The Renters Reform Bill: Key Changes You Need to Know

The Renters Reform Bill: Key Changes You Need to Know

The Renters Reform Bill (RRB) has passed its second reading and is expected to become law in the coming months. The bill represents the most significant overhaul of the private rented sector since 1988. At Good Place Lettings, we welcome the government's efforts to create a fairer, more secure system for tenants while ensuring landlords have the tools and knowledge to manage their properties effectively.

Here’s what landlords need to know about the upcoming changes to ensure your tenants benefit from the new, higher standards while minimizing your risks:

The End of Assured Shorthold Tenancies (ASTs)

One of the most significant changes in the RRB is the end of Assured Shorthold Tenancies (ASTs), with the introduction of periodic Assured Tenancies. This means all new tenancies will automatically become periodic by default. Fixed-term contracts will no longer be an option, replaced by rolling tenancies, which can be ended by the tenant with two months’ notice or by the landlord under valid grounds through the courts.

The abolishment of ASTs also means that Section 21 notices (often referred to as 'no-fault evictions') will no longer be available. Currently, tenants can be evicted without a specified reason, but under the new bill, landlords will need to rely on specified grounds for eviction, such as but not limited to:

• The landlord moving back into the property
• Selling the property
• Rent arrears

These grounds are extensive and cover most of the legitimate reasons a landlord might seek possession.

Changes to Eviction Process and Grounds

As Section 21 evictions will no longer be an option, landlords will need to use specific grounds for eviction, which include selling the property or significant rent arrears. In the case of rent arrears, tenants must owe at least three months' rent for a court to grant mandatory possession. Landlords may still seek possession for lesser arrears or for persistent non-payment.

The notice period for eviction will generally be four months, though this depends on the grounds for eviction. Where the tenant is not at fault such as the landlord needing to sell the property, eviction notices cannot be served within the first 12 months of the tenancy. For rent arrears, landlords can give a four-week notice which should give landlords some peace of mind.

Landlords should ensure tenants are made aware of the grounds for eviction at the beginning of the tenancy, namely 2ZA, 2ZD, 5 to 5H, or 18.

If you are concerned about staying on the right side of this legislation, Good Place Lettings can help ensure you are fully compliant with the upcoming changes whatever may happen.

Rent Increases

Under the new legislation, rent increases will be subject to tighter regulation. Landlords must give tenants at least two months' notice before raising the rent, and increases can only occur once per year. Tenants will also have the right to challenge rent increases through the tribunal system, although take-up on such challenges has been historically low and is unlikely to change.

These tribunal challenges may take place within 6 months of a new tenancy or during a rent review.

Rent increases built in to tenancies will also be scrapped.

Pets in Rental Properties

The RRB introduces an implied term in all assured tenancies, allowing tenants to keep pets, provided they seek written permission from the landlord. Landlords may not unreasonably withhold consent but can reject the request for valid reasons, such as if the property is unsuitable for the proposed pet or if there are contractual obligations to consider. Landlords may also require tenants to have pet insurance to mitigate risks.

Discrimination and Fairness in Letting

The bill further enshrines what has already been the guidance: no blanket bans on renting to households with children or those receiving benefits. These practices were already discouraged, as they often lead to discriminatory outcomes, particularly for women. These bans can also lead to missing out on fantastic prospective tenants who don’t apply for a property they would be perfect for. Landlords can still apply fair affordability criteria and refuse tenancies if the property is not suitable for children, but blanket bans will no longer be permissible.

Terms in mortgages and insurances contracts forcing landlords to discriminate will also be voided by the legislation.

Rental Bidding Practices

The RRB bans landlords from renting out properties at a higher rate than originally advertised, putting an end to bidding wars. This practice has contributed to rapidly escalating rents in high-demand areas, leading to unsustainable tenant turnover.

This is a change we welcome at Good Place Lettings as we consider the method poor practice that has led to greater dissatisfaction with the rental market.

Redress Schemes and Landlord Database

All landlords will be required to join a redress scheme before marketing a rental property. This will allow tenants or prospective tenants to raise complaints, which will be independently investigated and resolved. Failure to comply could result in financial penalties of up to £7,000.

Additionally, a compulsory landlord database will be introduced, restricting landlords from marketing or letting properties unless they are listed. This register will help local authorities identify and take action against rogue landlords, particularly those abusing eviction procedures or making false claims about intending to move into the property.

Housing Standards and Awaab’s Law

The RRB extends ‘Awaab’s Law’ to the private rental sector, requiring landlords to investigate and address potential hazards, such as damp and mould. The legislation also incorporates parts of the Decent Homes Standard (DHS) for private sector properties, giving the Secretary of State authority to implement further DHS requirements.

Non-Compliance Penalties

Local councils will be given enhanced powers to enforce housing standards and address landlord misconduct. Serious or repeat offences could result in penalties of up to £40,000, with a standard fine of up to £7,000 for non-compliance. Landlords could face fines for issues such as unlawful evictions, failure to maintain property standards, and non-compliance with the redress scheme.

Tenants will also gain expanded recourse through Rent Repayment Orders, allowing them to claim up to 24 months of rent for an expanded list of specified breaches.

Where Good Place Lettings comes in:

The economic reality is that ensuring your property complies with the new legislation will protect your interests and help you avoid costly penalties. It is important your managing agent helps you ensure your properties are kept at a good standard and treat your tenants with the respect and care they deserve.

If you have concerns about these changes and how they may impact your property management, contact Good Place Lettings. We can guide you through the changes and ensure your property remains compliant with the new regulations.

Our 12.5% flat fee for full management services without upfront charges means you can maximise your rental yield while providing a good quality home without the stress as the Renters Rights Bill passes into law.