The Renters Reform Bill sets out reasonable circumstances where the landlord can evict a tenant.
What are the changes?
The Renters' (Reform) Bill outlines plans to abolish Section 21 notices, strengthen the grounds under Section 8 of the Housing Act 1988, transition all tenancies to Assured Tenancies, create more rights for tenants to keep pets in rental properties, make changes to rent review clauses and more. The government introduced the Renters' (Reform) Bill to parliament on 17 May 2023.
What is a Section 21 Notice?
A Section 21 Notice is an eviction notice that Landlords can serve, which provides no reason for the eviction. It is often referred to as a “no-fault” notice. Once the notice is served, a tenant is given two months to leave their home and find somewhere else to live. A Section 21 Notice can be served at any time after a fixed term has expired or after the first four months of the fixed term of the tenancy.
What are the changes to Section 21 Notices?
The Renters’ Reform Bill first proposed the abolition of the Section 21 Notice, and this has now been confirmed by the Government’s Fairer Private Rented Sector White Paper.
The Government’s plan is to transition all tenancies to periodic tenancies, which will create longer tenancies with more stability for tenants. Tenants will be able to end the tenancy themselves at any time, provided they give the Landlord at least 2 months’ notice, Landlords however will have to provide a valid reason for wanting possession of the property.
By abolishing Section 21 Notices, Landlords will only be able to seek to terminate the tenancy if they can make out at least one of the statutory grounds. Landlords will need to serve a Section 8 Notice identifying the ground(s) upon which they intend to rely, and then to commence possession proceedings assuming that the tenant does not vacate in line with the notice.
Essentially, with the abolition of Section 21 Notices and the likely end to “no fault” evictions, Landlords wanting to evict problem tenants will face an even tighter procedure at the Court, meaning they must have a reason for evicting the tenant which can, in some circumstances, prove difficult. There is also the ongoing concern that Court delays will unnecessarily elongate the process, and it is taking increasingly longer for Landlords to secure possession,
What is a Section 8 Notice?
A Section 8 Notice can be used to evict tenants, but only under certain circumstances. Under the Housing Act 1988, a Section 8 Notice can be used to end a shorthold tenancy before the fixed term expires. However, Section 8 Notices can only be issued if tenants have broken the rules of their tenancy in some way, for example, if tenants:
- Are in rent arrears;
- Have damaged the property;
- Gained the tenancy by providing false information about themselves;
- Become a nuisance to neighbours;
- Have been found guilty of using the property for criminal activities.
The ground we see Landlords relying on the most is Ground 8; that the tenant is in a minimum of two months’ worth of arrears. However, under The Renters’ (Reform) Bill, whether the reason is that the Landlord wants to sell the property, move back in, or because the tenant is in rent arrears, they are all going to covered by Section 8 Notices.
The proposed changes to the mandatory grounds for possession
When a Landlord serves a Section 8 Notice, there are two grounds to rely on. Namely mandatory and discretionary grounds. Where a Landlord relies on a mandatory ground, the Court must grant possession. However, if the Landlord relies on discretionary grounds, it is down to the Judge to decide whether it would be reasonable for an Order for Possession to be made.
The main proposed changes to the mandatory grounds are set out below:-
- An amended mandatory Ground 1 if the Landlord or close member of Landlord’s family requires the property as their only or principal home.
- A new mandatory Ground 1A if the Landlord intends to sell. It remains unknown what evidence a Court will require a Landlord to produce to prove its intention to sell and how this will impact on the process particularly if there are delays in recovering possession through the Court and whether therefore Landlords will try to recover possession before the property goes under offer.
- An amended Mandatory Ground 2 (where the mortgagee requires possession) to state that there is no requirement for the mortgage was entered into before the tenancy.
- The introduction of Ground 6A which allows a Landlord to seek possession to allow compliance with enforcement action.
- Ground 8 (mandatory ground for at least 2 months’ rent arrears) will be amended to disregard from the arrears any universal credit payment that the tenant is entitled to receive which has not yet been paid.
- A new mandatory Ground 8A for repeated rent arrears i.e., at least 2 months’ rent unpaid on at least 3 separate occasions within a 3 year period. This is intended to address the issue of a tenant paying off or reducing rent arrears shortly before a hearing and avoiding the Court making an order for possession on the existing mandatory ground 8. As above, the universal credit disregard will apply.
- Ground 14 is broadened to apply to conduct “capable of causing” instead of “likely to cause” a nuisance or annoyance. This is intended to lower the threshold for proving the ground. The Court will still have discretion as to whether or not to make an Order for Possession even if it is satisfied that the ground applies.
- New notice periods – for example, the notice period for the existing Ground 8 will be increased from 2 to 4 weeks.
Additional Proposed Changes for Landlords
- Further, the Bill is proposing that there will be a compulsory Ombudsman Scheme introduced which will be created to investigate and resolve tenant complaints as opposed to these claims going through the Courts, as is the case presently. The new Ombudsman will allow tenants to seek free advice in circumstances where their Landlord has failed to deal with a legitimate complaint about their tenancy. This could include complaints about the behaviour of the Landlord, the standards of the property or where repairs have not been completed within a reasonable timeframe.
The Ombudsman will have powers to put things right, including compelling Landlords to issue an apology, provide information, take remedial action, and/or pay compensation of up to £25,000.
- Abolition of assured shorthold tenancies. There will no longer be what is now known as an assured shorthold tenancy, such tenancies will become periodic assured tenancies. As such, it will not be possible to require a tenant to commit to a minimum fixed term.
The new periods for tenancy agreements will be the same as those for which the rent is payable, which cannot exceed one month. Tenants will also be able to terminate the tenancy on serving two months’ notice at any time.
- There will be a term implied into all tenancies that a Landlord cannot unreasonably refuse a tenant’s request for permission to keep a pet, although a Landlord can require a tenant to have insurance in place for any damage caused by a pet or to pay the Landlord’s reasonable costs of such insurance.
- Rent review clauses in Tenancy Agreements will be abolished. Instead, a notice would need to be served giving the tenant two months’ notice or in the case of a low-cost tenancy, the landlord will be required to give the tenant one months’ notice of the increase.
- It is also proposed that a new Privately Rented Property Portal containing a register of residential Landlords and properties, including information about Landlords, is to be created and properties should not be marketed until the registration requirements have been met.
When can Landlords expect the changes to come into force?
Since the last update from the Government in May 2023, it is not expected that Landlords need to take any immediate action however, Landlords should certainly consider any existing tenants carefully ahead of these proposed changes especially having regard to the abolition of “no-fault” evictions and the uncertainty of when these changes will come into force.
If this bill becomes law, Landlords will need to ensure that they comply with the new rules and regulations to avoid penalties and enforcement action. However, we do expect there to be a transitioning period in relation to new and existing tenancies but it is inevitable that the new rules will be applied to all tenancies retrospectively.
If you have any questions on the Renters Reform Bill, please get in touch with a member of our team.