Renters (Reform) Bill – A change in the legal landscape for Residential Landlord and Tenants

The Renters (Reform) Bill 2023 introduced by Michael Gove on 17 May 2023 proposes a major overhaul of the private residential landlord and tenant sector.

Currently, Landlords are able to agree Assured Shorthold tenancies of a fixed duration (often between 6 months and 3 years), and upon expiry of the fixed term, the tenants can remain in occupation on the same terms under a statutory periodic tenancy.

• Landlords can only evict tenants by seeking a Possession Order on the basis of having given the Tenant either a 2 month notice pursuant to s.21 Housing Act 1988 (expiring on or after the end of the fixed term) or a notice pursuant to s.8 Housing Act 1988 detailing one or more mandatory or discretionary statutory grounds for possession.
• The Court must make a possession order if a valid s.21 notice has been served, even if the Tenant has not done anything wrong, which is why this route has been called “no fault eviction”. Similarly, and by way of example, where a s.8 notice has been served specifying that the Tenant lawfully owed at least 2 months/8 weeks rent at the date of the notice, the Court must make a possession order where there still remain rent arrears of at least the same amount lawfully due to the Landlord at the date of the Court hearing.

The current system is tricky and complex, especially for Landlords. This is as a result of successive Governments since 2004 having tried to combat perceived bad practices by Landlords mainly about housing conditions and financial fairness with their tenants by introducing successive pieces of legislation, which imposed various different administrative requirements on Landlords as pre-conditions to being able to obtain possession orders from the Court.

• Landlords and their agents are expected to be familiar with the rules and documentary requirements relating to the protection of deposits, and other rules about the different documents and information which must be given to every Assured Shorthold tenant on the grant of a tenancy, and under other circumstances.
• In turn, these complexities have generated a significant body of case-law of judicial interpretation of the rules.

However, the presentation of the Renters (Reform) Bill is the latest indication that there remains real or perceived unfairness in the legal regulation of the private rented sector from the perspective of both landlord and tenants. The Renters (Reform) Bill is noteworthy by attempting to confront these perceived injustices. The main changes are in summary:

• An end to fixed term assured tenancies;
• The introduction of universal assured periodic tenancies for periodic terms not exceeding a month;
• The abolition of Assured Shorthold tenancies in their entirety, including all the provisions relevant to the termination of under section 21 Housing Act 1988
• The introduction of a residential landlord database, which may be a requirement for any lettings of assured tenancies under the Housing Act 1988 or regulated tenancies under the Rent Act 1977 by private landlords;
• The introduction of a landlord redress scheme to deal with complaints about private landlords (with an ombudsman style approach) as an alternative supplement to the County Court system;
• The introduction of financial penalties and related offences against the private landlords who do not comply the myriad of duties and requirements being introduced by the Renters (Reform) Bill, enforceable by local authorities;
• The amendment to the requirements for Tenancy Deposit registration, in order to apply to the new assured periodic tenancies, with restrictions on obtaining possession where a landlord is in breach of these requirements
• The reformulation of the grounds of possession applicable to section 8 notices used by landlords of assured tenancies, which include the introduction of new grounds for possession, and the amendment of some of the current grounds of possession (including notice periods). In particular, highlights include granting possession where the landlord or immediate relatives want to live in the property, where the landlord intends to sell the property, or where the tenant has fallen into arrears of a sufficient amount on at least three occasions within a period of three years;
• The creation of an implied term to all assured tenancies that allow for tenants to keep pets in the property subject to certain conditions;
• Changes to the way in which rent of assured tenancies can be increased and the procedure for doing so;

It is expected that politicians, interest groups, and lawyers will scrutinize the proposed Renters (Reform) Bill in order to anticipate how the changes will be received, and whether the proposed changes meet their respective needs.

It is currently unclear how long this proposed legislation will be debated in Parliament, but the guidance published by the Government suggests that the Renters (Reform) Bill will not be implemented before the various Courts and statutory bodies have been set up and are ready to cater for the proposed changes, and also not before sufficient time has been afforded to landlords and tenants to prepare for the transition to the new legal landscape.

Landlords or tenants who are uncertain about their current tenancy situation, and who may be unsure what they should do in order to prepare for changes to come, can contact Solomon Taylor & Shaw LLP solicitors for further advice and assistance.