Renters Reform Bill – Your Q&A

A month has passed since the draft legislation for the Renters Reform Bill was introduced to parliament. Whilst it only made a brief appearance in the national media, the trade press has been full of comments, opinions and predictions for the future health of the Private Rented Sector.

I have been following much of this and attended a few webinars. It is fair to say that there are alot of if’s, but’s and maybe’s. Indeed many of our landlords have been in touch with questions.  We have shared below some of those questions and ‘to the best of our knowledge’ answers.

How will I get my property back when they abolish section 21 notices? 

By removing Section 21 notices all tenancies will become ‘assured’ which means that we will no longer be able to use Assured Shorthold Tenancies. This gives the tenant greater security of tenure.

There will still be a route for possession using the Section 8 process. The intention is to modernise and strengthen the grounds in Schedule 2 of the Housing Act 1988. These are the grounds under which a landlord can end a tenancy.

This will include a ground should the landlord or a member of their family (defined in the legislation!) wish to move back into the property. Another new ground will be if the landlord wishes to sell the property. Neither of these grounds can be used in the first six months of a tenancy.

Currently Ground 14 allows a landlord to deal with tenants displaying anti social behaviour, and this will be bolstered with a change in the wording to make it easier to take action.

Will a tenant move out after I have served a Section 8 notice? 

As is currently the case, the Section 8 process will involve serving the notice and then applying to court for possession so it is likely to take some time and involve a cost.

If I can’t use Section 21 and I don’t have time to go to court, is there any other ways of getting my house back? 

There is no reason why you could not come to a mutual agreement with the tenant to end the tenancy. This is what we call an early surrender. You would need to be careful not to be seen to be harassing the tenant. Repeatedly offering them money to leave for example.

How much notice will my tenant have to give me if they want to leave?

This will increase to two months notice in writing.

 I don’t want pets in my property under any circumstances. Do I have a choice?

You will need to consider any request. The draft legislation makes it an implied right that the tenant can ask permission. Where they do, you will then have 42 days to respond or request more information. Having been given more information you will then have a further 7 days to give or withhold consent.

Under the new law the tenant will need to put their request in writing along with a description of the pet. Not doing this will mean their request is not valid and you will not be bound by the need to respond.

There may be times when you can refuse consent but you will need to demonstrate ‘reasonableness’ as a tenant could challenge this. One example will be with flats where there are restrictions on the head lease, although you will still need to ask the Freeholder to show that you have been reasonable.

If you decide to withhold consent you will need to be able to justify your reasons.

Can I take a bigger deposit if my tenant wants a dog? 

The Tenant Fees Act 2019 restricts deposits to 5 weeks rent (6 weeks if rent over £50k per annum). There is no proposal to change this but you will be allowed to make the tenant take out insurance to protect against damage as part of your consent. Or you can take out the insurance which the tenant then has to pay for.

What if I sign my tenant up on a non-AST tenancy will these new rules apply?

Any tenancy that is not an Assured tenancy will fall outside the Housing Act 1988. This new legislation specifically amends the Housing Act 1988 so non-assured tenancies will not be affected by these new rules.

You would use a non-Assured tenancy where you are letting to an entity (e.g  a Company) or to someone who won’t live in the house as their primary residence.

Will I be able to give the tenants a fixed 12 month contract? 

The idea is that all tenancies will start as a periodic i.e a rolling month by month contract. This gives the tenant the flexibility to give notice when they wish. That could even be after just one month.

This is a contentious area for landlords, and for some tenants who want the security of fixed contracts.

I am a student landlord and rely on fixed contracts. How will this affect me? 

This new legislation as it currently stands is not good news for landlords that rent to students. It is a specialised market and relies entirely on fixed term contracts that can be ended ready for the next intake of students. Consequences will include when the properties are marketed for the next group of students, uncertainty of possession at the end and tenants leaving mid way through the academic year.

Student landlords really need to make their views known to their MP’s as quickly as possible to force a change for this area of the market. It has already been raised by the national landlord groups and additional pressure from individual landlords is essential.

What is the most rent in advance I will be able to take?

This is an interesting question and an area of debate! As all tenancies will be periodic, the term of the tenancy will always be one month. Does this mean that the most rent you can ask for in advance is one month?

One solicitor on a recent webinar suggested that you could ask for 12 lots of one months payments. No doubt this will need court interpretation so watch this space!

If a tenant signs a 12-month AST before the new law comes in, are they tied into the property until their tenancy ends or can they get out early with the new law changes?

It is usual to have a transition period with new legislation. This means that if the Act comes into force on the 1st July 2024 (for example) then any tenancy starting after that point will need to comply with the new law. Existing tenancies are normally given an extra 12 months before they have to comply.

So, if you start a tenancy with your tenant on the 20th June 2024 for 24 months then until the 30th June 2025 it will be a fixed AST. After this it may then automatically become periodic.

Alternatively they may allow a fixed term tenancy to remain fixed until the end date.

The transitional provisions will be written as separate regulations at a later date so we will know more at that point.

Can I still increase my rent or will there be rent controls? 

Yes. However, the notice period will increase to two months and you will have to use a Section 13 notice. You can only use this notice once every 12 months.

To keep up with market rents you will need to make sure you do this every year.

There is no suggestion of rent control in the legislation. That said, the new law allows a tenant to appeal to the First Tier Tribunal who will determine whether the rent is a fair market rent so in a way this is rent control.

How will mortgage lenders react to this? Buy to let mortgages began because of the introduction of Assured Shorthold Tenancies. 

This is a valid concern. The Council of Mortgage Lenders have said that they would not withdraw BTL mortgages as a result of this legislation.

I can see it becoming much harder to obtain such finance as there will be less availability, higher charges and stress testing on the mortgage. All this on top of rising interest rates…

If we have to join a redress scheme, register with a property portal, ensure my house meets the Decent Home Standard and implement all these changes, are we expected to do all this from day one? 

The draft legislation talks about allowing the Secretary of State to write regulations for a lot of these requirements. This means they won’t all come into force at once and are likely to be staggered over the next few years.

Why do the Government hate landlords?

This one tickled me! It certainly feels like it at the moment. It is natural to be anxious and resistant to change particularly where more obligations are placed on us. The name of the Act does little to help you feel it is not tenant weighted.

There will be changes to the current proposals as it works its way through parliamentary process. Hopefully the final version will not be too onerous.

This is your opportunity to make your views known by writing to your local MP. Landlords do not have activist groups campaigning for them, so we need to take a collective responsibility to make our views known.

You can contact your MP using the WritetoThem link

We will keep adding to these pages as details of the legislation unfold. Meanwhile if you have a burning question, please do send us an email and we’ll do our best to provide an answer – hello@stuartsresidential.com

Please note the date this article was published as the law or the essence may have changed since it was posted. You should always seek independent legal advice if you are intending to rely on any of the contents. The Renters (Reform) Bill was introduced to parliament in May 2023 and the contents of this post are based on the position as of the 22nd June 2023.

Unless stated otherwise this article only reflects the position for the Private Rented Sector in England and therefore may not apply to other countries within the United Kingdom.