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Amongst the 35 bills that Labour plans to get through Parliament, the King’s Speech on 17 July 2024 revealed a new Renters’ Rights Bill. The speech set out the new Labour Government's priorities for the months ahead, following the party's landslide General Election victory on 4 July 2024.
The key components of the Bill, which the Government describes as a ‘crucial step towards ending the housing crisis, were published in a press release from the Ministry of Housing, Communities and Local Government (MHCLG) ahead of the first reading of the Bill in Parliament on 11 September 2024. The press release, ‘Landmark reforms to give greater security for 11 million renters’ is very much in line with and signposts to the King’s Speech background briefing notes:
“The Renters’ Rights Bill, introduced to Parliament today, will ban Section 21 ‘no-fault’ evictions for new and existing tenancies, extend Awaab’s Law into the private rented sector and end blanket bans for those on benefits or with children.”
You can read the full Bill here and the Government has also produced a Guide to the Renters’ Rights Bill with more detailed information.
Both the name of the Bill and the content are similar to Michael Gove’s Renters (Reform) Bill that fell at the final hurdle, failing to make it to the statute book before Parliament was prorogued on 25 May after the General Election was announced.
“The Bill is essentially and, in most places, word for word the same as the Renters (Reform) Bill that floundered in the Lords when the election was called, but with some bells and whistles that we had a good inkling was in the offing."
- Sean Hooker, Head of Redress at the Property Redress Scheme
In her blog, First look at what's in the new Renters' Rights Bill, The Independent Landlord, Suzanne Smith, provides a useful side-by-side comparison of the Renters' Rights Bill with the Renters (Reform) Bill, which makes it easier to spot the differences.
Labour’s manifesto was thin on detail about their plans for the private rented sector, but they did promise that they would ‘immediately’ abolish Section 21 ‘no fault’ evictions and ‘overhaul’ the regulation of the private rented sector. The Renters’ Rights Bill, they explained in the notes that accompanied the King’s speech, “delivers our manifesto commitment to transform the experience of private renting, including by ending Section 21 ‘no fault’ evictions – we will take action where the previous Government has failed. The Bill will give renters much greater security and stability so they can stay in their homes for longer, build lives in their communities, and avoid the risk of homelessness.”
While the Government made the point that landlords must enjoy robust grounds for possession where there is good reason to take their property back, they stated they are “determined to level decisively the playing field between landlord and tenant by providing renters with greater security, rights and protections and cracking down on the minority of unscrupulous landlords who exploit, mistreat or discriminate against tenants with bad practices such as unfair rent increases intended to force tenants out, and pitting renters against each other in bidding wars.”
Many of the measures in the Renters’ Rights Bill, which the Government says will ‘overhaul’ the private rented sector, were included in the original Renters (Reform) Bill. Here, we explore the provisions of the Bill and what they mean for landlords.
Although the vast majority of private landlords do have written tenancy agreements – usually an AST – it is not currently a legal requirement.
However, the Renters’ Rights Bill will require landlords to give a written ‘statement of terms’ to tenants before the tenancy is entered into, and there is a list of specific information that must be provided.
We should expect regulations prescribing terms setting out tenants' rights, which will have to be included in written tenancy agreements. Whether landlords will be mandated to re-serve tenancy agreements once these regulations are published is currently unknown.
Like the Renters (Reform) Bill before it, the Renters' Rights Bill will remove fixed-term assured tenancies. Instead, all tenancies will be periodic. Tenants will be able to stay in their home until they decide to end the tenancy by giving two months’ notice.
The Bill will also expand grounds for possession. Landlords will need to provide evidence to court that the ground is met. For mandatory grounds, the court must award possession if the ground is proven. For discretionary grounds, the court can consider if eviction is reasonable, even when the ground is met.
As is the case currently, where a tenant is at fault, landlords can give notice using the relevant ground(s) at any point in the tenancy. This includes where a tenant commits antisocial behaviour, is damaging the property, or falls into significant arrears. However, the Bill proposes increasing the mandatory rent arrears threshold for eviction from two to three months’ arrears, and doubling the notice period, from two to four weeks.
