The Renters Rights Bill- Key Changes
The Renters Rights Bill is designed to give tenants more protection and rights as well as stability to reside in their homes longer. Some of the changes will take effect on the commencement date of the Bill and others may take effect at a later date.
At present most tenancies are assured shorthold tenancies (AST) which are fixed for a period of time such as for 6, 12, or 24 months. After the fixed term, the AST becomes a periodic tenancy rolling on a month by month basis until a new AST is entered into for a fixed term or either the tenant or the landlord serves notice to terminate.
Under AST, tenants can be evicted from the property either by:
- Section 8 route
Section 8 route is whether the tenants have breached the terms of the tenancy and the landlord is requesting for that breach to be rectified otherwise they will claim possession of the property.
- Section 21 route
Section 21 route is regarded as the ‘no fault route’. This means that even if a tenant is paying all the rent on time and comply with all the terms of the tenancy agreement however, after the fixed term of their tenancy agreement, they can be evicted from the property.
Changes that the Renters Rights Bill will create
The new bill will create a new tenancy system whereby all tenancies will be an Assured Tenancy. This applies to all tenancies where:
- The rent is under £100,000 per annum
- The tenant is not a lodger
- The property that the tenant is renting is their sole or main home
As soon as the new Renters Rights Bill comes into effect, it will automatically turn all ASTs in to Assured Tenancies. There will not be any fixed term tenancies so all tenancies will be a rolling month by month (periodic tenancy) and will continue to be in force indefinitely until a tenant serves a Notice of Quit or the Landlord has grounds to evicts the tenant under the Section 8 route. This means that the Assured Tenancies does not need to keep being renewed and therefore, creates security for the tenants.
If a tenant decides to terminate the Assured Tenancy, they must give at least 2 months written notice being a Notice to Quit which must expire at the end of the rent period.
Rent Period
The Renters Rights Bill will enforce all tenancies to have a maximum of one month rent period – for when the rent is paid. This means that where rent is paid quarterly, termly or yearly, it will automatically be changed to monthly after the rent period.
The Proposed Rent
The landlord will be required to state the proposed rent on all new adverts and listings for new tenants. This is called the Proposed Rent.
Rental Bidding
The Bill prevents landlord’s from accepting more rent from a tenant who offers to pay more even if the landlord did not ask the tenant to pay more. This means that rental biding will be banned.
Applicants for new listings are allowed to offer under the proposed rent but the applicants cannot offer more than the proposed rent.
Terms of the Tenancy
The Bill prevents the term of the tenancy to be amended for landlords to request more than one month’s rent in advance. This therefore means that the landlord cannot make it a condition of the contract for the tenant to pay 3 or 6 months in advance.
However, a tenant may choose to pay rent in advance voluntarily once an agreement has been entered into.
Landlord will need to allow tenants to have pets and cannot unreasonably refuse – except if the lease says no pets.
Increase Rent
A landlord is able to increase the rent by serving a Section 13 Notice (using Form 4) however, this can only be done once per calendar year and the increase must be inline with market rent.
A tenant can challenge a Section 13 Notice for rental increase at the First Tier Tribunal. The new rent will not come into force until after the judge has made a decision. The judge has the power to reduce the rent if they believe the rental increase is above market rate and not in line with other similar properties in that area.
The landlord cannot include any rent review clauses and any pre-existing rent review clauses will be null and void.
Other Key Changes to come into effect at a later stage
- Landlord must keep a separate entries for each of their properties
- Landlord will need to register with the Landlord Ombudsman – landlord will have to pay a yearly fee towards this.
- Landlord’s must comply with the Decent Homes Standard – Government needs to set guidelines on this – such as state of repair
- Government to set out guidance on the time lines in which the landlord will have to make homes safe / fix any disrepair etc
Things that the Landlord must be aware
- Civil penalties from the local council have increased. Penalties can be up to £7k for the first offence and can increase to £40k for continued and repeated offences.
- Tenants can claim for Rent Repayment Order for up to 2 years
- Local authorities have the right to ask landlords for information and enter business premises
Landlords must be careful when evicting tenants and ensure that they are complying with the correct ground otherwise the landlord can face civil penalties. For example, if a landlord uses grounds 8 to evict a tenant claiming the reason for evicting the tenant is because the landlord is planning to move into the property then landlord cannot relet the property for 12 months. This is designed to prevent the landlord from abusing the grounds under section 8 to evict their tenants. If the landlord relets the property to another tenant within that 12 month period then the landlord can be fined up to £7k and the tenant can make a claim for rent repayment order.
In summary, some of the key points that the Renters’ Rights Bill intends to do is:
- Abolish section 21 evictions
- The grounds for possession to be fair for both the tenant and landlord
- Stronger protections for tenants and prevents unlawful eviction
- Creates a new Private Rented Sector Landlord Ombudsman
- Stricter rules on landlord to ensure that the property is up to a decent standard
