In May 2023, the government set out their proposals to change the way in which tenancy agreements can be bought to an end in the Renters (Reform) Bill. The aim of the legislation is to provide tenants with greater security and to prevent landlords from evicting them from properties (where they may have been for a number of years) without any reason.
At the same time, the government have also extended the grounds under which a landlord can legally evict a tenant who is not complying with the terms of the tenancy agreement.
A great deal of attention to the draft legislation has been focused on the proposed abolishing of section 21 Housing Act 1988 (HA 1988), whereby a landlord can presently give a tenant two months’ notice to vacate a property, without having to provide any reason for them to leave. Tenants have often felt that such a provision is draconian, especially if they have been in a property (abiding by the terms of the lease and paying rent on time) for a number of years.
Evidence suggests that tenants are often fearful of raising legitimate concerns about the property (and its state of disrepair) with their landlord, through fear of them being evicted via the section 21 route, where the landlord currently does not have to provide a reason for wanting his property back.
Such tenants have often put down roots in a community, work close to home or may have children at local schools and therefore have had the risk that they could be evicted at fairly short notice without any reason being provided by their landlord.
The new bill abolishes fixed term or Assured Shorthold Tenancies (AST) and will move them to periodic tenancies which will not have an end date. The period for each tenancy will either be one month or no longer than 28 days in duration and will normally depend on when the rent is paid.
As such, the tenancy will only be able to come to an end if the tenant decides they wish to leave (by giving at least two months’ written notice to expire at the end of a period) or if the landlord serves notice on the tenant to leave, relying on certain specific statutory grounds as set out in a new amended Schedule 2 of the Housing Act 1988.
At present Schedule 2 currently provides for 17 grounds under which a landlord can give notice (of varying timeframes) to a tenant to vacate the property, failing which the landlord can commence possession proceedings. Some of these grounds are mandatory (if proved, the Court must order possession), whereas others are discretionary (if proved, the Court may order possession).
The proposed legislation will extend some of these grounds and also introduce new grounds by which a landlord can give notice to the tenant that they wish to take back possession of the property.
Amongst the new grounds are:
- A repeated serious rent arrears ground, whereby if the tenant has been in rent arrears of at least two months on three separate occasions over the previous three years, a landlord can give them four weeks’ notice to leave. This will be a mandatory ground
- The current mandatory ground 1, whereby a landlord can give the tenant two months’ notice to leave the property because they (or their spouse) wish to move into it, has now been extended to other close members of the landlord’s family, such as parents, grandparents, children or siblings
- A new mandatory ground whereby a landlord can give two months’ notice because they wish to sell the property. This can only be given after the first six months of the tenancy
If the tenant refuses to leave the property and the landlord is forced to commence possession proceedings, they are likely to have to provide evidence to the court that the ground they are relying on for possession applies to their claim. Guidance has not yet been provided by Parliament as to what evidence will be required, but for example, where a landlord claims to be selling the property, they may need to provide evidence that they have instructed solicitors and estate agents.
As landlords have lost the ability to obtain their properties back without having to provide a reason, it is possible that landlords will try to find ways around the new rules to obtain their property back as soon as possible. It will be interesting to see how robust the Courts are and what type of evidence they require before they will grant possession of the property.
Other new items proposed
Whilst the majority of the focus on the draft Renters Reform Bill has been in relation to the abolition of no-fault notices, the Bill also proposes other new items, including:
- An implied term into every assured tenancy that a tenant is allowed to have a pet at the property with the landlord’s consent. The landlord is reasonably allowed to refuse consent, but must provide reasons for doing so. A tenant must request to have a pet in writing and specify the type of pet. The landlord has 42 days to respond to the request and can request further information. The landlord is also entitled to recover the cost of any insurance he takes out for any potential damage caused by the pet or can ask the tenant to take out a similar insurance policy themselves
- The appointment of a new Property Ombudsman to resolve disputes between landlords and tenants. It will be mandatory for landlords to be members of this scheme
- Landlords will be under a duty to provide tenants with a written tenancy agreement and terms before the start of the tenancy
- All landlords will need to register with a Private Rental Sector Database, which will contain details of landlords, properties and any banning orders. It is likely that landlords will need to pay a fee to register and failure to do so will result in fines or prosecution
- There will also be new provisions relating to rent increases. Landlords will be able to charge market rent, but two months’ notice of any increase must be given (up from the present one-month notice). Rent increases will need to follow the provisions set out in section 13 of the Housing Act 1988
The Bill is not likely to become legislation until sometime in 2024. As such, the present section 21 notice procedure still applies and with increases in mortgages, many landlords may decide that now is the time to exit the private rental market and recover their property. At present, possession claims are taking many months to resolve through the courts and it is not clear what will happen to any claims that have already been issued following the passing of the Bill. The government will announce any transition periods in due course but if a section 21 notice was issued before the new legislation becomes law, it is likely to still be valid.
Mark Ovenell, Commercial Litigation and Professional Negligence specialist, comments:
Whilst the new proposed legislation is seen as good news for tenants, many landlords are unhappy with the proposed changes and may see this as their opportunity to leave the rental market. This may mean that the number of rental properties actually decreases over the next year or so, which will not help the housing crisis which the government are keen to address with the new Bill. As with all new proposed legislation, it is a case of “watch this space”.