Renters Rights Bill – Legal Update

On 11th September 2024, Deputy Prime Minister Angela Rayner introduced the Renters Rights Bill to Parliament.

The Bill promises several material changes that will affect landlords and tenants.

The main headline-grabbing provision is that a ban on Section 21 no-fault evictions will be introduced under this legislation. The previous Conservative administration had proposed such a ban, but the legislation was not introduced due to the relatively snap nature of the 4th July 2024 general election.

Under the present proposals, no-fault evictions will be banned, and landlords will only be able to retake possession of properties in limited circumstances. These circumstances will include situations where the Landlord wishes to sell the property or occupy it himself, where there are rent arrears or other concerns about the Tenant’s conduct.

The present position is that, subject to certain restrictions that most landlords can overcome, a Section 21 Notice can be issued to a tenant. Once served, the Tenant has two months within which to leave the property. The landlord does not have to give any reason for the service of the notice, hence the term “no-fault.”

Suppose a tenant remains in occupation after the expiry of the Section 21 Notice. In that case, the landlord has to make an application to the County Court and obtain an Order from a Judge, termed a Possession Order, which requires the tenant to leave the property.  If the tenant does not leave bailiffs are then instructed.  From start to finish, legal action of this nature often takes up to 6 months (assuming bailiffs are required). The timescale is usually much longer in London because of delays in making bailiff appointments.

The previous Government had expressed concerns about the Courts’ capacity to deal with possession claims.  There are already long delays, and the typical possession hearing has a Court listing of only 5 minutes.  If landlords must now prove fault on the part of the tenant 5 minutes will not be sufficient and so it is easy to imagine that the delays that are currently experienced by Court users will become much more protracted as each possession hearing becomes a mini trial in its own right.  Practitioners foresee that the Courts will be swamped by backlogs.  It is not clear to what extent the Government has considered this factor.

The other principal changes that will affect landlords and tenants are proposed as follows: –

• Landlords will be banned from letting properties for higher than the advertised rent. This is intended to prevent tenants from being forced into bidding wars. It mirrors provisions that have already been introduced in Australia to prevent spiralling rents in cases of high demand.
• Landlords will be prevented from refusing tenants with children and/or pets tenancies.
• A new Private Rented Sector Landlord Ombudsman will be introduced.

One of the consequences of these changes is that being a Landlord will be much more unattractive to some individuals.  One view on the political dimension is that the Government has created something of a perfect storm in which tenants are being made to suffer.  When council tenants were granted the right to buy in the 1980s, the original premise was that funds raised by the sale of council houses would be invested in new social housing.  We know that successive governments have failed to make good on this promise and that the supply of social housing has been reduced to a level where demand vastly outstrips supply.  One consequence of this is that private landlords have entered the market to provide accommodation to tenants who cannot obtain social housing.  This system has, by and large, worked relatively well.  However, recent regulatory and taxation changes, including those changes now proposed under the Renters Rights Bill, will continue to make being a landlord less appealing.  We experience that many landlords have already left the market, and we expect more to follow.  A reduction in the supply of private housing has seen rents increase, and nothing within this Government’s proposals will prevent further increases.  One view, therefore, is that whilst this legislation is intended to promote tenants’ rights, it will, in effect, result in unintended adverse consequences for Tenants. A healthy and competitive rental market depends upon an active market. It is a fear that these proposals will effectively lock prospective tenants out of the rental market, which cannot be the intention.

As always, we shall see what the future holds.  If you require advice in relation to any Landlord and Tenant matters, please contact Property Litigation Partner Will Oakes at [email protected]

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