The much-anticipated Renters' Rights Bill (RRB) was introduced into Parliament on 11 September 2024. It is part of a package of reforms set to introduce wide ranging changes to the residential sectors in England and Wales update from the King's Speech.

The previous government failed to pass the Renters (Reform) Bill before Parliament was dissolved ahead of the July general election. This new Bill is a reboot of that but goes further and faster in its attempt to "give greater rights and protections to people renting their homes". While the legislation is likely to be welcomed by tenants, landlords will want to scrutinise the detail to make sure there are no unintended consequences and that the market functions properly for both landlords and tenants.  Even with the Government's large majority, the Bill will be scrutinised and amended as it makes its way through both Houses of Parliament – expect further analysis to follow.

No more fixed term tenancies

Picking up the proposals from the previous government, fixed term assured tenancies will be abolished – so no more assured shorthold tenancies (ASTs) which have been a staple in the residential occupier market. Instead, short term residential tenancies will be periodic – not just future tenancies but existing ones too as soon as the relevant provisions are brought into force. Tenants will be able to stay in their properties until they decide to leave (by giving two months' notice) unless their landlord can prove a ground for eviction (see below). The Government has said that they will provide sufficient notice ahead of the implementation of these provisions and ensure a smooth transition so that rent increases and notices served before implementation remain valid.

Leases over seven years will not be able to be assured tenancies meaning that shared ownership leases can still have fixed terms and cannot be subject to the assured tenancy possession grounds.

No-fault evictions and grounds for possession

Currently landlords can use s21 of the Housing Act 1988 to evict tenants without having to specify any grounds – so called "no-fault evictions". It has proved a straightforward and cost-effective way for landlords to regain possession.

The RRB will abolish s21 evictions for new and existing tenancies so that a landlord will have to prove a ground before it is able to get possession and, if challenged by the tenant, this will lead to a court hearing. The previous Government, while supporting the end of no-fault evictions, was persuaded that reforms needed to be postponed until court systems were improved so that courts would have the capacity to handle the expected increase in claims. The RRB does not allow such a delay and there is some concern that courts will simply not cope with an increased workload.

Existing possession grounds will be overhauled – for example, where tenants are in arrears the mandatory threshold for eviction will be increased from two to three months and the notice period for eviction will be increased from two to four weeks. Although landlords will be able to regain possession when their circumstances change (for example, they want to sell the property or they or a close relative want to occupy it), they won't be able to do so in the first year of the tenancy and will have to give four months' notice.

Section 21 evictions will also be abolished in the social rented sector. However, the Regulator of Social Housing will need to update its Tenancy Standard which will require a statutory consultation process and so the new system will be delayed for social tenancies where the landlord is a private registered provider of social housing.

Awaab's law and the Decent Homes Standard

Living standards will be driven up by the extension of "Awaab's law and the Decent Homes Standard to the private sector – currently they only apply to social housing landlords. Awaab's law refers to the death of two-year-old Awaab Ishaak who passed away because of a severe respiratory condition due to prolonged exposure to mould in his home. All landlords will be required to investigate and fix health hazards in their properties within a specified time.

While this may lead to increased costs for landlords who have to improve their properties, these reforms are broadly welcome to make sure that homes are safe.

Rent controls and rent increases

Rent controls are not included in the Bill. However, landlords will only be allowed to raise rent once a year using the statutory procedure and tenants will be able to challenge increases which are above market (the rent the property would have achieved if newly let) – this could involve arguments from both sides and possibly a hearing which will pose an increased administrative burden on landlords.  Investors expecting a fixed annual rent increase from their assets will be especially interested in this change and how they will manage it. The rent increase process for most low-cost tenancies will be different.

Landlords and letting agents will be required to publish an asking price for their property and banned from asking for, encouraging or accepting bids above that price. This may have the effect of landlords asking for inflated rents, tenants offering less and the landlord accepting the highest "under bid".

Tackling discrimination

Discrimination against tenants on benefits or who have children will be unlawful when deciding whether to grant tenancies to them. These provisions will apply to existing leases, superior leases, mortgages and insurance products.

Pets

All tenants will have the right to request to keep a pet and the landlord cannot unreasonably refuse.  The landlord may require that the tenant takes out insurance for any damage caused by the pet or may put insurance in place itself and recover the costs from the tenant.

New Ombudsman and Private Rented Sector Database

A new Private Rented Sector Database will be introduced which all landlords will need to register with.  It is intended to provide a "one stop shop" for landlords to gain access to relevant guidance, to provide transparent information for tenants and to provide local councils with data about the private rented sector.

All private landlords will be required to join a new Ombudsman and tenants will be able to use the service for free if there are complaints about landlord behaviour. The service will provide binding resolution and will be able to compel landlords to apologise for behaviour, provide information, take remedial action and pay compensation.

Enforcement

Initial or minor breaches by landlords will lead to fines of up to £7,000 while more serious or repeated breaches could lead to fines of up to £40,000 or criminal prosecution. Councils will be given new powers of investigation to enforce the new laws.

While all market players will welcome measures to ensure that renters can enjoy their homes, there will have to be a balance so that investors are not deterred from the private residential market which would lead to fewer homes at greater rents which would have the exact opposite effect than that intended by this proposed legislation. The Bill is only just starting its passage through Parliament; however, it is likely that the Government will want it to pass as quickly as possible and have indicated that many of the provisions should be implemented by next summer.

We will be providing further updates on how this impacts the various residential asset classes in the coming weeks which will be accessible on our Living sector page.