In his blog, A First Look at Renters' Rights, David Smith, Partner at JMW Solicitors, says that it is concerning that the mandatory ground 8 for rent arrears has been changed. He says:
"This will require tenants to be in three months of arrears. Coupled with the increase in the notice period to four weeks this means that tenants will be almost four months in arrears before court proceedings even commence. Given that court proceedings remain hopelessly slow with little prospect of improvement this will have landlords owed a year of rent or more in tough arrears evictions. I do not think this is sustainable and the government needs to think this through."
- David Smith, Partner at JMW Solicitors
Although landlords will still be able to regain possession of their properties if they want to sell or move in themselves, tenants will be protected from eviction under these grounds for a 12-month period at the beginning of a tenancy. In addition, the notice period for these grounds is doubling, from two to four months; an extension on the three months proposed in the Renters (Reform) Bill.
Section 21 evictions will be banned “to protect renters from a key driver of homelessness and empower them to speak up against discriminatory treatment.”
The MHCLG’s press release states: “Banning Section 21 alone will reassure tenants they can challenge bad practice without the fear of retaliatory eviction, as landlords will need to provide a valid cause to end a tenancy early. Going further than ever before, 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.”
This was one of the most contentious measures contained within the original Bill, and the new Bill goes further in abolishing Section 21 evictions for both existing and new tenancies at the same time. The original Bill would have abolished Section 21 for existing tenancies at a later date than for new tenancies.
In its Guide to the Renters' Rights Bill, the Government explains:
"To end the scourge of section 21 evictions as quickly as possible, we will introduce the new tenancy for the private rented sector system in one stage. On this 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 ban on no-fault evictions is understood to be on course to come into effect in summer 2025 at the earliest.
Speaking to LandlordZONE, Paul Shamplina, founder of Landlord Action, predicts a “tsunami of landlords” will put in Section 21 notices before the ban is implemented. He points out that the courts need more resources to deal with the number of hearings that will double.
“We need confidence in the court system - at present the delays are unacceptable and will just get worse. Landlords need to know they can get their properties back in good time. The new strengthened grounds under Section 8 have to be robust, with lots more mandatory grounds."
- Paul Shamplina, Founder of Landlord Action
Propertymark’s head of policy and campaigns, Timothy Douglas, echoes this sentiment. He says that with such significant changes to the current tenancy regime there must be a commitment to ensure the court system and grounds for possession are robust and fit for purpose. He adds: “Without an enhanced, effective and well-resourced enforcement regime from local authorities it is unlikely that any benefits from the reforms will be realised.”
Ben Beadle, CEO of the NRLA also stressed the need for reform to make sure courts do not buckle under the pressure of possession claims that will need to be heard under the new rules. He said:
“In addition, ending Section 21 will leave the courts needing to hear possession claims where landlords have a legitimate reason. The cross-party Housing Select Committee has warned that without reforms to ensure the courts process cases much more swiftly, they risk becoming overwhelmed. This will not serve the interests of tenants or landlords seeking justice.”
- Ben Beadle, CEO of the NRLA
Commenting on LinkedIn, Ben Beadle added, “Extra regulation only works if you have the homes left to regulate. A failure to ensure a properly functioning court system means these reforms will be doomed to failure if that careful balance isn’t struck.”
However, Paul Shamplina advises landlords to keep calm and not panic. "Let’s remember the letting market is thriving at present, because of demand.”
This measure aims to stop tenants being ‘forced out by the back door’, where unscrupulous landlords hike rents to a level that they know is unaffordable for their current tenant. Under the Bill, landlords will no longer be able to write rent increases into contracts and will only be allowed to raise the rent once a year, which must be in line with the current market rate.
David Smith has suggested that this is another way of expressing a provision that was in the previous Bill, which required that landlords always had to put rent increases on a Section 13 notice and allowed tenants to challenge them in the First-Tier Tribunal as being above market level. See our article, ‘Are tenants being given more power to challenge rent rises?’ which provides more detail on the original proposals.
One interesting extra element is that, as it stands, if the matter goes to the First-Tier Tribunal, the rent could actually end up being increased to a higher rate than the landlord was proposing if the Tribunal felt that was a fair market rent. The new proposals prevent this, meaning tenants will be able to challenge rent increases in the future without the risk of ending up in a worse financial position.
There has been much speculation about Labour introducing a form of rent control, but this is unfounded. In our podcast, ‘Should landlords be worried about a Labour government?’, Paul Shamplina said that bringing in rent caps as a way to control the rental market would ‘scare the life out of landlords’ and cause many to exit the sector. The party has itself confirmed that it does not plan to introduce rent caps.
