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On 4 July 2024, the UK elected a new Labour government led by Sir Keir Starmer.
During its election campaign, Labour promised significant changes to the private rented sector (PRS), and now these changes are poised to come into effect under the new Renters’ Rights Bill, which replaces the Conservatives’ Renters’ Reform Bill.
The Renters’ Rights Bill was published on 11 September 2024 and is expected to become Law in early 2025. Its primary aim is to give renters greater security and stability at a time when the price of rental costs are at an all-time high.
Most landlords work hard to ensure they are providing tenants with a high standard of living and a fair and professional service. The reforms being introduced aim to support responsible landlords in delivering an even better experience for tenants while addressing and preventing the actions of unscrupulous landlords who fail to meet their obligations.
In this article, we’ll compare the key differences between the old Renters’ Reform Bill and Labour’s new Renters’ Rights Bill and discuss the effects these changes could have.
What will change when Labour’s new Renters’ Rights Bill becomes Law?
Landlords must have a good understanding of what will change when the Renters’ Rights Bill becomes Law. Landlords are responsible for updating and adapting their services to ensure compliance with the new regulations and to avoid being penalised for non-compliance.
In this section, we’ll outline the key changes that you need to be aware of and explain how they could impact your responsibilities as a landlord.
Abolishment of Section 21 evictions
Under existing rules, landlords can use a Section 21 notice to evict tenants at any time after their fixed-term tenancy has ended or at any time during a periodic tenancy, providing they give at least 2 months’ notice. When issuing a Section 21 notice, landlords do not need to provide a legitimate reason for seeking possession of their property, hence why these notices have become known as “no-fault evictions”. Currently, many landlords use Section 21 notices rather than Section 8 notices to evict tenants because it is a quicker and simpler route to regaining possession. However, this causes great instability and anxiety for tenants, who worry that they could be evicted and made homeless at any time, particularly in today’s rental market, where demand for rental properties outstrips supply in many areas.
The new Renters’ Rights Bill will abolish Section 21 notices. Landlords will only be able to evict tenants using one of the allowable grounds under Section 8. These changes will provide tenants with more security and empower them to challenge unfair practices without fear of eviction.
Although landlords will no longer be able to regain possession of their property using a Section 21 notice, the grounds for eviction under Section 8 are being strengthened – more about this a little later.
Move from fixed-term tenancies to periodic tenancies
In addition to abolishing Section 21 notices, the Renters’ Rights Bill will replace all fixed-term and assured shorthold tenancies with periodic tenancies. This move aims to simplify tenancies and provide tenants with greater flexibility. The periodic tenancies will have a maximum term of one month and no fixed end date.
Rolling contracts will make property management less predictable for landlords, with the potential for tenants to leave at any time. This uncertainty will make it more challenging for landlords to plan for void periods and property renovations.
Strengthened grounds for repossession
While tenants mustn’t be evicted unfairly, the new Bill also recognises that it’s important that landlords can recover their property when they need to, within reason. When Section 21 is abolished, two new grounds for repossession will be added to the existing 17 grounds. These two new grounds are:
- Landlord intends to sell property.
- Landlord or family member intends to move in.
Landlords will not be able to use these grounds within the first 12 months of the tenancy. They will also be required to provide at least four months’ notice when serving a Section 8 notice on one of these grounds. Neither will they be able to relet or market the property within 12 months of serving a Section 8 notice on one of these grounds.
In addition to these two new grounds, grounds for repossession due to anti-social behaviour will also be strengthened.
Landlords facing nuisance tenants will have grounds for repossession if the tenant is engaging in behaviours “capable of causing” nuisance or annoyance to neighbours or the wider community. In these cases, the notice period for repossession will also be reduced to two weeks.
However, under the Renters’ Rights Bill, the threshold for repossession due to rent arrears has been increased, rather than reduced, from two months to three months. And the notice period for repossession due to rent arrears has also increased from two weeks to four weeks. These steps aim to give tenants more leeway to resolve the issue and repay their arrears before they face eviction.
Changes to rent increase rules
Under current rules, there are concerns that some landlords use unscrupulous backdoor methods for evicting tenants, like increasing rent to an unaffordable level.
