Category: Business Aquisition

Is the Renters’ Rights Bill much different from the Renters (Reform) Bill, on whose shoulders it stands?

In this blog post, I compare the new Renters’ Rights Bill and the Renters (Reform) Bill in a user-friendly side-by-side table to make it easy to see what is new, what has changed and what has gone. I then expand on the differences between the two Bills in the text, to explain what it means for landlords.

This analysis of the Renters’ Rights Bill is one of the first, if not the first, to be published. I’m happy for people to take inspiration from my analysis for their own content, provided they properly credit my efforts with a backlink 😊

• Related Post: The 12 key provisions in the Renters’ Rights Bill
• Related Post: Does the Renters’ Rights Bill deliver the promised level playing field?
• Show notes: Good Landlording podcast – Overview of Labour’s new Renters’ Rights Bill

At a glance: Renters’ Rights Bill versus Renters (Reform) Bill

• Side-by-side comparison of Renters’ Rights Bill with Renters (Reform) Bill
• What’s new in Renters’ Rights Bill – not in Renters (Reform) Bill?
  • 1. Ban on encouraging or inviting rental bidding, or accepting higher rent
  • 2. Requirement for advertising to state proposed rent
  • 3. Changes to the Section 13 rent process
  • 4. Remedying hazards (Awaab’s Law)
  • 5. Additional offences for Rent Repayment Orders
• What’s missing from Renters’ Rights Bill that was in Renters (Reform) Bill?
  • 1. No minimum 6 month tenancy
  • 2. No new Mandatory Ground 8A for serious repeated rent arrears
  • 3. No wider wording for Discretionary Ground 14 for anti-social behaviour
  • 4. No Lord Chancellor’s assessment before implementation of s21 abolition
• Which provisions are different in the Renters’ Rights Bill?
  • 1. Longer notice periods for landlords using Section 8 possession procedure
  • 2. New Mandatory Ground 1A cannot take effect until 12 months into tenancy, instead of 6 months
  • 3. New Mandatory Ground 4A restricted to students in HMOs
  • 4. Change to Mandatory Ground 8 (serious rent arrears)
  • 5. Longer notice period for Section 13 rent increase
  • 6. Shorter time limits for landlords to approve pets
• Is there a new “hardship” test for Section 8 mandatory grounds for possession in the Renters’ Rights Bill?
• Are there rent controls in the Renters’ Rights Bill?
• When will the Renters’ Rights Bill come into effect?
• Final thoughts

Side-by-side comparison of Renters’ Rights Bill with Renters (Reform) Bill

Although the Renters’ Rights Bill is very similar to the Renters (Reform) Bill, there are some significant differences.

This table compares the key provisions side-by-side to show how the Renters’ Rights Bill compares and contrasts with the Renters (Reform) Bill to make it easier to spot the differences at a glance. I go into the detail in the rest of the blog post.

What’s new in Renters’ Rights Bill – not in Renters (Reform) Bill?

Whilst the Renters’ Rights Bill is largely similar to the Renters (Reform) Bill, the Renters’ Rights Bill has a number of provisions that were not in the Renters (Reform) Bill or which differ that Bill. Most were trailed in Labour’s 2024 King’s Speech and were proposed by Labour as amendments at the Report Stage of the Renters (Reform) Bill:

1. Ban on encouraging or inviting rental bidding, or accepting higher rent

It’s no surprise that the new Bill contains wording that prohibits “rental bidding”, ie inviting or encouraging applicants to offer to pay rent that’s higher than the amount in the listing.

However, the Bill goes a little further in that it also stops landlords from accepting an offer from an applicant to “pay an amount of rent under the proposed letting that exceeds the stated rent”.

This means that even if a tenant offers to pay more than the stated rent, without any encouragement, the landlord won’t be able to accept it.

The prevention of rental bidding was mentioned in the King’s Speech, and Matthew Pennycook tabled an amendment to this effect at the Report Stage of the Renters (Reform) Bill.

The Bill gives the local authority the power to impose a fine of up to £7,000 if they are satisfied “on the balance of probabilities” that the landlord or agent breached this obligation.

2. Requirement for advertising to state proposed rent

There is a new obligation for landlords and letting agents to state the proposed rent when advertising the property for let. This is needed for the ban on rental bidding.

That said, there’s no requirement to state the rent on a “To Let” board outside of a property.

3. Changes to the Section 13 rent process

As expected, the Bill changes the powers of the First-tier Tribunal under Section 14 of the Housing Act 1988.

As the Guidance explains: “Currently, tenants face the risk that the Tribunal may increase rent beyond what the landlord initially proposed – we will end this, so tenants never pay more than what the landlord asked for”.

