Renters’ Rights Bill: should landlords be concerned? Total Landlord Insurance

20 September 2024

Note: Articles on the Renters’ Rights Bill will be continuously updated as details emerge

Initial reaction to the Renters’ Rights Bill

There’s been much media coverage over the past few months and years in anticipation of the coming changes to the residential letting rules. First, through the period of the Conservative Government and its Renters (Reform) Bill, which never became law, then under the new Labour Government with its Renters Rights Bill, which was published on 11 September 2024. That’s the one we are concerned with here.

Given the speed with which the new Government wish to implement reforms to the private rented sector, much of the material set out in the previous Bill has been used as a basis for the new Bill, with several crucial additions.

In the light of the Government’s commanding majority, it is anticipated that the Bill will go through Parliament and become law by spring/summer 2025 largely unchanged, though there will inevitably be some changes, which we will follow here as they occur.

It must be said that some of these reforms will cause landlords concern, though with proper planning and diligent tenancy management there’s nothing that serious landlords and their agents shouldn’t be able to cope with. The point of this article is to identify the key issues and allay some of the fears.

A major change is the abolition of the Section 21 “no-explanation” eviction process. We must now rely solely on Section 8 for evictions. That’s for rent arrears, breaching other tenancy terms or exhibiting anti-social behaviour.

It must be said that by far most residential tenancies are problem free. The tenant pays rent on time, looks after the property and leaves by giving notice. But there are a minority of tenancies that, for one reason or another, go wrong and landlords have no choice but to seek possession.

The grounds for possession are a safeguard for the many issues that can go wrong and are there to assist landlords in achieving a successful eviction of a problem tenant.

In all these cases the key to a successful eviction is having sufficient documentary evidence to prove your case to the court. This will be ever more important under the new rules. This article is designed to help with that.

One major concern for landlords has been the backlog of court cases causing delays in getting access to justice. But if the new Government is true to its word, this situation should improve dramatically with coming court reforms.

Housing Minister, Matthew Pennycook, has pledged that the Government will invest in additional court capacity to manage the increased demand expected once Section 21 is banned.

“We will invest in additional court and tribunal capacity to handle any extra hearings generated by these reforms. Additionally, a new digital system for possession claims is being developed to streamline the process, making it quicker, clearer, and more reliable for landlords and tenants alike.”

- Housing Minister, Matthew Pennycook

In this guide, we’ll briefly summarise the key provisions in the Renters’ Rights Bill before looking at the implications for landlords and how you can best navigate the changes.

Note: This is a guide, not advice and applies primarily to England. The published Bill is a first draft and subject to change as it progresses through Parliament. Seek professional advice before making any decisions.

What are the main measures in the Renters’ Rights Bill?

Overview of the Bill’s measures

We cover the Bill in more detail in our article, What does Labour’s Renters’ Rights Bill mean for landlords?. To summarise, the Renters’ Rights Bill will introduce:

• The abolition of Section 21 evictions including the assured shorthold tenancy (AST). By leaving only assured tenancies but of a simpler structure, all assured tenancies are to be monthly periodic (month by month). Court hearings will be universally required for an eviction.  The fixed term tenancy goes, giving tenants more security. That’s because effectively the tenancy does not end unless either the tenant gives two months’ notice to leave (they can do this from day one), the landlord wants to sell or occupy the property (either themselves or their relatives), or there is a breach of the terms of the tenancy giving rise to an eviction.
  
  The new scheme will be introduced “in one stage” meaning all existing tenancies will be overridden. They will transform into the new periodic type of assured tenancy at the date the new Bill becomes law. This will be “giving all tenants security immediately”. Landlords and agents will need to update tenancy agreements as appropriate at the time.
  
