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Jun 2023

New rental legislation affecting landlords is just a year away

New rental legislation affecting landlords is just a year away

The Renters (Reform) Bill is now working its way through parliament, first in the House of Commons and then the House of Lords before it achieves royal assent and becomes law. The bill is described as a “once in a generation” reform for renters in England and marks “the biggest shake-up of the private rented sector in 30 years”. Although we could be a year away from a change in the law, we’ll be making sure all our landlords are fully compliant with the new legislation when it is passed. So what do you need to know?

Removing section 21 ‘no fault’ evictions

At present, tenants can be evicted for no obvious reason, so the Bill outlines the complete abolition of section 21, in which notice is given to a tenant to end an assured shorthold tenancy, allowing the landlord to gain possession of the property. In return, Section 8 is being strengthened to allow landlords to recover their property, in certain circumstances. This includes evicting a tenant based on anti-social behaviour, and if a landlord wishes to sell their property or allow a close family member to move in. The government says this will provide “more security for tenants and empower them to challenge poor practice and unfair rent increases without fear of eviction”.

Abolishing assured shorthold tenancies (ASTs)

Tenancies will be switching to a single system of periodic tenancies instead of ASTs which is the most common type of residential tenancy in England. Tenants will usually enter a tenancy on a six or twelve-month fixed-term agreement before having the option to either renew the fixed-term tenancy or move onto a periodic tenancy – rolling by each month without a specified end date. This single system of periodic tenancies mean that tenants would need to provide two months’ notice when leaving a tenancy, allowing landlords to find a new tenant and avoid any lengthy void period.

Rent increases limited and can be appealed

Rent increases will be limited to once per twelve-month period and the landlord notice period for an increase will be doubled to two months. Tenants will also be able to appeal against excessively above-market rents, with judgements to be made by an independent tribunal.

Pets allowed

Landlords will not be able to unreasonably refuse a request for a tenants’ pet although the regulations may ask tenants to take out pet insurance to protect against any damage that may occur because of the pet.

A new private landlords’ ombudsman scheme

A new Private Rented Sector Ombudsman will require all private landlords who rent out property in England to join a government-approved redress scheme. Memberships are set to become mandatory, with failure to join resulting in enforcement action ranging from £5,000 civil penalties to £30,000 fines, criminal prosecution, and Banning Orders for repeat offenders. Tenants will be able to seek redress for free, where their landlord has failed to deal with a legitimate complaint about their tenancy. It would also have the power to compel landlords to issue apologies, provide information, take remedial action, and to pay compensation of up to £25,000.

Compulsory registration

A new “rental portal” will be created to help landlords understand their legal obligations and demonstrate compliance. Landlords will be legally required to register themselves and their properties and would incur a penalty if they fail to do so. For tenants, the portal will increase the information available to them and direct them to their local council or the new Ombudsman to resolve any issues.

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