Rent Reform Bill Moves to the House of Lords

Following several months of debate, the Rent Reform Bill has now moved from the house of commons to the House of Lords for approval.

Despite criticism from renters’ groups that protections for tenants had been watered down, Jacob Young, MP, stated that the Bill strikes a fair balance, further commenting that measures that were bad for landlords would not be good for tenants.

Section 21 and changes to the court system

The ban on no-fault evictions has been the most high-profile aspect of the Bill since it was first announced and continues to dominate the mainstream press coverage. The Bill now requires an assessment of the readiness of the courts before Section 21 can be abolished.

Young said that the courts must be ready, or tenants will not benefit from the changes to eviction rules, adding that the UK Government has already allocated £1.2 million for the Courts and Tribunals service to deliver a new end-to-end online possession service.

When questioned by Clive Betts, MP, Chair of the Levelling Up, Housing and Communities Committee, Young rejected the idea of a dedicated housing court, saying that the judiciary did not support this approach.

The Minister also stated that the UK Government was looking at whether serious eviction cases such as those involving anti-social behaviour can be prioritised and will explore options for doing this after the Bill has gained Royal Assent.

Selective licensing is here to stay

Young indicated that there is no plan to remove HMO or selective licensing after the Bill is introduced. Instead, it is intended that they will be used differently to target specific local issues.

To prevent duplication with the new Property Portal, the UK Government will conduct a review of the licensing regime, claiming they will look to reduce burdens on landlords.      

However, there is more work to do on fixed terms

The latest amendment has improved the picture for student lets. If it’s made clear at the start of a tenancy, and all the residents of a property are students, landlords will be able to use the student possession ground to evict tenants in line with the academic year. This will apply to any property, not just HMOs.

It is however disappointing to see the proposed amendment from Anthony Mangnall MP overlooked, which would have allowed a fixed-term contract to be agreed between landlords and tenants on an individual basis.

A fixed term allows security of tenure for the tenant and a guarantee of rent payments for the landlord. For tenants with low income or poor credit history, the fixed term allows a guarantor to be confident about the length of time they are signing up to support them. The complete removal of this option is likely to impact more vulnerable tenants the most.

The above are the main concerns for many landlords, but read below for some further amendments that were also agreed at Report stage:

• Clause 2 – Abolition of assured shorthold tenancies –This means that the default tenancy will now be an assured tenancy rather than an Assured Shorthold. As this clause deletes Chapter 2 of Part 1 of the Housing Act 1988, it also means that the Committee has in effect approved the abolition of Section 21, subject to the transition provisions.

• Clause 4 – Form of notice of proceedings for possession –This clause allows the Secretary of State to make regulations to a form used for possession of an Assured tenancy, which will be a revised version of the current form 3. See Form 3 here.

• Clause 5 – Statutory procedure for increases of rent –This is makes it compulsory for landlords to use a Section 13 notice to increase rent in a tenancy. A new rule is that Landlords will need to give two months’ notice to increase the rent rather than the previous one month. See Form 4 here.

• Clause 6 – Challenging amount or increase of rent – This clause sets out the process for tenants to challenge the rent or rent increase at the First Tier Tribunal if they do not feel the rent increase is fair or reflective of their market.

• Clause 7 – Right to request permission to keep a pet – This was approved but the opposition wanted to reduce the landlord’s time period to consider a request to keep a pet from 42 days to 14 days, but this part did not get approval. Housing Minister Jacob Young said guidance on this would be published at a later date.

• Clause 8 – Pet insurance – following a detailed discussion on how requiring a tenant to have pet insurance would work, this also gained approval.

• Clause 11 – Landlords etc: financial penalties and offences – passed with government amendments. One of these made it an offence for landlords and letting agents to serve a notice for possession using a ground which a landlord is not entitled to rely on.  This means if a notice is served saying a landlord intends to sell then they must then sell.

• Clause 74 – Rent Repayment Orders (Offences) – the offences listed in the Housing and Planning Act 2016 regarding rent repayment orders will be extended for continuing or repeat breaches of the PRS database and PRS Ombudsman, and for providing false or misleading information to the PRS database.

• Clause 78 – Rent Repayment Orders (General) – this doubles the maximum amount of rent that a landlord might be ordered to repay from 12 months to 24 months if issued with a rent repayment order. It also enables the First-tier Tribunal to make an order against a “superior landlord” in a rent-to-rent structure, effectively reversing the Supreme court decision in Jepsen v Rakusen.

What are the next steps?

The House of Lords will debate the bill and further amendments can be put forward. The journey continues.

The Future

The legislation must help to increase the supply of homes to rent. Propertymark are working with MPs in the Lords to champion the role of property agents and will continue to put forward the case to support both landlords and tenants.

Assuming there are no issues in the House of Lords it is likely that the Bill will receive Royal Assent by a general election in October or November 2024.

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