The Renters (Reform) Bill – Where are we now?

The aim of the Renters (Reform) Bill was to strengthen tenants’ rights and protection in the private rented sector. At the same time, it was vital to ensure that the Bill recognises and safeguards private and institutional landlord’s interests since failing to do so could cause significant and widespread damage to the rental market. 

Since the Bill was first published a year ago, there has been ever-increasing criticism from renters claiming that it has been watered down to appease landlords and no longer lives up to its stated intention of creating a fairer private renters market.

These comments were replicated by the House of Lords last week on the Bill’s second reading but, despite being unhappy with the changes, the Lords made clear that they had no intention of holding up the Bill.

Our previous Law-Now (available here) gave our preliminary views on the Bill as first drafted and this article now sets out the three key changes which have, arguably, tipped the balance in favour of landlords.

Section 21 Notices

The abolition of Section 21 notices, the so called ‘no fault eviction’ route, is the headline policy of the Bill. It has been promised by the Government since 2019 and is seen as vital by renters to give them security and certainty in their homes.

The latest version of the Bill however does not provide for the immediate abolition of Section 21 notices but, instead, proposes that they be abolished once much needed changes and improvements have been made to the court process.

While this delay recognises the practical issues faced by landlords and practitioners dealing with an antiquated and overburdened county court network, there are some who are concerned that it doesn’t do enough to reassure the renters of today. Renters groups are vocally furious about the ‘watering-down’ of the Bill and as one Lord remarked “the central plank of the Bill is missing.”

While it seems unlikely that the Lords will push back and insist upon an immediate abolition, a sensible balance might be to seek to impose a reasonable longstop date to both hold the Government accountable and to appease renters.

Fixed Term Tenancies

Another notable effect of the Bill is the abolition of all fixed term assured tenancies. The practical effect of this change as first drafted was that all assured tenancies would be rolling tenancies, which tenants could terminate on two months’ notice. 

While increasing flexibility for tenants, this change would harm landlords by increasing their risk of rental voids, as well as more frequent onboarding costs for new tenants.

To reach a balance, the latest version of the Bill includes a proposal that there be an initial six-month period from the commencement of a tenancy where the tenant cannot terminate it (save for a few, exceptional circumstances).

This change has attracted criticism as it still potentially leaves tenants stuck in an unsuitable or unsafe tenancy for the initial six months. Again however, hopefully this impasse can be solved by setting out clear exceptions (such as where the property is hazardous) to allow tenants to terminate a tenancy on short notice within that initial six-month period.

Student Accommodation

The first draft of the Bill failed to recognise the unique nature of the student rental market and was met by immediate concerns from landlords of student accommodation. Given the cyclical nature of this market, such landlords must arrange their lettings around the academic terms and need certainty that they can recover possession from former tenants at the end of those terms.

There has been strong lobbying by such landlords over the last year and the Bill is becoming ever more weighted towards these landlords, while inevitably attracting the ire of student renter organisations.

The current position appears to be the intentional creation of a two-tier rental market:

• Student lettings by universities and government registered purpose-built student accommodation is likely to fall outside the remit of the Bill since they do not constitute assured tenancies; and
   
• Private landlords who let to students will not be caught by this exemption and so will be affected by the changes in the Bill. A new mandatory ground for possession has been introduced to allow such landlords to recover possession from former students at the end of the academic year.

This introduction of a two-tier market is unprecedented and may result in significant issues. Essentially, some students will benefit from the new protections in the Bill and others will not.

It is likely this issue will need to be addressed by the Lords and further clarity will be much welcomed by both landlords and renters in this unique sub-section of the rental market.

What’s next?

Having passed its second reading, the Bill will now move to the committee stage in the House of Lords, followed by the report stage and then its third reading. Any further amendments will then be considered, before being passed for Royal Assent. Depending on the pace of the Lords, there is still a possibility that the Bill will pass before the next election.

Landlords can be reassured that key bodies in the industry have worked hard to protect their interests and the latest version of the Bill does contain greater protection for landlords than the version published this time last year. On the other side of the argument, renters claim that a once in a generation opportunity to significantly bolster tenant protection has been squandered.

As we approach the conclusion of the Bill, both sides will no doubt be eagerly awaiting the next development in this ever-changing saga to find out whether in fact a fair balance is possible.