We recently published an article summarising 10 key facts on the Renters' Reform Bill, in its current form as a first draft piece of legislation working through parliament. In this article, we will share our views on the bill through 10 key observations. The legislation has been designed to promote a “fairer” private rented sector, so to what extent does it advance the cause of fairness, which should entail an even-handed attention to both landlord and tenant interests?
1) Periodic tenancies reduce security for landlords.
It’s a myth that landlords’ interest are at odds with tenants’ desire for a stable long-term home. Our clients place great value on stable, long-term tenancies, and make every effort to support those tenants with prompt maintenance, fair and moderate rent reviews, and often upgrades to the property.
With the removal of fixed-terms tenancies, landlords will lose the security and forward planning that comes with assured tenure for 6 or 12 months. This has not been offset by other reforms in the bill and fails to give landlords confidence.
2) Periodic tenancies don’t work in the student market.
This is one of the most glaring inadequacies of the bill in its current form. There is a terrible shortage of student properties nationwide, and switching to periodic tenancies can only worsen that crisis by causing private student landlords to sell or turn away from the student market. Landlords fear that students will stay in the property after the 12 month academic year has finished. This makes it dangerous to sign up new students on a contract for the following academic year, which could produce a mad rush for accommodation in the summer, when the availability of accommodation finally becomes known.
Conversely, students may choose to leave their tenancy after 9 months, disappearing for the summer holiday and leaving their landlord with a crushing 3 month void period. There needs to be an exemption to periodic tenancies granted to private student landlords, to avoid potential decimation of the student market.
3) The right to keep pets is fair but insufficiently clear.
This is surely a reform made for all the right reasons. It is utterly distasteful and illiberal that anyone should be denied the right to a pet, simply because of their housing arrangements or landlord whims. Equally, it would be quite unfair for landlords to pay for damage to their properties caused by someone’s pet, but sensible measures like pet insurance can deal with this well enough.
However, more nuance and guidance is needed here, for example when landlords are faced with a request by a tenant in a shared house (HMO). What are we meant to advise our clients when one HMO tenant asserts their right to keep a pet, whilst their 3 housemates strongly object, perhaps due to allergies?
4) 1 month rent periods penalise some tenants.
This reform makes it impossible to ask for several months’ rent up front, which is a perfectly sensible compromise when certain tenants cannot pass the normal referencing. It is not the fault of international students, for instance, that they do not have a UK guarantor or sufficient income, but neither can landlords be blamed for wanting to mitigate these risks. Up front rent is a good solution and without it these tenants may struggle to find accommodation. This reform is therefore not fair on landlords or certain types of tenants.
5) The landlord portal/register is good but one-sided.
The new landlord portal, which acts as a public register of landlords, is a good idea. This is a tool for driving up standards in the PRS and driving out rogue landlords. It will set out the legal responsibilities that landlords have in one place, which should simplify a complex and confusing area. It will also attach a tracking number to landlords, which enables tenants to research their reputation and any potential housing offences before taking a tenancy. This should make it harder for bad landlords to rent their properties in future.
All good so far. But for every bad landlord there is a bad tenant, willing to make life miserable for a good landlord trying their best to provide a comfortable home. It would be fairer to introduce a tenant register alongside the landlord register, to help good landlords research applicants and avoid tenants who have trashed properties, behaved anti-socially, or treated rent as optional in the past. Legislation should help good tenants and good landlords equally, but this reform only goes halfway, and lets bad tenants off the hook.
6) Removing Section 21 evictions puts pressure on the creaking courts system.
When Section 21 is removed, this will shift the administrative burden for possessions across to the court system under the Section 8 procedures. The courts are not currently equipped to handle this increase in cases. Section 8 requires landlords to make an application for a court hearing, which typically leads to several months of delay, even for mandatory evictions like 2 months’ rent arrears.
These delays are already costly and will only become worse when the accelerated route of Section 21 is lost, which could lead to crippling expense and void periods for landlords. Unless there is reform to the courts and Section 8, this legislation will not be fair on landlords and cause significant damage to the sector.
One remedy could be to make the mandatory grounds under Section 8 an accelerated process, like Section 21, without the need for a court hearing. This would still prevent “no fault evictions”, as a legitimate ground must be selected and proved, but it would avoid penalising landlords with excessive delays and burdening courts with unmanageable caseloads.
7) Expansion to the anti-social behaviour ground is unclear.
The proposal to expand the definition of anti-social behaviour under Section 8 possession grounds is welcome, and one of the few reforms of this bill designed with fairness to landlords chiefly in mind. Currently, anti-social behaviour can only be proven with some form of conviction, which is an extremely high bar.
Eviction is a last resort, so the bar should be high, but in practice there are many kinds of anti-social, abusive, or threatening behaviours which fall short of arrest-able offences, but should be legitimate grounds for eviction. The government needs to provide clear guidance around this, in order to genuinely help landlords struggling with the stressful problem of anti-social tenant behaviour.
8) The new rent increase procedure looks like a price cooling strategy.
The banning of rent increase clauses in contracts will not automatically slow price increases, because it will still be possible to serve a formal rent increase notice every year. But the procedure for challenging and enforcing these notices, through the First Tier Tribunal, is likely to be very slow, meaning that increased rents will have already fallen behind the new market level by the time they take effect.
This procedure, therefore, looks like a deliberate strategy for slowing the pace of rental price inflation, even though landlords will have no such relief from the inflation of prices on their own costs.
9) The Decent Homes Standard might duplicate existing rules.
The Decent Homes standard is a perfectly good framework for regulating the quality of privately rented homes. But we already have enough legislation to ensure landlords maintain their properties adequately, such as the Homes (Fitness for Habitation) Act, the Housing Health and Safety Rating System, and Section 11 of the Landlord and Tenant Act.
New legislation should replace and simplify regulations, instead of duplicating existing rules, which can further burden and discourage good landlords, whilst failing to impact bad landlords who continue ignoring regulations as they did before. There needs to be clear legislation and guidance to encourage landlord compliance, alongside better enforcement regimes.
10) Some new Local Authority enforcement powers are concerning.
There is a desperate need for increased enforcement of regulations in the private rent sector, so reforms in this area are generally positive news. However, the proposal to give Local Authorities power to enforce outside of their own region is potentially concerning.
It raises the prospect of over-zealous enforcement hubs springing up in certain Local Authorities, policing regulations in different locations, without the constructive relationships with good agents and landlords that help to maintain a healthy system.
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