This means that if a tenant challenges a rent increase in a Section 13 notice at the First-tier Tribunal, if the market rent is higher than the rent in the s13 notice, the tribunal will not be able to increase the rent to the market rent, as is the case now.

This was referred to in the King’s Speech, and Matthew Pennycook tabled an amendment to the Renters (Reform) Bill with a similar effect at the Report Stage.

There are a couple of new details in the Bill. As the Guidance explains, the Bill will “end the practice of backdating rent increases – with the new rent instead applying from the date of the Tribunal determination”.

Also, the First-tier Tribunal will be able to delay the implementation of the rent increase by up to two months: “in cases of undue hardship, we will give the Tribunal the power to defer rent increases by up to a further 2 months”.

This will undoubtedly increase the number of appeals to the First-tier Tribunal, as tenants will have nothing to lose, and the start date of the higher rent will be delayed.

Related Post: The new rules about rent in the Renters’ Rights Bill

4. Remedying hazards (Awaab’s Law)

Again, this addition comes as no surprise because it was specifically mentioned in the King’s Speech.

“Awaab’s Law” is an amendment to Section 10A of the Landlord and Tenant Act 1985 which was introduced by Section 42 Social Housing (Regulation) Act 2023 to require social housing providers to remedy hazards within a certain timeframe. The law was introduced after the death of Awaab Ishak in 2020 caused by the inhalation of mould in his parents’ social housing flat.

There is no detail in the Bill about how Awaab’s Law will be implemented for the private rented sector.

However, the Guidance states: “We recognise that there are differences between the private and social rented sectors. We will carefully consider how best to apply Awaab’s Law to the private rented sector in a way that is fair, proportionate and effective for both tenants and landlords, and will consult on this. We will set out further detail on our plans in due course”.

Related Post: Awaab’s Law and other new social housing laws

5. Additional offences for Rent Repayment Orders

The Bill adds the following extra offences to the list in Section 40 Housing and Planning Act 2016, for which the First-tier Tribunal can impose a Rent Repayment Order, over an above those in the Renters (Reform) Bill:

• Knowingly or recklessly mis-using a possession ground
• Breach of restriction on letting or marketing a property
• Tenancy reform: continuing breaches

Related Post: The new Rent Repayment Order rules in the Renters’ Rights Bill

What’s missing from Renters’ Rights Bill that was in Renters (Reform) Bill?

The Labour government has omitted from the Renters’ Rights Bill the following four key provisions that were in the Renters (Reform) Bill:

1. No minimum 6 month tenancy

One of the amendments to the Renters (Reform) Bill at the Report Stage was that tenants needed to wait 4 months before serving 2 months’ notice to quit, instead of serving 2 months’ notice at any time. This effectively created a minimum tenancy period of 6 months.

Jacob Young explained the reason for this in the Report Stage debate of the Reform Bill: “The change ensures that landlords are able to recover the costs of replacing tenants and will prevent tenants from using PRS properties as short-term or holiday lets”.

In the same debate, Matthew Pennycook criticised the clause for the following reason: “the proposed six-month initial period will not only trap large numbers of tenants in unsafe and unsuitable properties, but put at risk the coherence of the tenancy regime that is at the heart of the Bill”.

The Renters’ Rights Bill does not create a minimum period and renters can serve a notice to quit straight away, even on day one of the tenancy. In the parts of the country where Airbnb is popular, this will create concern for landlords.

The Explanatory Notes to the Rights Bill (para 176) say that the “default period of notice required is not less than two months before the end of a period of the tenancy”. A landlord can agree to a shorter period, either in the tenancy agreement or in a separate document”.

It also calls into question the business model of letting agents that charge a large up front sum of, say, one month’s rent for a tenant find. I foresee that even more landlords will use online letting agents and bypass high street agents.

2. No new Mandatory Ground 8A for serious repeated rent arrears

The new Mandatory Ground 8A for serious rent arrears in the Renters (Reform) Bill is not in the Renters’ Rights Bill.

This is not surprising. Labour criticised this provision during the passage of the Renters (Reform) Bill through parliament. Matthew Pennycook said in Committee that the case for the new Ground 8A was “threadbare” and “could lead to a great many vulnerable tenants being evicted. It is a punitive and draconian measure that will cause great hardship”.

He added that it had been incorporated into the Bill “purely at the behest of those voices in the landlord lobby who have been forced to accept, but are by no means happy about, the wider reforms contained in this legislation [the Renters (Reform) Bill].”