  Read our guide to What’s happening to evictions and Section 21 and our separate article for more information on the background to the abolition of ASTs.
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• The grounds for possession will be extended from 17 under the AST to 36 (11 discretionary and 25 mandatory) under the Renters’ Rights Bill. Many of these grounds don’t apply to private landlords – see a summary below. According to the Government’s guidance this will “ensure possession grounds are fair to both parties”. It will “give tenants more security, while ensuring landlords can recover their property when reasonable.” Tenants will have “more time to find a home if landlords evict to move in or sell” and will ensure “unscrupulous landlords cannot misuse grounds.”
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• Market rents. Landlords will still be able to increase rents to market levels every 12 months. However, above market rent bargaining will be banned and tenants will be able to appeal to the First-tier Tribunal (FFT) if they think increases are above market levels. This will “provide stronger protections against backdoor eviction by ensuring tenants are able to appeal excessive above-market rents which are purely designed to force them out.”
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• Private Rented Sector Landlord Ombudsman. The new ombudsman scheme will provide “quick, fair, impartial and binding resolution for tenants’ complaints” about landlords. This scheme is intended to mirror the free tenant-landlord complaint resolution service “with established redress practices for tenants in social housing and consumers of property agent services.” All private landlords in England with assured or regulated tenancies will be required by law to join the scheme, including those using a managing agent. The service will be free for tenants to use to complain about a landlords’ actions or behaviours, failure to carry out repairs etc. Local councils will be able to act against landlords who fail to join, or against anyone who markets a property where the landlord is not registered. This will include civil penalties of up to £7,000 for initial breaches and up to £40,000 or criminal prosecution for continuing or repeated breaches. Tenants will be able to seek rent repayment orders against their landlord if the landlord commits an offence by persistently failing to join the ombudsman service.
  
  Read our guide, How will the new ombudsman work, for more information.
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• Private rented sector database. A new landlord database will support local councils, helping them target enforcement activity where it is needed most. All landlords will be required to register on the database (paying a small fee) before they are able to use certain possession grounds. This will also be used to help landlords understand their legal obligations better, as well as providing information to tenants to make informed decisions when entering into a new tenancy agreement. Read our article on the landlord database for more information.
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• Tenants’ rights to request a pet in the property will be strengthened. Tenants will be given the right to request a suitable pet, and the request cannot be unreasonably refused. As a safeguard, landlords will be given the right to insist on pet insurance to cover any damage caused to their property. Our article on renting to tenants with pets provides more information.
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• The Decent Homes Standard. For the first time the Decent Homes Standard is to be applied in the private rented sector. Previously only applicable in the social housing sector, this is to give tenants “safer, better value homes and remove the blight of poor-quality homes in local communities.” Find out more the Decent Homes Standards here.
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• ‘Awaab’s Law’. The Bill extends Awaab’s Law from the social sector to the private rented sector, aiming to set clear legal expectations about timeframes within which landlords must take action to make homes safe where they contain serious hazards, such as damp, mould and condensation. This law was introduced to the social housing sector in July 2023 as part of the Social Housing (Regulation) Act.
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• Discrimination. The new Bill will make it illegal for landlords and agents to discriminate against those prospective tenants who are in receipt of benefits or those with children. Landlords will still be able to discriminate on affordability grounds or the suitability of, say, a family for the accommodation space.
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• Ending rental bidding. The practice of agents and landlords bidding up the price of rents when accommodation is scarce will be prohibited under the new Bill. Landlords and agents will be forced to state their (market level) rent in their advertisements and accept no offers above the advertised rent, with tenant appeals available to the First Tier Tribunal.
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• Strengthening penalties. Local authorities will be given increased enforcement powers by expanding civil penalties. A package of “investigatory powers” will be introduced bringing in a new requirement for local authorities to report on their own enforcement activity.
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• Rent repayment orders are to be extended to superior landlords, doubling the maximum penalty and making sure repeat offenders must repay the maximum amount. This is usually where a landlord (property owner) – the superior landlord – rents out an HMO property to a property manager (tenant) who then sublets without complying with the HMO licencing regulations. See our article for more information about rent repayment orders.

What are the implications of the Renters’ Rights Bill for landlords?

The Renters’ Rights Bill is likely to have a significant impact on both landlords and tenants. While it is aimed at giving tenants greater security, some measures such as the abolition of Section 21 may cause more landlords to consider selling. Landlords will certainly need to make sure they are carrying out thorough tenant referencing and that their tenancy agreements are robust. And some landlords may need to make improvements to their properties. But this is all best practice and what good landlords should be doing anyway.

Housing minister Matthew Pennycook has committed to engaging with landlord and tenant groups as the Bill progresses to make sure everyone is prepared for the changes.

Here, we’ll explore the implications of the new Bill for landlords.

Abolition of Section 21. This is perhaps the biggest change. It means landlords can only end tenancies in specific circumstances using the new grounds for possession under Section 8 of the Housing Act 1988.

