What is the renters reform bill and when will it be introduced?
The renters reform bill is trying to be introduced by the government to streamline the processes for tenants and landlords. It will be abolishing various items such as; section ending the section 21 notice and changing tenancy agreements. It will also an end to a fixed term tenancy or assured short hold tenancy and life time deposits.
When is it being introduced?
The proposal of the bill was given to the house of commons back in 2019. However, due to Brexit and the ongoing issues with Covid it was thought that the proposals would not take place for some time. However, in the last few months the government have decided that they need to bring this legalisation forward so it may come into force this year. The government are committed to trying to push this through as quickly as possible.
We have laid out the provisions of what will happen within the act and how it will affect landlords. You need to be aware that this is going to dramatically change the whole concept of tenancy agreements for landlords. The name itself outlines that it is for rental reform.
What is a section 21 notice?
A section 21 notice is bringing an end to a tenancy either for a fixed term or where the tenant goes onto a month to month. This gives the landlord the ability to give notice to the tenant without outlining why they have given such notice. The landlord may wish to sell the property or move back in but at this moment of time he doesn’t need to give a reason why he is serving the notice. This bill will change the whole of this. We will outline the proposals later.
What else does it bring into account?
It will detail how a tenancy can end, how the landlord can create a framework for it to end and giving it a new ground to be able to sell the property. Others taken into account will be rent arrears, anti-social behaviour, domestic abuse, property standards, accelerated possession. The government are trying to ensure that deposit’s last for a lifetime rather than a one off property. So, you can move them from property to property.
Will this bring an end to the section 21 notice?
Yes, it will. Landlords in future will not be able to serve a section 21 but they will have to have a specific reason why they are serving a relative notice. The government feels that this is the best way to give tenants security in their property and within their tenancy.
Are there any proposals regarding the assured short hold tenancy?
Yes. They will be changing the assured short hold tenancies as follows;
1. A fixed term assured tenancies. This will give both the landlords and tenants stability and clarity; it allows the parties to agree a set term for the property and the conditions for the contract length. Tenants have the security of knowing that their home is theirs under a set term from the agreed period. Landlords know that the tenants will be at the property for that period of time. Rent increases would be agreed in the contract and both parties are clear on the rights. At the end of the fixed term tenancy, unless both parties agree to a new agreement, the tenancy would roll into a month to month basis.
2. Assured periodic tenancy. This is where a tenancy comes to the end of its fixed term. It then goes onto rolling contract. It is a more flexible arrangement. The government will allow you to do this from day one. Ie have a tenancy on a month to month basis whereby the tenant can give one months’ notice. There is no confirmation from the government of what the landlord would have to give by way of notice but we discuss this later on. However that if the rent is paid weekly then the tenant only has to give one weeks’ notice.
Ending a fixed term tenancy early through a break clause.
We get asked this question on many occasions on inserting a break clause. They are not a requirement of the housing act in 1988. They can be included within the agreement but can only be enforced by way of consent. However, the law will be changed to ensure that they are enforceable in future.
Will this prevent landlords from increasing the rent?
The government does not support introduction of additional rent controls. However, the new agreements will be on a fixed term basis with a fixed rent. The rent cannot then be increased during that term. On a rolling contract details have not yet been given on what the landlord can do. We anticipate within a set period of time that they will not allow the rent to be increased.
Are there any other provisions?
Yes, there are many it will extend the protection that is already involved in the deregulation act 2015. Under the current act the landlord has to serve a copy of the how to rent checklist, gas safety and an EPC. They also have to give details of the deposit scheme. This can be extended to include an EICR.
How will you be able to bring a fixed term tenancy to an end when the renters reform bill is introduced?
The government’s new deal for renting will retain a flexibility for many people within the private rental sector. This allows them to be able to have security. In an assure tenancy ie open ended tenancy the tenants will be able to give a notice at any time.
How does a landlord then finish a tenancy?
The landlord’s will be able to end either tenancy by issuing a notice of section 8 of the housing act 1988. The current grounds are all laid out within the act. Ranging from 4 weeks’ through to 2 months’ and beyond and some of them are discretionary through the courts. It is not clear yet how the government are going to allow landlords who just wish their property back. Landlords will have to give prior notice to the tenants of what the grounds they wish to have it back before move a new tenant in. The whole idea is to have the stability for tenants on a long term basis.
Will there be a ground for selling a property?
Yes, the landlord will have the ability to sell the property. Many landlords currently use the section 21 notice to this effect but the government want a specific ground for it.
What if I have rental arrears, are you still entitled to then serve a notice?
Ground 8 is the mandatory ground for possession where a tenant still has arrears will be allowed. However, under the current government scheme no evictions or bailiffs can take place until Mid-February. There is a high likely hood that this will be extended. The government are going to outline the simpler system within the ground 8.
What if my tenant is causing anti-social behaviour will I still be able to ask the tenant to leave?
These powers are already within the local authority’s ability to deal with. They will be extended to include mandatory evictions on this ground. There are various other grounds which will be included which are already within the current legalisation.
Will there be further extensions regarding property standards?
Yes, the government already have the House (Fitness For Human Habitation Act) and will strengthen tenants rights. This will include quiet enjoyment of their home. You are also required to give a minimum of 24 hours’ notice to give visits to the property. It will drive up further standard within the rented sector. But again at this moment in time these have not yet been outlined.
I have a student accommodation in Brighton will this really affect me?
The government want to have specific provisions when it comes to student accommodation. It will affect dramatically any landlord that deals with a student. They want to balance it for both parties. So, landlords can recover their property with certainty about timing but students have the right to security. The government hasn’t outlined the details of what will take place.
Will the renters reform bill include short term lets?
Short term lets are commonly known as holiday lets. There is no legally binding contract for a tenant that takes a property less than 6 months. However, the government want to have contracts that enter short term lets for properties in future.
Lifetime deposits, how would that work?
This is an amendment to the current proposal. A lot of tenants want to be able to use and move their deposit from one property to another. However, it makes it difficult when there are potential claims on the deposit for landlords. The government are going to come up with a scheme which will have a system known as a lifetime deposit. How this will work there is no proposals at this moment in time and no-one has an idea on how this will work and we are all waiting to see.
Is there a provision within the legalisation to include a rouge data base for landlords?
Yes, there will be a new provision. Including a database of rouge landlords and property agents to the public. The database is to be maintained by the local authority but is not currently available for tenants to view. The new provision will allow tenants to contact the local authority. Also, find out who their rouge landlords are and how they will have a right to redress.
Will the renters reform act affect the future of Buy to lets?
There is a high possibility that this is going to affect lenders. Where swift re-possessions are required or people are in default. The current notices of section 8 arrears can make it long and slow for landlords. Therefore, serving a section 21 is much easier. There are possibilities that lenders might start to look at buy-to let loans in a completely different way. They may require larger deposits to be put down.
The government have clearly made a decision to push this bill through as quickly as is possible. They are keen to roll the provisions out as soon as is possible. It is currently going through reading with the houses of commons. There will be various amendments throughout the readings of the bill before it comes into legislation.
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