Renters’ Rights Bill | MIH Property Management

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The end of no-fault evictions?

The Renters’ Rights Bill has been receiving much attention in the press and media this month. The conservative party began the reform process during their last term in government via the Renters’ Reform Bill. With the election of a Labour government, the bill was recently revised and republished on 11^th September 2024, now known as the Renters’ Rights Bill. The new draft builds on the previously proposed legislation with some particular differences aimed at the Private Rented Sector (PRS).

Section 21 evictions to be banned

At present, tenants with an Assured Shorthold Tenancy (AST) can be evicted using a Section 21 or Section 8 notice (or both). A Section 8 notice is served when a tenant has broken the terms of the tenancy, but the more controversial Section 21 notice can be served without a reason (also known as a no-fault eviction).

There are, nevertheless, rules governing the use of a Section 21 notice e.g. it can only be served:

after a fixed term tenancy ends – if there’s a written contract.
during a tenancy with no fixed end date – known as a ‘periodic’ tenancy.

You can see further details here. The intention is to give renters more security and the assurance that they won’t lose their home unexpectedly contrary to the terms of their contract.

The main reasons cited for Landlords issuing Section 21 notices are:

Wanting to move back into the property
Wanting to rent the property to an alternative party (possibly at a higher fee)
Wanting to sell the property without a tenant

Whichever way, a section 21 notice issued to a responsible and reliable tenant (i.e. they haven’t given cause to be evicted) can be deeply distressing for the tenant. And with just 2 months’ notice and the threat of a court order and bailiffs, it is a tenant’s greatest worry.

It is worth noting here that Deputy Prime Minister, Angela Rayner recently said:

“

Most landlords act in a responsible way but a small number of unscrupulous ones are tarnishing the reputation of the whole sector by making the most of the housing crisis and forcing tenants into bidding wars.

Hence the proposed legislation will target just the less principled landlords.

Rent Review clauses abolished

Another key clause in the bill is a ban on in-tenancy rent increases. This has come about mainly due to the cost-of-living crisis which put great pressure on landlords struggling to fulfil their duties when rent income fell short of mortgage, maintenance and other outgoings. However, the upshot of this was that unexpected increases in rent then exceeded the tenant’s financial capability. This naturally caused untold chaos with tenants defaulting on payments leading to evictions, whilst landlords struggled to meet their own financial responsibilities.

Under the new bill, landlords will only be allowed to raise the rent once a year, and to the market rate. This creates more certainty, predictability and transparency.

Decent Homes Standard (DHS)

Following much coverage of seriously sub-standard rental properties, featuring for example extensive mould and water leaks that have led to ill health, the government is taking more steps to regulate landlords and the upkeep of property. Currently, the Decent Homes Standard applies only to social housing, but the government is now looking to extend this to the Private Rental Sector.

An end to bidding wars

The high demand for rental property has changed the traditional process of finding and securing a rental property. Instead, tenants have to submit an offer potentially including longer tenancy commitments and upfront payments to secure a home. With lets being snapped up in less than 48 hours, competition has been ridiculously high leading to desperate tenants offering higher bids to try to nail a deal.

Moving forward the intention is that landlords and letting agents will be legally required to publish an asking rent for their property and banned from asking for, encouraging, or accepting any bids above this price.

Whys and wherefores

The aim overall is to make the private rental sector fairer, improve the standards and safety of property, and provide more security for tenants. For landlords, clearer guidelines and consistency in rent adjustments should simplify and stabilise the financial aspect leading to fewer disputes – and ultimately a more stable and predictable rental market.

The second reading of the bill takes place on 9th October 2024 with the aim of receiving Royal Assent in 2025. Follow our blog for further updates.