The Renters (Reform) Bill – help or hindrance to the Private Rented Sector?

It’s been a month since the first reading of the Renters (Reform) Bill currently having its second reading in the House of Commons, but for many letting agents and landlords, the publication of the Bill raised more questions than it answered.

A clue to the reason for this lack of clarity is provided by the long title of the bill which states; “Make provision changing the law about rented homes, including provision abolishing fixed term assured tenancies and assured shorthold tenancies; imposing obligations on landlords and others in relation to rented homes and temporary and supported accommodation; and for connected purposes.

Download PDF versions of the Renters (Reform) Bill

What is the Bill aiming to achieve?

The long title of a bill sets the agenda of the bill.  In the case of the Renters (Reform) Bill, the operative words in the long title, “Make provision changing the law” highlight that the bill doesn’t change the law so much as create an obligation to make changes within specific areas of the private rented sector.  The Bill is essentially a collection of promises that the Secretary of State must make good on at a certain point in the future.

Broadly, the ‘promises’ that must be delivered cover the following key areas:

• To abolish fixed term tenancies and to make assured tenancies periodic with a rent period not exceeding one month
• To amend the grounds for possession and to change the form of notice for possession
• To establish the grounds and process for rent increases
• The right of tenants to request permission to keep a pet in the property
• Details of offences and financial penalties that could apply to breaches of the regulations once they are implemented.

In the context of our current political uncertainty, however, it’s anyone’s guess who will be putting these promises into practice.  The manner of delivering those promises will be defined by the government of the day, whoever that might be when the time comes.  In light of this, you could be forgiven for thinking that the Bill’s lack of detail is by design, in order to ensure some level of flexibility to the powers that must deliver on the promises.  The thinking would seem to be that, rather than to make the Bill so rigid that the next government chooses to repeal it in favour of a fresh start, the flexibility is there to allow for changes that might be minimal or far-reaching.

How are landlords reacting to the proposed Bill?

Property professionals will usually welcome steps that lead to improvement. Indeed, generally, there is widespread support for any regulation that raises the standards in the private rented sector and most people that I speak to in the industry, aren’t against these proposed changes.  What does concern those in the know, however, is the current lack of infrastructure that will be needed to enable the day-to-day practical needs of the proposed Bill.  The current court process will need to be adapted because simply upgrading section 8 grounds for possession will not suffice if the Housing Courts cannot process these claims in good time; the bailiff process will need a change to avoid exacerbating the growing delays that already exist;  leaseholder procedures for establishing a right to provide consent for pets will need to be amended and deposit legislation may need to be amended; insurance norms must change to prevent direct conflict with the bill; mortgage and lenders policies will need to be reviewed; the list goes on and on.

All these areas require review and change to ensure that the spirit of the Renters (reform) Bill can be implemented in a constructive and balanced way but the current government has so far failed to address many of these matters, fueling concerns already raised by property professionals. To make matters worse the Department for Levelling Up, Housing and Communities (DLUHC) added to those concerns recently, when it appeared to send out mixed messages on some parts of the bill in a recent e-mail that informed animal rights campaigners that the measures would only apply to existing tenancies at first while publishing on its website that the new rules on pets in rented properties will apply to new tenancies at first, and then be extended to existing tenancies. Maybe that was just the tail wagging the dog for a moment!

If you stop to think about what is really needed in the Private Rented Sector (PRS), it’s more housing.  The lack of rentable stock is the biggest single detracting factor that nobody wants to talk about.  The truth is, however, that new stock will not arrive in time to avert the problem.

A housing shortage is here to stay for the foreseeable future and the last thing the PRS needs is a further drop in housing stock.  Sadly though, Landlords are already voting with their feet.  The Royal Institute of Chartered Surveyors says that two-thirds of its members have seen more landlords than usual selling their properties over the last six months and Knight Frank reported that the number of new tenants registering in London between January and April 2023 was 39% higher than the 5-year average in the same area but, over the same period, the number of new listings coming onto the market was 34% lower.
What can Agents do right now?

The Renters (Reform) Bill is expected to deliver the biggest changes to the private rented sector regulation since the Tenant Fees Act but the lack of detail set out in the bill is fueling widespread concern from private landlords.  The longer this uncertainty prevails, the bigger the risk of an even greater exodus of landlords from the private rented sector.  It’s therefore unsurprising that people like David Smith, a recognised expert in landlord and tenant law, are suggesting that the most important action agents can take in this uncertain time, is to try to calm and reassure landlords that, while the status quo must and will change, it could be for the better, so long as panic doesn’t take over.