The Renters (Reform) Bill – One Step Forward, Two Steps Backwards?

The introduction of the Renters (Reform) Bill plays a key role in supporting the Government’s mission to protect tenants in the private rented sector and tackle unscrupulous landlords. While no doubt a laudable aim, the scope and uncertainty of these reforms may cause concerns to professional and institutional landlords and, potentially, exacerbate the very problems the Bill was meant to address.

The Government’s 2019 manifesto included a commitment to abolish section 21 notices, known commonly as ‘no fault’ eviction notices. By this method, landlords could recover possession of their properties at the end of the fixed term without having to demonstrate a breach by the tenant, thus creating the difficult situation where tenants could be evicted from their homes through no fault of their own.

Despite continued concerns, delays and rumours of last-minute revolts by MPs, the Bill as published on 17 May 2023 includes at its heart the abolition of section 21 notices. While not overly surprising given the public backlash the Government would face by going back on this commitment, it is nonetheless a huge step forward in favour of protecting tenants. Other notable features of the Bill include:

• An abolition of fixed term assured tenancies and assured shorthold tenancies, with all such tenancies to become periodic tenancies on a monthly rolling basis. Any existing rent review clauses will also be replaced by a statutory process which landlords can implement at most once a year and which tenants will have the power to challenge;
   
• Amendments to the grounds by which landlords can seek possession of their property via the section 8 notice route, including new grounds for when landlords wish to sell their property and for repeated rent arrears. These amendments are intended to make it easier for landlords to recover their properties given they can no longer rely on the section 21 notice route;
   
• Improving the enforcement powers of councils to take action against landlords and the introduction of certain new offences, for example punishing landlords who recklessly or incorrectly serve section 8 notices which lead to tenants surrendering their tenancy;
   
• The introduction of an implied term in all tenancies that tenants may request to keep a pet in their home, which cannot be unreasonably refused; and
   
• The creation of a database containing details of all residential landlords, all properties let under residential tenancies and all persons who have been found guilty of certain housing offences.

Alongside the Bill, the Government has made a number of announcements that further legislation will be introduced to support these reforms, for example the introduction of a new Ombudsman to deal with landlord disputes, the digitisation of the court process and a new online Property Portal providing information to landlords and tenants. It is not yet clear when this supporting legislation will be introduced and some may be surprised that these changes did not make it into the Bill given the time it has taken to reach this point.

Generally speaking however, the headline announcements of the Bill are positive and will be welcomed by renters across the country.

However, the possible unintended consequences of this Bill should not be underestimated. When debating the Bill, the Government must finely balance the rights of tenants against providing sufficient support and certainty to the professional and institutional landlords in the private rented sector. Landlords now have less control over their own properties and a lack of clarity over the future of the landlord and tenant relationship.

It is not yet clear how landlords will react to these reforms. Existing landlords may seek to protect themselves via rent increases or by diversifying their portfolio and, going forward, institutional investors will have to address these concerns when deciding whether to further invest in the private rented sector. These landlords are fundamental to providing a sufficient number of homes and stifling the pipeline of much needed investment risks reducing the number of properties available in the long term, which adversely affects the Government’s levelling up agenda and no doubt would also result in rent increases for tenants.

The introduction of the Bill has been described as a ‘once-in-a-generation’ landmark moment to protect the rights of tenants and, on the face of it, it appears to be a positive step forward in that aim. The underlying worry however is whether enough consideration has been given to balancing the rights of professional and institutional landlords, without whom the private rented sector cannot survive. Whilst the headlines today may suggest utopia for renters moving forward, the reality may in fact be far less positive for renters of the future.

You can read the Renters (Reform) Bill here.