FAQs: the Renters’ Reform Bill

The Renters’ Reform Bill has been brewing for the last couple of years and when it comes into force, it is likely to lead to some significant changes in the way properties are managed. Right now, the bill is still in its early stage. Despite it hitting the headlines in the last couple of weeks, we are not expecting it to come into effect for some time. 

Until the bill is in force, the specific details and some of the areas it covers are all subject to change. As more details are revealed, we’ll share them with you along with the best guidance we can provide for how to manage your properties. For now, it is still business as usual! Ian Speirs, our lettings and property management officer, with 10 years of experience in the property sector talks us through the most frequently asked questions from landlords surrounding the Renters’ Reform Bill.

When will the bill come into effect?

If you read the news, you might get the impression that the changes are imminent. The reality of it is, the bill is still in its early stages and is not yet law. Once the bill becomes an act, the Secretary of State must set out a date on which the changes will apply to new tenancies. It is likely pre-existing tenancies will have an extended time before the bill applies to them.

Will I still be able to evict my tenants?

In short, yes. However, the process and background processes will change. Part of the Conservative manifesto commitments were to abolish Section 21 notices (to bring a tenancy to an end without reason). The abolition of Section 21 won’t happen immediately and once the bill becomes an act, it will happen in stages. Initially, it will apply to new tenancies only and then later to pre-existing tenancies.

Where a landlord has served a Section 21 notice before the act applies, the tenancy will continue to be an Assured Shorthold Tenancy and the Section 21 notice will remain valid until it either expires or a possession order is enforced.

When Section 21 is abolished, how do I regain possession?

Once Section 21 is abolished, landlords and agents will be expected to serve a Section 8 notice to bring the tenancy to an end. Section 8 notices are different from Section 21 notices because a reason as to why possession is being sought must be provided. 

As part of the reform, there are several changes and additions to the Section 8 grounds for possession. As well as the current grounds for possession, landlords will be able to serve notice where: 

• They wish to sell the property.
• They intend to move a family member into the property.
• The landlord has been served with an enforcement notice by the local authority and needs possession to be able to comply.
• The tenant has been in at least two months of arrears at least three times in the last three years.

These new grounds are mandatory, meaning that the court must grant possession if it can be demonstrated that the grounds applies. The existing Section 8 grounds will continue to be used if:  

• The tenant is in two months or more of arrears when the notice is served and on the day of the hearing.
• The landlord intends to move back into their property.
• All the tenants have no right to rent.
• The tenant has been convicted of a severe anti-social behaviour offense.

Many of the grounds will be updated or amended. Most, however, do not apply to private landlords. Here’s a link to the full list of grounds on the Government website.

Amendments will be made to the discretionary anti-social behaviour ground. There is an innocuous change in terminology relating to the provision of evidence. Currently, to use this ground, a landlord needs to provide evidence to show that the tenant’s behaviour is likely to cause a nuisance. The amendment will be made to demonstrate that their behaviour is capable of causing a nuisance. This represents a significant reduction in the level of evidence required. However, as the ground is discretionary, it is unclear whether it will increase the likelihood of possession being granted. Much will depend on the guidance provided by the courts on when to grant possession.

What is the new type of tenancy?

The bill will remove fixed-term tenancies and Assured Shorthold Tenancies which your tenants are usually signed up to. Instead, you will only be able to give a periodic assured tenancy to your tenants (similar to the existing rolling contracts after a fixed term).

The rental periods for these tenancies will be capped at a maximum of one month. Where an existing tenancy requires rent to be paid in rental periods longer than a month, there will be a provision to state that the tenancy will be treated as if it was a month-to-month tenancy and will provide a formula to calculate the rent.

Will I need to give updated contract terms to my tenants?

Tenants will likely need to be provided with updated contract terms when the tenancy type changes from the current Assured Shorthold Tenancies to a periodic assured tenancy. When the government provides further information, we will be able to assist our landlords with executing these requirements. New terms will be drawn up for any new tenancy agreement when the legislation kicks in.

How much notice can a tenant give to end the new type of tenancy?

Tenants will be able to give up to a month’s notice to end the contract at any time. This notice can be served in any form and may be withdrawn, subject to the landlord’s agreement in writing.

Will I still have to protect the deposit?

Yes, all relevant legislation still applies concerning the security deposit. You will be unable to serve a Section 8 notice on any ground other than anti-social behaviour grounds while the deposit is unprotected. 

Will I have to allow my tenants to have pets?

No, though you won’t be able to unreasonably refuse a request for one. The bill introduces a term to all contracts that the landlord must respond to requests for pets within a certain timeframe. This will normally be within 42 days, but there will be an allowance of additional time if you request more information or need to speak with your freeholder/superior landlord (where applicable). Provided it is reasonable to refuse a pet, you are not obligated to allow one.

Will I need to register my properties on a portal?

Eventually, yes. There are no specific details provided on the timeline for this or what details will need to be collected, but once created, landlords will need to register their properties to advertise their property for rent.

At the moment, the bill outlines that there may be a fee to pay to register your property, but not how much the fee will be. Naturally, the fees must be proportionate to the cost of running and enforcing the requirements of the portal.

Will I need to join a redress scheme?

Eventually, yes. The bill grants the Secretary of State the power to require landlords to join a redress scheme to manage complaints by prospective, current, and former tenants. Once in place, if a landlord advertises, markets, or lets a property without being a member of a redress scheme, the local authority may fine them. 

It is unclear right now, whether this can be delegated to a letting agent on your behalf as we are already lawfully members of a redress scheme.

Will court reform be part of the bill?

We recognise that this would very much be needed, but as it stands there is not a provision for court reform as part of the bill. There is, however, confirmation from the Secretary of State that they will “align the abolition of Section 21 and new possession grounds with court improvements. This includes end-to-end digitisation of the process and our work with the courts to explore the prioritisation of certain cases, including antisocial behaviour.”

Will I still be able to increase the rent or rely on the rent increase clause in my tenancy agreement?

The bill would remove the ability to enforce a rent increase using a rent review clause or rent increases by agreement. All rent increases will need to be presented using a Section 13 notice to increase the rent, a mechanism that is already in place for current rolling contracts. 

A Section 13 notice can only be served once a year and the notice period will likely increase from one month to two months’ notice. Tenants will be able to refer any request they consider to be an unfair increase to the First Tier Tribunal for adjudication.

Summary

Whilst there are a lot of big headlines relating to these changes, we are still in the earlier stages of this and there may well be some further changes or aspects dropped from the bill. There is no current action required of landlords but understanding that such shifts may be unsettling.

As a proactive letting agent, we will be sure to keep our finger on the pulse of these upcoming changes and of course, communicate any changes with as much notice as we can provide. You’re always welcome of course to give us a call on 0161 474 2696 and talk through what this might mean for you.