The Impact of the Renters' Rights Bill on the Private Rental Sector

We are keen to explore how the proposed Renters' Rights Bill, put forward by the Labour government, will impact both landlords and tenants in the private rental sector.

While the Bill is still in the early stages and there may be some amendments, the government is determined to push it through parliament as soon as possible. Accordingly, given the strength of the government’s majority, the Renters' Rights Bill will likely become law sooner rather than later.

The changes proposed will reshape the private rental sector in several key areas:

Abolition of Section 21

One of the key proposals in the Bill is the abolition of Section 21, which currently allows landlords to evict tenants without providing a reason. If this goes ahead, it would apply to both new and existing tenancies, meaning landlords may no longer be able to issue “no-fault” evictions.

That said, the proposal does include provisions for landlords to regain possession of their property if they plan to sell or move back in, but only after the tenant has been in place for 12 months, with four months’ notice required. This extended notice period is aimed at offering tenants more security, though its final form is yet to be determined.

Potential for Increased Tenant Flexibility

Another significant update is the removal of the minimum six-month tenancy. If this comes into effect, tenants could serve notice to quit at any time, even from the first day of their tenancy. This would provide tenants with greater flexibility, particularly those who may need to move at short notice for personal or professional reasons.

While this flexibility could be a welcome change for renters, it does raise potential concerns for landlords about increased turnover, particularly in areas where short-term lets, such as Airbnb, are popular.

Proposed Changes to Rent Increases

The Bill also outlines changes to the way rent increases might be handled. Under the new rules, rent could only be raised through a Section 13 notice, and tenants would need to receive two months’ notice of any increase, instead of the current one-month requirement. Additionally, backdating rent increases would no longer be permitted, offering more protection for tenants from unexpected costs.

The proposal also suggests that the First-tier Tribunal, which deals with rent disputes, will no longer be able to increase the rent beyond the amount proposed by the landlord. This could encourage tenants to challenge rent hikes, knowing they wouldn’t face a higher rent than initially requested.

New Rules Around Pets and Rental Bidding

The Bill also seeks to address two issues that have been long-standing points of concern for tenants. Landlords may no longer be able to prohibit tenants from keeping pets without reasonable grounds, and landlords would be required to respond to such requests within 28 days (down from 42 days in the previous version of the reform).

Additionally, a ban on rental bidding is proposed, which would prevent landlords from encouraging or accepting offers above the advertised rent. If this provision is implemented, landlords could face fines of up to £7,000 for violations. This measure is aimed at curbing rising rents in competitive markets, though the details are still being debated.

Section 8 Possessions and Rent Arrears

The Renters' Rights Bill is also expected to introduce longer notice periods for Section 8 possessions in certain circumstances. For example, if a landlord wishes to regain possession of the property for sale or personal use, the proposed notice period would be extended to four months, and landlords would need to wait until the tenant has been in the property for at least 12 months.

For serious rent arrears (Ground 8), the threshold is set to be raised from two months to three months, giving tenants more time to catch up on rent. While this could provide additional breathing room for tenants facing financial difficulties, landlords may be concerned about longer periods of unpaid rent.

Awaab’s Law

A notable addition to the Renters' Rights Bill is the proposed extension of Awaab’s Law to the private rental sector. Awaab’s Law was introduced following the tragic death of Awaab Ishak, a toddler who died due to prolonged exposure to mould in his family’s social housing. The law requires landlords to remedy serious health hazards, like mould and damp, within a specified timeframe.

While the exact implementation details for the private sector are still being discussed, the Bill indicates that landlords in the private rental sector may soon be required to address such hazards within 14 days of being notified. The government has acknowledged that there are differences between social and private housing and intends to consult on how best to apply the law fairly across both sectors.

The introduction of Awaab’s Law would put more responsibility on landlords to ensure the safety of their properties, but it also means they may need to act quickly and allocate resources to address these issues. For tenants, this could offer greater protection from health risks related to poor housing conditions.

Big Bang Implementation

Unlike previous versions of the Renters' Reform Bill, the Renters' Rights Bill proposes a "big bang" implementation, where all changes would come into effect on a single date. This means that both new and existing tenancies would be subject to the new rules simultaneously, with existing fixed-term tenancies converting to periodic tenancies. Landlords would no longer be able to serve Section 21 or old-style Section 8 notices under the proposed framework.

The government believes this approach could prevent confusion and create a more straightforward legal framework for all parties, though the timeline and specific details are yet to be finalised.

Final Thoughts

While the Renters' Rights Bill is still in the proposal stage, it suggests some substantial changes that could impact the way landlords and tenants interact in the private rental market. The potential abolition of Section 21, new rules around rent increases, and the increased flexibility for tenants all point to a shift towards tenant protection. However, landlords will need to stay informed about how these changes develop and be prepared to adapt their practices.

The inclusion of Awaab’s Law in the private rental sector is an important step toward ensuring tenant safety, though it will likely add new compliance pressures for landlords.

As these discussions progress, it’s clear that both tenants and landlords may face new challenges, but also new opportunities. At Brown&Co, we are committed to helping our clients understand the evolving legislative landscape and ensuring they remain compliant and well-positioned in the market.

We will continue to monitor the progress of the Renters' Rights Bill and provide guidance as more details emerge.

For more information, please contact Josh Bailey, Senior Lettings Negotiator, on 01603 629871 or email josh.bailey@brown-co.com