Tenants will benefit from a 12-month protected period at the beginning of a tenancy, during which landlords cannot evict them to move in or sell the property. Landlords will need to provide four months’ notice (previously two months) when using these grounds, giving tenants time to find a new home. When in rent arrears tenants will enjoy increased protection as the mandatory threshold for eviction is increased to three months’ arrears from two months under the present AST.

To regain possession, landlords will need to serve notice in the prescribed form, giving at least the required notice period to the tenant. Under Section 8, if a tenant does not leave, the landlord will need to go to court and convince a judge to issue a possession order by providing sufficient evidence that the chosen ground or grounds apply.

Factual evidence is vital as anecdotal evidence will not stand up in court. For example, in the case of rent arrears or persistent late paying the landlord might provide a schedule of payments and missed payments over a period, bank statements showing when payments were made and when they have been missed, copies of correspondence or diary entries following phone contacts, emails and letters reminding the tenant when payments are due and when they were missed, etc.

Sale or re-occupation. Landlords will be required to show evidence that relying on these grounds is genuine, for example by providing evidence that an estate agent is engaged. There could also be penalties if the sale is not followed through. In both cases eviction is not possible during the first 12 months of the tenancy and thereafter there is a four months’ notice period, to allow the tenant time to re-locate.

The grounds for possession. There will be 25 mandatory grounds where a judge cannot refuse a possession order when the ground is proven, and 11 discretionary grounds where the judge can decide whether to issue an order. If landlords feel confident presenting their case in court, they can appear in person (litigant in person) or they can use the services of an eviction specialist. See Schedule 1 of the bill in conjunction with Schedule 2 of the Housing Act 1988 for a full list of the grounds for possession, with the new notice periods etc.

Unlike previously with Section 21, Section 8 allows claimants to attach a money order to cover rent arrears. This means that the evicted tenant could also be given a county court judgement (CCJ) for any arrears claimed.

Market rents. Section 13 of the 1988 Act (increases of rent) is to be amended in accordance with the new rules. The Bill says the Government does not intend to impose rent controls, and nothing in the Bill restricts landlords from raising rents in line with market prices. With the new system, all private rented sector increases will be made via the statutory ‘Section 13’ process, as amended. This requires a landlord to complete a simple form, which will be published on GOV.UK, and serve this on the tenant.

If the tenant accepts the proposed rent increase, they simply need to pay the new amount on the next rent day. A tenant can dispute the increase by applying to the First-tier Tribunal, if they think it is above market level. This must be before the starting date of the proposed new rent and tenants should notify their landlord that they are doing so. The Bill makes changes to the tribunal system to support tenants in challenging unreasonable rent increases.

Awaab’s Law. The Bill extends Awaab’s Law and makes clear legal expectations about timeframes within which landlords must take action to make homes safe where they contain serious hazards, such as damp and condensation. As far as landlords and agents are concerned the emphasis should be on making sure that the property is free from serious defects, carrying out regular inspections and risk assessments.

Tenants’ rights to request a pet are to be strengthened. When considering the request to accept a pet in the property landlords and agents should be mindful of the suitability of the pet for the property type, including the rights of neighbours, whether the pet comes with references, say from a vet to confirm injections / behaviour etc, and whether insurance cover is available. Landlords still have a right to refuse if the pet does not pass these basic tests. See our article on renting to tenants with pets and Total Landlord’s pet damage protection plan, designed for renting to tenants with pets, for further information.

Tenant checks. Rigorous checks when selecting and verifying new tenants are an important part of tenancy management for landlords and agents. Credit checks and referencing are vital if landlords are to avoid taking on a problem tenant.

Grounds for possession – Renters’ Rights Bill – Schedule 2 Housing Act 1988 and Schedule 1 Renters Rights’ Bill September 2024.

This is a summary of those grounds for possession set out in the Bill that are applicable to private landlords

For more detail see the Government’s guide to the Bill and the Bill itself in conjunction with the Housing Act 1988 as amended.

Mandatory grounds

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Many of these rule changes will make little difference to the way responsible landlords operate at present. However, there is to be a general tightening-up of the rules on the conditions in the property and in the ways in which tenants are treated. This includes in terms of discrimination, rent levels and increases, allowing children, benefit tenants and pets where appropriate, and county court oversight of all evictions.

The new Bill should hold no fears for responsible landlords and agents who take a pro-active approach, provide safe, warm and secure properties and who treat tenants fairly.

Keep up to date on the Renters’ Rights 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’ Rights Bill hub which will be regularly updated as more details emerge.

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