Article written by Adina-Leigh Collins, Litigation Solicitor
The Renters Reform Bill – what is it?
Parliament introduced the hotly anticipated draft Renters (Reform) Bill on 17 May 2023. With a reported eleven million tenants across England, it is stated that the Bill will help to create “safer, fairer and higher quality homes thanks to a once-in-a-generation overhaul of housing laws”.
What is the Bill proposing?
Fundamentally, the Bill proposes:
- To abolish Section 21 Notices (known as the “no fault” notice).
- To abolish the Assured Shorthold Tenancy model. Instead, it proposes that all new tenancies will be Assured Tenancies.
- To abolish fixed terms. Instead, all new tenancies will be periodic tenancies, depending on the payment structure – i.e. if your tenant pays monthly, then it will be a monthly periodic tenancy.
- To abolish rent review clauses.
- To introduce a new regime for the landlord to serve notice for any increase in rent, which the tenant can challenge.
- To amend and strengthen current grounds for possession.
- To introduce new grounds for possession.
- To introduce a new Ombudsman and new portal to assist with settling disputes.
- Laws relating to tenants’ rights to request or keep pets in their home.
Is this definite?
No. The Bill is currently in its draft form and is going through the usual process for new legislation. Currently, it is undergoing a second reading in the House of Commons. It must still pass through the Committee Stage, Report Stage and Third Stage at the House of Commons.
Then it will be passed to the House of Lords, where it will need to pass through the above stages again.
Thereafter, consideration will be given to any amendments proposed during those stages before the Bill receives Royal Assent.
When is this likely to come into effect?
Given the number of stages the Bill has to pass through before it receives Royal Assent, it is not likely to be any time before Spring 2024.
Abolition of Section 21 Notices
Perhaps the most fundamental change being proposed is the abolition of Section 21 Notices.
As most tenants and landlords will know, a Section 21 Notice (under the Housing Act 1988) is a notice that can be served by the landlord on their tenant asking the tenant to leave without providing any reasons. The notice requires at least two months to be provided to the tenant. It is commonly known as the “no fault” notice as a result but has attracted controversy over the years.
Instead, under the new Bill, it is proposed that an Assured Tenancy will only end if the tenant gives notice to end it, or the landlord has a valid ground for possession thus giving the tenant greater security of tenure.
To assist with this, the Bill proposes extensive amendments to the current grounds for possession as well as introducing new grounds – both mandatory and discretionary.
Proposed New Grounds for Possession
Ground 1A – the Landlord intends to sell the property.
Ground 2ZA – where a superior lease has ended.
Ground 5A – where the landlord requires possession of the property to house a person employed by the landlord “in agriculture as a seasonal or permanent employee”.
Ground 6A – where the property is subject to some enforcement action for example, breach of HMO laws or planning etc.
Ground 8A – a notice can be served, and possession obtained, where there are rent arrears of more than 2 months/8 weeks (except for unpaid Universal Credit) that have been unpaid on at least 3 separate occasions over a period of 3 years, regardless of the amount outstanding at the hearing.
The rationale behind this addition is to protect tenants from one-off defaults but also to protect landlords against more unscrupulous tenants who are served with a (current) Section 8 notice (on ground 8) but then pay just enough to reduce the level of arrears below the 2 month/8 week threshold and circumvent an order at the possession hearing.
There are also a few amended grounds to note:
Ground 1 – currently, a notice can be served on Ground 1 where the landlord intends to occupy the property as their main or principal home. This ground will be widened to include the landlord or a family member. The property cannot be marketed “to let” for at least 3 months.
Ground 2 – a notice may be served where a mortgagee requires possession in order to sell the property. This is amended to remove the requirement that the property had to be subject to the mortgage before the beginning of the tenancy.
Ground 4 – provides a ground for possession in respect of accommodation previously let by an educational establishment to a student.
Ground 6 – currently a notice on this ground can be served where the landlord intends to demolish, reconstruct or carry out substantial works to the Property. This ground is widened to include any relevant landlord. However, a notice on this ground cannot be relied upon until after at least 6 months of the start of the tenancy.
Ground 8 – probably the most common ground, ground 8 permits landlords to serve a notice where at least 2 months/8 weeks’ unpaid rent has accrued. This ground is amended to include an exception where rent, or part thereof, is unpaid because the tenant has not yet received their Universal Credit allowance.
Ground 14 – this ground permits a landlord to serve a notice where the tenant or any other person residing in the property is causing a nuisance. The terminology here is changed from “likely to cause a nuisance or annoyance” to “capable of causing a nuisance or annoyance”. This slightly widens the net of what is a nuisance or annoyance and lowers the threshold somewhat.
As above, the Bill proposes various other changes, and we will delve into those in future. As it stands the Bill is very much welcomed by Tenant Associations particularly with the abolishment of the Section 21 notice. Tenants will no doubt welcome more security and flexibility with the removal of fixed terms, particularly in these uncertain times. But with the introduction of new, and strengthened grounds for possession, the Bill also seeks to balance the interests of landlords too.
We will be keeping an eye on any further amendments to the draft as it proceeds through the various stages.