Reform of the rental market has been a talking point for many years, but it finally looks like new legislation will be introduced in a month or two’s time which will make some significant changes to the way that residential property is let out.
The Renters’ Rights Bill is currently in the Committee stage of being debated and examined, but it is almost certain that when the Bill is passed as Act of Parliament it will look something like this.
The end of section 21
Much has been written about “no fault evictions”. This is convenient shorthand to refer to the right for a landlord to serve a notice under section 21 of the Housing Act to bring a tenancy to an end once its fixed term has expired. The landlord need not give a reason, and often this mechanism has been used to enable a landlord to make maximum use of increases in market rents in the local area.
The new Act almost certainly will bring to an end a landlord’s right to use the section 21 procedure. A landlord will still have the right to seek to bring a tenancy to an end if there are arrears of rent or if they wish to sell their property, but they will no longer be able to get rid of a tenant simply because they know that they can get a higher rent elsewhere.
No more fixed term tenancies
Sitting alongside the abolition of section 21 notices will be an end to fixed term tenancies. Very typically, a tenancy will be granted for a 12 month term which a landlord may renew at their discretion. The new Act will likely mean that all new tenancies are in effect “open ended” with only the tenant having the ability to serve two months’ notice at any time.
The end to bidding wars
A tenant’s frequent complaint is the difficulty in actually finding a property at the advertised price. Often a queue of prospective tenants means that the asking rent will dramatically increase before some even have a chance to view a property. The new Act will prohibit landlords from accepting rent that exceeds the advertised asking price.
Once a tenancy has been created, a landlord will only be able to increase rents one in any twelve month period. A tenant will have a right to challenge any rent increase that they believe to be unfair and which does not reflect the market rate.
Decent Homes Standard and registration
It seem likely that a “Decent Homes Standard” will be published which will set out a minimum standard for rental properties, and that there will be some system of penalties for failing to provide property to the required standard.
Also in an effort to increase the quality of rental stock, there will be a requirement that landlords register on a government portal.
An end to discriminatory practices
Barring discrimination of grounds of race, sex or other protected characteristics has thankfully been a feature of the lettings market for a number of years. It is likely that the new Act will take these measures further by preventing discrimination against tenants where their rent is being paid by the Local Authority, tenants with children, and even tenants who wish to keep a pet at the property.
Whilst the Act sets out a Brave New World for landlords and tenants alike, the new legislation looks like it will very closely follow the lettings rules introduced in to Wales in 2021, and it is helpful to look at the experience in the Principality as a guide to what might happen in England when the new Act is passed. Anecdotally at least, Wales has seen landlords withdraw from the market citing increased costs and also uncertainty around being able to meet their obligations. This has created narrower tenant choice due to a shortage of properties and this has, fairly predictably, resulted in increases in rents.
It may well be the case that the rental market reacts differently in South West London, and we will endeavour to provide further information on the various parts of the Renters’ Rights Act when it actually comes into force.