Under the new Bill, landlords will need to follow set rules when it comes to increasing rent. They will only be allowed to increase rent once a year to the market rate by serving tenants a Section 13 notice. The notice will officially set out the new rent amount and provide tenants with two months’ notice of the change. If tenants believe the rent increase to be unfair or to exceed the market rate, they can challenge it through a tribunal.
Tenants will benefit from the new process as it will give them the power to challenge unfair rent increases. However, some landlords worry that the changes will make it more difficult for them to respond to and cover rising costs.
Introduction of a Private Rental Sector Ombudsman
The Renters’ Rights Bill will introduce a new Private Rented Sector Landlord Ombudsman to help provide quick, fair, and impartial help resolving tenant complaints away from the courts. It will be mandatory for all landlords to join the ombudsman scheme. The ombudsman will have the power to instruct landlords to issue apologies, take remedial action, and pay compensation to tenants when appropriate.
The ombudsman scheme will make it simpler for tenants to get grievances resolved without the complexity and cost of going to court.
New private rented sector database/application of Decent Homes Standards to the PRS
Once the new Bill becomes Law, all landlords in England and Wales will need to register themselves on a new Private Rented Sector database. The new database aims to help landlords understand their legal obligations and will require them to demonstrate compliance. Once registered, landlords will need to ensure that they comply with a new Private Rented Sector Decent Homes Standard. This new standard will ensure that all privately rented homes are safe and provide a good standard of living.
These changes will help to improve landlord accountability and transparency and ensure that rental properties meet minimum safety and quality standards.
Extend Awaab’s Law to the PRS
Awaab’s Law currently only applies to social housing, but Labour will extend this to the Private Rented Sector. Awaab’s Law is named after a young boy who tragically died from prolonged exposure to black mould in his family’s rented home. The Law requires landlords to address health hazards like damp and mould in a property within strict timeframes.
Extending this Law to the PRS will help to protect tenants from unsafe and unhealthy living conditions.
Strengthen tenants’ right to request pet ownership
Under current laws, landlords can ban tenants from keeping pets in their rented homes. Under the new rules, landlords cannot unreasonably refuse tenant requests to keep a pet at the property. Reasonable grounds for refusing pet ownership include the suitability of the property for pets and health and safety concerns. To address concerns about potential property damage, landlords will be allowed to require tenants to take out pet insurance before bringing a pet into the property.
Introduce new Energy Efficiency Standards
The Renters’ Rights Bill will also introduce stricter energy efficiency standards for properties in the private rented sector. Under current rules, rental properties must have a minimum Energy Performance Certificate (EPC) rating of E. The Conservative government previously announced plans to change the minimum EPC requirements to a C rating by 2028. However, these plans were scrapped in 2023. The Labour government is reinstating this target while providing landlords with additional time to prepare. Landlords will now have until 2030 to comply with the upgraded standard.
Stricter energy efficiency standards within the PRS will help landlords reduce their properties’ environmental impact to align with the UK’s commitment to achieving net zero carbon emissions by 2050. It will also benefit tenants by helping to create warmer and more comfortable homes that cost less to heat.
Reactions to the Renters’ Rights Bill
The new Renters Rights Bill has sparked both support and concern.
For tenants, the Bill introduces a range of measures aimed at significantly improving the renting experience. Tenants will benefit from greater security, with the abolition of Section 21 “no-fault” evictions and stricter rules around rent increases. These changes will give them more power to voice concerns about poor treatment or unsafe living conditions without fear of eviction.
For landlords, while many of the changes are positive as they encourage higher housing standards and greater transparency, they also present challenges. Some landlords worry that the abolishment of Section 21 notices could make evicting problematic tenants more complex and time-consuming. Others worry about the financial implications of meeting new requirements, such as energy efficiency upgrades, compliance with the Decent Homes Standard, and mandatory registration on the PRS database.
No matter which side of the fence you sit on, the changes are imminent and will reshape the rental market. It’s crucial for landlords to fully understand the new regulations and adapt their rental practices to ensure compliance.
