Proposed Changes To The UK’s Private Rented Sector & What It Means For Landlords and Tenants

When the UK government published its white paper A Fairer Private Rented Sector in June 2022, it heralded that 2023 is on course to be the year of significant change in UK residential law – but just what do the proposed reforms mean for Landlords and Tenants?

What Is Proposed?

The white paper introduced the New Deal concept, which is centred on the provision of new measures to ensure quality homes are available to rent, and that tenants have greater legal protection and power to challenge substandard practices and unfair rent rises.

The new reforms proposed will be widespread if they become law and include the introduction of a Decent Homes Standard and the scrapping of no-fault evictions.

Decent Homes Standard

For the first time, private landlords will have to meet legal standards for their properties with regard to health and safety and maintenance – and local councils will have the powers to ensure standards are met.

A consultation on this ran last September and October, and we are expecting the government outcomes to be announced soon.

Tenant Security & Protection Proposals

This represents a significant change.

The no-fault eviction clause, Section 21 Notices of Termination of Tenancy, is being scrapped. Going forward, landlords will need to evidence reasonable grounds for eviction, although they will be able to serve notice to end a tenancy to sell the property or to move family in if the tenant is at least six months into their tenancy agreement. The exact details of these grounds are still awaited.

Landlords will still be able to evict tenants that are in rent arrears of more than two months after serving notice. However, the notice period will now be four instead of two weeks’ notice.

Tenants will be allowed to end a tenancy when they want, provided they give two months’ notice. Tenants will have the powers to challenge any unreasonable rent increases.

Rent increases will be allowed once a year with a minimum of two months’ notice given to the tenant.

Tenants are not being given an automatic right to have a pet in their rented property and landlords will keep their right to refuse pets on reasonable grounds.

Landlords will no longer be able to ban families with children or individuals who receive benefits from renting their properties. However, landlords will still be able to set affordability requirements and run credit checks before agreeing to let to tenants.  This is also likely to impact on the ability of Landlords to increase rents substantially.

Additional Support For Tenants

A new ombudsman

Landlords will have to become members of a new ombudsman scheme, by law, designed to benefit tenants in the private rental market by giving them access to advice and support.

Better process

Although the proposal to have a Housing Court has been scrapped, there are reforms in place to improve the existing court systems and increase access to legal advice for tenants.

Property portal

Landlords are required by law to register on a new property portal to enable tenants to make better informed decisions about their housing options. Local councils will be empowered to act against those private landlords who don’t join the portal.

Rent repayment order (RRO)

Landlords renting a single property to multiple residents – four or more people and two or more separate households – must have a licence for the property. Without a licence form the local council, the tenant can apply for a rent refund through a rent repayment order (RRO).

The licence to house multiple occupants (HMO) must be obtained by landlords from the council. This licence usually lasts 5 years but can be less. Without a licence, landlords have to repay rent to the tenants, are unable to evict tenants with a Section 21 or no-fault notice, and face a ban from renting out property.

When Do The Reforms Become Law?

Initially, the new reforms will be applied to existing tenancies only, followed by two stages of introductions.

When the Renters Reform Act passes into law, six months later all new tenancies that qualify will be affected by the new reforms. A minimum of 12 months after this date the second stage will happen – all current residential assured and assured shorthold tenancies will then be governed by the new rules.

Do The Rules Apply To All Tenancies?

The majority of tenancies will be covered by the new reforms, including student housing that is privately rented out. The one exception is purpose-built student housing, if the landlord is registered for a government approved code.

Are The Proposed Reforms Positive?

For tenants, the reforms promise greater security and protection to enable individuals to feel safe in their homes without the threat of being evicted with a no-fault notice at any time and for no reasonable grounds.

For landlords, there are understandable concerns about the scrapping of no-fault evictions and the inability to regain possession of a property at the end of a fixed term unless there is a breach in the agreement by the tenant.

What Happens Now?

The white paper proposals are anticipated to be heard by Parliament in the form of a Renters Reform Bill at some time during this session. We will watch the progress of the proposals and hope the reforms become law in 2023 – watch this space.

If you are a landlord and require advice and assistance please speak to one of our specialist solicitors at our Chorlton office on 0161 860 7123 or via email chorlton@hlfberry.com or at our Failsworth office on 0161 681 4005 or email failsworth@hlfberry.com