For new tenancies, agents and landlords will no longer be able to accept offers above the advertised price.
This is a new measure, which was not in Labour’s manifesto but was included in the King’s Speech, aimed at strengthening tenants’ rights and protections. Landlords and letting agents will be legally required to publish an asking rent for their property and banned from asking for, encouraging, or accepting any bids above this price. Angela Rayner said:
“Most landlords act in a responsible way but a small number of unscrupulous ones are tarnishing the reputation of the whole sector by making the most of the housing crisis and forcing tenants into bidding wars.”
There is a similar law prohibiting rental bidding that came into force in 2021 in New Zealand. The New Zealand law states:
“Landlords cannot invite or encourage prospective tenants to pay more rent for a property than is stated in the advertisement or offer. This means they cannot organise an auction over a rental property or offer to give the rental to a tenant if they agree to pay more for it.
Prospective tenants or any other person can still voluntarily offer to pay more than the stated amount of rent and a landlord may accept this offer.”
David Smith has covered this in more detail in his blog and as reported by LandlordZONE, arguing that it would be very difficult to enforce and could end up with advertised rents being artificially inflated.
Landlords will have to consider a tenant’s right to request a pet and cannot unreasonably turn them down, although this will be on a case-by-case basis.
There will be certain valid circumstances for refusal. For example, it will always be reasonable for a landlord to refuse a request when their superior landlord prohibits pets. And if the tenant is proposing keeping a large dog in a small flat when they are at work all day, a landlord could reasonably argue that it is simply not an appropriate home for the pet. The Government will provide guidance to landlords and tenants to support decisions.
Landlords will also be able to request insurance to cover potential damage from pets if needed. This was in the original Renters (Reform) Bill – see ‘Will landlords have to accept pets soon?’
The Decent Homes Standard will be applied to the private rented sector for the first time. This is to make sure homes are safe, secure and hazard free, ‘tackling the blight of poor-quality homes’.
Currently 21% of privately rented homes are considered non-decent and more than 500,000 contain the most serious of hazards. Clear expectations will be set so tenants can expect safe, well-maintained, and secure living conditions. Landlords who fail to address serious hazards can be fined up to £7,000 by local councils and may face prosecution for non-compliance.
Ben Beadle, CEO of the NRLA, said:
“Too often the actions of a minority of rogue and criminal landlords have brought the sector into disrepute.
We therefore support measures to ensure every rental home is of a decent quality, and swift action is taken where standards threaten the health of tenants. However, this all needs to be backed up with robust enforcement by councils.”
Although this was omitted from the Renters (Reform) Bill, the previous government had committed to a Decent Homes Standard, but with an extended implementation period ‘to avoid the cost of any improvements being passed on to tenants’.
Find out more in our article, 'What's the Decent Homes Standard?'.
This measure involves setting clear legal expectations about the timeframes within which landlords in the private rented sector must make homes safe where they contain serious hazards such as damp and mould. This will make sure that all renters in England are empowered to challenge dangerous living conditions.
For more information, read David Smith’s blog, ‘What is Awaab’s law?’ and the Government’s Awaab’s Law: Consultation on timescales for repairs in the social rented sector - GOV.UK (www.gov.uk)
A new private rented sector database will be created to help landlords understand their obligations for compliance and provide tenants with the information they need to make informed choices for new tenancies. It will also enable councils to focus enforcement where it is needed most.
Landlords will be legally required to register details about themselves and their properties, and the database will also show any offences or penalties they have incurred.
"In terms of getting the landlords to register, the provisions are the same as the previous Bill, apart from the added stick of a landlord being unable to get possession of property if they do not register, as well as a new increased fine. This move, along with redress, will be positive for all parties in the sector."
- Sean Hooker, Head of Redress at the Property Redress Scheme
The Government will introduce a new ombudsman, which all private landlords in England with assured or regulated tenancies will be required by law to join, including those who use a managing agent.
This is aimed at supporting quicker and cheaper resolution when there are disputes, preventing them escalating to costly court proceedings by providing fair, impartial and binding resolution, to both landlords and tenants. This was included in the previous Renters (Reform) Bill and you can read more in our article, ‘How will the new ombudsman work?’
