Renters (Reform) Bill – second reading

The Renters (Reform) Bill (the Bill) had its second reading on Monday 23 October 2023. An overview of the measures contained in the Bill is here. Some key themes/points which were highlighted in the second reading include:

• Concerns in relation to the slow progress made in relation to the Bill so far and uncertainty in relation to the implementation date. 

• The need for an 'effective and efficient court system' to deal with the proposed reforms. However, there are no plans for a specialist housing court with Michael Gove noting ' the view of the Ministry of Justice, His Majesty's Courts and Tribunals Service and others involved in the court system is that the creation of a specialist housing court would divert resources from the effort to make the existing system work better'.  Michael Gove also commented that if the property portal and the role of the private rented sector ombudsman work effectively 'both should obviate the need for the court processes.'  

  The government's focus on the need to ensure the justice system 'is fit for purpose' is seen as a potential obstacle and reason for delay in relation to implementing the measures set out in the Bill. In particular, there was reference by the government to an 'end-to-end digitisation' of the court process and 'landlords being offered a digital process for possession on all grounds'.  These processes are not currently in place. In addition, on 20 October 2023 the government published a response to a report by the Levelling Up, Housing and Communities Committee on Reforming the Private Rented Sector which noted they would 'not commence the abolition of section 21 until stronger possession grounds and a new court process is in place'.

• A commitment by the government to bring forward changes to 'ensure that the student market, which operates differently from other aspects of the private rented sector, is regulated in a different way.' It appears this may include giving landlords a right to terminate the tenancy in line with the university year. In its response to the Levelling Up, Housing and Communities Committee on Reforming the Private Rented Sector the government noted 'We recognise that the student market is cyclical and that landlords must be able to guarantee possession each year for a new set of tenants, and we will introduce a new ground for possession to facilitate this'. However, concerns were raised that a one size fits all approach will not address the needs of a diverse student population encompassing many different stages of both life and study.  It appears the early termination right will remain and students will be able to terminate at any time on two months' notice for all student lettings, including purpose-built student accommodation (PBSA).   

• A statement by Michael Gove that 'we will bring forward details of a decent homes standard in the private rented sector' and 'we will be clear that landlords cannot have blanket bans on children/tenants on benefits'. However, it is not clear exactly  how these measures will be implemented and whether they will ultimately form part of the Bill.

• In relation to the Ombudsman, the question was asked as to who may undertake this, with Michael Gove noting '[t]here is a case for both a separate organisation and for having the issue fall to the existing ombudsman' and the government has noted that the Bill 'provides flexibility for an existing or new redress provider'. The existing Housing Ombudsman Service currently looks at complaints about registered providers of social housing.

  In its response to the Levelling Up, Housing and Communities Committee on Reforming the Private Rented Sector the government also noted that it does not have plans to consolidate and bring letting agents under the remit of a single ombudsman scheme which would be 'legally and practically challenging to achieve'.

• There were calls for clarity as to what constitutes 'anti-social behaviour' and also ensuring tenant protections in relation to evictions cannot be easily overridden or avoided. In particular concerns were raised that the proposed three month moratorium on marketing for re-letting or re-letting the property where the tenant has surrendered the property on grounds the landlord wishes to sell or they or their close family member wishes to move into the property is insufficient and lacks real teeth. However, in its response to the Levelling Up, Housing and Communities Committee on Reforming the Private Rented Sector the government stated that in its view 'a three-month restriction provides the right balance'.

• Michael Gove also rejected a call for formal 'rent controls' on the basis they would reduce market supply and instead refenced the tribunal system as a way of ensuring 'that excessive rents that are way out of kilter with the market can be dealt with'. In the government's response to the Levelling Up, Housing and Communities Committee on Reforming the Private Rented Sector it stated '[r]ents in the private rented sector should be agreed between landlords and tenants, and it is not for government to intervene in this' and '[w]here there are disputes between a landlord and tenant, the First-Tier Tribunal is best placed to resolve these and to determine the market rent'. However, this is also likely to require additional improvements and resources in relation to the tribunal process but this has not featured in the parliamentary debates as the main focus is on the s.21 eviction process.

• During the second reading it was also noted that the government expects to respond 'shortly' to consultations on registration and changes to planning use requirements in relation to 'Airbnb' style short term lets in England. Although a need for increased housing supply alongside any such measures was also acknowledged.

Labour have stated they will support the Bill. However, during the second reading they called for increased protections for 'economic evictions' and greater clarity on what constitutes 'anti-social behaviour'.  They flagged the lack of adequate social housing as a problem. They also flagged two key components missing from the Bill were the decent homes standards and making it illegal to have blanket bans on renting to families and those on benefits. Their position was the Ombudsman must have 'real teeth' and regulation and redress was a key focus. In addition, they noted that  they would 'probe the Government's intentions in respect of dealing with the complexities of the student market'. They also stated that they would put forward:

• an increase in the proposed notice periods from two months to four months;

• measures to strengthen councils' enforcement powers;

• powers to limit the amount of advance rent that landlords can ask for; and

• provisions to expand rent repayment orders to cover repayment for non-decent homes.

The Bill will now enter committee stage. A Public Bill Committee will scrutinise the Bill and is expected to report to the House of Commons by Tuesday 5 December 2023.