The Renters’ Reform Bill is a piece of legislation that has been introduced to parliament. In its plans, it outlines the proposal to abolish section 21 and for periodic tenancies to become standard. If passed through parliament, it will provide a fundamental overhaul of the rental sector. The bill was introduced by the government, titled ‘The Renters’ (Reform) Bill’ on 17 May 2023.
The bill aims to deliver on the government’s commitment to “bring in a better deal for renters”. This includes abolishing ‘no fault’ evictions and reforming landlord possession grounds. It will legislate for reforms set out in the private rented sector white paper published in June 2022.
We outline exactly what is in the Renters Reform Bill, the impact that this is expected to have on landlords, and why the government are attempting to achieve this.
What Is The Renters’ Reform Bill & What Is Included?
This development marks a monumental step forward, representing a substantial overhaul of existing standards. The government’s Renters’ Reform Bill has been developed in consultation with landlord and tenant groups over the past 5 years. The Renters (Reform) Bill states:
- Abolish section 21 ‘no fault’ evictions and move to a simpler tenancy structure where all assured tenancies are periodic.
- Introduce more comprehensive possession grounds so landlords can recover their property (including if looking to sell or move in family).
- Provide stronger protections against backdoor eviction. This is achieved by ensuring tenants are able to appeal excessively above-market rents, intended to force them out. As now, landlords will still be able to increase rents to market price for their properties. If needed, an independent tribunal will make a judgement on this. To avoid fettering the freedom of the judiciary, the tribunal will continue to be able to determine the actual market rent of a property;
- Introduce a new Private Rented Sector Ombudsman for private landlords. This will provide fair, impartial, and binding resolutions to many issues. It will also prove quicker, cheaper, and less adversarial than the court system;
- Create a Privately Rented Property Portal to help landlords understand their legal obligations and demonstrate compliance. This is alongside providing better information to tenants to make informed decisions when entering into a tenancy agreement.
- Give tenants the right to request a pet in the property, which the landlord must consider and cannot unreasonably refuse. To support this, landlords will be able to require pet insurance to cover any damage to their property.
Why Have The Government Introduced The Renters’ Reform Bill?
The Renters’ Reform Bill presents an array of interesting and speculative measures which aim to enhance the private rented sector. This bill also wishes to foster a harmonious bond between landlords and the 4.4 million UK citizens who rent privately. It not only provides crucial assistance to those grappling with the burden of the cost-of-living crisis but also strives to rectify ‘arbitrary and unfair’ rent escalations, while introducing additional safeguards for the most vulnerable. Notably, it seeks to eliminate Section 21 evictions, ensuring enhanced protection for tenants in need.
Government data reveals that a significant portion of tenants across the nation enjoy the benefits of secure and well-maintained rental homes. However, it is concerning that a noteworthy 21% of private renters currently reside in substandard living conditions. To challenge this, the introduction of the “New Deal” confirms a remarkable transformation by extending the Decent Homes Standard. This outlines the minimum requirements for social housing to the private rental sector.
Michael Gove, Secretary of State for Levelling Up, Housing and Communities states, “Everyone has a right to a decent home. No one should be condemned to live in properties that are inadequately heated, unsafe, or unhealthy. Yet more than 2.8 million of our fellow citizens are paying to live in homes that are not fit for the 21st century. Tackling this is critical to our mission to level up the country.”
Approximately 25% of privately rented residences fall short of basic standards of decency. The heart-breaking loss of two-year-old Awaab Ishak brought attention to the deplorable conditions of unsafe, chilly, and hazardous living spaces. It’s crucial to acknowledge that these issues extend beyond the realm of social rented housing. These neglected homes impose a significant burden on the NHS, with estimated annual costs of around £340 million.
What Will The Impact Of The Renters’ Reform Bill Be?
Adam Truluck, Nordens’ Tax Manager, believes, “A rent reform has been long wanted by tenants nationwide. This was promised four years ago but has now become reality. Whilst the proposed changes will have many tenants celebrating, the same cannot be said about landlords. HMRC have brought in some rules that in my opinion could be detrimental to the sector as a whole. I have seen many landlords who are now contemplating selling up. This is down to raising costs and increased admin, feeling it is not a viable business anymore.”
Adam goes on to positively say, “All is not lost though. The new rules will no doubt have a massive effect on rouge landlords. These are landlords who rent properties either illegally or in poor condition, taking advantage of renters who desperately need accommodation. It’s become harder for these types of landlords to successfully rent. Adversely, it’s become easier for renters to acquire a suitable and secure property. Overall, I believe this will hopefully have a positive impact on the market.”
We hope this has outlined to you exactly what the Renters’ Reform Bill and how it will impact landlords and tenants in the rental sector. If you’d like to know any further information on anything mentioned, or anything accounting related for that matter, please do not hesitate to get in contact with us at Nordens, where one of our trusted advisors would be happy talking you through your query.