The ombudsman will be expected to resolve consumer disputes on a variety of matters, including whether it is reasonable for a landlord to prevent a tenant keeping a pet at the property.
The ombudsman will also be able to offer tenancy mediation to landlords and tenants to resolve disputes when initiated by landlords. This is a service already offered by the Property Redress Scheme's Tenancy Mediation Service, who may be able to link directly with the new ombudsman.
The Bill includes robust enforcement measures and local councils will be able to take action against landlords who fail to join. This will include civil penalties of up to £7,000 for initial breaches and up to £40,000 or criminal prosecution for continuing or repeated breaches. In addition, tenants will be able to seek rent repayment orders if their landlord commits an offence by persistently failing to join the ombudsman service.
Sean Hooker, Head of Redress at the Property Redress Scheme, supports this measure. He says:
“Of particular interest to me, is the recommitment to landlord redress and the provision in the new Bill is absolutely identical to the defunct Renters (Reform) Bill. The only significant change will be a hike in the fines for not joining a scheme.
How the system will be set up is still wide open and the ultimate decision will be with the Secretary of State. It could be one or many schemes, an existing scheme or schemes or totally new players. Watch this space."
- Sean Hooker, Head of Redress at the Property Redress Scheme
The guidance says the Government will pursue the most appropriate route for designating or approving an ombudsman scheme and that there is likely to be a small fee to the landlord for each property covered.
Blanket bans on tenants with children or those in receipt of benefits will be abolished to make sure everyone has fair access to housing.
This was also contained within Michael Gove’s original Bill and you can find more details on the original proposals in our article, 'Are no DSS blanket bans being outlawed?'.
However, landlords will still have the right to refuse tenants if they believe they will be unable to afford the rent.
‘New investigatory powers will make it easier for councils to identify and fine unscrupulous landlords and drive bad actors out of the sector.’
Some of this was featured in the original Renters (Reform) Bill – find out more in our article, ‘What are the new powers being given to local councils?’ and our article on Rent Repayment Orders, which includes information on changes proposed by the original Bill.
Council powers to issue financial penalties against landlords who flout the rules will be extended, to collect and retain revenue for future enforcement work. Initial or minor non-compliance will incur a civil penalty of up to £7,000 and serious, persistent or repeat non-compliance, a civil penalty of up to £40,000, with the alternative of a criminal prosecution.
The Government has also committed to making sure that homes in the private rented sector meet minimum energy efficiency standards by 2030 and will set out more detail following further consultation.
While the Labour Government is keen to implement these changes sooner rather than later, it will take some time before they can become law - Sean Hooker provides likely timings.
“The Second Reading took place on 9 October and the Committee stage could happen soon after.
Expect a fairly rapid passage through the Commons, though, as the Government has a big majority.
The Bill still needs to navigate itself through the Lords, but this again could be relatively quick as much of it has been presented before and there may only be a few sticking points to negotiate.
The indication is that provisions such as the abolishment of Section 21 could be in place as soon as next summer.”
- Sean Hooker, Head of Redress at the Property Redress Scheme
In the press release ahead of the first reading on 11 September, Angela Rayner said:
“There can be no more dither and delay. We must overhaul renting and rebalance the relationship between tenant and landlord. This Bill will do just that and tenants can be reassured this Government will protect them.”
- Angela Rayner, Deputy Prime Minister
To explore the key components of the Bill further, follow the links to the relevant pages below, within our in-depth look at the legislation, to see how it will affect you.
Other proposed bills that will impact the property sector include the English Devolution Bill, a draft of the Leasehold and Commonhold Reform Bill, and the Planning and Infrastructure Bill, which aims to "get Britain building, including through planning reform, to accelerate the delivery of high-quality infrastructure and housing”.
We will update this article with more information as the Renters’ Rights Bill progresses. To find out more about the implications for landlords and how you can best navigate the changes, read, ‘Renters’ Rights Bill: should landlords be concerned?’
And for more relevant information on the impact of the Labour government on landlords, read our article, ‘What does the General Election mean for landlords?’ which features highlights and insights from the National Landlord Investment Show, and listen to The Property Cast election special, ‘Should landlords be worried about the new Labour government?’ with Sean Hooker, Head of Redress at the Property Redress Scheme.
For regular updates on breaking private rented sector and property news, subscribe to LandlordZONE, also powered by Total Property.
