Renters’ Rights Bill – Spotlight on: Tenancy Reform

We are providing a series of articles on specific parts of the Renters Rights Bill. This particular article covers Tenancy Reform. Other elements will be covered in later articles, so do keep an eye out for these updates in the coming months.

As outlined in our previous article “Renters’ Rights Bill published”, the Renters’ Right Bill was introduced in the House of Commons on 11 September 2024. The Government are proposing to reform housing law in England, with the intention that most key reforms are to be implemented by Summer 2025.  The Renters’ Rights Bill builds on the previous Renters Reform Bill introduced by the former Government in May 2023. The second reading of this Bill took place on 9 October 2024, giving MPs the first opportunity to debate the Bill since its introduction. 

Tenancy Reform

This article focusses on the proposed changes in respect of tenancy reform and implications on Registered Providers of Social Housing (“RPs”). The Bill provides a move towards a simpler tenancy system, and the abolishment of the mandatory possession ground under section 21 Housing Act 1988.  The Government’s motivation behind these changes is to “provide tenants with greater security and empower them to challenge bad practice without fear of retaliatory eviction”. The focus is largely on the private rented sector, however, the Bill does have implications for all assured tenancies and does therefore impact on RPs.   

While the Bill remains in its infancy, the key takeaways and potential implications are:

·       The Bill will remove fixed-term assured tenancies, and instead all assured tenancies will be periodic, with rent periods of the tenancy being either monthly or no more than 28 days.  All terms of an assured tenancy that try to create a fixed term will have no legal effect. 

RPs quite often charge rent on a weekly or monthly basis already, as such this will not likely provide a major change.  Also, RPs will be very used to dealing with assured tenancies generally. Following tenure reform as a result of the Localism Act 2011, many RPs granted fixed term assured tenancies. It appears these will be caught by the proposals and will automatically become assured tenancies. Therefore, this will generate work for RPs which could include, internal reviews of lettings and tenancy policies and procedures and potential redrafting of new tenancy agreements.

·       The Bill provides that tenants can serve a 2 month notice to quit to terminate their tenancy, which is longer than the one month period most tenancies prescribe. Such notice must be in writing, but the landlord cannot dictate a prescribed form. Whilst many RPs will have a pro-forma Notice to Quit, a tenant cannot be required to use such a form. There will remain the ability for landlord’s to agree shorter notice periods with their tenants. This is particularly important where agreeing a shorter period is appropriate, for example, in situations where a tenant may need to flee a property due to domestic abuse.

·       The Bill removes provisions of the Housing Act 1988 which establishes assured shorthold tenancies, abolishing  section 21 “no fault” evictions for new and existing tenancies. Many RPs grant “starter” assured shorthold tenancies on a periodic basis which can be extended up to 18 months. These provide a useful tool to establish if a new tenant can maintain an assured tenancy. Such starter tenancies can be ended by a section 21 notice, albeit RPs usually only use such notices in the event of serious tenancy breaches. At this point in time, it appears starter tenancies will also be part of the abolition of assured shorthold tenancies.

It is not just starter tenancies which are impacted. There are a number of other situations where it is appropriate for RPs to grant assured shorthold tenancies, such as specialised supported accommodation or situations whereby a person’s immigration status is such, that a landlord granting an assured shorthold tenancy was the most appropriate tenancy to ensure compliance with immigration legislation. The government are seeking to update their Direction by the Regulator of Social Housing as to a new Tenancy Standard which will be crucial for RPs to understand what they must do when the Bill comes into force. Given the statutory consultation process which must be undertaken, the statutory guidance has confirmed that implementation for private Registered Providers of Social Housing will likely be delayed.            

Much of the Bill matches the previous Renters’ Reform Bill, with the major change being that there will be no transitional period for the changes to be put in to place.  Therefore, as currently drafted, all assured tenancies will automatically convert to assured periodic tenancies shortly after Royal Assent of the Renters’ Rights Bill, meaning that RPs need to be ready for fairly imminent change to the way they manage their housing stock However, as stated above there appears to be some suggestion that there could be a separate and later date for RPs given the changes to the Tenancy Standard which will be required.

There remains a concern as to how HM Courts and Tribunals Service will manage possession claims and the changes the reforms bring. It is clear that the abolition of s21 will remove the accelerated possession procedure in its entirety, which is likely to result in a significant increase in possession claims which will require a court hearing. The Minister for Housing, Matthew Pennycook, has made a commitment to invest in the Court service and emphasised the service will be ready. However, it does not appear that any such investment or implementation will hold up the progress of the Bill.

The Bill will now proceed to the committee stage on 22 October 2024. Parliament has made a call for evidence and expertise to provide submissions to assist scrutinise the Bill so we will closely watching this space.

If we can assist with any advice regarding the Bill and the impact on your organisation, please do not hesitate to get in touch.