Key proposals in the Bill
As they currently stand, the key proposals so far as they apply to private landlords in England are:
- Assured shorthold tenancies will cease to exist.
- There will be no more fixed terms; all tenancies will be periodic assured tenancies, rolling on a monthly or shorter basis.
- No-fault evictions under section 21 of the Housing Act 1988 will be abolished.
- For section 8 notices, new grounds for possession will be introduced (including a new ground where the landlord wants to sell, and for serious rent arrears) and some existing grounds will be amended (for example, enabling the landlord to recover possession where a parent, child or grandchild are to move in, and widening the anti-social behaviour ground).
- Landlords will need to give a written statement of the terms of the tenancy.
- Deposits will need to be protected before possession orders can be obtained under most grounds for possession.
- Tenants will be able to challenge the rent in the first six months of a new tenancy; private landlords will have to use the statutory process to increase the rent each year.
- Tenants will be able to terminate assured tenancies by giving two months' notice.
- Tenants will have a right to request permission to keep a pet.
- Landlords could be required to join a new Landlord Redress Scheme before they market or let properties.
- Information about the Landlord and the property will need to be entered on a new Private Rented Sector Database before a property could be advertised.
- New penalties and offences will apply for breach of the new rules.
It will take many months for the Bill to go through the Parliamentary process and it may change, potentially considerably, along the way.
The government proposes that, even once the Bill is enacted, it will be introduced in two stages, with all new tenancies being governed by the new rules from stage 1 and all existing tenancies moving to the new regime from stage 2.
The government has said it will give six months' notice before stage 1 comes into force, and that there will be at least 12 months between stage 1 and 2.
How might the Bill change?
We will know more about the main areas of contention once the Bill has had its second reading in Parliament, which is expected in the second half of 2023.
However, various concerns have already been raised which may lead to amendments. These include problems for student-lettings if fixed-term tenancies can’t be granted based around the academic year, the potential for the sale and own-use grounds to be abused by landlords, and what other conduct the courts will be able to take into account when the amended anti-social behaviour ground is relied on.
Problems have also been identified around the difficulties private landlords of mixed-used premises may face in recovering possession from residential subtenants, and what will happen to clauses in long residential leases that currently permit underlettings only on fixed-term ASTs.
Some commentators cite the proposed ban on no-fault evictions as one reason why the number of accelerated possession claims being issued in the second quarter of 2023 was at its highest since 2017, and why a number of landlords are or may be considering selling-up. Other reasons include rising interest rates, higher mortgage costs, tax changes and the prospect of more stringent minimum energy performance requirements.
Whether that is right or not, it is clear that residential tenancy reform will be a central issue in the run-up to the next general election.
The next election has to be held in January 2025 at the latest, but is more likely to be called in 2024. It is possible that the Bill will not be passed into law by then. Even if it is passed - whether in its current or an amended form - the implementation date for stage 2, if not stage 1 as well, will fall after the next election. This gives rise to uncertainty as to what might happen to the reforms under any new government, of whatever complexion.
Although some of the government’s own backbenchers are said to be unhappy with the Bill, any new Conservative government would presumably stand by at least some tenancy reform.
For its part, the Labour Party has said it will introduce a Renters’ Charter that will ban section 21 notices; mandate longer notice periods; establish a national register of landlords; and give tenants the right to make alterations, request speedy repairs and to have pets.
The Liberal Democrats have indicated that they too support ending section 21 no-fault evictions, but favour making longer tenancies the default.
Despite areas of apparent consensus, it remains to be seen whether the opposition parties will support the Bill, and whether, if it is passed, any Labour or coalition government would retain, amend or replace the legislation.
What is reasonably clear is that whatever happens to the Bill, or at the next election, section 21 notices seem destined to be scrapped.
We will monitor the Bill as it progresses through Parliament.