3. No wider wording for Discretionary Ground 14 for anti-social behaviour

The Renters (Reform) Bill included a slight change to Ground 14 to include tenant behaviours that are “capable of causing” nuisance or annoyance. At present, landlords need to show that behaviour was “likely to cause” a nuisance or annoyance.

When the Renters (Reform) Bill was in Committee, Matthew Pennycook said of the change to Ground 14: “the range of behaviours that might be interpreted as falling within the definition of ‘capable of causing nuisance or annoyance’ is so expansive that even families with high-spirited children renting privately might fall foul of it”.

This change to Ground 14 is not in the Renters’ Rights Bill.

4. No Lord Chancellor’s assessment before implementation of s21 abolition

When the Renters (Reform) Bill was at the Report Stage, the then Junior Housing Minister, Jacob Young, introduced a new clause that required the Lord Chancellor to assess the operation of the county court possession order process and enforcement before the abolition of Section 21 would apply to existing tenancies.

The then government had introduced this clause after concerns from Conservative backbenchers that the country courts would not be ready for the influx of applications for orders for possession under Section 8.

Matthew Pennycook criticised the new clause when the Bill was debated at the Report Stage on the grounds there was no timescale, no metrics, no obligations and nothing to compel the government to take measures “to make the courts ready for the new system”.

He added that they had “heard extensive evidence in Committee about the fact that the system is essentially working fairly well and is recovering well from covid”.

Unsurprisingly, there is no Lord Chancellor’s assessment in the Renters’ Rights Bill.

The government press release states “the Bill will abolish Section 21 evictions for both new and existing tenancies at the same time, giving all private renters immediate security and assurance”.

Which provisions are different in the Renters’ Rights Bill?

Here are the provisions that were in the Renters (Reform) Bill, but the detail of which has been changed in the Renters’ Rights Bill.

1. Longer notice periods for landlords using Section 8 possession procedure

The Renters’ Rights Bill has longer notice periods than the Renters (Reform) Bill for some Section 8 grounds for possession.

Here are some examples of the longer notice periods:

• Ground 1 (occupation by landlord or family): 4 months from date of service of notice, instead of 2 months, and it cannot take effect in the first 12 months of a tenancy instead of 6 months in the Renters (Reform) Bill.
• Ground 1A (sale of property): 4 months from date of service of notice, instead of 2 months, and it cannot take effect in the first 12 months of a tenancy, instead of 6 months in the Renters (Reform) Bill.
• Ground 4A (student HMOs for occupation by full-time students): 4 months from date of service of notice, instead of 2 months
• Ground 6 (redevelopment by landlord): 4 months from date of service of notice, instead of 2 months

On the other hand, the notice period for Ground 8 (serious rent arrears) is unchanged, remaining at 4 weeks from date of service of notice.

2. New Mandatory Ground 1A cannot take effect until 12 months into tenancy, instead of 6 months

Landlords will be happy that the new Mandatory Ground 1A in the Renters (Reform) Bill (which allowed landlords to obtain possession where they intended to sell) is also in the Renters’ Rights Bill.

However, whereas the notice could take effect at the 6 month stage of a tenancy under the Renters (Reform) Bill, the relevant date when the notice expires will need to be at least 12 months into the tenancy. The 12 months will start from the beginning of the tenancy, even if that’s before Royal Assent of the Bill or when it comes into effect. In other words the clocks won’t restart when the new regime comes into force.

Landlords will need to give 4 months’ notice instead of the 2 months in the Renters (Reform) Bill, as mentioned above.

There are tough rules to make sure landlords genuinely do want to sell. They won’t be able to re-market or re-let the property for 12 months from the date the notice is served until the date the notice expires, or from the date they serve the particulars of claim if they serve a possession claim.

This has teeth as landlords may be fined up to £7,000 by the local authority if they break these rules.

3. New Mandatory Ground 4A restricted to students in HMOs

The original version of Mandatory Ground 4A (student accommodation for occupation by students) in the Renters (Reform) Bill was limited to HMOs. This restriction was lifted in the Report Stage so that it would apply to all full-time students, and not just those living in an HMO.

The Renters’ Rights Bill limits Ground 4A to full-time students in an HMO, as per the original draft of the Renters (Reform) Bill. In other words, if a full-time student rents a property by themselves or with another full-time student, the landlord won’t be able to use Ground 4A. Equally, if even one of the students in the HMO is part-time (for instance, doing a part-time Masters or PhD, which is very common), this new ground won’t be available.

4. Change to Mandatory Ground 8 (serious rent arrears)

The Bill changes Ground 8 so that the rent arrears need to be three months, up from two months, both at the time the notice is served and at the hearing. The notice is 4 weeks, an increase from the 2 weeks at present.

