The Renters’ Rights Bill (RRB) had its third reading on 14th January and has now finished its passage through the House of Commons.
There were a few Government amendments that had been made at the Committee stage, but the Bill passed easily with all these amendments accepted, and will now move on to the House of Lords.
Here’s a summary of the most significant changes proposed in the Bill as it currently stands:
Section 21 will be abolished
Landlords will no longer be able to give a tenant two months’ notice to leave without having to state a reason. The only way to evict a tenant will be via a section 8 notice, stating a valid legal ground.
Fixed terms will disappear, and all tenancies will be periodic
Assured Shorthold Tenancies (ASTs) will be replaced by a new type of tenancy agreement, and it will no longer be possible to ask for a minimum commitment from tenants, e.g. 6 or 12 months. Tenants will be able to give two months’ notice at any point from the start of their tenancy.
It will also become a legal requirement to issue tenants with a written statement of the terms of the tenancy, and landlords and agents can be fined if the tenancy agreement purports to grant a fixed term.
New prescribed clauses and other regulations are expected to be set out in due course.
Section 8 grounds will be reformed – and many notice periods will increase
Landlords will still be able to evict tenants who breach the terms of their rental agreement and regain possession if they have a good reason, such as wanting to sell or move into the property themselves.
However, because Labour is keen to avoid tenants becoming homeless, many grounds have been reformed to give them more time to find new accommodation.
There are two changes that have caused some concern among landlords. First is the reform of the ground for rent arrears.
Currently, once a tenant is two months in arrears, you can give them two weeks’ notice to leave. But under the RRB, they will have to be three months in arrears, and the notice period will double to four weeks.
And if you wish to sell or move into the property, the notice period will increase to four months and the tenant will be protected from eviction under these grounds for the first 12 months of their tenancy.
It’s also important to note that if you want to sell, there is a 16-month ‘block out’ period once the notice has been served, during which the property can’t be either marketed for let or rented out in any form, including as a holiday let or on licence.
So, if you evict your tenant and then either can’t sell or change your mind, the property will have to sit empty until both the notice period (4 months) and a further 12 months have elapsed.
Landlords will be legally required to register on a new portal and join an ombudsman
A Private Rented Sector (PRS) Portal will be established, which will contain details of landlords and their properties, as well as certain information about convictions and fines, ultimately replacing the current database of rogue landlords.
It will also serve as an information resource for landlords to help them comply with existing rules and keep them updated on changes to the law.
A new ombudsman will also be set up to provide a forum for tenant complaints and give tenants a route to redress.
Registration with both the portal and the ombudsman will be mandatory. The fees for these have yet to be decided, but the Government has said they will be ‘reasonable and proportionate’.
‘Bidding wars’ for new tenancies will be outlawed
Landlords and agents will be banned from encouraging bidding wars between tenants and prevented from charging more than the advertised rent.
Discrimination rules will be strengthened
It will be illegal for landlords and agents to refuse to accept tenants simply because they have children or are in receipt of benefits.
Landlords will be unable to refuse reasonable requests for tenants to keep a pet
If a tenant makes a written request to have a pet, landlords won’t be able to refuse without a good reason, such as the property being unsuitable for the type of pet, or the head lease prohibiting pets.
To help protect landlords, the Tenant Fees Act will be amended so they can require the tenant to pay for pet insurance.
Landlords won’t be able to ask for more than one month’s rent in advance
This was an amendment made at the Committee stage in the House of Commons. Advance payments of more than one month’s rent will become a prohibited payment under the Tenants Fees Act, although if a tenant wishes to pay more up front, they can – it’s simply that the landlord will no longer be able to request or require it.
This will not affect the tenancy deposit, which can still be up to 5 weeks’ rent (six weeks’ rent if the annual rent exceeds £50,000) and landlords will still be able to take a holding deposit.
The normal one month’s rent in advance cannot be paid until after the tenancy agreement has been signed.
There will be new minimum standards for property condition
A Decent Homes Standard will be introduced, setting clear minimum health and safety requirements for privately rented properties. Under ‘Awaab’s Law’, landlords will also be required to address and fix serious health hazards within a strict legal timeframe.
Civil penalties will be expanded and increased
The maximum civil penalty – that’s a fine that can be issued by a local authority without having to take a landlord to court – will increase from £30,000 to £40,000.
Councils will also be able to issue a civil penalty for unlawful evictions, which currently require them to take landlords to court.
More information about how penalties are changing can be found in our article, ‘Landlord fines and changes to penalties under the Renters' Rights Bill’.
Rent Repayment Orders (RRO) will be strengthened
The original draft of the Bill proposed RROs be extended to superior landlords and the maximum penalty doubled, from one to two years' rent.
This was amended at the Committee stage to make it clear that orders can be made against any landlord in the chain, regardless of who receives the tenants’ rent.
We expect the Bill to pass by the spring, without anything more than further minor and technical changes as it proceeds through the House of Lords.
Although Labour has repeatedly indicated they would like some parts – such as the removal of section 21 – to come into force immediately, much of what’s in the Bill will take time to finalise and enact.
If you have any questions or concerns, we’re always here to help. You can contact your local branch to speak with an expert in your area. Alternatively, book a lettings consultation to find out how much your property could let for.
The Reeds Rains Content Marketing Team
