The contentious Renters’ Rights Bill received Royal Assent from King Charles last week and has become law following an announcement in parliament.
The legislation, which will significantly change how the private rented sector is regulated and heap more red tape on letting agents and landlords, is due to beofficially read out in the Lords with MPs in attendance.
Once this has been completed, the Government will have to get any secondary legislation affected by the Bill changed, along with the amendments necessary to regulations.
Secretary of State Steve Reed said “our historic Act marks the biggest leap forward in renters’ rights in a generation. We are finally ending the injustice overseen by previous governments that has left millions living in fear of losing their homes. For decades, the scales have been tipped against tenants. Now, we’re levelling the playing field between renters and landlords.
We are tearing down the walls of injustice in the private rented sector and building a future where tenants are protected, respected and empowered. This is an historic moment for renters across the country and we’re proud to deliver it.”
Reed said during an interview on BBC Radio 4’s Today programme "he would publish a timetable of when these changes would take place a soon as possible so that agents, landlords and tenants could understand when the Renters’ Rights Act would go ‘live’ in full."
This includes the abolishment of Section 21, which is the most radical element of the Act.
Campaign groups such as Shelter and Generation Rent have been calling on ‘no fault’ evictions to be banned immediately, but Labour has pushed back, saying property managers need time to adjust.
It is also clear that many County Courts are not ready for the changes and the likely large increase in workload; the Renters’ Rights Act effectively forces all evictions to go through these courts, making removing rogue tenants both a lengthier and more expensive process for landlords and letting agents.
Other ducks will also need to lined up including Awaab’s Law, which the Act says will now including private landlords, but also a new national database of landlords and their properties, and a new ombudsman.
What is changing?
The new Act will introduce:
- A new standard tenancy for private renting.
- A Decent Homes Standard and new rules on responding to hazards.
- Changes to advertising and letting practices.
- Limits on when and how much rent can be taken in advance.
- The removal of Section 21 notices for possession.
- Changes to Section 8 grounds for possession.
- Changes to rent increases.
- A new private rented sector database and Ombudsman that landlords must sign up to.
- New offences and civil penalties for landlords who don't comply with these rules.
What will happen first?
Some new local authority enforcement powers will be available in two months’ time. But in terms of major reforms, the first will relate to tenancy changes. When the Act comes into force – its ‘commencement date’ these will include:
- The abolition of Section 21 and the introduction of new Section 8 possession grounds.
- Both new and existing tenancies becoming periodic by default in most cases (otherwise known as the loss of the fixed term).
- The new requirement to provide a written tenancy agreement.
- Bans on taking rent in advance and allowing rental bidding wars.
- Changes to rent increases.
When will this happen?
So far ministers have been tight-lipped as to exactly when we can expect this to happen, however Housing Minister Matthew Pennycook is on record as saying landlords and tenants will be given ‘sufficient notice’.
Existing tenancies
Remember if you have an existing assured shorthold tenancy (AST) your tenancy will automatically convert to a periodic tenancy – you do not need to sign new documents.
However, there are things you will need to do:
All landlords will need to issue an information about the new rules for existing changes within the first month of the commencement date. Much like the ‘How to Rent’ guide, we expect the Government will make a document available on the GOV.UK website.
If you don’t have a written tenancy agreement you will need to provide one.
Student landlords will also need to make sure they inform tenants within the first month if they want to use the student possession ground, to ensure they can get their properties back at the end of the academic year.
If you have an unexpired Section 21 (or Section 8 notice under former grounds) you should also be aware it will only be valid for a possession claim in the first three months.
New tenancies
All new tenancies will require updated tenancy agreements and related documents. Once the Government has confirmed what will need to be included in this documentation (ahead of commencement).
Which parts of the Act will come in later – and why?
Other parts of the Act will need ‘secondary legislation’ – regulations put to Parliament, but which don’t require debate – to be introduced, and as such are expected to be introduced further down the line. These include:
- The introduction of a new landlord ombudsman.
- The development of a private rented sector (PRS) database including landlords’ details.
- The extension of a Decent Homes Standard into the PRS. The proposed deadline for full introduction is currently 2036, however, the requirement for the property to be free of category 1 hazards (the most dangerous) may come much earlier.
- The introduction of Awaab's Law, regarding treatment of damp and mould – with a consultation on proposals expected soon.
All landlords will have to sign up to the database and the ombudsman when required – although, again, at present there is no detail as to when these will be introduced.
New enforcement powers for local authorities
One thing we do know for sure is that some of the new enforcement powers given to local authorities will come into force two months from now – as this date is written into the legislation itself.
From then, local authorities will also be able to demand documentary evidence to prove compliance and will have the power to enter business premises or rented residential accommodation without a warrant in certain cases.
Other new rules coming in because of the Act include:
- The introduction of 15 new offences that can see landlords issued with civil penalties.
- An increase in the maximum civil penalty fine that can be imposed of up to £40,000.
- The introduction of six new offences that can result in landlords facing a rent repayment order.
- An increase in the maximum claim period for such orders, with tenants now able to claim back up to two years of rent payments for breaches.
As councils will be breach of the law if they fail to enforce the new rules it is likely private rented housing will be a high priority for enforcement teams across England and Wales, so it is more important than ever that you are on top of all your legal obligations – and have the documents to prove it.