There had been some speculation that this would become a discretionary ground or subject to a hardship test, but this is not the case.

5. Longer notice period for Section 13 rent increase

At present, a landlord can increase rent using a Section 13 notice on Form 4, giving at least one month’s notice to start at the beginning of a new rent period.

The Renters’ Rights Bill increases the notice period from one month to two months, and it won’t come into effect until a determination by the First-tier Tribunal, if the tenant chooses to challenge the increase.

Related Post: The new rules about rent in the Renters’ Rights Bill

6. Shorter time limits for landlords to approve pets

Instead of allowing landlords the 42 days to consider requests for consent to keep pets that was in the Renters’ (Reform) Bill, the time limit has been reduced to 28 days in the Renters’ Rights Bill.

Is there a new “hardship” test for Section 8 mandatory grounds for possession in the Renters’ Rights Bill?

No. During August, the Daily Telegraph claimed that ministers were “considering bringing in French-style ‘hardship tests’ that would have to be carried out before landlords could evict tenants, effectively banning evictions in cases where renters were found to be worse off”. The Telegraph did not quote a government source in the article.

Whilst we do not know if ministers were considering hardship tests, they are not in the Renters’ Rights Bill.

This means that for Mandatory Grounds, the courts will continue to have no choice but order possession where landlords can prove they satisfy the requirements of the relevant ground.

Related Post: How to evict tenants and obtain possession under Section 8

Are there rent controls in the Renters’ Rights Bill?

No. Landlords are free to increase their rent to whatever level they believe is appropriate. However, they will need to use the process in Section 13, and the First-tier Tribunal will continue to have the power to reduce any proposed rent if it is above the open market value for a similar property in that area.

The Ministry of Housing, Communities and Local Government confirmed in a press release on 15 August that it had “no plans whatsoever to devolve rent control powers”.

When will the Renters’ Rights Bill come into effect?

Unlike the Renters (Reform) Bill, the Renters’ Rights Bill will abolish Section 21 in one go “as quickly as possible”, with a single date, and not with the two-tier system in the Renters (Reform) Bill. In other words, a “big bang” date where all tenancy agreements will move to the new system on the same day.

Matthew Pennycook told the BBC on 11 September they hoped the Bill would “make very quick progress through the House of Commons and that we have that new tenancy system in place within the first half or around summer next year.” In other words, the Renters’ Rights Bill is likely to come into effect by the summer of 2025 at the latest.

The Guidance states that on the implementation date, “the new tenancy system will apply to all private tenancies – existing tenancies will convert to the new system, and any new tenancies signed on or after this date will also be governed by the new rules. Existing fixed terms will be converted to periodic tenancies, and landlords will no longer be able to serve new section 21 or old-style section 8 notices to evict their tenants. This single date will prevent a confusing 2-tier system, and give all tenants security immediately”.

The Guidance adds there will ensure a “smooth transition and avoid unnecessary ‘cliff edges’, for example maintaining the validity of rent increases and notices served prior to implementation”.

Related Post: Renters’ Rights Bill: What happens when?

Final thoughts

Instead of rushing a short Bill through parliament that would abolish Section 21 “no fault” evictions, the government have used the Renters (Reform) Bill to create the Renters’ Rights Bill.

As the table above shows, the government have not just done a cut and paste job, but have made a number of changes to address some of the issues they raised when the Renters (Reform) Bill was going through the House of Commons, particularly those at the Report Stage. They have also simplified the implementation with a “big bang” date.

Renters will be disappointed there is not a hardship test for Section 8 evictions, there are no rent controls, and landlords will still be able to evict them if they wish to sell up.

Landlords will be disappointed there is no 6 month minimum tenancy period, no fixed term period for student landlords, no additional serious rent arrears ground for possession and no linking of the abolition of Section 21 for existing tenancies to court reform. They will also be disappointed that even fair increases will be delayed if the tenants challenge them at the First-tier Tribunal.

On the other hand, many of the provisions from the Renters (Reform) Bill that will benefit the wider PRS remain in the Bill. These include the PRS database, Landlord Ombudsman, extending the Decent Homes Standard to the private rented sector and widening the scope of rent repayment orders. Although, for most of these, we await the detail.

Finally, landlords will be pleased that Labour have retained the new Mandatory Ground 1A from the Renters (Reform) Bill. This “no fault eviction” will enable landlords to obtain an order for possession if they want to sell their property. Having to wait 12 months into the tenancy before the notice can expire, instead of the 6 months in the Renters (Reform) Bill, seems to me to be a fair compromise.

Original Post: https://theindependentlandlord.com