Renters (Reform) Bill: What are the new powers being given to local councils? - Total Landlord Insurance

May 1, 2024
Renters (Reform) Bill: What are the new powers being given to local councils? - Total Landlord Insurance

Note: Articles on the Renters (Reform) Bill will be continuously updated as details emerge

Article updated on 29 April 2024

Read an interactive and user-friendly version of this guide below.

Renters (Reform) Bill update:Third reading

Note: this section was published on 29 April 2024 following the third reading of the Bill in Parliament on 24 April 2024

The long awaited Renters (Reform) Bill returned to Commons for its third reading (the report stage) on 24 April 2024, where MPs considered over 200 new amendments to the legislation from both sides of the house ahead of a final vote before the Bill continued its passage to the House of Lords.

For an overview of amendments to the Bill following the report stage, head over to our Renters (Reform) Bill hub.

The Local Government Association (LGA) published a detailed response following the third reading of the Bill. While the LGA welcomed the Bill in its first draft, it highlights the need for the Government to make sure there is ufficient funding for councils to enforce the new measures if the Bill is to be effective:

“The Bill places significant new regulatory and enforcement responsibilities on councils. We welcome the provisions in the Bill that enable local authorities to keep the proceeds of financial penalties to reinvest in enforcement activity. However, this funding is unlikely to be sufficient to cover the costs of the new duties in the Bill or the scale of the proactive work that is needed to improve standards for tenants.”

The following are some of the amendments that will have the most impact on local councils.

Further strengthening rent repayment orders

MPs agreed that the Housing Act 2004 would be altered so that ‘superior’ landlords as well as rent-to-rent companies (the ‘immediate’ landlord) are both covered when served with improvement notices and could be liable for rent repayment orders (RROs). This is a major shift in policy, expanding the range of offences for which landlords can be held accountable.

While the LGA welcomes these changes, it has called on the Government to expand the use of RROs to the following additional circumstances:

  • Reletting or remarketing a property within the ‘prohibited period’ (currently three months) - “While we agree with Government that the ‘prohibited period’ will be a helpful mechanism to prevent the eviction grounds from becoming Section 21 by the backdoor, RROs will provide a far more robust deterrent and incentivise tenants to be proactively aware of their landlord’s compliance with the new regulations.”
  • Letting a property without active relevant entries in the database
  • Letting a property that fails to meet the minimum energy efficiency standards

See our ultimate guide to rent repayment orders for more information on RROs.

Commitment to a review of selective licensing and HMOs

During the debate in the House of Commons, the minister explained the distinction between the role of selective licensing and the new property portal, committing to a review. He said:

“The portal will be a resource for local authorities and to help landlords understand their legal obligations, while selective licensing gives councils powers to license properties to address issues such as poor housing and crime.”
“There will be overlap with data. We don’t want to see selective licensing abolished but want to ensure the processes are streamlined – that’s why we’re committing to a review of selective licensing and HMOs.”

The LGA is strongly in favour of retaining the ability of local housing authorities to designate areas as subject to selective licensing. In response to the Government’s amendments to the Bill it said:

“We broadly support the announcement that the Government intends to conduct an independent review of selective licensing alongside the new property portal to ensure there is no duplication and that efforts are streamlined for landlords, tenants and local authorities. We urge the Government to engage with sector experts and local authorities as part of the review.
We continue to call on the Government to amend the Housing Act 2004 to remove the requirement for councils to seek approval from the Secretary of State for larger selective licensing schemes.”

Background to the role of local councils in the private rented sector

Note: this section was published on 22 May 2023 following the introduction of the Bill to Parliament on 17 May 2023

One of the key problems for many councils trying to improve their local private rented housing stock, including via clampdowns on rogue landlords, is that they lack the powers and funding to do it.

Only a handful of (mainly)London councils have large teams inspecting properties and following up their failings with landlords. But across London, according to Safer Renting, 2.2 enforcement officers on average are expected to police around 10,000 homes each.

It’s why so many HMO and selective licensing schemes have sprung up across the UK recently –they are a way for local authorities to fund better enforcement.

Ministers are aware that they can promise as much new legislation and regulation as they like, but it’s local councils who do much of the heavy lifting - and who, ironically, have had their budgets slashed in recent years.

Nevertheless, the fairer renting white paper made it clear that the Government believes ‘local councils should have strong and effective enforcement tools to crack down on poor practice’.

But how are they going to achieve that? On top of the £6.7 million they have given to some 180 local authorities over the past five years, and a commitment to ‘give local councils the tools to enforce the Decent Homes Standard in the private rented sector so that they can crack down on non-compliant landlords while protecting the reputation of responsible ones’, here’s the list. contained within the Renters (Reform) Bill, which was introduced to Parliament on 17 May 2023.

  • Pilot schemes will be run with a selection of local councils to explore different ways of enforcing standards and work with landlords to speed up the adoption of the Decent Homes Standard
  • Local councils’ enforcement powers and ability to crack down on criminal landlords will be strengthened by seeking to increase investigative powers and strengthening the fine regime for serious offences
  • The Government is also exploring a requirement for local councils to report to Department for Levelling Up, Housing & Communities on their housing enforcement activity

Although local councils will be able to fine more, which will itself generate additional funding over time, it’s still not clear how the Government proposes to fund the initial increased activity required in order to make checks and identify criminal landlords.

Councils already have the power to issue fines of up to £30,000 without going to court, and yet, because of a lack of resources, the problem of sub-standard rented properties has not been properly tackled and there are still landlords getting away with breaking the law.

For more insights on the Renters (Reform) Bill, listen to a special episode of The Property Cast with Sean Hooker, Head of Redress at the Property Redress Scheme, and leading property expert Kate Faulkner OBE, who share their initial reactions to the Renters (Reform) Bill – will it deliver what tenants need and will it have unintended consequences? Tune in to find out what the experts think.

Keep up to date on the Renters (Reform) Bill

Our media partner, LandlordZONE, offers exclusive insights and breaking news on the private rented sector. Keep up to date with everything you need to know by subscribing to LandlordZONE, the UK’s largest online landlord property news website.

You can also visit Total Landlord's Renters (Reform) Bill hub which will be regularly updated as more details emerge.

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