Understanding the Renters Rights Bill: Key Changes and Implications for Landlords and Tenants

In 2019, the previous Conservative Government first proposed updating legislation for a "Fairer Private Rented Sector", and in May 2023, the "Renters (Reform) Bill" was officially introduced to Parliament. Following the election of the Labour Government, the Renters Rights Bill was submitted in September 2024 and is scheduled to become Law later this year.

The Bill aims to provide tenants greater security and stability, improve living conditions by strengthening local authority enforcement, and increase the maximum fines for non-compliant landlords. In this article, Amelia Ford, Property Litigation Expert at Warner Goodman LLP, examines the key changes in the proposed Bill, the additional obligations for landlords, and its potential impact on the private rented sector if it receives Royal Assent.

Key Changes in the Renters Rights Bill

Removal of Fixed-Term Assured Shorthold Tenancies

The Bill proposes replacing all existing and future fixed-term assured and assured shorthold tenancy agreements with periodic tenancies. This change will allow tenants to provide two months' notice to vacate the property at any time. Tenants will also not be liable for rent until the end of a fixed term if the property is deemed substandard. The new system will be introduced in one stage, applying to all private tenancies from a set date.

Rent Increases

Landlords can only increase rent once a year to market value by serving a Section 13 Notice with two months' notice. If a tenant believes the new rent exceeds market rates, they can challenge it through the First-tier Property Tribunal, which will determine the appropriate amount. Back-dated rent increases will no longer be permitted, with the new rent only becoming payable from the Tribunal's decision date.

Advance Rent Payments

The Bill will amend the Tenant Fees Act 2019 to prevent landlords from requesting or accepting rent payments before signing a tenancy agreement. Landlords can only request up to one month's rent once the agreement has been signed and before commencement.

Local authorities will have the power to require landlords to repay prohibited rent payments and impose civil penalties of up to £5,000. However, concerns remain about enforcement due to funding limitations for local authorities.

Prohibiting Rental Discrimination and Bidding Wars

The Bill seeks to eliminate rental discrimination, prevent bidding wars, and make it easier for tenants to keep pets. Landlords will be legally required to consider all applications fairly. Any terms in mortgages or superior agreements that prevent letting to tenants receiving benefits will be void.

Landlords and managing agents will also be prohibited from encouraging tenants to outbid each other. Additionally, landlords must not unreasonably refuse a tenant's request to keep a pet but may require tenants to obtain insurance to cover potential damages.

Abolition of Section 21 Notices

The long-discussed abolition of Section 21 'no-fault' eviction notices will take effect under the Renters Rights Bill. The Bill will prohibit the service of new Section 21 notices and old-style Section 8 notices.

Updates to Grounds for Possession

Although the removal of Section 21 Notices may make it more challenging for landlords to regain possession of their property, the Bill introduces additional grounds for possession. Similar to the Housing Act 1988, the Bill provides both mandatory grounds, where the court must grant possession if the landlord proves the ground is met, and discretionary grounds, where the judge decides whether granting possession is reasonable.

Key mandatory grounds introduced by the Bill include:

• If a landlord or a close family member wishes to occupy the property, they must wait 12 months from the start of the tenancy before serving four months' notice.
• If a landlord wishes to sell the property, they must also wait 12 months before serving four months' notice.
• The same restrictions apply to landlords selling under a rent-to-buy mortgage and lenders exercising their power of sale due to borrower defaults.

The Bill also introduces specific notice periods for tenants occupying properties under special circumstances, such as agricultural workers, employment-related housing, homelessness accommodations, and stepping-stone housing.

Therefore, Tenants in a private rental tenancy who have not breached the Renter Rights Act or any terms in the tenancy agreement will have a right to residency for at least 16 months.

Proposed amendments to Ground 8:

• Landlords may give tenants four weeks' notice to vacate if they are in at least three months' rent arrears.

New discretionary ground:

• Landlords can provide four weeks' notice to vacate if a tenant in supported accommodation refuses to engage with the support services offered.

Overall, the Bill will require landlords to give tenants significantly longer notice periods to allow them to find alternative accommodation.

Introduction of the Private Rented Sector Ombudsman

The Bill will establish a Private Rented Sector Ombudsman, requiring all private landlords to register and pay an annual fee per rental property.

Tenants can file complaints about landlord behaviour, property conditions, and unresolved repairs, with the Ombudsman issuing free, binding decisions. However, landlords will not be able to file complaints.

Failure to register will result in penalties starting at £7,000 for initial breaches, rising to £40,000 and potential criminal prosecution for repeated violations.

Establishment of the Private Rented Sector Database

A Private Rented Sector Database will require all landlords to register themselves and each private rental property. This will serve as a precursor to a digital property portal centralising information for tenants, landlords, agents, and local authorities. Non-compliance will result in penalties similar to those for Ombudsman registration.

Extension of the Decent Homes Standard and Awaab's Law

The Decent Homes Standard will now apply to private rentals, ensuring all properties meet minimum safety, repair, and living condition standards, as currently required in social housing.

Awaab's Law, introduced through the Social Housing (Regulation) Act 2023 following the tragic death of Awaab Ishak from mould exposure, will also be extended to the private sector. This Law enforces stricter deadlines for landlords to address hazards such as mould and damp.

Strengthening of Enforcement Powers

The Bill enhances enforcement measures to hold landlords accountable. Local authorities will have greater powers to inspect properties, issue compliance notices, and take action against non-compliant landlords.

The scope of Rent Repayment Orders will be expanded to include superior landlords, allowing tenants to reclaim rent if their landlord commits serious breaches, such as failing to address unsafe conditions or carrying out illegal evictions.

The maximum penalty under a Rent Repayment Order will increase from one year's rent to two years' rent. Landlords who carry out illegal evictions will face both civil and criminal liability.

Conclusion

The Renters Rights Bill represents a significant shift in the UK rental market, offering tenants greater protections and increasing landlords' responsibilities. If passed into Law, it will introduce substantial changes in tenancy agreements, rent regulations, property standards, and enforcement mechanisms.

For more information on the Renters Rights Bill and how this may affect you, please get in touch with Amelia Ford and our Property Litigation team on 023 8063 9311 or email enquiries@warnergoodman.co.uk.