Renters’ Rights Bill

The Conservative version of this Bill (the Renters (Reform) Bill) did not make it through the wash up prior to the election. Further to its manifesto commitments, Labour has resurrected and reintroduced the draft legislation as the Renters’ Rights Bill. Now in government, Labour has updated its version of the Bill to reflect many of the points it proposed while in opposition.

The foundations of the Bill remain the same but there are also some key additional features. Timing will be one of the main differences under the Renters’ Rights Bill. Under the Bill there will be no transitional period. The government has stated ‘we will introduce the new tenancy for the private rented sector system in one stage. On this date the new tenancy system will apply to all private tenancies - existing tenancies will convert to the new system, and any new tenancies signed on or after this date will also be governed by the new rules.’ They also note ‘[t]his single date will prevent a confusing 2-tier system, and give all tenants security immediately.’

If the Bill progresses, which is very likely given this was a key Labour manifesto commitment, it will:

• Bring about the end of assured shorthold tenancies and section 21 'no fault' evictions. The private rented sector will move to a system of periodic assured tenancies known as ‘relevant assured tenancies’ (possibly generally referred to as PATs?) with annual rent review (which is subject to a statutory tenant appeal process). Tenants will be required to give a minimum of two months’ notice to bring a tenancy to an end. There will no longer be fixed term tenancies of less than 7 years.

• Rent review clauses will no longer be permitted and the procedures by which tenants can appeal rent increases will be revised. Private landlords will only be able to increase rent annually to market rate. To initiate a rent increase a landlord must issue a statutory notice (a section 13 notice) giving a minimum of two months' notice of any change. If a tenant does not agree with the increase they will be able to challenge this at the First-tier Tribunal. Rent increases will not be backdated and they will not be permitted to be higher than the amount proposed in the landlord’s s.13 notice. There is no tenant jeopardy – the rent cannot increase above the level put forward by the landlord in its notice.

  The government has also stated they will ‘reform how the Tribunal works to ensure tenants feel confident in challenging poor practice and enforcing their rights’. The timing of those improvements is likely to be later than the new processes coming into force.

• Tenants will also have the ability to challenge the amount of rent as being above market rent within the first six months of signing the new tenancy agreement. This will be of particular interest to landlords of build to rent schemes in relation to the initial leasing up of the building.

• End the practice of rental bidding by prohibiting landlords and agents from asking for or accepting offers above the advertised rent.

• Reform certain possession grounds Landlords will only be able to obtain possession on updated grounds of possession which are set out in the legislation and they must give statutory notice. The key changes under the Labour government’s Bill are generally focussed on individual buy to let properties and providing more protections for tenant occupiers.

• Anti-discrimination provisions are included in relation to any practices which discourage renting to tenants in receipt of benefits or with children. Promotional materials and training of those dealing with lettings will need to be carefully considered to avoid breaching these rules.

• Introduce a new Ombudsman scheme that private landlords must join and a Private Rented Sector Database which will be a new database of residential landlords and privately rented properties in England.

• There are greater enforcement provisions and sanctions for breaching administrative regulations like the database and the above discrimination rules. One of the sanctions that has been increased is the ability for the local authority to impose up to two years of rent to be repaid and that claim can be commenced two years after the breach. Importantly it could be imposed on individual directors of landlord companies.

• Introduce a decent homes standard for the private rented sector and also apply ‘Awaab’s Law’ to the sector. In short, Awaab’s Law will require specific response times to deal with complaints about the condition of the property.

The guidance to the legislation refers to purpose built student accommodation being excluded from some of these changes but the legislation as published does not reflect that intention so it is a question of watch this space.