Note: Articles on the Renters’ Rights Bill will be continuously updated as details emerge
Last updated 11 October 2024
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While the scrapping of Section 21 has been top of the headlines around the Renters’ Rights Bill, the other very significant change is that fixed-term assured tenancies will be removed. Assured shorthold tenancies will disappear and every tenancy will become periodic.
At the moment, most tenancies have a ‘fixed term’ that requires an initial minimum commitment from the tenant. This is commonly 12 months, often with a six-month ‘break clause’. This means the tenant is liable for the full rent for that fixed term, even if they choose to leave the property, giving the landlord some security of rental income.
Under the new rules, tenants will be able to give two months’ notice at any point, right from day one of their tenancy.
The Government’s reasoning for this change is:
“Fixed-term tenancies mean renters are obliged to pay rent regardless of whether a property is up-to-standard, and they reduce flexibility to move in response to changing circumstances, for example after relationship breakdown, to take up a new job or when buying a first home.
Instead, all tenancies will be periodic, with tenants able to stay in their home until they decide to end the tenancy by giving 2 months’ notice. This will end the injustice of tenants being trapped paying rent for substandard properties and offer more flexibility to both parties to respond to changing circumstances.”
Currently, if a tenancy is periodic and the tenant pays rent monthly (the most common rental period), they are only required to give one month’s notice to leave. Increasing this to two months gives landlords a little more time to find a new tenant, reducing the likelihood of a significant void period between tenancies.
Created in 1988 and widened in scope a few years later, Assured Shorthold Tenancies (ASTs) have become the most common category of residential tenancy, and a legal format that millions of landlords and tenants have become used to signing.
But campaigners have argued that ASTs give too little security to tenants within the private rented sector, and ministers appear to agree – despite the Government’s own English Housing Survey 2022 to 2023 revealing that the average tenure is four years. And while younger tenants tend to move more often, the survey reveals that the most common length of residence for private renters aged 65 to 74 was between five and nine years, rising to between 10 and 19 years for those over 75.
So the reality is that landlords of ‘single let’ properties shouldn’t be impacted much by the change. Even though they will be losing the security of the first six months’ rental commitment from tenants, the vast majority of tenants wouldn’t leave in that time anyway – not unless there was something wrong with the property or their circumstances unexpectedly changed.
Although the vast majority of private tenancies do already have a written tenancy agreement, it is not legally required under current rules.
Under the Renters’ Rights Bill, it will become a legal requirement for landlords or their agents to provide tenants with a ‘written statement’ of the terms of the rental arrangement.
The statement must include “such terms of the tenancy as are specified in regulations made by the Secretary of State”. This “will enable Government to reflect future changes to regulation of the private rented sector and allow further consultation on the details of which terms are necessary”.
So, we should expect regulations prescribing terms setting out tenants' rights, which will have to be included in tenancy agreements. Whether landlords will be mandated to re-serve tenancy agreements once these regulations are published is unknown.
For more information, see Tessa Sheppersons’ blog ‘The Renters Rights Bill and new rules for tenancy agreements’.
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