Long-awaited Renters' (Reform) Bill introduced to UK Parliament

The private rental sector reforms have been the source of wide speculation for many years, with the UK government finally confirming implementation of its planned changes, leading to a significant shake-up of the current system.

The Renter's (Reform) Bill was laid before Parliament on 17 May 2023, over four years after the government published its response to its consultation on reforming the private rental sector titled "A New Deal for Renting".

The bill follows on from the white paper, published in June 2022, and seeks to introduce new reforms to the UK's private rented sector by offering "quality, affordability and fairness" to renters. While the bill provides clarity on those proposals (including the abolition or "no fault" evictions), various provisions could be scrapped or indeed further regulations added as the bill progresses through Parliament.

What is in the bill?

It includes the long-awaited abolition of "no fault" (section 21) evictions, and, in a move very similar to Wales's new renting reforms, abolishes all fixed-term assured shorthold tenancies, instead providing that all new tenancies will be periodic. The bill also includes a requirement for landlords to give at least two months' notice before increasing rent and provides that rent increases will only be permitted once a year.

The bill proposes a new "property ombudsman" which is expected to expediate disputes as well as a digital "property portal" (which is mandatory and requires a fee from the user) to provide public legal education to both landlords and tenants on their rights, responsibilities and obligations. The government, in its press release announcing the introduction of the bill to Parliament on 17 May, confirmed that possession hearings will be digitised for efficiency, presumably as a response to the current backlogs faced by the courts.

Additional reforms include:

• A mandatory ground for possession should the landlord or a close family members wishes to move into the property, provided at least six months has passed since the beginning of the contract.
• Further grounds for possession including regular failures to pay rent, where a possession order will be granted if there have been at least two months' arrears on any three occasions within a three-year period, regardless of the balance of arrears at the hearing date.
• The notice period for a section 8 notice to quit for serious rent arrears will be increased from the existing two weeks to four weeks.
• Various financial and criminal penalties for landlords for breaching their obligations. These include, for example, if a landlord uses the new possession ground to move a family member into the property which forces the tenant to vacate, and a landlord subsequently lets the property within the prohibited three month window, the local authority may impose a financial penalty of up to £5,000 (which may be recurring if the contravention continues for more than 28 days) or prosecute for a criminal offence. 
• A requirement for landlords to provide tenants with a written statement including terms of the tenancy prior to the commencement of the tenancy.
• A right for tenants to request permission to keep a pet in their home, which cannot be unreasonably refused (although landlords can require the tenant to maintain pet insurance or cover the landlord's reasonable costs for doing the same).
• The Decent Homes Standard will apply to the private renting sector which the government hopes will "halve the number of non-decent rented homes by 2030" (confirmed in the 17 May press release and explanatory notes but not yet in the bill).

Osborne Clarke comment

The new bill provides more detail on how the property ombudsman and online property portal will work. However, it remains to be seen how many of the provisions will remain once the document progresses through Parliament.

The bill provides ample room for further regulations to be made further down the line, much in the same way as the Renting Homes (Wales) Act 2016 that recently came into force in Wales. Despite committing to applying the decent homes standard to the private renting sector, the government has not yet released its response to its consultation on the Decent Homes Standard, which closed in September 2022. It is likely that many factors will change between now and when the bill eventually becomes law.

The industry has greeted the draft bill with mixed responses. Get Living, a leading provider of rental properties, has welcomed several of the reforms; however, it has also flagged the riskier elements in the bill, in particular that "the abolition of section 21 no fault evictions must be partnered with the introduction of an effective mechanism to legitimately remove people who are displaying or withholding rent payments... without this the sector is open to exploitation." The British Property Federation also expressed concern on the same point, stating it must happen with "essential court reform… as the reforms set out in the bill will mean that all good reasons for landlords wanting their property back will now have to go to court."

Key for many investor landlords is the proposal to abolish fixed term tenancies and contractual rent reviews, instead relying on the often clunky section 13 procedure, currently used when a fixed term has come to an end and providing the tenant with a right to challenge the proposed increase at the tribunal.

However, given the increase in restrictions on serving section 21 "no fault" eviction notices in recent years, many may feel that this particular proposal may not be as revolutionary as it may appear on first blush. It may receive a warner reception from landlords if it goes hand in hand with true reform of the court process.

Jack De Beetham-Walton, a Paralegal with the Property Disputes team at Osborne Clarke, contributed to this Insight.