What the New Renters’ Rights Bill Means for Private Landlords
Published on September 30, 2024 by Sarah Mac
As of this month, the government has confirmed its plans for the private rented sector by presenting the Renters’ Rights Bill to parliament.
The Bill will introduce sweeping changes to the PRS, including the abolition of Section 21 ‘no-fault’ evictions for new and existing tenancies, and will also get rid of blanket bans on renting to those on benefits or with children.
As per an announcement from the Ministry of Housing, Communities and Local Government, the Bill will also extend Awaab’s Law into the private rented sector, allowing tenants to challenge hazardous living conditions. It will also bring social housing’s Decent Homes Standard into private rentals.
Landlords will also be banned from including mid-tenancy increases in rental contracts, and will only be able to raise the rent by the market rate once a year.
Landlords and letting agents will be legally required to publish an asking rent for their property, and will not be permitted to ask for or encourage any bids above this rate, in order to prevent bidding wars.
A new Private Rented Sector Database will also be created to help landlords keep abreast of their compliance responsibilities. The database will also provide tenants the information they require to make informed choices on new tenancies, as well as allowing councils an easier route to enforcing rules where needed.
Let’s take a look at what all of these changes will mean for landlords.
How will the Renters’ Rights Bill impact private landlords?
The Bill is Labour’s plan to improve the private rented sector and will bring significant changes when it becomes law. Here’s what it contains, although do bear in mind that much of it will be subject to discussion and some as mentioned will need consultation, so it is by no means set in stone at this stage:
No more Section 21 ‘No-Fault’ evictions
The Bill wants to end so-called no-fault evictions, meaning landlords would need a good reason to end a tenancy. But possession grounds are likely to be strengthened, so landlords should still be able to reclaim their properties should they need to.
The finer detail is yet to be ironed out, however, and there is a question mark over how ready the courts will be to cope with increased demand.
Ban on rental bidding wars
Landlords and letting agents will be banned from encouraging or accepting offers above the listed rental rate.
The Bill will grant local authorities the power to impose fines of up to £7,000 if they are convinced ‘on balance of probability’ that the landlord or agent has breached the rule.
Limits on rent increases during tenancies
Landlords will only be permitted to raise the rent for current tenants using a Section 13 notice, and that will only be allowed once a year.
The increase would be limited to the lower of market rates, or the amount proposed by the landlord.
Two months’ notice would be required by the landlord, and tenants would be allowed to challenge the increase via the First-Tier Tribunal. The rent would not increase until the tribunal had made its decision.
Landlords will also be banned from including rent review clauses within their tenancy agreements.
Extension of Awaab’s Law to the private rented sector
Awaab’s Law was introduced into the social housing sector following the tragic death of Awaab Ishak in 2020 due to mould inhalation in his social housing accommodation.
The law requires housing providers to remedy hazards within a set timeframe. The bill aims to extend this rule to private rentals, but it doesn’t yet explain how it will work in practice.
As an overview, renters in England will be able to challenge unsafe conditions, and landlords who fail to fix them in the set timeframe could face fines of up to £7,000.
Expansion of Rent Repayment Orders
New offences are to be added to the list for which the First-Tier Tribunal can impose a Rent Repayment Order. These will include knowingly or recklessly misusing a possession ground; breaching restrictions on letting or marketing a property, and continuing to breach tenancy reform rules.
End of fixed-term tenancies
All tenancies will be moved over to ‘periodic agreements’, with intervals of no more than one month. Tenants will be able to give two months’ notice to end the tenancy at any time in writing.
New and amended grounds for possession
The bill will introduce a new ground for landlords who intend to sell their property to take possession, and will amend the existing ground for landlords who wish to move themselves or their families into the property. These grounds would not apply for the first 12 months of the tenancy.
Landlords will also be required to give tenants four months’ notice, and would not be allowed to market the property for 12 months following the expiry of the notice or the date any court claim is filed.
There will also be a new ground for student possession, requiring landlords to give prior notice and applying only to HMOs (houses in multiple occupation) which are rented entirely to students.
The bill would also amend the obligatory rent arrears ground (Ground 8), upping the required arrears from two to three months, both at the time the notice is per the previous government’s Renters (Reform) Bill.
When will the Renters’ Rights Bill become law?
The Bill has only just had its first reading and still needs to go through the House of Commons and House of Lords before it can become an Act, and even then there will be a period of preparation before everything becomes legally enforceable.
However, this particular Bill is likely to move more swiftly than others, being a key Labour Party manifesto commitment. The Housing Minister, Matthew Pennycook, expects it to pass by summer 2025. Some of the measures may need consultation or primary legislation, which means they may take longer to get through.
We will keep up to date with the process of the Bill moving through parliament, and will report any confirmed changes for landlords as soon as we hear about them.