Renters (Reform) Bill

The King's speech confirmed the Renters (Reform) Bill is being carried over into the new parliamentary session. A summary of the key provisions currently contained in the Bill is here and commentary on the second reading is here.

Picking up on commitments made during the Bill's second reading, in the briefing note to the King's speech the government noted it was also introducing various additional provisions to the Bill (some of which it has now tabled) to:

• Make it illegal to have blanket bans on renting to tenants in receipt of benefits or with children. Although the briefing note also states 'landlords will retain the final say on who they rent to'.

  The proposed new clauses target discriminatory practices relating to the marketing and availability of the property to those with children and claiming benefits, as well as rendering provisions in agreements ineffective so far as they would prohibit a tenant from having a child live with or visit them or from being a benefits claimant. However, landlords will still be able to take a prospective tenant's income into account when considering whether they would be able to pay the rent. Local housing authorities may impose a financial penalty for breach of these provisions, up to a maximum penalty of £5,000.

  The proposed clauses also provide for the terms of a mortgage or insurance contract to be ineffective so far as they would prohibit a tenant of a property from having a child live with or visit them or from being a benefits claimant.  From a lending/borrowing perspective parties will need to be aware that if the loan terms did have a contravention on letting to those with children or who are in receipt of benefits these would no longer have effect (these could be incorporated by way of the facility agreement if they are referred to in the borrower's business plan).

  The proposed clauses also allow for the provisions to be expanded by Government (through secondary legislation) to protect other categories of people who may face similar challenges. 

• Make it easier for councils to target enforcement action and arm them with further enforcement powers. This aim of this is stated to be to 'squeeze out criminal landlords who undercut the responsible majority'.

  Proposed new clauses include the ability for local housing authorities to require information and to enter certain business premises (including with or without a warrant) in order to obtain information. Various offences are proposed.

• 'Protect the student market'. The government has stated it will introduce a new ground for possession to enable landlords to be able to guarantee possession for the beginning of each academic year for a new set of tenants. This is being dealt with as a new ground for possession (rather than creating a fixed term tenancy) and will only apply to student accommodation which is an HMO. This also means a section 8 notice giving 2 weeks' notice (taking effect between 1 June and 30 September) is required to be served in order for tenancy to be brought to an end. However, concerns remain about the impact on the market of students being able to give two months' notice to quit at any point during the academic year.

The government has also confirmed it has tabled amendments to the Bill so that 'a Decent Homes Standard (DHS) will be applied to the private rented sector for the first time'. The press release notes '[t]he new standard will set a clear bar for what tenants should expect from their home ensuring it is safe, warm and decent. It will be set following further consultation and will help to meet the target of reducing non-decency in rented homes by 50% by 2030.'

It also notes that 'Local Authorities will be given new enforcement powers to require landlords to make properties decent, with fines up to £30,000 or a banning order in the worse cases. Tenants will also be able to claim up to 24 months rent back through rent repayment orders up from 12 previously.'

Amendments to the Bill allow for the DHS to be introduced.

Amendments are also proposed to make it clearer that various obligations imposed on landlords will also apply to parties such as third party operators, managers and agents engaged by the landlord to act on their behalf.

Timings...

The briefing note to the King's speech will do little to allay fears about delays in implementing the measures contained in the Bill with the government again noting it will align the abolition of the section 21 'no fault' eviction process with reform of the courts.   Although reference is made to starting work on a 'new digital system for possessions' and an initial commitment of £1.2 million to begin designing this, it seems unlikely this will be a quick fix, leaving the time frame for implementing the Bill uncertain.