Summary
The Government recently published the Renters’ Rights Bill, a much-anticipated piece of legislation which will make significant changes to existing rental rules. It proposes banning some practices, like no-fault evictions as well as fixed-term contracts for some types of tenancy.
According to Angela Rayner, the Deputy Prime Minister, the Bill is designed to “rebalance the relationship between tenant and landlord”. Successive governments have attempted to make the private rental sector more coherent and accessible – the last Conservative government attempted to pass its own Renters Reform Bill before the UK’s 2024 General Election.
To help make sense of the proposed legislation and its implications, Investec put questions to property lawyer David Smith, a Partner at UK law firm JMW Solicitors. David is an expert on residential property rights and has extensive experience in regulatory matters. He leads JMW’s dispute resolution team, which includes property litigation and commercial litigation divisions.
Jump to a section:
The Renters’ Rights Bill at a glance
| Measure | Impact |
|---|---|
| Banning no-fault evictions (Section 21 notices) | Landlords will need to have a reason to end a tenancy and will have to give up to four months’ notice. The permitted reasons include:
|
| Replacing assured shorthold tenancies with periodic tenancies | Fixed-term tenancies will be abolished and replaced with periodic or ‘rolling’ tenancies. Tenants can leave a property after serving two months’ notice. |
| Applying Awaab’s Law and the Decent Homes Standard to the private rental sector | Landlords must address tenant notices about unsafe conditions within a specific timeframe. Rental properties must meet set criteria for a decent home. |
| Banning rental bidding | Landlords and agents must publish an asking rent for rental properties and cannot accept offers above the advertised figure. |
Replacing assured shorthold tenancies
Will existing tenancies become periodic?
David: The Government has suggested that existing fixed-term contracts will become periodic immediately. But the legislation suggests that fixed-term contracts will run their course and then become periodic, so it is not totally clear. I think this is something that will become clearer as the Bill progresses.
Can landlords and tenants form agreements outside of this legislation?
David: No, and any landlord that suggests it will be committing a criminal offence.
However, it is possible to legitimately form a contract that isn’t a tenancy. If the tenant does not have exclusive use of a property because the landlord provides a regular service that requires access, the licence agreement may fall outside this legislation. For example, in the student market, some landlords provide in-room cleaning.
What happens if a landlord is using a management company that guarantees the rent?
David: The landlord would be jointly liable for violations of the law. Therefore, rent-to-rent agreements may become riskier as landlords would be liable for the mistakes of the rent-to-rent company. In addition, the rent-to-rent company will have to hand back the property with the tenants they have selected in place, so landlords will inherit those tenants.
Does the legislation apply to holiday lets?
David: If someone is renting a property for the purposes of a holiday, the agreement is outside of the legislation. If someone is renting a property to live in as their home, the agreement will fall within the legislation, regardless of how they sourced the property.
Housing Minister Matthew Pennycook has said that he's aiming for summer 2025 and I think that some parts of the Renters' Rights Bill – including no-fault eviction rules – could be in effect before then.
No-fault evictions
What happens if you evict a tenant for the purpose of selling your property but don’t make the sale?
David: Under the new Bill, landlords must give tenants four months’ notice if they intend to sell or occupy a property. The property cannot be re-let for 12 months after this notice period expires. If you try to re-let the property during this time, it is an offence. The Local Authority will also issue a civil penalty of up to £7,000 and tenants can reclaim the rent they have paid for up to 24 months.
The only exception to the 12-month lockout period is a temporary licence where the tenant is in the process of buying the property.
Banning increased bids and improving access
How will the ban on offers over asking price work?
David: The legislation is modelled on legislation in the state of Victoria, Australia. Landlords must market a property at a fixed price and can't accept bids over the advertised price. It could mean that landlords advertise properties for a high price and tenants bid up to it.
Paying a lump sum in advance is also likely to be prohibited under the Bill.
The only exception to the 12-month lockout period is a temporary licence where the tenant is in the process of buying the property.
Landlords must not discriminate against tenants on benefits, or those with children. Are there any exemptions here?
David: No, not unless the decision is made to achieve a legitimate aim. For example, it may be possible to refuse a tenant with children if it would cause illegal overcrowding of a property.
On what ‘reasonable grounds’ can landlords refuse to allow a tenant to own a pet?
David: The only example that's in the legislation is when a superior landlord has said no. For example, if the freeholder forbids pets, a leaseholder can refuse. I imagine that case law will emerge and clarify what is ‘reasonable’.
Providing a decent standard of accommodation
There's a new Ombudsman service being proposed for private rental-sector landlords. How will it work?
David: The Government's hope is that disputes about disrepair be handled by an Ombudsman. An Ombudsman can't issue court orders requiring action by a landlord, but it can impose a financial penalty.
What deadlines might we see for emergency repairs and significant risks?
David: Those deadlines are still to be consulted on. The regulation has not yet been published.
Timelines
When is this Bill likely to come into effect in law?
David: Housing Minister Matthew Pennycook has said that he's aiming for summer 2025 and I think that some parts – including no-fault eviction rules – could be in effect before then. The second parliamentary reading is listed for October 2024, immediately after the Labour Party Conference.
I don't think much of the Bill is likely to be changed, because this is a very strong government with a substantial majority.
Want to discuss our mortgage and borrowing options? Please get in touch today.
Important information:
This article is for general information purposes only. The opinions featured are not to be considered as the opinions of Investec Bank plc and do not constitute financial, legal or other advice. It is advisable to contact a professional advisor if you need advice. Your use of and reliance on any of this content is entirely at your own risk.
Browse articles in