Leaseholder protection – Renters’ Rights Bill has its first reading

What is the Renters’ Rights Bill?

On 11th September the Renters’ Rights Bill had its first reading, promising greater rights to the 11 million private renters in England. The Government’s Guide to the Renters’ Rights Bill (the Guide) states that the Bill offers “greater security and stability so they can stay in their homes for longer, build lives in their communities, and avoid the risk of homelessness”. The Guide also claims that the Bill will improve matters for 2.3 million landlords.

Some of the new legislation appears to mirror the previous government’s Renter’s Reform Bill which was not passed before Parliament was dissolved prior to the general election.

Whilst most of the Bill extends to England only, a few provisions also alter the existing rental regime in Scotland and also in Wales – the Welsh rental scheme itself was overhauled a few years ago by the Renting Homes (Wales) Act 2016.

The Bill is scheduled to have its second reading on 9th October. The development will be of interest to landlords, tenants and investors of residential property in England and Wales.

Lease termination - what can we expect?

A key feature of the Bill is that it promises to bring to an end s.21 “no fault” evictions for new and existing tenancies. This was originally also a feature of the Renter’s Reform Bill. However, those plans were put on hold while the effects of the new system on the county courts were assessed.

As currently drafted this new Bill looks to implement a ban on s.21 notices - it will apply to new and existing leases from the same date. Some provisions do, however, allow landlords to rely on a s.21 notice served before the proposed ban comes into effect, in particular where possession proceedings have already been commenced in reliance on a valid s.21 notice.

The Bill also looks to reform landlords’ grounds for possession. The Guide sets out in table format the various ground for possession with the notice period required in each case. For example, if a landlord wishes to end a tenancy in order that it can occupy the property itself or for its family it can give 4 months’ notice. That ground cannot be relied upon, however, during the first 12 months of the tenancy. This gives a tenant effectively a minimum term of 16 months security.

Other features of the Bill:

• Abolition of fixed term assured tenancies and assured shorthold tenancies – fixed term tenancies will be converted to periodic tenancies with tenants being able to stay in their home until they decide to end the tenancy by giving 2 months’ notice;
  
  
• Extension of Awaab’s Law into the private rented sector – this will require landlords to take action to make homes safe where they contain serious hazards;
  
  
• Ban of in-tenancy rent increases written in to contracts - under these reforms, landlords will only be allowed to raise the rent once a year, and to the market rate. Tenants can challenge rent increases and ask the First Tier Tribunal to set the market rent;
  
  
• Establishment of a new Private Rented Sector Database to help landlords understand their obligations for compliance and provide tenants the information they need to make informed choices for new tenancies. Landlords will need to be registered on the database before they can rely on certain possession grounds;
  
  
• End blanket bans for those on benefits or with children – this reform is being extended to apply to Welsh and Scottish residential tenancies;
  
  
• Tenants will have a right to request to keep a pet in their property and landlords will not be able to unreasonably withhold their consent;

Key points

• The introduction of a bill in parliament does not guarantee that it will be passed, and those that are passed are usually amended as they progress through the two Houses;
  
  
• It will be interesting to see to what extent this Bill will alter as it travels between the Houses. Will it seek to go even further in its reform? During consideration of the previous government’s Renters (Reform) Bill, for example, some argued for a six-month moratorium on the marketing of a property as a holiday let if it had been repossessed by the landlord on no-fault grounds;
  
  
• This may not be the end of the matter in so far as leasehold reform by this government is concerned. In a debate on 12th September the Parliamentary Under-Secretary (Housing, Communities and Local Government) mentioned that further legislation to reform the leasehold system was in the pipeline;
  
  
• It is very much a matter of watch this space - a second reading is scheduled to take place on 9th October.