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Expectation versus reality: The Renters (Reform) Bill

12th Aug 2023 | Real Estate Dispute Resolution
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It’s a little over 2 months since the Renters (Reform) Bill (RRB) was first introduced to Parliament.

As the RRB currently makes its way through the various stages of Parliamentary scrutiny, there will doubtless be numerous amendments before the RRB becomes law. Even at this early stage, however, there has been plenty of speculation about how the proposals will shake up the lettings sector.

Cameron Horton, trainee solicitor, and Sarah Barratt, partner, in our real estate dispute resolution team discuss what the RRB aims to set out and consider how this might differ in reality.

Talking point: Section 21 notice

The period of time since the RRB’s introduction is roughly the same as the notice period (2 months, to be precise) that a landlord is required to give their tenant to terminate a tenancy using a Section 21 notice (the so-called ‘no fault’ procedure).

The irony in this coincidence is that one of the major talking points to come out of the RRB is the proposed abolition of the Section 21 notice – but just how significant will this change be for the private rented sector?

Tipping the scales

First: a little context. Historically, legal regulation of the lettings industry has involved a balancing act between the interests of two main factions: landlords and tenants.

This is based on the apparent conflict between the interests of landlords, who want a return on investment/flexibility to find good tenants on rents that can increase with the market; and tenants, who want a good home that’s fit for purpose without having to worry that their tenancy will be taken away through no fault of their own.

The balance of power between these two interests has shifted over time through various legislative changes. Now, with a much-publicised housing crisis and the dream of home ownership becoming increasingly unattainable for many, it is crucial that good quality properties are available for renters, with a lettings sector that works for both sides.

However, some commentators feel that the RRB is just the most recent in an increasing line of Government interventions which have moved the dial firmly in tenants’ favour.

No fault? No problem!

Of all the proposals in the RRB, one that has caused serious concern for commentators from the landlord’s perspective is the abolition of fixed-term assured tenancies, and the removal of the Section 21 notice from the landlord’s toolkit.

Currently, Section 21 notices can be used to bring an assured shorthold tenancy to an end on or after the end of the fixed term. However, with the proposed abolition of fixed-term tenancies, the Section 21 procedure will no longer be available. 

At first glance, one might be forgiven for thinking that this change will be seismic. After all, the Section 21 procedure is currently a landlord’s best way of recovering possession of a tenancy at the end of a fixed term, if the tenant is a ‘good tenant’. 

This is because the Section 21 procedure does not require the landlord to demonstrate that the tenant has breached the terms of their tenancy, or even to demonstrate any particular reason at all for ending the tenancy. Provided the notice period is correct and the landlord has complied with statutory obligations, the landlord should be able to recover possession of the property using a section 21 notice. 

By proposing to scrap this procedure, the RRB is clearly making it harder for landlords to remove tenants from their properties, as they will have to satisfy one of a number of (fairly limited) grounds for eviction in order to rely on a Section 8 notice. 

The impact

Despite this, for the vast majority of tenancies, the impact of this change is likely to be less significant than first feared. This is because most landlords simply want a suitable tenant who will pay the rent on time and take good care of the property.

As long as the tenant holds up their end of the bargain, most landlords aren’t in a rush to see the back of them.

And what about those tenants who don’t? The Section 8 procedure can be used to recover possession when tenants fail to pay their rent or behave anti-socially, in breach of the terms of their tenancy.

Even where the tenant has complied with the terms of their tenancy, the Section 8 procedure can plug some of the gaps left behind by the removal of Section 21 notices.

This is because a new ground has been proposed under the RRB, enabling a landlord to recover possession to sell the property (one of the most frequent situations for which the Section 21 process was used).  

However, there are some restrictions on when this can be used. It is important to note that, as currently drafted, a landlord would commit an offence if it then lets, or markets to be let, the property within three months of having recovered possession on this ground.

As a result, whilst of course there will be outliers – particularly where the landlord’s reasons for wanting to recover the property do not fit into the Section 8 grounds – the basic position for landlords will be largely unchanged.

After all, to misquote a famous credit card company’s slogan, some tenancies are priceless – for everything else, there’s Section 8. 

If you want to find out more about the impact of the proposals under the Renters (Reform) Bill, contact Sarah using [email protected] or 0191 211 7923.

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