The published Renters’ (Reform) Bill – what’s the deal?

It was an interesting week as the long-awaited “once-in-a-generation overhaul of housing laws” was published by the government on 17th May. 

 

Let’s just breathe…

 

The Bill came as no real surprise.  It was largely in line with the White Paper, “A Fairer Private Rented Sector” that was introduced last year.

It is important to remember, amidst all the frenzied media coverage of the new Bill, that this is the beginning of a long journey.  

The Bill is not law today.  

The Bill needs improvement.  It is lacking in detail and fails to give confidence to landlords (and tenants) in the PRS sector, but there seems to be a significant change in the anti-landlord rhetoric.  As Ben Beadle of the NRLA says: “He [Mr Gove] needs responsible landlords”.  

It seems to be common ground for both landlords and tenants that changes are needed to the Bill to make it workable.  With sensible and rational argument this should be attainable.

The Bill includes proposals to: 

• Abolish Section 21 “no-fault” evictions and move to a tenancy structure in which all tenancies are periodic rolling tenancies with no fixed end date. There will be no more assured shorthold tenancies.
• Reform current possession grounds, to include mandatory grounds for possession where a landlord intends to sell or in cases of repeated rent arrears.
• Create a new property Ombudsman to settle disputes and relieve pressure on the courts, which private landlords must join. 
• Implement a digital Property Portal to better inform tenants and landlords of their rights and obligations and assist local councils in carrying out their enforcement duties.
• Establish a statutory right for tenants to request a pet. 

Landlords will be pleased to note that the Bill has taken note of NRLA proposals to: 

• Focus action on tackling anti-social tenants and those not paying their rent.
• Improve the speed of court repossession hearings through better use of digital platforms.
• Ensure better reporting by councils on their enforcement action to root out rogue and criminal landlords.

However, more is still required if landlords are to have confidence in the new system. The NRLA has said they will continue to engage constructively with the Government during the passage of the Bill to try and ensure that:

• Student landlords can still continue to offer homes at the start of each academic year;

Comment: It seems from statements made this week that the government has already indicated an intention to amend the current Bill, to take into account the need for student lettings to be treated as an exception to the general rule that tenancies will be periodic with no fixed end date;

• The details of how the proposals work for landlords to give them reassurance that they can get their property back;
• Implementation of the reforms does not unduly disrupt landlords’ businesses; and
• The courts are resourced well enough to prevent delays. The time to progress a Possession Claim has become too long, and tenants have become adept in causing delays, even where a section 21 Notice has been used.

The other side of the coin is that tenants are concerned at the lack of detail in some of the proposals.  Tenants see a raft of landlord-friendly rules, regulations, and criteria.  

For example, the new mandatory ground for “repeated rent arrears” could be problematic for tenants who perhaps have instances of a standing order not going through, or a change in job meaning payment is slightly delayed, which could conceivably mean a tenant could fall into spikes two months’ arrears even if paid off immediately. The “offence” is cumulative over three years. This may not be willful default yet could be caught by the new criteria. The position where a Universal Credit payment to which a tenant is entitled has not been paid is covered specifically: In this case a tenant cannot be evicted.

Of particular concern is the new ground for possession that allows a landlord to serve notice on a tenant if they or a family member want to move in.  They could do this six months into a tenancy.  What evidence would be needed to prove this ground so that it is not misused or used a “loophole”? 

After a tenant moves out, a landlord would have to wait 3 months before letting or advertising to let the property or face a £5,000 penalty issued by the local authority.  But who would police this?  Should the deterrent be a Rent Repayment Order for the outgoing tenant?

So, where are we now?

There is a general acceptance that Section 21 repossessions will, and probably should end, but there is disappointment with the level of detail provided as to what will replace it. 

The Government statement assures landlords it will make it easier for landlords to repossess in cases of rent arrears and anti-social behaviour, however the details are flimsy and open to interpretation and abuse…by tenants as well as bad landlords. Other new mandatory grounds have been met with concern.

The Government needs to ensure that responsible landlords have confidence that they can swiftly and effectively repossess properties where there are legitimate grounds. 

Tenants need to be reassured that the new grounds will not be open to misuse.

With many landlords considering their future in the PRS, without retaining landlord confidence, the Bill will only worsen the supply crisis tenants face today.

The Bill in its current form is a framework for discussion.  

Let’s have that discussion.

Let’s make the new law an achievement for the PRS: a result for landlords and tenants alike.