Following the publication of the proposed Renters (Reform) Bill on 17 May 2023 (“the Bill”), landlords are understandably concerned as to how the proposed changes may affect them and their properties in the future. The focus in the news has been the abolition of the ‘no fault’ eviction. While that is a significant change, landlords should not overlook the other proposed changes and how that may change the way that they can manage their properties. We have summarised these for consideration below.
Abolishment of Section 21 notices and ‘no fault’ evictions
Most significantly, the Bill proposes to abolish notices pursuant to Section 21 of the Housing Act 1988 (“Section 21 notices”) and their subsequent no fault eviction route. Section 21 notices currently give landlords the power to obtain vacant possession on a ‘no fault basis’, and under this route, a hearing is not usually required for a Possession Order to be made at the court unless the tenant defends matters. The ‘no fault’ possession route is usually much more favourable for landlords as it is quicker and generally more cost effective.
If Section 21 notices are abolished, landlords can serve a notice pursuant to Section 8 of the Housing Act 1988 (“a Section 8 notice”). However, for a Section 8 notice to be valid, landlords will need to prove that at least one of the grounds have been fulfilled under the Act.
The Bill does propose to extend the grounds a landlord can use, but in our opinion, the Bill will still provide more protection to tenants and will subsequently make it harder for landlords to gain back possession of their properties.
These new and amended grounds include the following scenarios:
- If the landlord intends to sell their property
- If the landlord wants vacant possession of the property so their family can move in
- If the landlord wants possession of the property back due to repeated arrears over the space of two years.
Some of the other changes in the Bill will benefit landlords, but many will be to their detriment as there will be further stringent processes and controls in place. We summarise these below in cascading order of their impact upon you as a landlord:
|Positive||Online portal for landlords
The Bill proposes that an online ‘Privately Rented Property Portal’ is created which aims to aid a landlord’s understanding of their legal obligations as well as presenting them with the ability to promote their compliance with these obligations in practice. If done correctly this will provide both landlords and tenants with a more streamlined and transparent process with regards to entering into a tenancy agreement which will be beneficial for all.
|Neutral||Tenants and their pets
The Bill proposes to make it easier for tenants to have pets at their properties. Under these proposals, the landlord must consider any request made by the tenant to own a pet and not ‘unreasonably refuse’ it.
Regardless of permission or refusal being given, the Bill states that it will be the landlord’s responsibility to provide an outcome within 42 days of the request being submitted by the tenant. Previously, landlords have been unable to charge an additional fee or request a higher deposit should permission be granted; however, the Bill provides that landlords will be able to require their tenants to acquire pet insurance or pay an additional fee which covers the landlord’s own insurance.
|Could be negative as it reduces landlord control for rental stream, but will even out the market||Rent reform
The Bill also impacts rent pricing with an independent tribunal being proposed to ensure the cost of rent remains in accordance with the market price. This prevents landlords from raising rents exponentially, so their tenants vacate.
|Negative||Tenancy housekeeping documents and risk
It used to be the case that if the ‘tenancy housekeeping documents’ were not in place, landlords would not be able to rely on a Section 21 notice and the accelerated procedure and would instead have to rely on serving a Section 8 notice and proving one of the ‘fault’ based grounds under the Housing Act 1988.
However, as the Bill stands, to obtain vacant possession under the new procedure, all the tenancy housekeeping documents, such as the service of all the correct deposit documents, need to be in place. This places much more risk and pressure on landlords and could mean that if a landlord makes a simple mistake with the tenancy documentation, they could be prevented from obtaining possession of their property.
Going forward, we expect that the Bill as it is currently drafted may be amended subject to further debates in Parliament.
In the interim we strongly advise landlords to consider both their short and long-term plans concerning their rental properties and to take this opportunity to re-examine their portfolios as they currently stand and to determine whether they should look to terminate any tenancies now ahead of these changes. If you are a landlord and have any queries in respect of the Renters (Reform) Bill and how this could affect your property, please do get in touch with us.