and landlords will no longer be able to request larger rent payments in advance from a tenant who has failed referencing. Landlords may not refuse reasonable requests to keep a dog, or refuse applicants on the grounds of reliance on Income Support or Housing Benefit to pay rent, or refuse applicants with children.

ENDING RENTAL BIDDNG

The Bill proposes to end the practice of rental bidding by prohibiting landlords and agents from asking for or accepting offers above the advertised rent. Landlords and agents will be required to publish an asking rent for their property, and it will be illegal to accept offers made above this rate.

RENT REVIEW APPEALS

While landlords are able to charge market rents, tenants will be able to appeal in the knowledge that they are protected from eviction for doing so.

DECENT HOMES STANDARD & AWAAB’S LAW

A new standard will impose minimum condition requirements and address poor quality housing. Awaab’s Law will set timeframes for landlords to take action to address serious defects such as damp and mould, with control for local authorities to undertake repairs and recharge the cost.

PRIVATE SECTOR LANDLORD OMBUDSMAN

An Ombudsman will provide quick (in theory), fair, impartial and binding resolution for tenants’ complaints about their Landlord.

LOCAL AUTHORITY ENFORCEMENT

The new law will strengthen local authority enforcement by expanding civil penalties, introducing a package of investigatory powers, and introducing a new requirement for local authorities to report on enforcement activity.

The specific grounds for possession mean that in practice many landlords may find the increased protection for tenants manageable in most circumstances.

It remains to be seen how the market will react but it may be that rental growth slows, or that the investor appetite for buy to let reduces and available stock decreases as a consequence.

Considerations for property owners in the shorter term are an audit of let property with attention to the following:

• Identifying properties which may be required in the short term for sale, or alternative use such as staff housing
• Reviewing tenancy agreements to ensure that the provisions are clear and detailed as they may be unchanged for some time
• Considering rent reviews where rents are below fair market levels to ensure that rent reviews after the change in law are not unduly contentious
• Implementing a regime of good, recorded, property inspections to identify defects and agree timescales for remedy

The existing regulatory compliance requirements continue to apply in respect of deposit registration, EPCs, gas safety certification, electrical safety certification, and more. EPCs are widely expected to increase in threshold in the medium term.